Description
The report for the financial year 2009 - 2010 of IDFC.
I D F C S U B S I D I A R I E S A N N U A L R E P O R T 09 - 10
CONTENTS
I D F C P R I VAT E E Q U I T Y C O M PA N Y L I M I T E D I D F C T R U ST E E C O M PA N Y LIMITED IDFC INVESTMENT ADVISORS LIMITED IDFC PROJECT EQUITY C O M PA N Y L I M I T E D
02
IDFC FINANCE LIMITED IDFC SECURITIES LIMITED I D F C C A P I TA L L I M I T E D
63 75
18
94 112
28
IDFC SSKI STOCK BROKING LIMITED
46
I D F C C A P I TA L C O M PA N Y LIMITED
126
IDFC PPP TRUSTEESHIP C O M PA N Y L I M I T E D IDFC PROJECTS LIMITED IDFC ASSET M A N AG E M E N T C O M PA N Y LIMITED IDFC AMC TRUSTEE C O M PA N Y L I M I T E D IDFC PENSION FUND MANAGEMENT LIMITED
136
I D F C C A P I TA L (SINGAPORE) PTE LIMITED IDFC FUND OF FUNDS LIMITED IDFC GENERAL PA RT N E R S L I M I T E D
210
146 163
226
236
184
DHEERU POWERGEN P R I VAT E L I M I T E D
246
196
IDFC private
equity company limited
B O A R D O F D I R E CTO R S
?
? ? ? ? ?
Dr. Rajiv B. Lall Chairman Mr. Vikram Limaye Mr. Kishor Chaukar Mr. N. S. Raghavan Mr. Jaithirth Rao Mr. Dominic Price
A U D I TO R S
?
Deloitte Haskins & Sells Chartered Accountants
P R I N C I PA L B A N K E R S
?
HDFC Bank Limited
R E G I ST E R E D O F F I C E
Naman Chambers, C-32, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai 400 051. TEL +91 22 42222000 FAX +91 22 26523803
2
I D F C A N N U A L R E P O R T 09 –10
D I R E CT O R S ’ R E P O R T
TO THE MEMBERS
Your directors have pleasure in presenting the Eighth Annual Report together with the audited accounts for the year ended March 31, 2010. recommended confirmation of the said interim dividend as final dividend for the year.
OPERATIONAL REVIEW
Your Company continues to be committed to the development of infrastructure in the country and manages three funds – India Development Fund, IDFC Private Equity Fund II and IDFC Private Equity Fund III having a total capital commitment of INR 59.92 billion. Your Company closed only two deals during the year and these deals were related to earlier deals done by IDFC Private Equity Fund II. No ‘new’ deal was closed during the year. This was primarily driven by the fact that, in our view, valuations were too high. Your Company, therefore, focused a lot of its efforts on managing the existing portfolio and on completing exits to reduce the size of the portfolio. As a result, there were 5 liquidity events (including 3 full exits and 1 partial exit) during the year and also fully exited our holding in one company that we had taken public earlier Your Company won three awards this year: INFRASTRUCTURE INVESTOR AWARDS 2009 i. Asian Infrastructure Fund Manager of the Year. ii. Asian Infrastructure Deal of the Year. PRIVATE EQUITY INTERNATIONAL AWARDS 2009 Best Private Equity Firm in India.
PARTICULARS REGARDING CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND EXPENDITURE
Since the Company does not carry out any manufacturing activity, the particulars regarding conservation of energy, technology absorption and other particulars as required by the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1998 are not applicable. The Company has no earnings in Foreign Exchange. The particulars regarding foreign exchange expenditure are furnished at Item No. 6 in the Notes to Accounts.
PARTICULARS OF EMPLOYEES’ REMUNERATION
The Company has eleven employees in receipt of remuneration of more than Rs.24 lakh per annum. In accordance with the provisions of Section 217 (2A) of the Companies Act, 1956 and the rules framed thereunder, the names and other particulars of employees are set out in the Annexure to the Directors’ Report.
DIRECTORS
Mr. Vikram Limaye and Mr. Kishor Chaukar retire by rotation at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment. The Board recommends their re-appointment as Directors of the Company.
RUPEES (IN MILLIONS)
FINANCIAL RESULTS
FOR THE YEAR ENDED MARCH 31, 2010 Total Income Less: Total Expenses Profit before Tax Less: Provision for Tax Profit after Tax Add: Balance Brought Forward Total Available for Appropriation 990.55 285.38 705.17 236.94 468.23 721.89 1,190.12 46.82 600.00 101.97 441.33 FOR THE YEAR ENDED MARCH 31, 2009 983.22 195.81 787.41 271.44 515.97 725.50 1,241.47 51.60 400.00 67.98 721.89
AUDITORS
M/s. Deloitte Haskins & Sells, Chartered Accountants will retire as the statutory auditors of the Company at the ensuing Annual General Meeting. The Board at its meeting held on April 22, 2010 has proposed their re-appointment as Auditors to audit the accounts of the Company for the financial year ending March 31, 2011. M/s. Deloitte Haskins & Sells, the retiring Auditors, have confirmed that their re-appointment, if made, would be in conformity with the provisions of Sections 224 and 226 of the Companies Act, 1956 and also indicated their willingness to be re-appointed. You are requested to consider their re-appointment.
APPROPRIATIONS:
Transfer to General Reserve Interim Dividend Tax on Dividend Balance Carried Forward
DEPOSITS
The Company has not accepted any fixed deposits during the year under review.
AUDIT COMMITTEE
The Audit Committee comprises of the following Directors as its Members: Mr. Dominic Price, Chairman Mr. N.S. Raghavan, Member Mr. Vikram Limaye, Member The Audit Committee met four times during the year.
DIVIDEND
Given the strong financial performance, the Board had approved interim dividend distribution amounting to Rs.600 million resulting in an aggregate dividend rate of 120000% i.e. Rs.12000/- per share. Your Directors have not recommended any further dividend and
I D F C P R I V A T E E Q U I TY C O M P A N Y L I M I T E D
3
DIRECTORS’ RESPONSIBILITY STATEMENT
Based on the information and explanation furnished by the Company, the Directors confirm: the applicable accounting standards have been followed in preparation of annual accounts and there are no material departures;
¬
The Board would like to express its gratitude for the unstinted support and guidance received from Infrastructure Development Finance Company Limited (IDFC), the parent organisation, and also from other group companies. The Board would also like to express their sincere thanks and appreciation to all the employees for their commendable teamwork, exemplary professionalism and enthusiastic contribution during the year.
that they have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2010 and of the profit of the Company for the year ended on that date;
¬
that they have taken proper and sufficient care for the maintenance of adequate accounting records, in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and
¬ ¬
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
that they have prepared the annual accounts on a going concern basis.
RAJIV B. LALL
APPRECIATION
The Board wishes to thank the investors of India Development Fund, IDFC Private Equity Fund II and IDFC Private Equity Fund III, the Ministry of Finance, Reserve Bank of India and Securities and Exchange Board of India for their continued support.
Chairman
Mumbai April 22, 2010
4
I D F C A N N U A L R E P O R T 09 –10
AU D I TO RS ’ R E PO RT
To The Members of IDFC Private Equity Company Limited
1. We have audited the attached Balance Sheet of IDFC PRIVATE EQUITY COMPANY LIMITED (“the Company”) as at March 31, 2010, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditor’s Report) Order, 2003 (CARO) issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. 4. Further to our comments in the Annexure referred to in paragraph 3 above, we report as follows: (a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; (b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination ofthose books; (c) the Balance Sheet, the Profit and Loss Account 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 Profit and Loss Account and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956; (e) in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2010;
(ii) in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date and (iii) in the case ofthe Cash Flow Statement, of the cash flows of the Company for the year ended on that date. 5. On the basis of the written representations received from the Directors as on March 31, 2010 taken on record by the Board of Directors, none of the Directors is disqualified as on March 31, 2010 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956.
FOR DELOITTE HASKINS & SELLS Chartered Accountants (Registration No. 117366W)
NALIN M. SHAH
Partner Membership No. 15860 Mumbai April 22, 2010
I D F C P R I V A T E E Q U I TY C O M P A N Y L I M I T E D
5
ANNEXURE
(Referred to in paragraph 3 of our report of even date) (i) Having regard to the nature ofthe Company’s business / activities / result / transactions, etc. clauses (i)(c), (ii), (viii), (x), (xi), (xii), (xiii), (xiv), (xv), (xvi), (xvii), (xviii), (xix), and (xx) of CARO are not applicable. (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of the fixed assets. (b) The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanations given to us, no material discrepancies were noticed on such verification. (iii) The Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956. (iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of fixed assets and the sale of services. During the course of our audit, we have not observed any major weakness in such internal control system. (v) To the best of our knowledge and belief and according to the information and explanations given to us, there were no contracts or arrangements that needed to be entered in the Register maintained under Section 301 of the Companies Act, 1956. (vi) According to the information and explanations given to us, the Company has not accepted any deposit from the public during the year.
TO THE AUDITORS’ REPORT
(vii) In our opinion, the internal audit functions carried out during the year by a firm of Chartered Accountants appointed by the Management have been commensurate with the size of the Company and the nature of its business. (viii) According to the information and explanations given to us in respect of statutory dues: (a) The Company has been regular in depositing undisputed dues, including Provident Fund, Income-tax, Service Tax, Cess and other material statutory dues applicable to it with the appropriate authorities. (b) There were no undisputed amounts payable in respect of Income-tax and other material statutory dues in arrears as at March 31, 2010 for a period of more than six months from the date they became payable. (c) There were no disputed Income Tax, Service Tax and any other material statutory dues which were not deposited as on March 31, 2010.
(ii) In respect of its fixed assets:
(ix) To the best of our knowledge and according to the information and explanations given to us, no fraud by or on the Company has been noticed or reported during the year.
FOR DELOITTE HASKINS & SELLS Chartered Accountants (Registration No. 117366W)
NALIN M. SHAH
Partner Membership No. 15860 Mumbai April 22, 2010
6
I D F C A N N U A L R E P O R T 09 –10
BALANCE SHEET
RUPEES SCHEDULE
AS AT MARCH 31, 2010
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
SOURCES OF FUNDS
Shareholders’ Funds Capital Reserves and Surplus Deferred Tax Liability (See Schedule 14 Note 10) TOTAL 1 2 500,000 539,750,213 10,612,000 550,862,213 3 548,149,622 40,599,956 507,549,666 4 5 6 7 1,840 – 43,124 321,260,172 57,826,606 379,129,902 Less: Current Liabilities and Provisions Current Liabilities Provisions Net Current Assets TOTAL Notes to the Accounts Schedules 1 to 14 form an integral part of the Accounts. 14 8 9 321,739,710 14,079,485 335,819,195 43,310,707 550,862,213 269,305,975 11,229,263 280,535,238 144,117,702 777,797,207 544,283,104 10,605,439 533,677,665 100,001,840 103,493,773 16,598,846 219,957,618 84,602,703 424,652,940 500,000 773,497,207 3,800,000 777,797,207
APPLICATION OF FUNDS
Fixed Assets Gross Block Less: Depreciation and Amortisation Net Block Investments Current Assets, Loans and Advances Sundry Debtors Interest Accrued on term deposits with banks Cash and Bank Balances Loans and Advances
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants FOR AND ON BEHALF OF THE BOARD
NALIN M . S H A H
RAJIV B. LALL
VIKRAM LIMAYE
Partner
Chairman
Director
Mumbai | April 22, 2010
I D F C P R I V A T E E Q U I TY C O M P A N Y L I M I T E D 7
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
SCHEDULE
APRIL 1, 2009 TO MARCH 31, 2010 10 990,547,242 990,547,242 11 12 13 215,108,063 5,004,478 35,275,178 29,994,517 285,382,236 705,165,006 230,130,000 6,812,000 – 468,223,006 721,899,207 1,190,122,213 46,823,000 600,000,000 101,970,000 441,329,213 1,190,122,213
APRIL 1, 2008 TO MARCH 31, 2009 983,216,965 983,216,965 138,720,160 12,788,079 39,899,280 4,398,536 195,806,055 787,410,910 260,500,000 7,339,608 3,600,000 515,971,302 725,505,905 1,241,477,207 51,598,000 400,000,000 67,980,000 721,899,207 1,241,477,207 10,319.43
INCOME
Operating and Other Income TOTAL
EXPENDITURE
Staff Expenses Establishment Expenses Other Expenses Depreciation & Amortisation TOTAL PROFIT BEFORE TAXATION Less: Provision for Taxation Current Tax Deferred Tax (See Schedule 14 Note 10) Fringe Benefit Tax PROFIT AFTER TAXATION Add: Balance as per last Balance Sheet AVAILABLE FOR APPROPRIATION Appropriations: General Reserve Interim Dividend Tax on Dividend Balance carried forward Earnings per share (Face Value Rs. 10) (See Schedule 14 Note 11) Basic and Diluted Notes to Accounts Schedules 1 to 14 form an integral part of the Accounts 14 9,364.46
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants FOR AND ON BEHALF OF THE BOARD
NALIN M . S H A H
RAJIV B. LALL
VIKRAM LIMAYE
Partner
Chairman
Director
Mumbai | April 22, 2010
8 I D F C A N N U A L R E P O R T 09 –10
C A S H F L OW ST AT E M E N T
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010
APRIL 1, 2008 TO MARCH 31, 2009 787,410,910 4,398,536 3,152,349 (25,888,360) (21,580,536) 747,492,899 (112,861,970) (2,953,604) (270,317,046) 361,360,279 (85,181,677) 1,326,488,360 (1,400,600,000) 21,580,536 (137,712,781) (467,980,000) (467,980,000) (244,332,502) 464,290,120 219,957,618 (244,332,502)
A.
CASH FLOW FROM OPERATING ACTIVITIES
Profit Before Taxation Adjustments for: Depreciation and Amortisation Provision for Employee Benefits Profit on sale of Investments Dividend on Investments Interest Received Operating Profit Before Working Capital Changes Changes in: Current Assets, Loans and Advances Current Liabilities Direct Taxes Paid NET CASH FROM OPERATING ACTIVITIES 142,486,799 52,433,735 (225,791,206) 685,159,899 (3,866,518) (70,000,000) 70,000,000 2,156,753,753 (2,035,605,626) 831,046 118,112,655 (701,970,000) (701,970,000) 101,302,554 219,957,618 321,260,172 101,302,554 29,994,517 2,850,222 (12,905,626) (8,242,502) (831,046) 716,030,571 705,165,006
B.
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Fixed Assets Short term loan given Proceeds of repayment of short term loan Sale Proceeds of Investments Purchase of Investments Interest Received NET CASH FROM / (USED IN) INVESTING ACTIVITIES
C.
CASH FLOWS FROM FINANCING ACTIVITIES
Dividend paid (including dividend tax) NET CASH USED IN FINANCING ACTIVITIES Net Increase / (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents at the beginning of the year as per Schedule 6 Cash and Cash Equivalents at the end of the year as per Schedule 6
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants FOR AND ON BEHALF OF THE BOARD
NALIN M . S H A H
RAJIV B. LALL
VIKRAM LIMAYE
Partner
Chairman
Director
Mumbai | April 22, 2010
I D F C P R I V A T E E Q U I TY C O M P A N Y L I M I T E D 9
SCHEDULES
SCHEDULE 1 Capital
AUTHORISED: 5,000,000 Equity Shares of Rs.10 each ISSUED, SUBSCRIBED AND PAID-UP: 50,000 Equity Shares of Rs.10 each (All the above Equity Shares are held by Infrastructure Development Finance Company Limited, the holding company and its nominees)
ANNEXED TO AND FORMING PART OF THE ACCOUNTS
RUPEES
RUPEES
AS AT MARCH 31, 2010 50,000,000 500,000
AS AT MARCH 31, 2009 50,000,000 500,000
500,000
500,000
SCHEDULE 2 Reserves and Surplus
GENERAL RESERVE Opening Balance Add: Transfer from Profit & Loss Account PROFIT AND LOSS ACCOUNT
RUPEES
RUPEES
AS AT MARCH 31, 2010 51,598,000 46,823,000 98,421,000 441,329,213 539,750,213
AS AT MARCH 31, 2009 – 51,598,000 51,598,000 721,899,207 773,497,207
SCHEDULE 3 Fixed Assets
DESCRIPTION
As at April 1, 2009
RUPEES
GROSS BLOCK
As at March 31, 2010
DEPRECIATION AND AMORTISATION
As at March 31, 2010 On deductions during the year As at April 1, 2009
NET BLOCK
As at March 31, 2010 As at March 31, 2009 522,415,580 1,695,868 8,092,718 403,765 1,069,734 533,677,665
Tangible Buildings Computer Hardware Furniture, Fittings and Office Equipments Vehicles Intangible Computer Software Total Previous year 3,000,201 544,283,104 21,102,256 541,187 3,866,518 530,191,677 – – 7,010,829 3,541,388 548,149,622 544,283,104 1,930,467 10,605,439 13,217,732 999,606 29,994,517 4,398,536 – – 7,010,829 2,930,073 40,599,956 10,605,439 611,315 507,549,666 533,677,665 523,563,116 5,780,017 10,854,110 1,085,660 – 1,757,670 1,567,661 – – – – – 523,563,116 7,537,687 12,421,771 1,085,660 1,147,536 4,084,149 2,761,392 681,895 26,120,779 1,238,889 1,530,708 104,535 – – – – 27,268,315 5,323,038 4,292,100 786,430 496,294,801 2,214,649 8,129,671 299,230
10
I D F C A N N U A L R E P O R T 09 –10
Charge for the year
Additions
Deletions
SCHEDULE 4 Investments
I. LONG TERM (NON-TRADE) VENTURE CAPITAL UNITS (UNQUOTED) IDFC Infrastructure Fund 2 IDFC Private Equity Fund II -Class C II. CURRENT (TRADE) MUTUAL FUNDS (UNQUOTED) Nil Units (Previous Year 9,337,765.659 units) of IDFC Mutual Fund - IDFC Cash Fund - Growth Option ( Net asset Value Rs. Nil; Previous Year Rs. 100,019,609) 184 10 NUMBER OF UNITS FACE VALUE
RUPEES
RUPEES
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
1,840
1,840
– 1,840
100,000,000 100,001,840
SCHEDULE 5 Sundry Debtors (Unsecured and considered good)
Outstanding For Over Six Months Others
RUPEES
RUPEES
AS AT MARCH 31, 2010 – – –
AS AT MARCH 31, 2009 58,948,302 44,545,471 103,493,773
SCHEDULE 6 Cash and Bank Balances
CASH BALANCE WITH SCHEDULED BANKS - In Current Account - In Deposit Account
RUPEES
RUPEES
AS AT MARCH 31, 2010 7,396 2,252,776 319,000,000 321,260,172
AS AT MARCH 31, 2009 6,528 2,451,090 217,500,000 219,957,618
SCHEDULE 7 Loans and Advances (Unsecured and considered good)
Advances recoverable in cash or in kind or for value to be received Deposits Advance payment of Income Tax & Fringe Benefit Tax (Net of provision)
RUPEES
RUPEES
AS AT MARCH 31, 2010 2,659,576 4,688,400 50,478,630 57,826,606
AS AT MARCH 31, 2009 24,877,939 4,907,341 54,817,423 84,602,703
SCHEDULE 8 Current Liabilities
Management Fees Received in Advance Sundry Creditors (Other than Micro and Small Enterprises) (See Schedule 14 Note 12) Other Liabilities
RUPEES
RUPEES
AS AT MARCH 31, 2010 213,640,450 107,863,554 235,706 321,739,710
AS AT MARCH 31, 2009 232,103,686 36,517,852 684,437 269,305,975
SCHEDULE 9 Provisions
Provision for Employee Benefits (See Schedule 14 Note 5)
RUPEES
RUPEES
AS AT MARCH 31, 2010 14,079,485 14,079,485
AS AT MARCH 31, 2009 11,229,263 11,229,263
I D F C P R I V A T E E Q U I TY C O M P A N Y L I M I T E D
11
SCHEDULE 10 Operating and Other Income
RUPEES
RUPEES
APRIL 01, 2009 TO MARCH 31, 2010 OPERATING INCOME Management Fees (Tax deducted at source Rs. 115,929,975/-; Previous Year Rs.123,960,478/-) 968,500,071 OTHER INCOME Interest on Deposits with Banks (Tax deducted at source Rs. 69,726/-; Previous Year Rs.4,888,800/-) Profit on sale/redemption of current investments Interest on Income Tax Refund Dividend on Current Investments (non-trade) Interest Income on Short Term Loans (Tax deducted at source Rs.152,236 /-; Previous Year Rs. Nil) 22,047,171 990,547,242 12,905,626 67,997 8,242,502 671,826 159,220 968,500,071
APRIL 01, 2008 TO MARCH 31, 2009 935,748,069 935,748,069 21,580,536 25,888,360 – – – 47,468,896 983,216,965
SCHEDULE 11 Staff Expenses
RUPEES
RUPEES
APRIL 01, 2009 TO MARCH 31, 2010 Salaries (See Schedule 14 Note 6) Contribution to Provident and Other Funds (See Schedule 14 Note 5) (including Provision for Gratuity Rs.3,253,783/-; Previous Year Rs.7,103,505/-) Staff Welfare Expenses 4,839,202 215,108,063 198,996,909 11,271,952
APRIL 01, 2008 TO MARCH 31, 2009 117,286,322 15,147,896 6,285,942 138,720,160
SCHEDULE 12 Establishment Expenses
RUPEES
RUPEES
APRIL 01, 2009 TO MARCH 31, 2010 Rent (See Schedule 14 Note 9) Rates and Taxes Electricity REPAIRS AND MAINTENANCE Equipments Others Insurance Charges 2,272 1,189,359 143,117 5,004,478 1,320,000 328,897 2,020,833
APRIL 01, 2008 TO MARCH 31, 2009 8,270,939 1,765,709 1,094,873 188,112 1,365,024 103,422 12,788,079
SCHEDULE 13 Other Expenses
RUPEES
RUPEES
APRIL 01, 2009 TO MARCH 31, 2010 Travelling and Conveyance (See Schedule 14 Note 3) Realised Loss on Foreign Currency Transactions Printing and Stationery Postage, Telephone and Fax Advertisement and Publicity Professional Fees Directors’ Fees Auditors’ Remuneration (See Schedule 14 Note 2) Miscellaneous Expenses 15,286,819 27,961 870,595 2,141,780 5,414,573 6,517,036 240,000 1,052,198 3,724,216 35,275,178
APRIL 01, 2008 TO MARCH 31, 2009 13,298,246 – 1,235,952 2,213,149 9,268,160 9,306,879 320,000 1,080,014 3,176,880 39,899,280
12
I D F C A N N U A L R E P O R T 09 –10
SCHEDULE 14 Notes Forming Part of the Accounts
1 Significant Accounting Policies
A. Accounting Convention
These accounts have been prepared in accordance with historical cost convention, applicable Accounting Standards notified by the Companies (Accounting Standards) Rules, 2006 and relevant provisions of the Companies Act, 1956.
B. System of Accounting
The Company adopts the accrual concept in the preparation of the accounts. The preparation of financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.
C. Inflation
Assets and liabilities are recorded at historical cost to the Company. These costs are not adjusted to reflect the changing value in the purchasing power of money.
D. Investments
Long Term Investments are carried at acquisition cost. A provision is made for diminution other than temporary on an individual basis. Current Investments are carried at the lower of cost or fair value on an individual basis.
E. Fixed Assets
Fixed assets are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated depreciation.
F. Intangible Assets
Intangible Assets comprising of system software are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated amortisation. Any expenses on such software for support and maintenance payable annually are charged to the Profit and Loss Account.
G. Depreciation and Amortisation
? Tangible Assets Depreciation for all Fixed Assets, excluding certain electronic items, is provided on the written down value method, at the rates prescribed by Schedule XIV of the Companies Act, 1956. Certain electronic items are depreciated over a period of two years on a straight line method based on the Management’s estimate of useful life of assets. Depreciation on additions during the year is provided on a pro-rata basis. Assets costing less than Rs. 5,000 each are written off in the year of capitalisation. ? Intangible Assets Intangible assets consisting of computer software are being amortised over a period of three years on the straight line method.
H. Operating Leases
Leases of assets under which all the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the Profit and Loss Account, on a straight line basis, over the lease term.
I. Employee Benefits
Defined Contribution Plans The Company’s contribution to Provident Fund is deposited with Regional Provident Fund Commissioner and is charged to the Profit and Loss Account every year.
¬
The Company has taken a superannuation policy for future payment of superannuation and the Company’s contribution paid / payable during the year is charged in the Profit and Loss Account every year.
¬ ¬ ¬
Defined Benefit Plan
The net present value of the Company’s obligation towards Gratuity to employees is unfunded and actuarially determined at the year end based on the projected unit credit method. Actuarial gains and losses are recognised in the Profit and Loss Account.
¬ ¬
Other Long Term Employee Benefit
Liability for compensated absences in respect of sick leave which is of a long term nature is actuarially determined at the year end based on the projected unit credit method.
I D F C P R I V A T E E Q U I TY C O M P A N Y L I M I T E D
13
J. Income-Tax
The accounting treatment for income-tax in respect of the Company’s income is based on the Accounting Standard 22 on ‘Accounting for Taxes on Income’ as notified by the Companies (Accounting Standards) Rules, 2006. The provision made for income-tax in the accounts comprises both, the current tax and the deferred tax. The deferred tax assets and liabilities for the year, arising on account of timing differences, are recognised in the Profit & Loss Account and the cumulative effect thereof is reflected in the Balance Sheet. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax asset is recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax asset can be realised.
K. Revenue Recognition
(a) Management Fees are recognised on accrual basis (b) Interest and other dues are accounted on accrual basis. (c) Dividend is accounted when the right to receive is established.
L. Foreign Currency Transactions
Foreign currency transactions are accounted at the exchange rates prevailing on the date of the transaction. Foreign currency monetary items outstanding as at the Balance Sheet date are reported using the closing rate. Gains and losses resulting from the settlement of such transactions and translation of monetary assets and liabilities denominated in foreign currencies are recognised in the Profit and Loss Account.
2 Auditors’ Remuneration:
PARTICULARS Audit Fees Tax Audit Fees Other Services Out of Pocket Expenses Service Tax Less: Service tax set off CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
600,000 150,000 300,000 2,198 108,376 1,160,574 108,376 1,052,198
600,000 150,000 225,000 11,660 198,414 1,185,074 105,060 1,080,014
3 Expenditure in foreign currencies (on payment basis):
PARTICULARS Travelling Expenses Others CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
899,296 3,026,903
77,763 6,018,217
4 Earnings in foreign currencies:
There are no earnings in foreign currencies.
5 In accordance with the Accounting Standard 15 on “Employee Benefits” as notified by the Companies (Accounting Standards) Rules, 2006, the following disclosures have been made:
i. The Company has recognised the following amounts in the Profit and Loss Account towards contribution to defined contribution plans which are included under Contribution to Provident and Other Funds:
CURRENT YEAR
RUPEES
PARTICULARS Provident Fund Superannuation Fund
PREVIOUS YEAR
RUPEES
3,563,625 4,454,544
3,583,692 4,460,699
14
I D F C A N N U A L R E P O R T 09 –10
ii.
The details of the Company’s post – retirement benefit plans for gratuity for its employees are given below which is certified by the actuary and relied upon by the auditors:
CURRENT YEAR
RUPEES
PARTICULARS CHANGE IN THE DEFINED BENEFIT OBLIGATIONS: Liability at the beginning of the year Current Service Cost Interest Cost Benefits Paid Actuarial Loss / (Gain) Liability at the end of the year AMOUNT RECOGNISED IN THE BALANCE SHEET: Liability at the end of the year Fair Value of Plan Assets at the end of the year Amount recognised in the Balance Sheet under “Provision for Employee Benefits” EXPENSE RECOGNISED IN THE PROFIT AND LOSS ACCOUNT: Current Service Cost Interest Cost Expected Return on Plan Assets Net Actuarial Loss / (Gain) to be recognised Expense recognised in the Profit and Loss Account under staff expenses RECONCILIATION OF THE LIABILITY RECOGNISED IN THE BALANCE SHEET: Opening Net Liability Expense recognised Contribution by the Company Amount recognised in the Balance Sheet under “Provision for Employee Benefits” EXPECTED EMPLOYER’S CONTRIBUTION FOR THE NEXT YEAR EXPERIENCE ADJUSTMENTS: PARTICULARS Defined Benefit Obligation Plan Assets Surplus/(Deficit) Experience Adjustment on Plan Liabilities Experience Adjustment on Plan Assets PARTICULARS PRINCIPAL ASSUMPTIONS Discount Rate (per annum) Salary Escalation rate (per annum) YEAR ENDED MARCH 31, 2010 9,255,401 – (9,255,401) (708,140) – YEAR ENDED MARCH 31, 2009 7,328,873 – (7,328,873) 7,628,333 –
PREVIOUS YEAR
RUPEES
7,328,873 2,299,802 757,377 (1,327,255) 196,604 9,255,401 9,255,401 – 9,255,401 2,299,802 757,377 – 196,604 3,253,783 7,328,873 3,253,783 (1,327,255) 9,255,401 386,750
1,475,176 2,420,569 311,660 (1,249,808) 4,371,276 7,328,873 7,328,873 – 7,328,873 2,420,569 311,660 – 4,371,276 7,103,505 1,475,176 7,103,505 (1,249,808) 7,328,873 323,000
RUPEES
PERIOD ENDED MARCH 31, 2008 1,475,176 – (1,475,176) – –
MARCH 31, 2007 – – – – –
MARCH 31, 2006 – – – – – PREVIOUS YEAR
%
CURRENT YEAR
%
8.10 8.00
8.00 7.00
The estimate of future salary increases takes into account inflation, seniority, promotion and other relevant factors.
6 Salaries include Rs. Nil (Previous year: 18,832,369), being amount paid towards a long term employee benefit scheme applicable to select employees, by way of contribution to Class C units of IDFC Private Equity Fund III. 7 The Company’s main business is to provide asset management services. All other activities revolve around the main business. The Company does not have any geographic segments. As such, there are no separate reportable segments as per Accounting Standard 17 on ‘Segment Reporting’ as notified by the Companies (Accounting Standards) Rules, 2006. 8 As per the Accounting Standard 18 on ‘Related Party Disclosures’ as notified by the Companies (Accounting Standards) Rules, 2006, the related parties of the Company are as follows:
I. II. HOLDING COMPANY:
Infrastructure Development Finance Company Limited
FELLOW SUBSIDIARY (with whom there are transactions): IDFC Asset Management Company Private Limited
III. KEY MANAGEMENT PERSONNEL:
Mr. Luis Miranda – President and CEO
I D F C P R I V A T E E Q U I TY C O M P A N Y L I M I T E D 15
The nature and volume of transactions carried out with the above related parties in the ordinary course of business are as follows:
NAME OF RELATED PARTY AND NATURE OF RELATIONSHIP HOLDING COMPANY Infrastructure Development Finance Company Limited FELLOW SUBSIDIARY IDFC Asset Management Company Private Limited KEY MANAGEMENT PERSONNEL Mr. Luis Miranda Remuneration paid* 31,116,265 28,088,768 Asset purchased – 55,250 Rent recovered Interim Dividend paid – 600,000,000 120,000 400,000,000 PARTICULARS CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
* Excludes contribution of gratuity and insurance premium.
9 In accordance with the Accounting Standard 19 on ‘Leases’ as notified by the Companies (Accounting Standards) Rules, 2006, the following disclosure in respect of Operating Leases is made:
Establishment expenses include gross rental expenses of Rs.1,320,000 (Previous Year Rs. 8,270,939). The committed lease rentals in the future are:
PARTICULARS Not later than one year Later than one year and not later than five years CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
376,129 -
1,320,000 376,129
10 In compliance with the Accounting Standard 22 on ‘Accounting for Taxes on Income’ as notified by the Companies (Accounting Standards) Rules, 2006, the Company has debited an amount of Rs. 6,812,000 to the Profit and Loss Account towards deferred tax liability. (Previous year; Rs.7,339,608). The major components of deferred tax assets and liabilities arising on account of timing differences are:
PARTICULARS (a) (b) Depreciation Provisions NET DEFERRED TAX LIABILITY CURRENT YEAR 4,676,325 PREVIOUS YEAR 3,810,752 CURRENT YEAR 15,288,325 10,612,000 PREVIOUS YEAR 7,610,752 3,800,000
ASSETS (RUPEES) LIABILITIES (RUPEES)
11 Earnings Per Share:
In accordance with the Accounting Standard 20 on ‘Earnings Per Share’, as notified under the Companies (Accounting Standards) Rules, 2006 the Earning Per Share has been computed as under:
PARTICULARS (a) (c) Profit after taxation (Rs.) Earnings Per Share (Rs.) (a)/(b) (Basic and Diluted) (b) Weighted average number of Equity Shares outstanding CURRENT YEAR 468,223,006 50,000 9,364.46 PREVIOUS YEAR 515,971,302 50,000 10,319.43
12 There is no interest paid/payable during the year, by the Company to the “suppliers” covered under the Micro, Small and Medium Enterprises Development Act, 2006. The above information takes into account only those suppliers who have responded to the inquiries made by the Company for this purpose. 13 The figures for the previous year have been regrouped / rearranged wherever necessary.
FOR AND ON BEHALF OF THE BOARD
R A J I V B . LALL VIKRAM LIMAYE
Chairman Mumbai | April 22, 2010
16 I D F C A N N U A L R E P O R T 09 –10
Director
B A L A N C E S H E E T A B ST R A CT
AND COMPANY’S GENERAL BUSINESS PROFILE
I.
REGISTRATION DETAILS Registration No. State Code Balance Sheet Date U 1 3 6 1 1 0 3 2 0 1 0 7 1 9 0 M H 2 0 0 2 P L C 1 3 7 7 9 8
II.
CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000) Public Issue N I L Right Issue N I L
Bonus Issue N III. I L POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000) Total Liabilities 8 SOURCES OF FUNDS Paid-up Capital 5 0 0 5 8 6 6 8 1 8 8
Private Placement N I L
Total Assets 6 6 8 1
Reserves and Surplus 3 9 7 5 0
Secured Loans N I L
Unsecured Loans N I L
Deferred Tax Liability (Net) 1 APPLICATION OF FUNDS Net Fixed Assets 5 0 7 5 5 0 Investments 2 Miscellaneous Expenditure N I L 0 6 1 2
Net Current Assets 4 IV. 3 3 1 0
PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000) Turnover / Income 9 9 0 5 4 7 2 8 Total Expenditure 5 3 8 2
Profit Before Tax 7 0 5 1 6 5 4 6
Profit After Tax 8 2 2 3
Earnings per Share (in Rs.) 9 V. 3 6 4 1 2 0
Dividend % 0 0 0
GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS) Item Code No. (ITC Code) Product Description Item Code No. (ITC Code) Product Description N A N I S I S I N E L S L V R E V S I T C M E E S N T A D V I S O R Y E T M A N A G E M E N T
I D F C P R I V A T E E Q U I TY C O M P A N Y L I M I T E D
17
IDFC trustee
company limited
B O A R D O F D I R E CTO R S
?
? ? ?
Mr. S. B. Mathur Chairman Dr. Rajiv B. Lall Mr. U. Sundararajan Mr. Vikram Limaye
A U D I TO R S
?
Deloitte Haskins & Sells Chartered Accountants
P R I N C I PA L B A N K E R S
?
HDFC Bank Limited
R E G I ST E R E D O F F I C E
Naman Chambers, C-32, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai 400 051. TEL +91 22 422 22000 FAX +91 22 265 40354
18
I D F C A N N U A L R E P O R T 09 –10
D I R E CT O R S ’ R E P O R T
TO THE MEMBERS
Your Directors have pleasure in presenting their Eighth Annual Report with the audited accounts for the year ended March 31, 2010. Ahmedabad, as statutory auditors for the financial year ending March 31, 2011. As required under the provisions of Section 224 of the Companies Act, 1956 the Company has obtained a written confirmation from the Auditors proposed to be appointed to the effect that their appointment, if made, would be in conformity with the provisions of Sections 224 and 226 of the Companies Act, 1956. The shareholders are requested to appoint the auditors and fix their remuneration.
OPERATIONAL REVIEW
The main object of the Company is to act as trustee for various investment funds under the asset management business primarily established by Infrastructure Development Finance Company Limited and its subsidiaries. The Company continues to act as the trustee of India Infrastructure Fund, IDFC Infrastructure Fund 2 – IDFC Private Equity Fund II, IDFC Infrastructure Fund 3 – IDFC Private Equity Fund III, IDFC Project Equity Domestic Investors Trust – I and IDFC Project Equity Domestic Investors Trust – II. During the year under review, the Company has been appointed as Trustee of IDFC Private Equity Employees Fund III Benefits Trust, IDFC Project Equity Employees Benefits Trust and IDFC Employees Benefits Trust.
FOREIGN EXCHANGE EARNINGS AND EXPENDITURE
There was no income or expenditure in foreign currency during the year under review.
PERSONNEL AND OTHER MATTERS
Since your Company does not have any employees, the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are not applicable and hence not given. Since the Company does not own any manufacturing facility, the disclosure of information on other matters required to be disclosed in terms of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1998, are not applicable and hence not given.
FINANCIAL RESULTS
The summary of the financial results for the year under review is as follows:
RUPEES
FISCAL 2010 Gross Income Profit Before Tax Provision for tax Profit After Tax 5,869,823 5,638,553 1,663,000 3,975,553
FISCAL 2009 5,695,162 5,512,692 1,650,000 3,862,692
DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors confirm that: the applicable accounting standards have been followed in preparation of annual accounts and there are no material departures;
¬
DIVIDEND
Your Directors do not recommend payment of dividend for the year ended March 31, 2010.
PUBLIC DEPOSITS
During the year under review, your Company has not accepted public deposits under the provisions of Section 58-A of the Companies Act, 1956.
they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2010 and the profits of the Company for the year ended on that date;
¬
DIRECTORS
In terms of the provisions of the Articles of Association of the Company, Mr. Vikram Limaye and Mr. U. Sundararajan would retire at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.
they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and detecting fraud and other irregularities; and
¬ ¬
they have prepared the annual accounts on a going concern basis.
ACKNOWLEDGEMENTS
Your Company is grateful to Securities and Exchange Board of India for its support and advice during the period under review. The Company would also like to express its gratitude for the unstinted support and guidance received from Infrastructure Development Finance Company Limited and other group companies.
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
S. B. MATHUR
AUDITORS
M/s. B. S. Mehta & Co., Chartered Accountants will retire as the statutory auditors of the Company at the ensuing Annual General Meeting. They have expressed their unwillingness to be reappointed as the statutory auditors and have given the notice in terms of Section 224(2)(b) of the Companies Act, 1956 for the same. The Board of Directors has placed on record its sincere appreciation of the professional service rendered by M/s. B. S. Mehta & Co. as statutory auditors. In view of this, the Board has proposed the appointment of M/s. Deloitte Haskins & Sells, Chartered Accountants,
Chairman Mumbai April 21, 2010
I D F C T R U ST E E C O M P A N Y L I M I T E D
19
AU D I TO RS ’ R E PO RT
To The Members of IDFC Trustee Company Limited
1. We have audited the attached Balance Sheet of IDFC TRUSTEE COMPANY LIMITED (“the Company”) as at March 31, 2010, the annexed Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, which we have signed under reference to this report. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditor’s Report) Order, 2003 (“the Order”) issued by the Company Law Board in terms of Section 227(4A) of the Companies Act, 1956 (“the Act”) and on the basis of such checks as we considered appropriate, we annex hereto a statement on the matters specified in paragraph 4 of the said Order, to the extent applicable. 4. Further to our comments in the Annexure referred to above, we report that: (a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit; (b) In our opinion, proper books of account as required by law, have been kept by the Company, so far as appears from our examination of such books; (c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account; (d) In our opinion, the said Balance Sheet, Profit and Loss Account and Cash Flow Statement comply with the Accounting Standards referred to in Section 211(3C) of the Act, to the extent applicable; (e) On the basis of written representations / information received from Directors as on March 31, 2010 and taken on record by the Board of Directors, none of the Directors are prima facie, disqualified from being appointed as Director in terms of clause (g) of sub-section (1) of Section 274 of the Act; (f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the notes thereon, give the information required by the Act in the manner so required and give a true and fair view: (i) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2010;
(ii) In the case of the Profit and Loss Account, of the profit for the year ended on March 31, 2010; and (iii) In the case of the Cash Flow Statement, of the cash flows for the year ended on March 31, 2010.
FOR B. S. MEHTA & CO. Chartered Accountants Firm Registration No. 106190W
H. G. BUCH
Partner (Membership No.: 33114) Mumbai April 21, 2010
20
I D F C A N N U A L R E P O R T 09 –10
ANNEXURE
Statement referred to in paragraph 3 of our Report to the Members of IDFC TRUSTEE COMPANY LIMITED
i. ii. The Company does not have any fixed assets and hence items (i) (a), (b), & (c) of paragraph 4 of the Order are not applicable. The nature of the Company’s activities is such that requirements of items (ii), (vii) and (viii) of paragraph 4 of the Order are not applicable. a) The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, the information required at items (iii) (b), (c) & (d) of paragraph 4 of the Order is not provided. The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, the information required at items (iii) (f) & (g) of paragraph 4 of the Order is not provided. ix.
TO THE AUDITORS’ REPORT
The Company has not borrowed any sums during the year and hence does not have any dues payable to a financial institution, a bank or debenture holders. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. a) The provisions of any special statute applicable to chit fund / nidhi / mutual fund / societies do not apply to the Company. Accordingly, the information required at items (xiii) (a), (b) (c) & (d) of paragraph 4 of the Order is not provided.
x.
xi.
iii.
b)
b) c)
xii. The Company has not dealt or traded in shares, securities, debentures and other investments. The Company does not hold any shares, securities, debentures and other investments. xiii. As informed to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions. xiv. The Company has not taken any term loans. xv. The Company has not raised any funds on short term basis. xvi. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act. xvii. The Company has not issued any debentures. xviii. The Company has not raised any money by public issue. xix. As informed to us and on the basis of information available with us, no fraud on or by the Company has been noticed or reported during the year.
d) iv.
The Company has not purchased any inventory or fixed assets nor sold any goods during the year. In respect of services rendered during the year it has adequate internal control system commensurate with its size and the nature of its business. There are no transactions exceeding Rs. 5 lakhs in respect of any party entered into during the year that need to be entered into a register in pursuance of Section 301 of the Act. Accordingly, the information required at items (v) (a) & (b) of paragraph 4 of the Order is not provided. The Company has not accepted any deposits from public during the year.
v.
vi.
vii. The Company does not have any employee and hence the provisions of item (ix) (a) of paragraph 4 of the Order in respect of statutory dues of Provident Fund, Employees State Insurance do not apply. No undisputed amounts in respect of Investor Education and Protection Fund, Income tax, Sales tax, Wealth tax, Service tax, Custom duty, Excise duty, Cess and any other statutory dues were outstanding at the year end for a period of more than six months from the date they became payable. viii. The Company has no accumulated losses at the end of the financial year. The Company has not incurred cash loss in the current financial year and in the immediately preceding financial year.
FOR B. S. MEHTA & CO. Chartered Accountants Firm Registration No. 106190W
H. G. BUCH
Partner (Membership No.: 33114) Mumbai April 21, 2010
I D F C T R U ST E E C O M P A N Y L I M I T E D
21
BALANCE SHEET
RUPEES SCHEDULE
AS AT MARCH 31, 2010
RUPEES
RUPEES
MARCH 31, 2010
MARCH 31, 2009
SOURCES OF FUNDS
Shareholders’ Funds Capital Profit and Loss Account 1 500,000 9,692,904 10,192,904 500,000 5,717,351 6,217,351 5,960,656 142,483 177,495 319,978 63,283 437,348 10,192,904 Notes to the Financial Statements The Schedules referred to herein form an integral part of the Balance Sheet 6 256,695 6,217,351
APPLICATION OF FUNDS
Investments Current Assets, Loans and Advances Current Assets Loans and Advances Less: Current Liabilities and Provisions Current Liabilities Net Current Assets 3 4 5 73,274 311,320 199,302 510,622 2 9,755,556
THIS IS THE BALANCE SHEET REFERRED TO IN OUR REPORT OF EVEN DATE. FOR AND ON BEHALF OF
B. S. M E H TA & CO .
FOR AND ON BEHALF OF THE BOARD IDFC TRUSTEE COMPANY LIMITED
Chartered Accountants
H. G. BUC H
Partner Membership No. 033114 Mumbai | April 21, 2010
22 I D F C A N N U A L R E P O R T 09 –10
S. B. MATHUR
Chairman
RAJIV B. LALL
Director
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED MARCH 31, 2010
RUPPES
RUPEES
SCHEDULE
APRIL 1, 2009 TO MARCH 31, 2010 5,600,000 269,823 – 5,869,823
APRIL 1, 2008 TO MARCH 31, 2009 5,482,877 209,759 2,526 5,695,162
INCOME
Trusteeship Fees (TDS Rs. 1,374,807, Previous Year Rs. 1,546,568) Dividend on Mutual Fund Units Interest on Income tax Refunds
EXPENDITURE
Payment to Auditors Audit Fees Tax Audit Fees Other Services Service Tax Filing Fees Other Admin expenses Sitting Fees Professional Fees Loss/(Profit) on Sale of Investments Profit Before Tax Provision for Taxation Current Tax (including interest) 1,663,000 3,975,553 5,717,351 9,692,904 79.51 6 1,650,000 3,862,692 1,854,659 5,717,351 77.25 Profit After Tax Balance Brought Forward Balance Carried to Balance Sheet Earnings Per Share (Face value Rs.10) (See Schedule 6 Note 4) Basic and Diluted Notes to the Financial Statements The Schedules referred to herein form an integral part of the Profit and Loss Account 30,000 15,000 15,000 6,386 1,400 38,561 120,000 5,000 (77) 231,270 5,638,553 20,000 10,000 15,000 4,944 1,200 984 120,000 9,577 765 182,470 5,512,692
THIS IS THE PROFIT AND LOSS ACCOUNT REFERRED TO IN OUR REPORT OF EVEN DATE. FOR AND ON BEHALF OF
B. S. M E H TA & CO .
FOR AND ON BEHALF OF THE BOARD IDFC TRUSTEE COMPANY LIMITED
Chartered Accountants
H. G. BUC H
Partner Membership No. 033114 Mumbai | April 21, 2010
S. B. MATHUR
Chairman
RAJIV B. LALL
Director
I D F C T R U ST E E C O M P A N Y L I M I T E D
23
C A S H F L OW ST AT E M E N T
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
APRIL 01, 2009 TO MARCH 31, 2010
APRIL 01, 2008 TO MARCH 31, 2009 5,512,692 (209,759) 5,302,933 262,172 (1,368) 260,804 (1,931,042) 3,632,695 209,759 (6,695,369) 2,858,758 (3,626,852) – 5,843 15,378 21,221 5,843
A.
CASH FLOW FROM OPERATING ACTIVITIES
Profit Before Tax Adjustments for: Dividend on Current Investments OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES Changes in : Current Assets and Loans and Advances Current Liabilities Income Taxes (Paid) / Received (Net of TDS) Net Cash from Operating Activities (A) (110,300) 9,991 (100,309) (1,684,807) 3,583,614 269,823 (14,325,316) 10,530,416 (B) (C) (A+B+C) (3,525,077) – 58,537 21,221 79,758 58,537 (269,823) 5,368,730 5,638,553
B.
CASH FLOW FROM INVESTING ACTIVITIES
Dividend on Current Investments Purchase of Investments Sale of Investments Net Cash used in Investing Activities
C.
CASH FLOW FROM FINANCING ACTIVITIES
Net Cash (used in)/ from Financing Activities Net change in cash and cash equivalents Cash and cash equivalents as at the April 1, 2009 (as per Schedule 3) Cash and cash equivalents as at the March 31, 2010 (as per Schedule 3)
THIS IS THE CASH FLOW STATEMENT REFERRED TO IN OUR REPORT OF EVEN DATE. FOR AND ON BEHALF OF
B. S. M E H TA & CO .
FOR AND ON BEHALF OF THE BOARD IDFC TRUSTEE COMPANY LIMITED
Chartered Accountants
H. G. BUC H
Partner Membership No. 033114 Mumbai | April 21, 2010
24 I D F C A N N U A L R E P O R T 09 –10
S. B. MATHUR
Chairman
RAJIV B. LALL
Director
SCHEDULES
SCHEDULE 1 Capital
AUTHORISED: 100,000 (Previous Year: 100,000) Equity shares of Rs. 10/- each ISSUED, SUBSCRIBED AND PAID UP: 50,000 (Previous Year: 50,000) Equity Shares of Rs.10/- each fully paid up (All the above shares are held by Infrastructure Development Finance Company Limited, the Holding Company and its nominees)
ANNEXED TO AND FORMING PART OF THE ACCOUNTS
RUPEES
RUPEES
AS AT MARCH 31, 2010 1,000,000 500,000
AS AT MARCH 31, 2009 1,000,000 500,000
500,000
500,000
RUPEES
SCHEDULE 2 Investments (Unquoted, Non-Trade)
(AT LOWER OF COST AND MARKET VALUE)
RUPEES
AS AT MARCH 31, 2010 NUMBER OF FACE VALUE UNITS RUPEES Mutual Fund Units (Current) IDFC Liquid Fund - Daily Dividend IDFC Savings Advantage Fund – Plan A – Growth (Market Value as on March 31, 2010 Rs. 9,775,671) 9,755,556 Note: Market value of Investments in Unquoted Mutual Funds represents the repurchase price of the units issued by the Mutual Funds. – 7560.134 – 1,000 – 9,755,556
AS AT MARCH 31, 2009
5,960,656 – 5,960,656
SCHEDULE 3 Current Assets
Sundry Debtor (Unsecured, Considered Good) More than six months Others Bank Balance Balance with Scheduled Bank in Current Account
RUPEES
RUPEES
AS AT MARCH 31, 2010 176,412 55,150 231,562
AS AT MARCH 31, 2009 65,082 56,180 121,262
79,758 311,320
21,221 142,483
SCHEDULE 4 Loans and Advances
Unsecured, Considered good Advance Payment of Income-Tax (net of provisions)
RUPEES
RUPEES
AS AT MARCH 31, 2010 199,302 199,302
AS AT MARCH 31, 2009 177,495 177,495
SCHEDULE 5 Current Liabilities and Provisions
CURRENT LIABILITIES Sundry Creditors for Expenses (other than Micro, Medium and Small Enterprises) Other Liabilities
RUPEES
RUPEES
AS AT MARCH 31, 2010 49,635 23,639 73,274
AS AT MARCH 31, 2009 49,944 13,339 63,283
I D F C T R U ST E E C O M P A N Y L I M I T E D
25
SCHEDULE 6 Notes to the Financial Statements
1 Significant Accounting Policies
A. System of Accounting
The Company adopts the accrual concept in the preparation of accounts. The preparation of financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.
B. Revenue Recognition
a) Trusteeship fees are accounted for on accrual basis. b) Dividend income is recognised when the right to receive is established.
C. Taxation
The accounting treatment for Income Tax in respect of the Company’s income is based on the Accounting Standard 22 on ‘Accounting for Taxes on Income’ as notified by the Companies (Accounting Standards) Rules, 2006. The provision for Income Tax comprises both current tax and the deferred tax. Deferred tax is recognised, subject to the consideration of prudence in respect of deferred tax asset, on 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.
D. Investments
Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost and market value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognise a decline other than temporary in the value of the investments.
2 The Central Government approval of the application for payment of sitting fees to Directors in excess of Rule 10B of the Companies (Central Government’s) General Rules and Forms, 1956 under Section 310 of The Companies Act, 1956 is awaited. There was no other remuneration to Directors. 3 Information with regard to other matters specified in paragraphs 3, 4A, 4C and 4D of Part II of Schedule VI of the Companies Act, 1956 are either Nil or not applicable to the Company for the year ended March 31, 2010. 4 Earning Per Share
PARTICULARS a) c) d) Profit After Tax (Rs.) Basic & Diluted Earnings Per Share (Rs.) Nominal Value Per Share (Rs.) b) Weighted average number of equity shares (Nos.) CURRENT YEAR 3,975,553 50,000 79.51 10.00 PREVIOUS YEAR 3,862,692 50,000 77.25 10.00
5 Segment Information
The Company is engaged in the business of providing trusteeship services. As such, there is no separate reportable primary business segment or geographical segment as per Accounting Standard 17 on ‘Segment Reporting’ as notified by the Companies (Accounting Standards) Rules, 2006.
6 Related Party Disclosures Under Accounting Standard 18:
A. RELATIONSHIPS: HOLDING COMPANY:
Infrastructure Development Finance Company Limited
7 There are no contingent liabilities as at March 31, 2010. 8 Refer Annexure for additional information pursuant to Part IV of the Schedule VI of the Companies Act, 1956. 9 The figures for the previous year have been regrouped / rearranged wherever necessary.
SIGNATURES TO SCHEDULES 1 TO 6 FORMING PART OF THE FINANCIAL STATEMENTS FOR AND ON BEHALF OF
B.S. M E H TA & CO .
FOR AND ON BEHALF OF THE BOARD IDFC TRUSTEE COMPANY LIMITED
Chartered Accountants
H.G. BUC H
Partner Membership No. 033114 Mumbai | April 21, 2010
26 I D F C A N N U A L R E P O R T 09 –10
S.B. MATHUR
Chairman
RAJIV B. LALL
Director
B A L A N C E S H E E T A B ST R A CT
AND COMPANY’S GENERAL BUSINESS PROFILE
I.
REGISTRATION DETAILS Registration No. State Code Balance Sheet Date U 1 3 6 1 1 0 3 2 0 1 0 5 9 9 0 M H 2 0 0 2 P L C 1 3 7 5 3 3
II.
CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000) Public Issue N I L Right Issue N I L
Bonus Issue N III. I L
Private Placement N I L
POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000) Total Liabilities 1 SOURCES OF FUNDS Paid-up Capital 5 0 0 Reserves and Surplus 9 6 9 3 0 2 6 6 1 0 Total Assets 2 6 6
Secured Loans N APPLICATION OF FUNDS Net Fixed Assets N I L I L
Unsecured Loans N I L
Investments 9 7 5 6
Net Current Assets 4 3 7
Deferred tax Asset N I L
IV. PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000) Turnover / Income 5 8 7 0 Total Expenditure 2 3 1
Profit Before Tax 5 6 3 9
Profit After Tax 3 9 7 5
Earnings per Share (in Rs.) 7 V. 9 . 5 1
Dividend % N I L
GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS) Item Code No. (ITC Code) Product Description N T I R L U S T E E S H I P S E R V I C E S
I D F C T R U ST E E C O M P A N Y L I M I T E D
27
IDFC investment
advisors limited
B O A R D O F D I R E CTO R S
?
? ?
Mr. Vikram Limaye Chairman Mr. Naval Bir Kumar Mr. Mahendra N. Shah
A U D I TO R S
?
S. R. Batliboi & Co. Chartered Accountants
P R I N C I PA L B A N K E R S
?
HDFC Bank Limited
R E G I ST E R E D O F F I C E
Naman Chambers, C-32, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai 400 051. TEL +91 22 42222000 FAX +91 22 26540354
28
I D F C A N N U A L R E P O R T 09 –10
D I R E CT O R S ’ R E P O R T
TO THE MEMBERS
We are pleased to present the Fourth Annual Report to the Members, along with the Audited Profit and Loss Account for the period ended March 31, 2010 and the Balance Sheet as at March 31, 2010. equities. The portfolio shall endeavor to invest in companies that are expected to benefit from agriculture and agri-products related opportunities in India over the next 5 to 6 Years. The fourth PMS product offering was IDFC Farm to Fork Portfolio with an objective of ensuring capital appreciation over the medium term by investing in a diversified pool of listed equities. The portfolio shall endeavor to invest in companies that are expected to benefit from the growth in prices of food and food-related products in India over the next 5 to 6 years. The Company is also acting as Investment Advisor to India Infrastructure Opportunities Fund Ltd (“the Fund”), and its activities are to provide investment advisory services, identify, evaluate investment opportunities to the Fund and to monitor investments of the Fund in the Indian companies.
FINANCIAL RESULTS
RUPEES
PARTICULARS Gross Income Profit before Interest, Depreciation & Tax Provision for Tax Profit after Tax
YEAR ENDED MARCH 31, 2010 272,062,246 76,012,609 5,031,104 69,469,803
YEAR ENDED MARCH 31, 2009 26,149,413 (35,699,453) 301,234 (36,890,708)
PRINCIPAL ACTIVITIES
The Company is registered as a Portfolio Manager with the Securities and Exchange Board of India (SEBI) to carry out Portfolio Management Services pursuant to SEBI (Portfolio Managers) Regulations, 1993. IDFC Hybrid Infrastructure Portfolio (HIP) was the first portfolio offering for domestic retail investors under the PMS platform of the Company. The investment objective of HIP is to invest in permitted securities / instruments issued by companies operating in the Infrastructure space, and endeavor to achieve risk adjusted medium to long term capital appreciation. The proposed investment strategy would be to provide growth capital for business opportunities especially to mid-sized companies with sound track record and reputation and ride the growth curve with them and to optimise Returns through Portfolio Diversification. This PMS offering received overwhelming response from investors. HIP - discretionary portfolio collected approximately Rs.449.98 crs in capital commitment and approx Rs. 134.58 crs of initial contribution. The average portfolio size was approx Rs. 19.16 lacs. The HIP discretionary portfolio has been offered to all IDFC employees, where the minimum commitment amount was Rs. 5 lac. So far, 15 employee accounts have been opened and Rs. 1.35 cr in commitment amount has been received. HIP investors have been given online access wherein they can log into the website for an 24*7 access to Portfolio and Capital Registers. More reports are planned and would be subsequently added to the bouquet of existing Reports. The quarterly newsletters from the Fund Managers would also be made available on the site. The second PMS product offering was IDFC Growth Portfolio (IGP). The investment objective of IGP is to seek to generate capital appreciation over the medium term by investing in a diversified pool of listed equities. This portfolio shall endeavor to invest in companies that are expected to benefit from the consumption boom that is expected to take place in India over the next few years. The third PMS product offering was IDFC Agriculture Opportunities Portfolio (AOP) with an objective of ensuring capital appreciation over the medium term by investing in a diversified pool of listed
DIVIDEND
The Company wishes to plough back profits into the business. In view of this, the Directors do not recommend any dividend for the year ended March 31, 2010.
PUBLIC DEPOSITS
During the year under review, your Company has not accepted deposits under the provisions of Section 58-A of the Companies Act, 1956.
SHARE CAPITAL
Rs. 2 crore equity share capital was issued by the Company during the year.
DIRECTORS
In terms of the provisions of the Articles of Association of the Company and Companies Act, 1956, Mr. Mahendra Shah would retire at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.
AUDIT COMMITTEE
The Audit Committee consists of three Directors, Mr. Mahendra N. Shah as Chairman, Mr. Naval Bir Kumar and Mr. Vikram Limaye. The functions of the Committee include reviewing the half yearly and annual financial statements, internal control systems and significant accounting policies of the Company and discussing the audit findings and recommendations of the internal and statutory auditors of the Company.
AUDITORS
M/s. S. R. Batliboi & Co., Chartered Accountants will retire as the statutory auditors of the Company at the ensuing Annual General Meeting. They have expressed their unwillingness to be reappointed as the statutory auditors and have given the notice in terms of Section 224(2)(b) of the Companies Act, 1956 for the same. The Board of Directors has placed on record its sincere appreciation of the professional service rendered by M/s. S. R. Batliboi & Co. as statutory auditors. In view of this, the Board has proposed the appointment of M/s. M.P. Chitale & Co., as statutory auditors for the financial year ending March 31, 2011.
I D F C I N V E ST M E N T A D V I S O R S L I M I T E D
29
As required under the provisions of Section 224 of the Companies Act, 1956 the Company has obtained a written confirmation from the Auditors proposed to be appointed to the effect that their appointment, if made, would be in conformity with the provisions of Sections 224 and 226 of the Companies Act, 1956. The shareholders are requested to appoint the auditors and fix their remuneration.
the Company as at March 31, 2010 and the loss of the Company for the year ended on that date; they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and detecting fraud and other irregularities; and
¬ ¬
FOREIGN EXCHANGE EARNINGS AND EXPENDITURE
The details of income or expenditure in foreign currency are given in Note No. 11 of Schedule 12 to the Financial Statement.
they have prepared the annual accounts on a going concern basis.
ACKNOWLEDGEMENTS
The Directors thank the investors of India Infrastructure Opportunities Fund, clients of discretionary PMS and regulatory authorities such as The Reserve Bank of India and the Securities and Exchange Board of India for their continued support to the Company. The Directors also express their gratitude for the unstinted support and guidance received from IDFC Asset Management Company Limited and other IDFC group companies.
PERSONNEL AND OTHER MATTERS
As required by the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, names and other particulars of the employees are set out in the annexure to the Directors’ Report. Since the Company does not own any manufacturing facility, the disclosure of information on other matters required to be disclosed in terms of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1998, are not applicable and hence not given.
DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors confirm that: the applicable accounting standards have been followed in preparation of annual accounts and there are no material departures;
¬
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
VIKRAM LIMAYE
they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of
¬
Chairman Mumbai April 20, 2010
30
I D F C A N N U A L R E P O R T 09 –10
AU D I TO RS ’ R E PO RT
To The Members of IDFC Investment Advisors Limited
1. We have audited the attached Balance Sheet of IDFC Investment Advisors Limited (‘the Company’) as at March 31, 2010 and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditor’s Report) Order, 2003 (as amended) (‘Order’) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. 4. Further to our comments in the Annexure referred to above, we report that: (i) 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; (iv) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956. (v) On the basis of the written representations received from the directors, as on March 31, 2010, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956; (vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India; (a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2010; (b) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and (c) in the case of Cash Flow Statement, of the cash flows for the year ended on that date.
FOR S. R. BATLIBOI & CO. Chartered Accountants Firm registration number: 301003E
per SHRAWAN JALAN
(ii) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books; (iii) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;
Partner Membership No. 102102 Mumbai April 20, 2010
I D F C I N V E ST M E N T A D V I S O R S L I M I T E D
31
ANNEXURE
Annexure referred to in paragraph 3 of our report of even date
Re: IDFC Investment Advisors Limited (‘the Company’) (i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. (b) Fixed assets have been physically verified by the management during the year and no material discrepancies were identified on such verification. (c) There was no substantial disposal of fixed assets during the year.
TO THE AUDITOR’S REPORT
comment upon the regularity or otherwise of the company in depositing the same. (b) According to the information and explanations given to us, no undisputed amounts payable in respect of income-tax, service tax, cess and other undisputed material statutory dues applicable to the company, were outstanding, at the year end, for a period of more than six months from the date they became payable. (c) According to the information and explanation given to us, there are no dues of income tax, sales-tax, service tax and cess which have not been deposited on account of any dispute.
NATURE OF DUES AMOUNT PERIOD (RS) TO WHICH THE AMOUNT RELATES 3,224,881 AY 2007-08 FORUM WHERE DISPUTE IS PENDING CIT(A)
(ii) The Company provides investment management services and does not maintain inventories. Therefore, the provisions of clause 4(ii) of the Order are not applicable to the Company. (iii) (a) As informed, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. (b) As informed, the Company has not taken any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. (iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of fixed assets and for the sale of services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas. (v) According to the information and explanations provided by the management, we are of the opinion that there were no particulars of contracts or arrangements referred to in section 301 of the Act that need to be entered into the register maintained under section 301. (vi) The Company has not accepted any deposits from the public. (vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business. (viii) To the best of our knowledge and as explained, the Central Government has not prescribed maintenance of cost records under clause (d) of sub-section (1) of section 209 of the Companies Act, 1956 for the products of the Company. (ix) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including incometax, service tax, cess and other material statutory dues applicable to it. The provisions relating to provident fund, employees’ state insurance, investors’ education and protection fund, sales-tax, wealth-tax, customs duty and excise duty are not applicable to the Company. Further, since the Central Government has till date not prescribed the amount of cess payable under section 441 A of the Companies Act, 1956, we are not in a position to
NAME OF THE STATUTE
Incometax Act, 1961
Non-deduction of tax on payments made to IDFC Ltd.
(x) The Company has been registered for a period of less than five years and hence we are not required to comment on whether or not the accumulated losses at the end of the financial year is fifty per cent or more of its net worth and whether it has incurred cash losses in such financial year and in the immediately preceding financial year. (xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution. The Company has no outstanding dues in respect of banks or debenture holders. (xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. (xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4(xiii) of the Order are not applicable to the Company. (xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to the Company. (xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions. (xvi) The Company did not have any term loans outstanding during the year. (xvii)According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment.
32
I D F C A N N U A L R E P O R T 09 –10
(xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956. (xix) The Company did not have any outstanding debentures during the year. (xx) The Company has not raised money in the year by public issue. (xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.
FOR S. R. BATLIBOI & CO. Chartered Accountants Firm registration number: 301003E
per SH R AWA N J A L A N
Partner Membership No. 102102 Mumbai April 20, 2010
I D F C I N V E ST M E N T A D V I S O R S L I M I T E D
33
BALANCE SHEET
RUPEES SCHEDULE
AS AT MARCH 31, 2010
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
SOURCES OF FUNDS
Shareholders’ Funds Share Capital Reserves and Surplus Deferred Tax Liability (Net) 1 2 3 100,000,000 8,921,109 381,104 109,302,213 80,000,000 80,000,000
APPLICATION OF FUNDS
Fixed Assets Gross Block Less: Accumulated Depreciation and Amortisation Net Block Investments Current Assets, Loans and Advances Sundry Debtors (less than six months) (Unsecured, Considered good) Cash and Bank Balances Loans and Advances (A) Less: Current Liabilities and Provisions Current Liabilities Provisions (B) Net Current Assets Debit Balance in Profit and Loss Account Notes to the Financial Statements The schedules referred to above and notes to accounts form an integral part of the Accounts 14 (A)-(B) 8 59,939,937 22,207,317 82,147,254 63,525,739 109,302,213 12,152,617 4,560,366 16,712,983 3,995,846 60,548,694 80,000,000 6 7 100,046,505 705,336 44,921,152 145,672,993 2,995,226 1,292,068 16,421,535 20,708,829 5 4 9,194,361 3,460,917 5,733,444 40,043,030 3,693,184 1,980,601 1,712,583 13,742,877
AS PER OUR REPORT OF EVEN DATE FOR S.R. BATLIBOI & CO. Chartered Accountants FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF IDFC INVESTMENT ADVISORS LIMITED
per SH R AWA N J A L A N Partne r
NAVAL BIR KUMAR Director
MAHENDRA N. SHAH Director
Membership No. 102102
RAJENDRA L. PATIL
Mumbai | April 20, 2010
34 I D F C A N N U A L R E P O R T 09 –10
Company Secretary
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
SCHEDULE
APRIL 1, 2009 TO MARCH 31, 2010 9 10 269,842,048 2,220,198 272,062,246 11 12 13 4 57,205,940 740,679 138,103,018 1,511,702 197,561,339 74,500,907 4,650,000 381,104 69,469,803 69,469,803 (60,548,694) 8,921,109 7.48 9,282,192 14
APRIL 1, 2008 TO MARCH 31, 2009 24,178,275 1,971,138 26,149,413 30,070,588 9,664,477 14,375,801 890,021 55,000,887 (28,851,474) (108,766) 410,000 (29,152,708) (7,738,000) (36,890,708) (23,657,986) (60,548,694) (6.14) 6,005,479
INCOME
Fee Income Other Income Total
EXPENDITURE
Personnel Expenses Establishment Expenses Operating and Other Expenses Depreciation and Amortisation PROFIT/(LOSS) BEFORE TAX AND PRIOR PERIOD ITEMS Income Taxes Current Tax Deferred Tax Charge / (Credit) Fringe Benefit Tax
PROFIT/(LOSS) AFTER TAX AND BEFORE PRIOR PERIOD ITEMS Prior Period Item Net Profit/(Loss) After Tax Balance Brought Forward Balance Carried to Balance Sheet Earnings/(Loss) per share Basic and Diluted (Face value Rs.10) Number of equity shares in calculating basic earnings per share Notes to the Financial Statements The schedules referred to above and the notes to accounts form an integral part of the Accounts
AS PER OUR REPORT OF EVEN DATE FOR S.R. BATLIBOI & CO. Chartered Accountants FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF IDFC INVESTMENT ADVISORS LIMITED
per SH R AWA N J A L A N Partne r
NAVAL BIR KUMAR Director
MAHENDRA N. SHAH Director
Membership No. 102102
RAJENDRA L. PATIL
Mumbai | April 20, 2010
Company Secretary I D F C I N V E ST M E N T A D V I S O R S L I M I T E D 35
C A S H F L OW ST AT E M E N T
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010
APRIL 1, 2008 TO MARCH 31, 2009 (28,851,474) (7,738,000) 890,021 (860,817) (1,295) (36,561,565) (9,281,069) 25,998,976 (9,390,245) (6,487,899) (35,721,803) (555,745) (36,277,549) (80,594) 860,817 (119,594,786) 106,366,277 (12,448,286) 50,000,000 50,000,000 1,274,165 17,903 1,292,068 1,737 1,290,331 1,292,068
A.
CASH FLOW FROM OPERATING ACTIVITIES
Profit / (Loss) Before Tax and Prior Period Items Adjustments for: Prior Period Item Depreciation/Amortisation Fixed Asset Writen off Dividend Earned Profit on Sale of Investments Operating loss before Working Capital Changes Movements in working capital : (Increase) / Decrease in Loans and Advances (Increase) / Decrease in Sundry Debtors Increase / (Decrease) in Current Liabilities Increase / (Decrease) in Provisions Cash generated from Operations Direct Taxes Paid (Including Fringe Benefit Tax) NET CASH (USED IN)/ FROM OPERATING ACTIVITIES (A) (21,792,405) (97,051,279) 47,787,321 17,804,135 20,587,400 (11,514,397) 9,073,003 (5,559,779) 2,200,153 (160,700,109) 134,400,000 (B) (29,659,735) 20,000,000 (C) (A)+(B+(C) 20,000,000 (586,732) 1,292,068 705,336 705,336 705,336 1,511,702 27,217 (2,200,153) (45) 73,839,628 74,500,907
B.
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Fixed Assets Dividend Earned Purchase of Investments Sale Proceeds of Investments NET CASH (USED IN) / FROM INVESTING ACTIVITIES
C.
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from Issue of Share Capital NET CASH FROM FINANCING ACTIVITIES Net change in Cash and Cash Equivalents Cash and Cash Equivalents as at the beginning of the year Cash and Cash Equivalents as at the end of the year Components of cash and cash equivalents as at March 31, 2010 Cash on hand Balances with Scheduled Bank on Current Account
AS PER OUR REPORT OF EVEN DATE FOR S.R. BATLIBOI & CO. Chartered Accountants FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF IDFC INVESTMENT ADVISORS LIMITED
per SH R AWA N J A L A N Partne r
NAVAL BIR KUMAR Director
MAHENDRA N. SHAH Director
Membership No. 102102
RAJENDRA L. PATIL
Mumbai | April 20, 2010
36 I D F C A N N U A L R E P O R T 09 –10
Company Secretary
SCHEDULES
SCHEDULE 1 Share Capital AUTHORISED:
10,000,000 (Previous Year : 10,000,000) Equity shares of Rs.10/- each
ANNEXED TO AND FORMING PART OF THE ACCOUNTS
RUPEES
RUPEES
AS AT MARCH 31, 2010 100,000,000 100,000,000
AS AT MARCH 31, 2009 100,000,000 80,000,000
ISSUED, SUBSCRIBED AND PAID UP
10,000,000 (Previous Year: 8,000,000) Equity shares of Rs.10/- each, fully paid up (All the above shares are held by IDFC Asset Management Company Limited, the Holding Company and its Nominees) (Previous Year: All the above shares are held by Infrastructure Development Finance Company Limited, the Utilmate Holding Company and its Nominees) 100,000,000 80,000,000
RUPEES
SCHEDULE 2 Reserves & Surplus
Profit and Loss Account Balance as per Last account Transferred from Profit & Loss Account
RUPEES
AS AT MARCH 31, 2010 – 8,921,109 8,921,109
AS AT MARCH 31, 2009 – – –
SCHEDULE 3 Deferred Tax
DEFERRED TAX LIABILITY Effect of preliminary expenditure debited to profit and loss account in the current year / period but allowed for tax purposes in following years Differences in depreciation and other differences in block of fixed assets as per tax and financial books Gross Deferred Tax Liability DEFERRED TAX ASSET Effect of preliminary expenditure debited to profit and loss account in the current year / period but allowed for tax purposes in following years Carry forward unabsorbed tax losses Gross Deferred Tax Asset Net Deferred Tax Liability
RUPEES
RUPEES
AS AT MARCH 31, 2010 33,218 347,886 381,104 – – – – 381,104
AS AT MARCH 31, 2009 – 187,134 187,134 – 50,985 136,149 187,134 –
SCHEDULE 4 - Fixed Assets
DESCRIPTION As at April 1, GROSS BLOCK As at March DEPRECIATION AND AMORTISATION As at April 1, As at March NET BLOCK As at March
RUPEES
As at March
Additions
Additions
Deletions
Deletions
31, 2010
31, 2010
31, 2010
TANGIBLES Furniture and Fittings Office Equipment Computer Hardware INTANGIBLES Computer Software Total Previous Year 1,118,716 3,693,184 3,612,590 5,343,551 5,559,779 80,594 58,602 6,462,267 9,194,361 3,693,184 551,498 1,980,600 1,090,580 1,151,796 1,511,702 890,021 31,385 1,703,294 3,460,917 1,980,601 4,758,973 5,733,444 1,712,583 567,217 1,712,583 73,400 1,011,536 1,489,532 185,950 30,278 7,290 29,508 21,804 66,110 1,167,978 1,498,006 42,445 362,787 1,023,870 5,603 158,272 196,031 3,780 11,138 16,467 44,268 509,921 1,203,434 21,842 658,057 294,572 30,955 648,749 465,662
I D F C I N V E ST M E N T A D V I S O R S L I M I T E D
37
31, 2009
2009
2009
SCHEDULE 5 Investment - (Current) (At lower of cost and market value)
(Unquoted, Non Trade) Units in Mutual Fund 3,976,349.31 units (March 31, 2009: 1,364,693.91 units) of Rs. 10 each in IDFC Money Manager Fund-Treasury Plan -Inst Plan B (Daily Dividend Reinvestment Plan) Net Assets Value: Rs. 40,043,030 (Previous Year: Rs 13,742,877)
RUPEES
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
40,043,030
13,742,877
40,043,030 The following investments were purchased (including Dividend Reinvestment) and sold during the year: 15,957,831.762 units (March 31, 2009: 3,668,839.363 units) of Rs. 10 each in IDFC Money Manager Fund - Treasury Plan - Inst Plan B (Daily Dividend Reinvestment Plan) 13,346,176.372 units (March 31, 2009: 1,062,530.411 units) of Rs. 10 each in IDFC Money Manager Fund - Treasury Plan - Inst Plan B (Daily Dividend Reinvestment Plan)
13,742,877
SCHEDULE 6 Cash and Bank Balances
Cash on Hand Balance with a Scheduled Bank in Current Account
RUPEES
RUPEES
AS AT MARCH 31, 2010 705,336 705,336
AS AT MARCH 31, 2009 1,737 1,290,331 1,292,068
SCHEDULE 7 Loan and Advances
(Unsecured, considered good) Advance Recoverable in Cash or in Kind or for value to be received Service Tax Input Credit Advance Payment of Income Tax (Net of Provisions) (Unsecured, considered doubtful) Advance Recoverable in Cash or in Kind or for value to be received Less: Provisions
RUPEES
RUPEES
RUPEES
AS AT MARCH 31, 2010 23,868,208 7,893,923 13,159,021 44,921,152 44,921,152
AS AT MARCH 31, 2009 933,114 9,036,613 6,451,808 16,421,535 2,811,516 2,811,516 16,421,535
SCHEDULE 8 Current Liabilities and Provisions
CURRENT LIABILITIES Sundry Creditors for Expenses (Other than Micro, Medium and Small Enterprises) Fees Accrued in Advance Statutory Dues PROVISIONS Provision for Fringe Benefit Tax (Net of advance tax) Provision for Leave Encashment Provision for Bonus
RUPEES
RUPEES
AS AT MARCH 31, 2010 30,960,526 27,604,722 1,374,689 59,939,937 107,316 1,200,000 20,900,000 22,207,316 82,147,254
AS AT MARCH 31, 2009 10,309,007 1,555,111 288,499 12,152,617 264,501 720,865 3,575,000 4,560,366 16,712,983
38
I D F C A N N U A L R E P O R T 09 –10
SCHEDULE 9 Fees Income
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Portfolio Management Fees (Service Tax Rs. 13,969,448; Previous Year: Rs. 343,328) (Tax Deducted at Source Rs. 1,457,213; Previous Year: Rs. 167,055) Performance Fees Advisory Fees (Service Tax Rs. 167,731; Previous Year: Rs. 17,764) (Tax Deducted at Source Rs. 161,515; Previous Year: Rs. Nil) 269,842,048 108,292,077 25,924,257 135,625,714
APRIL 1, 2008 TO MARCH 31, 2009 3,070,826
21,107,449
24,178,275
SCHEDULE 10 Other Income
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Dividend from Units of Mutual Fund Foreign Exchange Gains (Net) Profit on Sale of Investments Excess Provision no longer required written back Miscellaneous Income 2,200,153 45 20,000 2,220,198
APRIL 1, 2008 TO MARCH 31, 2009 860,817 189,415 1,295 917,011 2,600 1,971,138
SCHEDULE 11 Personnel Expenses (See Schedule 14 Note 7)
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Salaries and Bonus Contribution to Provident Fund and Other Funds Staff Training and Welfare Expenses 54,940,501 2,049,989 215,450 57,205,940
APRIL 1, 2008 TO MARCH 31, 2009 27,599,947 2,327,792 142,849 30,070,588
SCHEDULE 12 Establishment Expenses
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Lease Rent for Employee Residence Lease Rent for Office Premises Muncipal Taxes for Office Premises Electricity Expenses Repairs and Maintenance - Building Repairs and Maintenance - Others 579,216 8,625 152,838 740,679
APRIL 1, 2008 TO MARCH 31, 2009 8,201,200 601,772 492,300 369,205 9,664,477
I D F C I N V E ST M E N T A D V I S O R S L I M I T E D
39
SCHEDULE 13 Operating And Other Expenses
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Brokerage Expenses Travelling and Conveyance Advertisement and Publicity Postage, Telephone and Telex Printing and Stationery Professional Fees Loss on Foreign Exchange Fluctuation Arzak India Fund (Sharia) Expenses Membership and Subscription Computer Software Expenses Office Maintenance Stamp Duty & Franking Expenses Relocation Expenses Operational Losses Fixed Asset Written off Miscellaneous Expenses AUDITORS’ REMUNERATION Audit Fees Tax Audit Fees Service Tax Out of Pocket Expenses 489,333 67,275 138,103,018 125,522,013 1,344,874 1,078,148 982,686 1,501,423 3,783,537 16,808 2,300,030 417,889 27,750 344,994 26,800 12,813 27,217 159,428
APRIL 1, 2008 TO MARCH 31, 2009 3,118,767 1,492,444 624,026 556,609 1,658,748 472,653 2,811,516 2,187,887 428,472 249,000 211,622 425,000 75,000 56,625 7,432 14,375,801
40
I D F C A N N U A L R E P O R T 09 –10
SCHEDULE 14 Notes Forming Part of the Accounts
1 Nature of Operations
IDFC Investment Advisors Limited (“the Company”) was incorporated on April 3, 2006. The Company entered into an Investment Advisory Agreement with the India Infrastructure Opportunities Fund Ltd. (“the Fund”) on August 14, 2006 to provide investment advisory services, identify and evaluate investment opportunities to the Fund and to monitor investments of the Fund in Indian companies. Under the agreement, the Company is entitled to receive advisory fees computed on the basis of the net assets of the Fund plus a performance fee. During the year the Company has started rendering portfolio management services to the IDFC Hybrid Infrastructure Portfolio (“HIP”), IDFC Growth Portfolio (“IGP”) and IDFC Agriculture Opportunities Portfolio (“AOP”).
2 Statement of Significant Accounting Policies
A. Basis of Preparation
The financial statements have been prepared to comply in all material respects with the Accounting Standards notified by Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956 (‘the Act’). The financial statements have been prepared under the historical cost convention on an accrual basis except in case of assets for which provision for impairment is made and revaluation is carried out. The accounting policies applied by the Company are consistent with those used in the previous year.
B. Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period end. Although these estimates are based upon management’s best knowledge of current events and actions, actual results could differ from these estimates.
C. Fixed Assets and Intangible Assets
Fixed assets are stated at cost less accumulated depreciation and provision for impairment, if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use.
D. Depreciation and Amortisation
Depreciation is provided using the written down value method, at the rates prescribed under schedule XIV of the Companies Act, 1956. Depreciation on additions during the period is provided on a pro-rata basis. Fixed assets having an original cost of less than Rs. 5,000 individually are depreciated fully in the year/period of purchase. Intangible assets are amortised over period of 3 years on straight line method.
E. Impairment
i. The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset’s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
ii.
F. Investments
Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognise a decline other than temporary in the value of the investments.
G. Revenue Recognition
Advisory Fee is measured on a quarterly basis in advance and is computed on the Assets Under Management of the Fund as at last day of the preceding quarter. Performance Fee is recognized on an annual basis on March 31, every year based on terms of the agreement. Fees earned from rendering Portfolio Management Services is recognized as per Portfolio Management Service Agreement. Interest income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable. Dividend income on investments is recognised when unconditional right to receive is established.
I D F C I N V E ST M E N T A D V I S O R S L I M I T E D
41
H. Brokerage Expenses
Brokerage is paid to brokers for IDFC Hybrid Infrastructure Portfolio (“HIP”), IDFC Growth Portfolio (“IGP”) and IDFC Agriculture Opportunities Portfolio (“AOP”) as per the terms of agreement entered into with respective brokers. In case of IDFC Hybrid Infrastructure Portfolio (“HIP”) product, the Company amortises the brokerage expenses (excluding Service tax) of corporate brokers over the tenure of agreement and unamortised brokerage is lying under Loans and Advances. In case of Individual brokers the entire brokerage expenses are charged to Profit & Loss A/c in the year it is incurred. For IDFC Growth Portfolio (“IGP”) and IDFC Agriculture Opportunities Portfolio (“AOP”) the entire brokerage expenses are charged to Profit & Loss A/c in the year it is incurred.
I. Operating Leases
Leases of assets under which all the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases. Payments under operating leases are charged to the Profit and Loss Account, on a straight line basis, over the lease term.
J. Income Taxes
Tax expense comprises of current, deferred and fringe benefit tax. Current income tax and fringe benefit tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act of 1961. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits. At each balance sheet date the Company re-assesses unrecognised deferred tax assets. It recognises unrecognised deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realised. The carrying amount of deferred tax assets are reviewed at each balance sheet date. The Company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.
K. Foreign Currency Transactions
(i) Initial recognition Foreign currency transactions are recorded in Indian Rupees, the Company’s reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. (ii) Conversion Foreign currency monetary items are reported using the closing rate. There are no non-monetary items. (iii) Exchange differences Exchange differences arising on the settlement of monetary items or the Company’s monetary items at rates different from those at which they were initially recorded during the year, or reported in the previous financial statements, are recognised as income or as expense in the year in which they arise.
L. Provisions
A provision is recognised when the Company has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
3 Cash and Cash Equivalents
Cash and cash equivalents in the Balance Sheet comprise of cash at bank and in hand and short-term investments with an original maturity of three months or less.
42
I D F C A N N U A L R E P O R T 09 –10
4 Segment Information
The Company is engaged in the business of providing investment advisory services. During the year, the Company was engaged in only one business segment and no geographical segments. As such, there are no separate reportable segments as per Accounting Standards 17 on ‘Segment Reporting’ issued by Institute of Chartered Accountants of India.
5 Employee residence is obtained on operating lease. There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements. There are no subleases. 6 Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The relevant details as described above are as follows:
PARTICULARS Net Profit /(Loss) (Rs.) Weighted average number of equity shares (Nos.) Basic Profit /(Loss) Per Share (Rs.) Face Value Per Share (Rs.) APRIL 1, 2009 TO MARCH 31, 2010 69,469,803 9,282,192 7.48 10.00 APRIL 1, 2008 TO MARCH 31, 2009 (36,890,708) 6,005,479 (6.14) 10.00
7 The Company does not have any employee on its payroll. Personnel expenses include salaries, allowances, bonus, reimbursements and contribution to provident fund and other funds. These expenses represent reimbursement of cost of employees, to Infrastructure Development Finance Company Limited, the (Ultimate Holding Company) & IDFC Asset Management Company Limited, the (Holding Company), on deputation to the Company. Therefore, all employees related benefits and statutory obligation of such personnel on deputation are charged by the Holding Company & Ultimate Holding Company. 8 Performance Fees
During the year Performance Fees on Advisory Service has been recognized based on return over high water mark from India Infrastructure Opportunities Fund, since there was appreciation in Net Asset Value of the units.
9 Related Party Disclosures Under Accounting Standard 18
(a) Relationships:
ULTIMATE HOLDING COMPANY:
Infrastructure Development Finance Company Limited
HOLDING COMPANY:
IDFC Asset Management Company Limited
FELLOW SUBSIDIARIES:
IDFC AMC Trustee Company Limited IDFC Pension Fund Management Company Limited
KEY MANAGEMENT PERSONNEL:
Mr. Vikram Limaye, Chairman Mr. Naval Bir Kumar, Director (b) The following transactions were carried out with the related parties in the ordinary course of business during the year :
RUPEES
NAME OF THE RELATED PARTY AND NATURE OF RELATIONSHIP Infrastructure Development Finance Company Limited (Ultimate Holding Company)
PARTICULARS Reimbursement of expenses (Based on the debit notes received) Subscription towards Equity Share Capital Management Fee Income Management Fees Received in Advance
APRIL 1, 2009 TO MARCH 31, 2010 38,387,406 1,946,125 5,888,875 100,000,000 6,630,697
APRIL 1, 2008 TO MARCH 31, 2009 48,898,321 50,000,000 24,07,975
IDFC Asset Management Company Limited (Holding Company)
Subscription towards Equity Share Capital Reimbursement of expenses (Based on the debit notes received)
I D F C I N V E ST M E N T A D V I S O R S L I M I T E D
43
(c) Following are the balances outstanding as at the year end:
RUPEES
NAME OF THE RELATED PARTY AND NATURE OF RELATIONSHIP Payable to Infrastructure Development Finance Company Limited (Ultimate Holding Company) IDFC Asset Management Company Limited (Holding Company)
AS AT MARCH 31, 2010 4,137,462 -
AS AT MARCH 31, 2009 3,207,727 24,07,975
10 Other Statutory Information
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 EARNINGS IN FOREIGN CURRENCY Advisory Fees EXPENDITURE IN FOREIGN CURRENCY Travelling Expense Membership and Subscription Charges 98,637 242,940 341,577 132,512,497
APRIL 1, 2008 TO MARCH 31, 2009 20,934,987 133,571 85,576 219,147
11 The Company has no amounts due to any micro, small and medium enterprises as defined under section 7 (1) (a)/ 7 (1) (b)/ 7 (1) of Micro Small and Medium Enterprises Development Act, 2006 as on March 31, 2010. 12 Contingent liabilities not provided for in respect of :
On 24th December, 2009, the Company received an Order from by Commissioner of Income Tax under section 156 of the Income Tax Act, 1961 for Assessment Year 2007-2008 (‘the Order’). The Assessing Officer had assessed the income of Assessment Year 2007-2008 at Rs. 15,194,780 as against loss of Rs. 20,112,503 reported by the Company. Accordingly, the Assessing Officer raised a demand of Rs. 6,624,881 on account of non deduction of tax on the payment made to IDFC Ltd. Subsequently, the Company filed an appeal to the CIT(A) and also made a request to the Commissioner of Income Tax to keep the demand in abeyance till such time the appeal is disposed off. On receipt of directions to pay 50% of the above demand in two installments the Company paid Rs. 3,400,000. Aggrieved by the Order, the Company has filed an appeal to the CIT(A). Pending the submission of the Appeal and subsequent settlement of the same, Rs. 3,224,881 (i.e. Rs. 6,624,881 Less Rs. 3,400,000) is being disclosed as contingent liability.
13 There are no contracts remaining to be executed on capital account and not provided for as at March 31, 2010 (Previous Year Rs. Nil). 14 The figures for the previous year have been regrouped / rearranged wherever necessary to conform to the current year’s classification.
FOR S. R. BATLIBOI & CO. Chartered Accountants
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF IDFC INVESTMENT ADVISORS LIMITED
per SH R AWA N J A L A N Partne r
NAVAL BIR KUMAR Director
MAHENDRA N. SHAH Director
Membership No. 102102
RAJENDRA L. PATIL
Mumbai | April 20, 2010
44 I D F C A N N U A L R E P O R T 09 –10
Company Secretary
B A L A N C E S H E E T A B ST R A CT
AND COMPANY’S GENERAL BUSINESS PROFILE
(Submitted in terms of Part IV of the Companies Act, 1956) I REGISTRATION DETAILS U 1 3 7 1 1 0 3 2 0 1 0 4 9 2 0 M H 2 0 0 6 P L C 1 6 0 9 3 7
Registration No. State Code Balance Sheet Date II
CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000) Public Issue N I L Bonus Issue N I L 2 Right Issue N I L Private Placement 0 0 0 0
III
POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000) Total Liabilities 1 9 1 4 4 9 1 9 1 Total Assets 4 4 9
SOURCES OF FUNDS Paid-up Capital 1 0 0 0 0 0 Reserves and Surplus 8 9 2 1
Secured Loans N I L
Unsecured Loans N I L
Deferred Tax Liability 3 APPLICATION OF FUNDS Net Fixed Assets 5 7 3 3 4 0 Investments 0 4 3 8 1
Net Current Assets 6 IV 3 5 2 6
PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000) Turnover / Income 2 7 2 0 6 2 1 9 Total Expenditure 7 5 6 1
Profit Before Tax 7 4 5 0 1 6
Profit After Tax 9 4 7 0
Earnings per Share (in Rs.) 7 V . 4 8
Dividend % N I L
GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS) N A I D L V I S O R Y S E R V I C E S
Item Code No. (ITC Code) Product Description
I D F C I N V E ST M E N T A D V I S O R S L I M I T E D
45
IDFC project
equity company limited
B O A R D O F D I R E CTO R S
?
? ?
Dr. Rajiv B. Lall Chairman Mr. Vikram Limaye Mr. Mahendra N. Shah
A U D I TO R S
?
S. R. Batliboi & Co. Chartered Accountants
P R I N C I PA L B A N K E R S
?
HDFC Bank Limited
R E G I ST E R E D O F F I C E
Naman Chambers, C-32, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai 400 051. TEL +91 22 42222000 FAX +91 22 26540354
46
I D F C A N N U A L R E P O R T 09 –10
D I R E CT O R S ’ R E P O R T
TO THE MEMBERS
Your directors have pleasure in presenting the Fourth Annual Report together with the audited accounts for the year ended March 31, 2010. also indicated their willingness to be re-appointed. You are requested to consider their re-appointment.
PERSONNEL AND OTHER MATTERS
The Company has 11 employees in receipt of remuneration of more than Rs.24 lakh per annum. In accordance with the provisions of Section 217 (2A) of the Companies Act, 1956 and the rules framed thereunder, the names and other particulars of employees are set out in the Annexure to the Directors’ Report. Since the Company does not own any manufacturing facility, the disclosure of information on other matters required to be disclosed in terms of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1998, are not applicable and hence not given.
OPERATIONAL REVIEW
Your Company is the Investment Manager to India Infrastructure Fund (“Fund”), which was set up as a part of ‘India Infrastructure Financing Initiative’, a collaborative effort between Government of India and leading Indian and global financial institutions for providing capital to infrastructure projects in India. The Fund has achieved the Final Close on June 8, 2009 with total commitments of INR 38.37 billion. The Fund’s investors include leading Indian and global institutional investors. The Fund focuses on investing equity for the long-term in a diversified portfolio of infrastructure assets in India.
FINANCIAL RESULTS
RUPEES (IN MILLION)
FOREIGN EXCHANGE EARNINGS AND EXPENDITURE
The particulars regarding foreign exchange expenditure are furnished in note no 13 to Schedule 10 of Notes to Accounts. There was no foreign currency income earned during the year.
FOR THE YEAR ENDED MARCH 31, 2010 Total Income Less: Total Expenses Profit/(Loss) before Tax Less: Provision for Tax Profit/(Loss) after Tax Add: Profit/(Loss) brought forward Profit/(Loss) carried forward 643.46 355.51 287.95 57.86 230.09 (106.66) 123.43
FOR THE YEAR ENDED MARCH 31, 2009 443.08 546.40 (103.32) 2.26 (105.58) (1.08) (106.66)
DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors confirm that: the applicable accounting standards have been followed in preparation of annual accounts and there are no material departures;
¬
DIVIDEND
The Directors do not recommend any dividend for the year ended March 31, 2010.
PUBLIC DEPOSITS
During the year under review, your Company has not accepted public deposits under Section 58-A of the Companies Act, 1956.
they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2010 and the Profit of the Company for the year ended on that date; ¬ they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and detecting fraud and other irregularities; and ¬ they have prepared the annual accounts on a going concern basis.
¬
DIRECTORS
In terms of the provisions of the Articles of Association of the Company and Companies Act, 1956, Mr. Mahendra N. Shah would retire at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.
ACKNOWLEDGEMENTS
The Directors thank the investors of India Infrastructure Fund, Reserve Bank of India and the Securities and Exchange Board of India for their continued support to the Company. The Directors also express their gratitude for the unstinted support and guidance received from Infrastructure Development Finance Company Limited and other group companies.
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
RAJIV B. LALL
AUDITORS
M/s. S.R. Batliboi & Co., Chartered Accountants will retire as the statutory auditors of the Company at the ensuing Annual General Meeting. The Board at its meeting held on April 19, 2010 has proposed their re-appointment as Auditors to audit the accounts of the Company for the financial year ending March 31, 2011. M/s. S. R. Batliboi & Co., the retiring Auditors, have confirmed that their re-appointment, if made, would be in conformity with the provisions of Sections 224 and 226 of the Companies Act, 1956 as
Chairman Mumbai April 19, 2010
I D F C P R O J E C T E Q U I TY C O M P A N Y L I M I T E D
47
AU D I TO RS ’ R E PO RT
To The Members of IDFC Project Equity Company Limited
1. We have audited the attached Balance Sheet of IDFC Project Equity Company Limited (‘the Company’) as at March 31, 2010 and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditor’s Report) Order, 2003 (as amended) (‘Order’) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. 4. Further to our comments in the Annexure referred to above, we report that: (i) 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; (iv) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956. (v) On the basis of the written representations received from the directors, as on March 31, 2010, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2010 from being appointed as a director in terms of Clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956; (vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India; (a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2010; (b) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and (c) in the case of Cash Flow Statement, of the cash flows for the year ended on that date.
FOR S. R. BATLIBOI & CO. Chartered Accountants Firm registration number: 301003E
per SHRAWAN JALAN
(ii) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books; (iii) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;
Partner Membership No.: 102102 Mumbai April 19, 2010
48
I D F C A N N U A L R E P O R T 09 –10
ANNEXURE
Annexure referred to in paragraph 3 of our report of even date
Re: IDFC Project Equity Company Limited (‘the Company’) (i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. (b) Fixed assets have been physically verified by the management during the year and no material discrepancies were identified on such verification. (c) There was no substantial disposal of fixed assets during the year. (c)
TO THE AUDITORS’ REPORT
According to the information and explanations given to us, there are no dues of income-tax, sales-tax, service tax and cess which have not been deposited on account of any dispute.
(x) The Company has been registered for a period of less than five years and hence we are not required to comment on whether or not the accumulated losses at the end of the financial year is fifty per cent or more of its net worth and whether it has incurred cash losses in such financial year and in the immediately preceding financial year. (xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution. The Company has no outstanding dues in respect of banks or debenture holders. (xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. (xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of Clause 4(xiii) of the Order are not applicable to the Company. (xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of Clause 4(xiv) of the Order are not applicable to the Company. (xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions. (xvi) The Company did not have any term loans outstanding during the year. (xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment. (xviii)The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Companies Act, 1956. (xix) The Company did not have any outstanding debentures during the year. (xx) The Company has not raised money in the year by public issue. (xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.
FOR S. R. BATLIBOI & CO. Chartered Accountants Firm registration number: 301003E
per SHRAWAN JALAN
(ii) The Company provides investment management services and does not maintain inventories. Therefore, the provisions of clause 4(ii) of the Order are not applicable to the Company. (iii) (a) As informed, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. (b) As informed, the Company has not taken any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. (iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of fixed assets and for the sale of services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas. (v) According to the information and explanations provided by the management, we are of the opinion that there were no particulars of contracts or arrangements referred to in Section 301 of the Act that need to be entered into the register maintained under Section 301. (vi) The Company has not accepted any deposits from the public. (vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business. (viii) To the best of our knowledge and as explained, the Central Government has not prescribed maintenance of cost records under Clause (d) of sub-Section (1) of Section 209 of the Companies Act, 1956 for the products of the Company. (ix) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, income-tax, service tax, cess and other material statutory dues applicable to it. The provisions relating to employees’ state insurance, investors’ education and protection fund, sales-tax, wealth-tax, customs duty and excise duty are not applicable to the Company. Further, since the Central Government has till date not prescribed the amount of cess payable under Section 441 A of the Companies Act, 1956, we are not in a position to comment upon the regularity or otherwise of the company in depositing the same. (b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, income-tax, service tax, cess and other undisputed material statutory dues applicable to the Company, were outstanding, at the year end, for a period of more than six months from the date they became payable.
Partner Membership No.: 102102 Mumbai April 19, 2010
I D F C P R O J E C T E Q U I TY C O M P A N Y L I M I T E D 49
BALANCE SHEET
RUPEES SCHEDULE
AS AT MARCH 31, 2010
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
SOURCES OF FUNDS
Shareholders’ Funds Share Capital Reserves and Surplus TOTAL 1 2 500,000 123,425,847 123,925,847 3 3,677,171 1,177,816 2,499,355 3,318,835 34,726 4 5 6 343,029,674 112,246,852 455,276,526 Net Current Assets / (Liabilities) Profit and Loss Account TOTAL Notes to the Accounts The Schedules referred to above form an integral part of the Balance Sheet 10 118,107,657 – 123,925,847 326,492,338 21,801,447 348,293,785 (106,833,090) 106,659,173 500,000 391,593,298 181,756,159 573,384,183 Less: Current Liabilities and Provisions Current Liabilities Provisions 1,029,979 356,062 673,917 – 50,301 113,914,406 127,495,988 241,460,695 500,000 – 500,000
APPLICATION OF FUNDS
Fixed Assets Gross Block Less: Accumulated Depreciation/Amortisation Net Block Deferred Tax Asset (Refer Schedule 10 Note 11) Current Assets, Loans and Advances Interest Accrued on term deposits with Banks Cash and Bank Balances Loans and Advances
THIS IS THE BALANCE SHEET REFERRED TO IN OUR REPORT OF EVEN DATE. FOR S. R. BATLIBOI & CO. Chartered Accountants
per SHRAWAN JALAN
FOR AND ON BEHALF OF BOARD OF DIRECTORS OF IDFC PROJECT EQUITY COMPANY LIMITED
VIKRAM LIMAYE
MAHENDRA N. SHAH
Partner Membership No. 102102
Director
Director
SANJAY AJGAONKAR
Mumbai | April 19, 2010
50 I D F C A N N U A L R E P O R T 09 –10
Company Secretary
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
SCHEDULE
APRIL 1, 2009 TO MARCH 31, 2010 605,593,024
APRIL 1, 2008 TO MARCH 31, 2009 436,629,371
INCOME
Investment Management Fees (Service Tax Rs. 64,469,267; Previous Year: 53,952,286) (Tax deducted at Source Rs. 76,670,295; Previous Year: 68,426,737) (Refer Schedule 10 - Note 2(H)) Interest on Fixed Deposits (Tax deducted at Source Rs. 28,926; Previous Year: 83,406) Dividend on Mutual Fund Units Profit on Sale of Mutual Fund Units Foreign Currency Gain (net) (Refer Schedule 10 - Note 2(I)) Miscellaneous Income 9,140,599 – 28,532,594 70,968 643,462,028 5,873,003 121,752 – – 443,079,311 993,351 85,643,191 909,030 458,501,098 356,062 546,402,732 (103,323,421) – 5,099 2,250,000 (105,578,520) (1,080,653) (106,659,173) (2,111.57) 124,843 455,185
EXPENDITURE
Bank Charges Personnel Expenses Establishment Expenses Administrative Expenses Depreciation/ Amortisation TOTAL PROFIT/ (LOSS) BEFORE TAXATION Provision for Taxation (Refer Schedule 10 Notes 2(K) and 11) - Current Tax - Deferred Tax - Fringe Benefit Tax PROFIT/ (LOSS) AFTER TAXATION Profit and Loss Account Balance Brought Forward Profit and Loss Account Balance Carried to Balance Sheet Earnings Per Share (Refer Schedule 10 Notes 2(N) and 10) Basic and Diluted (Face Value Rs.10) Notes to the Accounts The Schedules referred to above form an integral part of the Profit and Loss Account 10 4,601.70 61,181,266 (3,318,835) – 230,085,020 (106,659,173) 123,425,847 7 8 9 3 1,686 187,629,119 4,990,743 162,071,275 821,754 355,514,577 287,947,451
THIS IS THE BALANCE SHEET REFERRED TO IN OUR REPORT OF EVEN DATE. FOR S. R. BATLIBOI & CO. Chartered Accountants
per SHRAWAN JALAN
FOR AND ON BEHALF OF BOARD OF DIRECTORS OF IDFC PROJECT EQUITY COMPANY LIMITED
VIKRAM LIMAYE
MAHENDRA N. SHAH
Partner Membership No. 102102
Director
Director
SANJAY AJGAONKAR
Mumbai | April 19, 2010
Company Secretary
I D F C P R O J E C T E Q U I TY C O M P A N Y L I M I T E D 51
C A S H F L OW ST AT E M E N T
FOR THE PERIOD APRIL 1, 2009 TO MARCH 31, 2010
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010
APRIL 1, 2008 TO MARCH 31, 2009 (103,323,421) 356,062 (1,319,564) (5,873,003) (121,752) (455,185) (110,736,863) (50,301) (39,355,532) 329,043,839 178,901,143 (70,797,686) 108,103,457 (1,029,979) 5,873,003 455,185 (499,900,000) 500,021,752 5,419,961 113,523,418 390,988 113,914,406 MARCH 31, 2009
RUPEES
CASH FLOW FROM OPERATING ACTIVITIES
Net Profit / (Loss) Before Taxation Adjustments for: Depreciation / Amortisation Foreign Currency Gains / Losses on revaluation Dividend on Mutual Fund Units Profit on Sale of Mutual Fund Units Interest on Fixed Deposits Operating Profit / (Loss) Before Working Capital Changes (Increase) / Decrease in Interest Accrued Increase in Loans and Advances Increase in Current Liabilities and Provisions Cash Generated from Operations Direct Taxes Paid (including Fringe Benefit Tax) NET CASH FROM OPERATING ACTIVITIES A 821,754 (27,128,008) (9,140,599) – (124,843) 252,375,755 15,575 (32,942,216) 134,110,749 353,559,863 (82,499,221) 271,060,642 (2,647,192) 9,140,599 124,843 (701,300,000) 701,300,000 B A+B 6,618,250 277,678,892 113,914,406 391,593,298 MARCH 31, 2010
RUPEES
287,947,451
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Fixed Assets Dividend on Mutual Fund Units Interest on Fixed Deposits Purchase of Current Investments Proceeds from Sale of Current Investments NET CASH FROM INVESTING ACTIVITIES NET INCREASE IN CASH AND CASH EQUIVALENTS Cash and Cash Equivalents at the beginning of the Year Cash and Cash Equivalents at the end of the Year NOTE:
Cash and Cash Equivalents include: Cash in Hand Balance with a Scheduled Bank in Current Account Balance with a Scheduled Bank in Deposit Accounts 9,366 1,583,932 390,000,000 391,593,298 10,262 1,904,144 112,000,000 113,914,406
THIS IS THE CASH FLOW STATEMENT REFERRED TO IN OUR REPORT OF EVEN DATE. FOR S. R. BATLIBOI & CO. Chartered Accountants
per SHRAWAN JALAN
FOR AND ON BEHALF OF BOARD OF DIRECTORS OF IDFC PROJECT EQUITY COMPANY LIMITED
VIKRAM LIMAYE
MAHENDRA N. SHAH
Partner Membership No. 102102
Director
Director
SANJAY AJGAONKAR
Mumbai | April 19, 2010
52 I D F C A N N U A L R E P O R T 09 –10
Company Secretary
SCHEDULES
SCHEDULE 1 Share Capital
AUTHORISED: 10,000,000 (Previous year 10,000,000) Equity Shares of Rs.10 each ISSUED, SUBSCRIBED AND PAID-UP: 50,000 (Previous Year 50,000) Equity Shares of Rs.10 each fully paid up [The above Equity Shares are held by Infrastructure Development Finance Company Limited (the “Holding Company”) and its nominees]
ANNEXED TO AND FORMING PART OF THE ACCOUNTS
RUPEES
RUPEES
AS AT MARCH 31, 2010 100,000,000 500,000
AS AT MARCH 31, 2009 100,000,000 500,000
500,000
500,000
RUPEES
SCHEDULE 2 Reserves and Surplus
Profit and Loss Account
RUPEES
AS AT MARCH 31, 2010 123,425,847 123,425,847
AS AT MARCH 31, 2009 – –
SCHEDULE 3 Fixed Assets
DESCRIPTION OF ASSET April 1, 2009 GROSS BLOCK ACCUMLATED DEPRECIATION/ AMORTISATION April 1, 2009 NET BLOCK
RUPEES
March 31,
March 31,
March 31,
March 31,
Additions
Additions
Deletions
Deletions
2010
2010
2010
TANGIBLE Computer Hardware Furniture & Fixtures Office Equipments Vehicles INTANGIBLE Computer Software Total Previous Year 29,642 1,029,979 – 53,411 2,647,192 1,029,979 – – – 83,053 3,677,171 1,029,979 8,228 356,062 – 19,927 821,754 356,062 – – – 28,155 1,177,816 356,062 54,898 2,499,355 673,917 21,414 673,917 – 598,882 74,187 327,268 – 509,853 137,162 406,195 1,540,571 – – – – 1,108,735 211,349 733,463 1,540,571 227,278 15,232 105,324 – 244,496 27,540 210,708 319,083 – – – – 471,774 42,772 316,032 319,083 636,961 168,577 417,431 1,221,488 371,604 58,955 221,944 –
SCHEDULE 4 Cash and Bank Balances
Cash in hand Balance with a Scheduled Bank In Current Account In Term Deposit Accounts
RUPEES
RUPEES
AS AT MARCH 31, 2010 9,366 1,583,932 390,000,000 391,593,298
AS AT MARCH 31, 2009 10,262 1,904,144 112,000,000 113,914,406
SCHEDULE 5 Loans and Advances
Advance Payment of Tax and Tax Deducted at Source (net of provisions) Service Tax Input Credit (net) Security Deposits Advances recoverable in cash or in kind or for value to be received Prepaid Expenses Others
RUPEES
RUPEES
AS AT MARCH 31, 2010 89,865,641 973,504 77,511,881 10,767,479 2,637,654 181,756,159
AS AT MARCH 31, 2009 68,547,686 9,666,302 27,500,000 15,562,222 6,219,778 127,495,988
53
I D F C P R O J E C T E Q U I TY C O M P A N Y L I M I T E D
2009
As at
As at
As at
As at
As at
As at
SCHEDULE 6 Current Liabilities
Sundry Creditors for Expenses to Micro, Small and Medium Enterprises (Refer Schedule 10 - Note 17) to Others
RUPEES
RUPEES
AS AT MARCH 31, 2010 – 233,200,245 108,794,774 1,034,655 343,029,674 Provisions - Employee Benefits (Refer Schedule 10 - Note 6) 112,246,852 455,276,526
AS AT MARCH 31, 2009 – 225,250,701 100,784,574 457,063 326,492,338 21,801,447 348,293,785
Investment Management Fees Received in Advance Statutory Dues
SCHEDULE 7 Personnel Expenses (Refer Schedule 10 - Note 4)
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Salaries and Bonus Contribution to Provident Fund and Other Funds Staff Training and Welfare 175,955,517 6,281,579 5,392,023 187,629,119
APRIL 1, 2008 TO MARCH 31, 2009 78,625,267 6,108,990 908,934 85,643,191
SCHEDULE 8 Establishment Expenses
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Rent Rates and Taxes Electricity Repairs and Maintenance Buildings Equipments Others 50,288 5,250 199,480 22,342 4,990,743 1,267,893 1,918,487 1,527,003
APRIL 1, 2008 TO MARCH 31, 2009 546,500 62,862 – 288,707 – – 10,961 909,030
Insurance
SCHEDULE 9 Administrative Expenses
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Travelling and Conveyance Printing and Stationery Postage, Telephone, Fax Conference and Sponsorships Professional Fees Placement Fees (Refer Schedule 10 - Note 5) Service Fees Foreign Currency Loss (Refer Schedule 10 - Note 2(I)) Auditors Remuneration Statutory Audit Fees Tax Audit Fees Out of Pocket Expenses 400,000 100,000 9,537 5,162,249 162,071,275 13,366,893 168,791 1,158,423 6,258,012 4,162,785 48,570,000 82,714,585 –
APRIL 1, 2008 TO MARCH 31, 2009 6,984,159 9,787 1,533,044 5,690,344 8,848,576 358,876,350 66,014,110 5,533,580 400,000 100,000 6,055 4,505,093 458,501,098
Miscellaneous Expenses
54
I D F C A N N U A L R E P O R T 09 –10
SCHEDULE – 10 Notes to the Accounts
1 Nature of Operations
IDFC Project Equity Company Limited (“the Company”) was incorporated on February 6, 2007. The Company has entered into an Investment Management Agreement with IDFC Trustee Company Limited on March 11, 2008 to act as the Investment Manager of the India Infrastructure Fund (“Fund”) – a domestic venture capital fund registered under the Securities and Exchange Board of India (Venture Capital Funds) Regulations, 1996. In accordance with the agreement, the Company is entitled to receive an investment management fee for managing the Fund beginning from the Initial Closing of the Fund.
2 Statement of Significant Accounting Policies
(A) BASIS OF PREPARATION
The financial statements have been prepared to comply in all material respects with the notified accounting standards by Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956 (‘the Act’). The financial statements have been prepared under the historical cost convention on an accrual basis. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.
(B) USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting year end. Although these estimates are based upon management’s best knowledge of current events and actions, actual results could differ from these estimates.
(C) CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash in hand and at bank and short-term investments with an original maturity of three months or less.
(D) FIXED ASSETS
Fixed assets are stated at cost of acquisition less accumulated depreciation. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use.
(E) INTANGIBLE ASSETS
Intangible assets comprising of software are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated amortisation. Any expense on such software for support and maintenance payable annually is charged to the Profit and Loss Account. Website development cost is charged to the Profit and Loss Account in the year in which such cost is incurred.
(F) DEPRECIATION AND AMORTISATION
Tangible Assets – Depreciation on fixed assets is provided on written down value method, at the rates prescribed by Schedule XIV of the Companies Act, 1956. Mobile handsets are depreciated over a period of two years on straight line method. Depreciation on additions during the year is provided on pro-rata basis. Assets costing less than Rs. 5,000 are depreciated fully in the year of capitalization. Intangible Assets – Computer software is amortised over a period of three years on straight line method.
(G) IMPAIRMENT
(i) The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset’s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital. (ii) After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
(H) REVENUE RECOGNITION
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Investment Management Fees for managing the Fund is accrued from the date of initial closing as stipulated in the Investment Management Agreement dated March 11, 2008 entered into by the Company with IDFC Trustee Company Limited. Interest is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable. Dividend is accounted when the right to receive payment is established by the balance sheet date.
(I) FOREIGN CURRENCY TRANSACTIONS
(i) Initial Recognition Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.
I D F C P R O J E C T E Q U I TY C O M P A N Y L I M I T E D
55
(ii) Conversion Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined. (iii) Exchange Differences Exchange differences arising on the settlement of monetary items or on reporting monetary items of company at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as expenses in the year in which they arise.
(J) PROVISIONS
A provision is recognised when an enterprise has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
(K) INCOME TAX
Tax expense comprises of current, deferred and fringe benefit tax. Current income tax and fringe benefit tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act of 1961. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the taxes on income levied by same governing taxation laws. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits. At each balance sheet date, the Company re-assesses unrecognised deferred tax assets. It recognises unrecognised deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realised. The carrying amount of deferred tax assets are reviewed at each balance sheet date. The Company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.
(L) OPERATING LEASES
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased term, are classified as operating leases. Operating lease payments are recognized as an expense in the Profit and Loss account on a straight-line basis over the lease term.
(M) INVESTMENTS
Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognise a decline other than temporary in the value of the investments.
(N) EARNINGS PER SHARE
Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, the net profit or loss for the year 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.
(O) EMPLOYEE BENEFITS
i.
Defined Contribution Plans The Company’s contribution paid/payable during the year towards Provident Fund and Superannuation Fund is charged in the Profit and Loss Account every year.
ii.
Defined Benefit Obligation Gratuity liability is a defined benefit obligation and is provided for on the basis of actuarial valuation on projected unit credit method made at the end of each financial year. Actuarial gains and losses are recognized in the Profit and Loss Account.
56
I D F C A N N U A L R E P O R T 09 –10
iii. Other long-term employee benefits Long-term compensated absences are provided for on the basis of actuarial valuation on projected unit credit method made at the end of each financial year. Actuarial gains and losses are recognized in the Profit and Loss Account. iv. Short-term employee benefits Short-term compensated absences are paid to the employees at the end of every year along with the monthly salary.
3 Investment Management Fees
On June 9, 2008, the Fund achieved its Initial Closure and as per the Investment Management Agreement (“the Agreement”) dated March 11, 2008, the Company has started accruing and receiving investment management fees from that date. The Fund has achieved Final Closure on June 8, 2009 and as per the Agreement, the Investment Management Fees are charged on aggregate commitments received as at the Final Closure during the commitment period of the Fund.
4 Infrastructure Development Finance Company Limited, the Holding Company has transferred the employees to the payroll of the Company effective April 1, 2009 who were deputed to the Company in the previous year. 5 Placement Fees
Placement Fees represents fees in respect of Capital Commitments arranged by Citigroup Global Markets Limited, UK in the Fund pursuant to the Placement Agreement dated February 20, 2008 entered into with the Company. During the year, an amount of Rs. 48.6 million (USD 1.0 million) has been accrued based on the additional Capital Commitments received during the year ended March 31, 2010. This is in addition to placement fees accrued during the previous year of Rs. 358.9 million (USD 7.3 million). Of the above, the Company has paid Rs. 23.5 million (USD 0.5 million) during the current year.
6 Employee Benefits
In accordance with Accounting Standard 15 (Revised) on ‘Employee Benefits’ as notified by the Companies (Accounting Standards) Rules, 2006, the following disclosures have been made: i. The Company has recognised the following amounts in the Profit and Loss Account towards contribution to defined contribution plans which are included under Contribution to Provident and Other Funds:
APRIL 1, 2009 TO MARCH 31, 2010
RUPEES
APRIL 1, 2008 TO MARCH 31, 2009
RUPEES
Provident Fund Superannuation Fund
2,800,569 3,481,010 6,281,579
2,715,143 3,393,847 6,108,990
ii.
The details of post – retirement benefit plans for gratuity are given below which is certified by the actuary and relied upon by the auditors:
APRIL 1, 2009 TO MARCH 31, 2010
NON-FUNDED (RUPEES)
CHANGE IN THE DEFINED BENEFIT OBLIGATIONS: Liability at the beginning of the year Unfunded Obligation on transfer of employees from holding company Current Service Cost Interest Cost Benefits Paid Actuarial Loss / (Gain) Liability at the end of the year FAIR VALUE OF PLAN ASSETS: Fair Value of Plan Assets at the beginning of the year Expected Return on Plan Assets Contributions Benefits paid Actuarial Loss on Plan Assets Fair Value of Plan Assets at the end of the year Total Actuarial Loss to be recognised – – – – – – – – 5,426,826 867,115 275,706 (635,396) 447,077 6,381,328
I D F C P R O J E C T E Q U I TY C O M P A N Y L I M I T E D
57
APRIL 1, 2009 TO MARCH 31, 2010
NON-FUNDED (RUPEES)
ACTUAL RETURN ON PLAN ASSETS: Expected Return on Plan Assets Actuarial Loss on Plan Assets Actual Return on Plan Assets AMOUNT RECOGNISED IN THE BALANCE SHEET: Liability at the end of the year Fair Value of Plan Assets at the end of the year Amount recognised in the Balance Sheet under “Provision for Employee Benefits” EXPENSE RECOGNISED IN THE PROFIT AND LOSS ACCOUNT: Unfunded Obligation on transfer of employees from holding company Current Service Cost Interest Cost Expected Return on Plan Assets Net Actuarial Loss to be recognised Recovery of the Past service cost from the holding company Expense recognised in the Profit and Loss Account under staff expenses RECONCILIATION OF THE LIABILITY RECOGNISED IN THE BALANCE SHEET: Opening Net Liability Expense recognised Contribution by the Group Amount recognised in the Balance Sheet under “Provision for Employee Benefits” Estimated Contribution EXPERIENCE ADJUSTMENTS: (*) Defined Benefit Obligation Plan Assets Deficit Experience Adjustments on Plan Liabilities Experience Adjustments on Plan Assets 6,381,328 – (6,381,328) (177,117) –
%
– – – 6,381,328 – 6,381,328 5,426,826 867,115 275,706 – 447,077 (1,885,505) 5,131,219 – 5,131,219 – 6,381,328 –
INVESTMENT PATTERN OF PLAN ASSETS: Insurer Managed Fund The Company’s Gratuity liability is unfunded. PRINCIPAL ASSUMPTIONS: Discount Rate (p.a.) Expected Rate of Return on Assets (p.a.) Salary Escalation (p.a.) 8.10% – 8.00% – –
(*) The Company was incorporated on February 6, 2007 and did not have any employees on its payroll until April 1, 2009. Consequently, no disclosure has been made for previous 4 years in terms of Accounting Standard 15 on ‘Employee Benefits’. The estimate of future salary increase, considered in the actuarial valuation takes account of inflation, seniority, promotion and other relevant factors.
58
I D F C A N N U A L R E P O R T 09 –10
7 Purchase and Redemption of Current Investments
The Company has purchased and redeemed the following investments during the year.
APRIL 1, 2009 TO MARCH 31, 2010 PURCHASE UNITS IDFC MUTUAL FUND IDFC Cash Fund Super Institutional Plan C – Daily Dividend Option IDFC Money Manager Fund Investment Plan Institutional Plan B – Daily Dividend Option IDFC Money Manager Fund Investment Plan Super Institutional Plan C – Daily Dividend Option IDFC Money Manager Fund Treasury Plan Institutional Plan B – Daily Dividend Option IDFC Money Manager Fund Treasury Plan Super Institutional Plan C – Daily Dividend Option IDFC Fixed Maturity Plan - Quarterly Series 32 – Dividend IDFC Fixed Maturity Plan – Monthly Series 3 – Dividend IDFC Fixed Maturity Plan – Monthly Series 5 – Dividend IDFC Fixed Maturity Plan - Quarterly Series 43 – Dividend Total – – – – 111,352,343.836 – – – – 111,352,343.836 1,150,000.000 1,007,240.000 1,014,905.096 675,285.600 109,279,707.011 1,150,000.000 1,007,240.000 1,014,905.096 675,285.600 109,279,707.011 70,658,140.120 70,658,140.120 35,442,919.295 35,442,919.295 – – 1,149,807.991 1,149,807.991 10,209,910.011 10,209,910.011 – – 30,484,293.705 – 30,484,293.705 – 48,908,355.454 19,931,193.575 48,908,355.454 19,931,193.575 REDEMPTION UNITS APRIL 1, 2008 TO MARCH 31, 2009 PURCHASE UNITS REDEMPTION UNITS
8 Segment Information
The Company is an asset management company engaged in managing a domestic venture capital fund registered with the Securities and Exchange Board of India. During the year, the Company was engaged in only one business segment and no geographical segments. As such, there are no separate reportable segments as per Accounting Standard 17 on Segment Reporting as provided under the Companies (Accounting Standards) Rules, 2006.
9 Related Party Disclosures under Accounting Standard 18
(a) Relationships:
HOLDING COMPANY: FELLOW SUBSIDIARIES:
Infrastructure Development Finance Company Limited IDFC Private Equity Company Limited IDFC Capital Singapore Pte. Limited M.K. Sinha (President and CEO)
KEY MANAGERIAL PERSONNEL:
(b) The transactions / balances outstanding with related parties in the ordinary course of business during the year are as follows:
NAME OF RELATED PARTY AND NATURE OF RELATIONSHIP (A) HOLDING COMPANY Infrastructure Development Finance Company Limited Guarantee commission** Reimbursement of Expenses ** Recovery of Expenses ** Rent paid ** Repayment of Security Deposit Advances received and repaid Purchase of Fixed Assets Equity share capital outstanding Amount payable (B) FELLOW SUBSIDIARY IDFC Private Equity Company Limited IDFC Capital Singapore Pte Limited (C) KEY MANAGERIAL PERSONNEL M.K. Sinha Remuneration paid # 43,451,565 – Reimbursement of Expenses ** Reimbursement of Expenses ** 155,426 369,239 – 74,530 1,770,836 10,004,222 2,079,712 407,399 50,000,000 – 489,261 500,000 – – 89,248,141 – – – 11,150,000 822,045 500,000 236,245 PARTICULARS APRIL 1, 2009 TO MARCH 31, 2010
RUPEES
APRIL 1, 2008 TO MARCH 31, 2009
RUPEES
** - Includes Service tax # - Excludes gratuity and insurance premium
I D F C P R O J E C T E Q U I TY C O M P A N Y L I M I T E D 59
10 Earnings Per Share
Basic profit / (loss) per share is calculated by dividing the net profit / (loss) for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.
PARTICULARS Profit / (Loss) After Tax (Rs.) Weighted average number of equity shares outstanding (Nos.) Basic and Diluted Earnings / (Loss) Per Share (Rs.) Face Value Per Share (Rs.) APRIL 1, 2009 TO MARCH 31, 2010 230,085,020 50,000 4,601.70 10 APRIL 1, 2008 TO MARCH 31, 2009 (105,578,520) 50,000 (2,111.57) 10
11 Deferred Tax
In compliance with the Accounting Standard 22 on “Accounting for Taxes on Income” as notified by the Companies (Accounting Standards) Rules, 2006, the Company has credited an amount of Rs. 3,318,835 to the Profit and Loss Account towards Deferred Tax Asset (Previous Year: expense of Rs. 5,099 towards Deferred Tax Liability). The major components of the deferred tax assets and liabilities arising on account of timing differences are:
AS AT MARCH 31, 2010
RUPEES
AS AT MARCH 31, 2009
RUPEES
Preliminary Expenses Provision for Employee Benefits Depreciation Gross Deferred Tax Asset Depreciation Gross Deferred Tax Liability Net Deferred Tax Asset
1,661 3,304,096 13,078 3,318,835 – – 3,318,835
3,399 20,292 – 23,691 (23,691) (23,691) –
12 Leases
Residential premise for staff and office premises are obtained on operating lease. There are no non-cancellable operating lease agreements entered into by the Company.
APRIL 1, 2009 TO MARCH 31, 2010
RUPEES
APRIL 1, 2008 TO MARCH 31, 2009
RUPEES
Lease payments recognized in Profit and Loss Account
1,267,893
5,46,500
13 Expenditure in Foreign Currency (on accrual basis)
APRIL 1, 2009 TO MARCH 31, 2010
RUPEES
APRIL 1, 2008 TO MARCH 31, 2009
RUPEES
Travelling Placement Fees Service Fees Sponsorships and Conference Expenses Staff Training and Welfare Others Total
1,653,767 48,570,000 28,506,537 4,030,368 3,104,060 274,862 86,139,594
596,636 358,876,350 22,736,811 – – 978,401 383,188,198
14 There are no contingent liabilities as at March 31, 2010 (Previous Year: Nil). 15 There are no contracts remaining to be executed on capital account and not provided for as at March 31, 2010 (Previous Year: Nil). 16 Unhedged foreign currency exposure as at March 31, 2010: Rs. 220,647,229 i.e. USD 4,909,818.19 @ Closing Rate of 1 USD = Rs. 44.94 (Previous Year: 224,105,891 i.e. USD 4,398,545.46 @ Closing Rate of 1 USD = Rs. 50.95).
60
I D F C A N N U A L R E P O R T 09 –10
17 The Company has initiated the process of identification of suppliers registered under “The Micro, Small and Medium, Enterprises Development (‘MSMED’) Act, 2006” by obtaining confirmations from suppliers. Based on the intimation received by the Company, three suppliers have confirmed to be registered under MSMED Act, 2006. The Company has no amounts due to any Micro, Small and Medium Enterprises as defined under Section 7(1) (a)/7 (1) (b) / 7 (1) of MSMED as on March 31, 2010. 18 Previous year’s figures have been regrouped wherever necessary in order to conform to current year’s classification.
FOR S. R. BATLIBOI & CO.
CHART E R E D ACCOU N TA N TS per SHRAWAN JALAN
FOR AND ON BEHALF OF BOARD OF DIRECTORS OF IDFC PROJECT EQUITY COMPANY LIMITED
VIKRAM LIMAYE MAHENDRA N. SHAH
Partner Membership No. 102102
Director
Director
SANJAY AJGAONKAR
Mumbai | April 19, 2010
Company Secretary
I D F C P R O J E C T E Q U I TY C O M P A N Y L I M I T E D 61
B A L A N C E S H E E T A B ST R A CT
AND COMPANY’S GENERAL BUSINESS PROFILE
I.
REGISTRATION DETAILS Registration No. State Code Balance Sheet Date U 1 3 5 1 1 0 3 2 0 1 0 1 1 0 3 M H 2 0 0 7 P L C 1 6 7 6 1 1
II.
CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000) Public Issue N I L Right Issue N I L
Bonus Issue N III. I L POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000) Total Liabilities 5 SOURCES OF FUNDS Paid-up Capital 5 0 0 7 9 2 0 2 5 7 9
Stock Options N I L
Total Assets 2 0 2
Secured Loans N I L
Reserves and Surplus 1 APPLICATION OF FUNDS Net Fixed Assets 2 4 9 9 2 3 4 2 6
UnSecured Loans N I L
Investments N I L
Net Currect Assets 1 1 8 1 0 8
Miscellaneous Expenditure N I L
Deferred Tax Asset 3 IV. 3 1 9 Total Expenditure 3 5 5 5 1 5
PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000) Turnover/Income 6 4 3 4 6 2
Profit Before Tax 2 8 7 9 4 7 2 3
Profit After Tax 0 0 8 5
Earnings per Share (in Rs.) 4 V. 6 0 1 . 7 0
Dividend % N I L
GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS) Item Code No. (ITC Code) Product Description N A I S L S E T M A N A G E M E N T
62
I D F C A N N U A L R E P O R T 09 –10
IDFC finance
limited
?
B O A R D O F D I R E CTO R S
? ?
Mr. A. K. T. Chari Chairman Mr. Sadashiv Rao Mr. Mahendra N. Shah
A U D I TO R S
?
Deloitte Haskins & Sells Chartered Accountants
P R I N C I PA L B A N K E R S
?
HDFC Bank Limited
R E G I ST E R E D O F F I C E
The Capital Court, 2nd Floor, Olof Palme Marg, Munirka, New Delhi 110 067. TEL +91 11 46006100 FAX +91 11 26713359
IDFC FINANCE LIMITED
63
D I R E CT O R S ’ R E P O R T
TO THE MEMBERS
Your Directors have pleasure in presenting the Tenth Annual Report together with the audited accounts for the year ended March 31, 2010. their willingness to be appointed. You are requested to consider their reappointment.
FOREIGN EXCHANGE EARNINGS AND EXPENDITURE
There was no income or expenditure in foreign currency during the period under review.
FINANCIAL HIGHLIGHTS
Total Income of the Company during the year was Rs. 7,585,014/-. The Income includes Profit on Sale of Current Investments of Rs. 1,223,148/- and Dividend on Current Investment of Rs.6,331,722/-. The Company’s operations during the year have resulted in net gain of Rs. 7,112,908/- as against Rs. 15,379,893/- during the previous year.
PERSONNEL AND OTHER MATTERS
Since your Company does not have any employees, the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are not applicable and hence not given. Since the Company does not own any manufacturing facility, the disclosure of information on other matters required to be disclosed in terms of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1998, are not applicable and hence not given.
DIVIDEND
The Directors do not recommend any dividend for the year ended March 31, 2010.
PUBLIC DEPOSITS
During the period under review, your Company has not accepted public deposits under the provisions of Section 58-A of the Companies Act, 1956.
DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors confirm that: the applicable accounting standards have been followed in preparation of annual accounts and there are no material departures;
¬
DIRECTORS
In terms of the provisions of the Articles of Association of the Company, Mr. Sadashiv Rao would retire at the ensuing Annual General Meeting and being eligible, offer himself for re-appointment.
AUDIT COMMITTEE
The Audit Committee consists of three Directors Mr. A. K. T. Chari, Mr. Sadashiv Rao and Mr. Mahendra N. Shah. There were four meetings of the Committee held during the year. The functions of the Committee include reviewing the quarterly and annual financial statements, internal control systems and significant accounting policies of the Company and discussing the audit findings and recommendations of the internal and statutory auditors of the Company.
they have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2010 and the profit of the Company for the year ended on that date; ¬ they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and detecting fraud and other irregularities; and ¬ they have prepared the annual accounts on a going concern basis.
¬
ACKNOWLEDGEMENTS
The Directors also express their gratitude for the unstinted support and guidance received from Infrastructure Development Finance Company Limited and other group companies.
AUDITORS
M/s. Deloitte Haskins & Sells, Ahmedabad will retire as the statutory auditors of the Company at the ensuing Annual General Meeting. The Board of Directors, at its meeting held on April 22, 2010, has proposed the reappointment of M/s. Deloitte Haskins & Sells, Ahmedabad as statutory auditors to audit the financials of the Company for the year ending March 31, 2011. M/s. Deloitte Haskins & Sells, Ahmedabad have confirmed that their reappointment, if made, would be in conformity with the provisions of Sections 224 and 226 of the Companies Act, 1956 as also indicated
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
A. K. T. CHARI
Chairman Mumbai April 22 , 2010
64
I D F C A N N U A L R E P O R T 09 –10
AU D I TO RS ’ R E PO RT
TO THE MEMBERS OF IDFC FINANCE LIMITED
1. We have audited the attached Balance Sheet of IDFC FINANCE LIMITED (“the Company”) as at March 31, 2010, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditor’s Report) Order, 2003 (CARO) issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. 4. Further to our comments in the Annexure referred to in paragraph 3 above, we report as follows: (a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; (b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books; (c) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account;
FOR DELOITTE HASKINS & SELLS Chartered Accountants (Registration No. 117366W)
Z. F. BILLIMORIA
(d) in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956; (e) in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2010;
(ii) in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date and (iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date. 5. On the basis of the written representations received from the Directors as on March 31, 2010 taken on record by the Board of Directors, none of the Directors is disqualified as on March 31, 2010 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956.
Partner Membership No. 42791 Mumbai April 22, 2010
IDFC FINANCE LIMITED
65
ANNEXURE
(Referred to in paragraph 3 of our report of even date) (i) Having regard to the nature of the Company’s business/ activities/result/transactions etc., clauses (i), (ii), (vi), (viii), (x), (xi), (xii), (xiii), (xv), (xvi), (xvii), (xviii), (xix) and (xx) of CARO are not applicable.
TO THE AUDITORS’ REPORT
(b) There were no undisputed amounts payable in respect of Income-tax and other material statutory dues in arrears as at March 31, 2010 for a period of more than six months from the date they became payable. (vii) Based on our examination of the records and evaluation of the related internal controls, the Company has maintained proper records of the transactions and contracts in respect of its dealing in shares securities, debentures and other investments and timely entries have been made therein. The aforesaid securities have been held by the Company in its own name. (viii) To the best of our knowledge and according to the information and explanations given to us, no fraud by and on the Company has been noticed or reported during the year.
(ii) The Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956. (iii) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to the sale of services. During the course of our audit, we have not observed any major weakness in such internal control system. (iv) To the best of our knowledge and belief and according to information and explanation given to us, there were no contracts or arrangements required to be entered in the register maintained in pursuance of Section 301 of the Companies Act, 1956. (v) The Company does not have an internal audit system. (vi) According to the information and explanations given to us in respect of statutory dues: (a) The Company has been regular in depositing undisputed dues, including Income-tax and other material statutory dues applicable to it with the appropriate authorities.
FOR DELOITTE HASKINS & SELLS Chartered Accountants (Registration No. 117366W)
Z. F. BILLIMORIA
Partner Membership No. 42791 Mumbai April 22, 2010
66
I D F C A N N U A L R E P O R T 09 –10
BALANCE SHEET
RUPEES SCHEDULE RUPEES
AS AT MARCH 31, 2010
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
SOURCES OF FUNDS:
Shareholders’ Funds: Share Capital Reserves and Surplus 1 2 210,002,000 65,012,138 275,014,138 210,002,000 57,899,230 267,901,230 267,256,198 5,818 771,574 777,392 132,360 453,070 275,014,138 Notes to the Accounts Schedules 1 to 8 form an integral part of the Accounts 8 645,032 267,901,230
APPLICATION OF FUNDS :
Investments Curent Assets, Loans and Advances: Cash and Bank Balances Loans and Advances Less: Current Liabilities and Provisions: Liabilities Net Current Assets 5 216,787 3 4 175,832 494,025 669,857 274,561,068
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants
Z. F. B I L L I M O R I A A. K. T. CHARI SADASHIV S. RAO
FOR AND ON BEHALF OF THE BOARD
Partner Mumbai | April 22, 2010
Chairman
Director
IDFC FINANCE LIMITED
67
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
SCHEDULE
APRIL 1, 2009 TO MARCH 31, 2010 6 7,585,014 7,585,014
APRIL 1, 2008 TO MARCH 31, 2009 17,693,059 17,693,059 292,166 292,166 17,400,893 2,021,000 – 15,379,893 34,015,470 49,395,363 3,075,979 46,319,384 49,395,363 0.73
INCOME
Operating and Other Income
EXPENSES
Other Expenses PROFIT BEFORE TAXATION Less: Provision for Taxation Current Tax Excess provision for earlier years written back PROFIT AFTER TAXATION Add: Balance as per last Balance Sheet AVAILABLE FOR APPROPRIATION Appropriations: Special Reserve u/s 45-IC of RBI Act, 1934 Balance Carried Forward Basic and Diluted Earnings Per Share (Face Value Rs. 10) (See Schedule 8 Note 5) Notes to the Accounts Schedules 1 to 8 form an integral part of the Accounts 8 1,422,581 52,009,711 53,432,292 0.34 285,000 (143,868) 7,112,908 46,319,384 53,432,292 7 330,974 330,974 7,254,040
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants
Z. F. B I L L I M O R I A A. K. T. CHARI SADASHIV S. RAO
FOR AND ON BEHALF OF THE BOARD
Partner Mumbai | April 22, 2010
68 I D F C A N N U A L R E P O R T 09 –10
Chairman
Director
C A S H F L OW ST AT E M E N T
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010
APRIL 1, 2008 TO MARCH 31, 2009 17,400,893 (5,945,270) 11,455,623 (2,094,394) (3,139,277) 6,221,952 (1,862,890,114) 1,856,517,870 (6,372,244) – (150,292) 156,110 5,818 (150,292)
A.
CASH FLOW FROM OPERATING ACTIVITIES
Profit Before Taxation Adjustments for : Profit on Sale of Investments Operating Profit before Working Capital Changes Changes in : Current Liabilities Direct Taxes paid (Net of refund) NET CASH FROM OPERATING ACTIVITIES 84,427 136,417 6,251,736 (486,392,284) 480,310,563 (6,081,721) – 170,015 5,818 175,832 170,014 (1,223,148) 6,030,892 7,254,040
B.
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Investments Sale Proceeds of Investments NET CASH USED IN INVESTING ACTIVITIES
C.
CASH FLOW FROM FINANCING ACTIVITIES
NET CASH USED IN FINANCING ACTIVITIES Net increase/(decrease) in cash and cash equivalents (A+B+C) Cash and cash equivalents as at the beginning of the year (as per Schedule 4) Cash and cash equivalents as at the end of the year (as per Schedule 4)
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants
Z. F. B I L L I M O R I A A. K. T. CHARI SADASHIV S. RAO
FOR AND ON BEHALF OF THE BOARD
Partner Mumbai | April 22, 2010
Chairman
Director
IDFC FINANCE LIMITED
69
SCHEDULES
SCHEDULE 1 Shareholders’ Funds SHARE CAPITAL
Authorised : 40,000,000 Equity Shares of Rs. 10 each Issued : 27,000,400 Equity Shares of Rs. 10 each Subscribed and Paid-up : 21,000,200 Equity Shares of Rs. 10 each (All the above shares are held by Infrastructure Development Finance Company Limited, the holding company and its nominees)
ANNEXED TO AND FORMING PART OF THE ACCOUNTS
RUPEES
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
400,000,000 270,004,000 210,002,000
400,000,000 270,004,000 210,002,000
SCHEDULE 2 Reserves and Surplus
SPECIAL RESERVE U/S 45-IC OF RBI ACT, 1934 Opening Balance Add: Transfer from Profit and Loss Account PROFIT AND LOSS ACCOUNT
RUPEES
RUPEES
RUPEES
AS AT MARCH 31, 2010 11,579,846 1,422,581 13,002,427 52,009,711 65,012,138
AS AT MARCH 31, 2009 8,503,867 3,075,979 11,579,846 46,319,384 57,899,230
SCHEDULE 3 Investments
I. LONG TERM (NON-TRADE) NO. OF SHARES EQUITY SHARES (FULLY PAID) (UNQUOTED) SUBSIDIARY COMPANY IDFC Projects Limited (upto February 03, 2010) II. CURRENT (TRADE) MUTUAL FUNDS (UNQUOTED) ICICI Prudential Institutional Liquid Plan Super Institutional - Growth IDFC Money Manager Fund - Treasury Plan Super Institutional Plan C - Growth IDFC Fixed Maturity Plan Thirteen Month Series 5 - Growth GRAND TOTAL (I+II) 12,000,000.000 10 5,805,846.782 10 6,271.074 100 NO. OF UNITS FACE VALUE (RUPEES) 9,049,900 10 FACE VALUE (RUPEES)
RUPEES
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
90,499,000
90,499,000
812,744 63,249,324 120,000,000 184,062,068 274,561,068
812,744 175,944,454 – 176,757,198 267,256,198
70
I D F C A N N U A L R E P O R T 09 –10
SCHEDULE 4 Current Assets, Loans and Advances
A. CURRENT ASSETS Cash and Bank Balances with Scheduled Bank in Current Account B. LOANS AND ADVANCES Unsecured, considered good Advance Payment of Income Tax (Net of Provisions)
RUPEES
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
175,832 175,832
5,818 5,818
494,025 494,025 669,857
771,574 771,574 777,392
SCHEDULE 5 Current Liabilities and Provisions
A. LIABILITIES Sundry Creditors (Other than Micro, Small and Medium Enterprises) Other Liabilities
RUPEES
RUPEES
AS AT MARCH 31, 2010 196,933 19,854 216,787
AS AT MARCH 31, 2009 117,364 14,996 132,360
SCHEDULE 6 Operating and other Income
RUPEES
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 OPERATING INCOME Profit on Sale of Current Investments Dividend on Current Investments OTHER INCOME Interest on Income-Tax Refund 30,144 7,585,014 1,223,148 6,331,722 7,554,870
APRIL 1, 2008 TO MARCH 31, 2009 5,945,270 11,747,789 17,693,059 – 17,693,059
SCHEDULE 7 Other Expenses
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Legal and Professional Fees Auditors’ Remuneration (See Schedule 8 Note 2) Rates and Taxes Interest on delayed payment of Tax deducted at source Miscellaneous Expenses 20,133 309,296 1,400 145 – 330,974
APRIL 1, 2008 TO MARCH 31, 2009 30,394 251,462 – – 10,310 292,166
IDFC FINANCE LIMITED
71
SCHEDULE 8 Notes Forming Part of the Accounts
1 Significant Accounting Policies
A. Basis of Accounting
The Company adopts the accrual concept in the preparation of accounts. The preparation of financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.
B. Revenue Recognition
Interest Income is accounted for on accrual basis. Dividend income is recognised when the right to receive is established.
C. Investments
The Company is regulated as a Non-Banking Financial Company (NBFC) by the Reserve Bank of India (RBI). Accordingly, Investments are classified under two categories i.e. Current and Long Term and are valued in accordance with the RBI guidelines and Accounting Standard 13 on ‘Accounting for Investments’ as notified by the Companies (Accounting Standards) Rules, 2006.
¬ ¬
‘Long Term Investments’ are carried at acquisition cost. A provision is made for diminution other than temporary on an individual basis. ‘Current Investments’ are carried at the lower of cost or fair value on an individual basis.
D. Income Tax
The accounting treatment for income-tax in respect of the Company’s income is based on the Accounting Standard 22 on ‘Accounting for Taxes on Income’ as notified by the Companies (Accounting Standards) Rules, 2006. The provision made for income-tax in the accounts comprises both, the current tax and the deferred tax. The deferred tax assets and liabilities for the year arising on account of timing differences are recognised in the Profit and Loss Account and the cumulative effect thereof is reflected in the Balance Sheet. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the Company has unabsorbed depreciation or carry forward tax losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that the same can be realised against future taxable profits.
2 Auditors’ Remuneration :
PARTICULARS Audit Fees Tax Audit Fees Other Matters Out of pocket expenses Service Tax Total CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
150,000 30,000 100,000 456 28,840 309,296
100,000 20,000 106,000 – 25,462 251,462
3 The Company is engaged in investing activities in India and there are no separate reportable segments as per Accounting Standard 17 on ‘Segment Reporting’ as notified by the Companies (Accounting Standards) Rules, 2006. 4 As per the Accounting Standard 18 on ‘Related Party Disclosures’ as notified by the Companies (Accounting Standards) Rules, 2006, the related parties of the Company are as follows:
(a) Relationships:
I. II. HOLDING COMPANY : Infrastructure Development Finance Company Limited SUBSIDIARY: IDFC Projects Limited (upto February 03, 2010)
72
I D F C A N N U A L R E P O R T 09 –10
(b) The nature and volume of transactions carried out with the above related parties in the ordinary course of business are as follows:
NAME OF THE RELATED PARTY IDFC Projects Limited PARTICULARS Subscription towards Equity Share Capital CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
Nil
90,000,000
5 In accordance with the Accounting Standard 20 on ‘Earnings Per Share’ as notified by the Companies (Accounting Standards) Rules, 2006; the Earnings Per Share is as under:
PARTICULARS Profit After Tax (Rs.) Weighted average number of equity shares (Nos.) Basic & Diluted Earnings Per Share (Rs.) Nominal Value Per Share (Rs.) CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
7,112,908 21,000,200 0.34 10
15,379,893 21,000,200 0.73 10
6 The Company has no amounts due to any micro, small and medium enterprises as defined under Micro Small and Medium Enterprises Development Act, 2006 as on March 31, 2010. 7 The following additional information (other than what is already disclosed elsewhere) is disclosed in terms of RBI circular (Ref. No. DNBS (PD) CC No. 145 /03.02.001 /2009-10 dated July 1, 2009):
Investor group wise classification of all investments (Current and Long Term) in shares and securities (both Quoted and Unquoted):
CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
Category 1. Related Parties (a) Subsidiaries 2. Other then Related Parties
Market Value/ Breakup Value / Fair Value / NAV – 274,832,942
Book Value Net of Provision – 274,561,068
Market Value/ Breakup Value / Fair Value / NAV 90,499,000 177,169,577
Book Value Net of Provision 90,499,000 176,757,198
8 The figures for the previous year have been regrouped / rearranged wherever necessary.
FOR AND ON BEHALF OF THE BOARD
A. K. T. CHARI
SADASHIV S. RAO
Chairman Mumbai | April 22, 2010
Director
IDFC FINANCE LIMITED
73
B A L A N C E S H E E T A B ST R A CT
AND COMPANY’S GENERAL BUSINESS PROFILE
I.
REGISTRATION DETAILS Registration No. State Code Balance Sheet Date U 5 3 4 5 1 0 3 2 0 1 0 5 2 0 1 D L 2 0 0 0 P L C 1 0 5 2 9 2
II.
CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000) Public Issue N I L Right Issue N I L
Bonus Issue N III. I L POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000) Total Liabilities 2 SOURCES OF FUNDS Paid-up Capital 2 1 0 0 0 2 7 5 2 3 1 2 7
Private Placement N I L
Total Assets 5 2 3 1
Reserves and Surplus 6 5 0 1 2
Secured Loans N APPLICATION OF FUNDS Net Fixed Assets N I L 2 7 I L
Unsecured Loans N I L
Investments 4 5 6 1
Net Current Assets 4 IV. 5 3
Deferred Tax Asset N I L
PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000) Turnover / Income 7 5 8 5 Total Expenditure 3 3 1
Profit Before Tax 7 2 5 4
Profit After Tax 7 1 1 3
Earnings per Share (in Rs.) 0 V. . 3 4
Dividend % N I L
GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS) Item Code No. (ITC Code) Product Description N U F I R I L B N A A N N C I I N N F G R A S T R U C T U R E
74
I D F C A N N U A L R E P O R T 09 –10
limited*
? ? ? ? ? ? ?
IDFC securities
B O A R D O F D I R E CTO R S
Dr. Rajiv B. Lall Mr. Vikram Limaye Mr. T. S. Bhattacharya Mr. Yuvraj Narayan Mr. L. K. Narayan Mr. Tapasije Mishra Mr. Mahehdra N. Shah
A U D I TO R S
?
Deloitte Haskins & Sells Chartered Accountants
P R I N C I PA L B A N K E R S
?
HDFC Bank Limited
R E G I ST E R E D O F F I C E
Naman Chambers, C-32, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai 400 051. TEL +91 22 66222600 FAX +91 22 66222501
* Formerly known as IDFC - SSKI Securities Limited
I D F C S E C U R I T I E S L I M I T E D ( F O R M E R LY , I D F C - S S K I S E C U R I T I E S L I M I T E D ) 75
D I R E CT O R S ’ R E P O R T
TO THE MEMBERS
Your directors have pleasure in presenting the Seventeenth Annual Report together with the audited accounts for the year ended March 31, 2010. infrastructure, consumers and financials sectors as also mid-caps. While the Company was recognized for the differentiated research, it has also scaled up materially on its client relationships during the year.
FINANCIAL RESULTS
RUPEES
SUBSIDIARY COMPANIES
YEAR ENDED MARCH 31, 2010 YEAR ENDED MARCH 31, 2009 713,685,450 442,741,472 270,943,978 7,761,033 13,726,570 249,456,375
IDFC Securities Ltd. has two direct wholly owned subsidiary companies - IDFC Capital Ltd. (earlier known as IDFC – SSKI Ltd.) and IDFC – SSKI Stock Broking Ltd. In addition IDFC Capital Ltd. has a wholly owned subsidiary – IDFC Capital (Singapore) Pte Ltd. During the year, IDFC Capital Ltd. has further floated two wholly owned subsidiary companies namely, IDFC General Partners Ltd. and IDFC Fund of Funds Ltd. As required under the provisions of section 212 of the Companies Act, 1956, a statement of holding company’s interest in the subsidiary companies is attached to this report.
Gross Revenue Operating Expenses (including Employee Costs) Profit before Depreciation, Interest and Tax Depreciation/Amortisation Finance Charges Net Profit before Tax Provision for Taxation Current Tax Deferred Tax Fringe Benefit Tax Short provision for Income Tax Net Profit after tax
1,047,298,141 672,218,942 375,079,199 5,750,406 10,440,940 358,887,853
DIVIDEND
Your Directors do not recommend any dividend for the financial year ended March 31, 2010.
115,200,000 1,000,000 6,026,067 236,661,786
79,300,000 300,000 2,640,000 2,578,179 164,638,196
SHAREHOLDERS UPDATE
The Company had shifted its Registered Office from 803/804, Tulsiani Chambers, Nariman Point, Mumbai 400 021 to Naman Chambers, C-32, G- Block, Bandra- Kurla Complex, Bandra (East), Mumbai 400 051 with effect from December 25, 2009. During the financial year, the Company had changed its name from IDFC – SSKI Securities Limited to IDFC Securities Limited by passing special resolution at the Extraordinary General Meeting held on February 16, 2010 and the change of name was effective after obtaining fresh certificate of incorporation consequent to the name change from Registrar of Companies with effect from March 12, 2010. Infrastructure Development Finance Company Limited (IDFC) holds 100% of paid up capital of the Company. The name change was done to reflect the parentage of IDFC. The word "Securities" indicates important business of the Company.
BUSINESS REVIEW AND FUTURE OUTLOOK
After a tumultuous Financial Year 2009, the Indian economy has staged a smart V-shaped recovery in the Financial Year 2010, led by buoyant domestic demand as well as fiscal and monetary stimulus. The decline in interest rates drove the revival in domestic demand as indicated by higher sales of passenger cars, consumer durables, housing loan disbursals, etc. Industrial production growth, as measured by the Index of Industrial Production (IIP), reached a 15-year high in December 2009. Consequently, GDP growth was set to cross the 7% mark for FY10, notwithstanding the impact of a deficient monsoon. Buoyed by the improved macroeconomic environment, capital markets have been up by more than 100% over the year. However, amidst the euphoria, broking business encountered serious headwinds on many fronts as: (a) investors remain cautious after the debacle of the previous year and churn has been lower, due to which volume growth has not been commensurate with growth in the capital market; (b) competition is intensifying and an increasingly fragmented market has hit yields (commission rates), because of which revenue pool has not grown materially; and (c) derivatives (F&O) volumes have been subdued as the proprietary book and P Note market remains unaddressable. Despite the odds, performance of the Company was quite impressive. Our revenues have grown 47% and PAT 44% for FY10. The year also brought some ‘laurels’ for the Company – as the Company was awarded the ‘Best Local Brokerage’ for the last 20 years in Asiamoney’s ‘Poll of Polls’. Also, three of analysts of the Company featured in the league of top 20, ranked for their research on
76 I D F C A N N U A L R E P O R T 09 –10
DIRECTORS
Mr. T. S. Bhattacharya was appointed as an Additional Director (Independent) with effect from June 17, 2009 whose appointment was approved at the Annual General Meeting held on July 13, 2009. Appointment of Mr. L K Narayan as Director was also approved at the said Annual General Meeting. The Board, at its meeting held on April 21, 2010, proposed appointment of Mr. Anil Singhvi as an Independent Director subject to approval of exchanges. Dr. Rajiv Lall and Mr. Vikram Limaye are reting by rotation and being eligible, offers themselves for re-appointment at the ensuing Annual General Meeting.
AUDIT COMMITTEE
The Audit Committee was re-constituted during the year and the same consists of Mr. Vikram Limaye as Chairman, Mr. L K Narayan, Mr. Yuvraj Narayan and Mr. T. S. Bhattacharya. The Audit Committee met four times during the year under the review.
AUDITORS
M/s Deloitte Haskins & Sells, Chartered Accountants, Mumbai will retire and have expressed their willingness to continue as Auditors, if re-appointed, at the ensuing Annual General Meeting. Since more than twenty five percent of the subscribed share capital is held by Infrastructure Development Finance Company Limited, a Public Financial Institution, in terms of Section 224A of Companies Act, 1956, a Special Resolution would be required at the Annual General Meeting for their re-appointment
and prudent, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2010 and the profit of the Company for the year ended on that date; ¬ they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and detecting fraud and other irregularities; and ¬ they have prepared annual accounts on a going concern basis.
ACKNOWLEDGEMENTS
The Board wishes to thank the clients, custodians, Securities and Exchange Board of India, Stock Exchanges, Banks and other statutory and regulatory authorities for their support to your Company. The Board also places on record its appreciation for the sincere efforts of the staff. The Board would also like to express its gratitude for the unstinted support and guidance received from IDFC, the parent organisation, and also other group companies.
FOREIGN EXCHANGE
The particulars regarding foreign exchange earnings and expenditure are furnished at Item No. 7 in the Notes to the Accounts.
PERSONNEL AND OTHER MATTERS
As required by the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of employees are set out in Annexure to the Directors’ Report. Since the Company does not own any manufacturing facility, the disclosure of information on other matters required to be disclosed in terms of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the report of Board of Directors) Rules, 1988, are not applicable and hence not given.
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors confirm that: the applicable accounting standards have been followed in the preparation of the annual accounts and that there are no material departures; ¬ they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable
¬ RAJIV B. LALL TAPASIJE MISHRA
Director
Director
Mumbai April 21, 2010
I D F C S E C U R I T I E S L I M I T E D ( F O R M E R LY , I D F C - S S K I S E C U R I T I E S L I M I T E D )
77
AU D I TO RS ’ R E PO RT
TO THE MEMBERS OF IDFC SECURITIES LIMITED
1. We have audited the attached Balance Sheet of IDFC SECURITIES LIMITED (formerly, IDFC-SSKI SECURITIES LIMITED) (“the Company”) as at March 31, 2010, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditor’s Report) Order, 2003 (CARO) issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. 4. Further to our comments in the Annexure referred to in paragraph 3 above, we report as follows: (a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; (b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books; (c) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account;
FOR DELOITTE HASKINS & SELLS Chartered Accountants (Registration No. 117366W)
NALIN M. SHAH
(d) in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956; (e) in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2010;
(ii) in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date and (iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date. 5. On the basis of the written representations received from the Directors as on 31st March, 2010 taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March, 2010 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956.
Partner Membership No. 15860 Mumbai April 21, 2010
78
I D F C A N N U A L R E P O R T 09 –10
ANNEXURE
(Referred to in paragraph 3 of our report of even date) (i) Having regard to the nature of the Company’s business/activities/ result and transactions, etc. and clauses (ii), (vi), (viii), (x), (xii), (xiii), (xiv), (xv), (xvi), (xvii), (xviii), (xix) and (xx) of CARO are not applicable. (ii) In respect of its fixed assets: (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of the fixed assets. (b) The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and 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.
TO THE AUDITOR’S REPORT
(vii) In our opinion, the internal audit functions carried out during the year by a firm of Chartered Accountants appointed by the Management have been commensurate with the size of the Company and the nature of its business. (viii) According to the information and explanations given to us in respect of statutory dues: (a) The Company has generally been regular in depositing undisputed dues, including Provident Fund, Income-tax, Service Tax, Cess and other material statutory dues applicable to it with the appropriate authorities. (b) There were no undisputed amounts payable in respect of Incometax, Service tax and other material statutory dues in arrears as at 31st March, 2010 for a period of more than six months from the date they became payable. (c) Details of dues of Income-tax which have not been deposited as on 31st March, 2010 on account of disputes are given below:
NATURE FORUM WHERE OF DISPUTE IS DUES PENDING Income Tax Appellate Tribunal Income Tax Appellate Tribunal Income Tax Income Act, 1961 Tax Income Tax Appellate Tribunal High Court Commissioner of Income Tax (Appeals) A.Y. 2001-02 A.Y. 2007-08 6,316,859 6,451,227 A.Y. 1999-00 3,050,631 PERIOD TO WHICH THE AMOUNT RELATES A.Y. 1997-98 A.Y. 1998-99 42,334,898 AMOUNT INVOLVED (RUPEES) 42,48,070
STATUTE
(iii) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956. (iv) In respect of loans, secured or unsecured, taken by the Company from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956, according to the information and explanations given to us: (a) The Company has taken loans aggregating Rs. 5,819,000,000 from one party during the year. At the year-end, there was no amount outstanding of such loans taken and the maximum amount involved at any time during the year was Rs. 1,600,000,000. (b) The rate of interest and other terms and conditions of such loans are, in our opinion, prima facie not prejudicial to the interests of the Company. (c) The payments of principal amounts and interest in respect of such loans are regular/as per stipulations.
(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 and financial institutions. (x) To the best of our knowledge and according to the information and explanations given to us, no fraud by or on the Company has been noticed or reported during the year.
FOR DELOITTE HASKINS & SELLS Chartered Accountants (Registration No. 117366W)
NALIN M. SHAH
(v) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of fixed assets and the sale of services. During the course of our audit, we have not observed any major weakness in such internal control system. (vi) To the best of our knowledge and belief and according to the information and explanations given to us, there were no contracts or arrangements that needed to be entered in the Register maintained under Section 301 of the Companies Act, 1956.
Partner Membership No. 15860 Mumbai April 21, 2010
I D F C S E C U R I T I E S L I M I T E D ( F O R M E R LY , I D F C - S S K I S E C U R I T I E S L I M I T E D )
79
BALANCE SHEET
RUPEES SCHEDULE RUPEES
AS AT MARCH 31, 2010
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
SOURCES OF FUNDS
Shareholders’ Funds Share Capital Reserves and Surplus 1 2 141,372,000 1,165,743,145 1,307,115,145 141,372,000 929,081,359 1,070,453,359
APPLICATION OF FUNDS
Fixed Assets Gross Block Less : Depreciation and Amortisation Add : Capital Work - in - Progress Investments Deferred Tax Asset (See Schedule 15, Note 11) Current Assets, Loans and Advances Sundry Debtors Cash and Bank Balances Loans and Advances Less : Current Liabilities and Provisions Current Liabilities Provisions Net Current Assets Notes to the Accounts Schedules 1 to 15 form an integral part of the accounts 15 8 9 392,991,423 5,257,273 398,248,696 186,553,272 1,307,115,145 191,994,071 3,916,773 195,910,844 453,363,176 1,070,453,359 5 6 7 46,148,251 396,127,030 142,526,687 584,801,968 18,112,216 482,252,348 148,909,456 649,274,020 4 3 32,290,308 22,097,690 10,192,618 520,000 10,712,618 1,102,749,255 7,100,000 37,768,937 23,165,855 14,603,082 520,000 15,123,082 593,867,101 8,100,000
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants
NALIN M . S H A H RAJIV B. LALL TAPASIJE MISHRA
FOR AND ON BEHALF OF THE BOARD
Partner
Director
AMOL RANADE
Director
Mumbai | April 21, 2010
80 I D F C A N N U A L R E P O R T 09 –10
Company Secretary
PROFIT AND LOSS ACCOUNT
RUPPES
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
SCHEDULE
APRIL 1, 2009 TO MARCH 31, 2010 701,962,708 279,168,262 10 66,167,171 1,047,298,141
APRIL 1, 2008 TO MARCH 31, 2009 547,037,552 96,474,863 70,173,035 713,685,450 13,726,570 311,731,577 34,943,751 95,002,938 1,063,206 7,761,033
INCOME
Brokerage Fee Income (Advisory)(See Schedule 15, Note 5) Other Income
EXPENDITURE
Interest & Other Charges Staff Expenses Establishment Expenses Other Expenses Provision for Doubtful Deposits Depreciation & Amortisation PROFIT BEFORE TAXATION Less : Provision for Taxation Current Tax (See Schedule 15, Note 13) Add: Deferred Tax (See Schedule 15, Note 11) Add: Fringe Benefit Tax Add: Short provision for Income Tax PROFIT AFTER TAXATION Add : Balance as per last Balance Sheet AVAILABLE FOR APPROPRIATION Earning per share (Face Value Rs. 10) (See Schedule 15, Note 10) Basic and Diluted Notes to the Accounts Schedules 1 to 15 form an integral part of the Accounts 15 115,200,000 1,000,000 6,026,067 122,226,067 236,661,786 745,789,782 982,451,568 16.74 79,300,000 300,000 2,640,000 2,578,179 84,818,179 164,638,196 581,151,586 745,789,782 11.65 11 12 13 14 10,440,940 537,798,479 25,920,368 106,700,095 1,800,000 5,750,406 688,410,288 358,887,853
464,229,075 249,456,375
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants
NALIN M . S H A H RAJIV B. LALL TAPASIJE MISHRA
FOR AND ON BEHALF OF THE BOARD
Partner
Director
AMOL RANADE
Director
Mumbai | April 21, 2010
Company Secretary
I D F C S E C U R I T I E S L I M I T E D ( F O R M E R LY , I D F C - S S K I S E C U R I T I E S L I M I T E D ) 81
C A S H F L OW ST AT E M E N T
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 CASH FLOW FROM OPERATING ACTIVITIES: Profit before Tax Adjustments for Depreciation and Amortisation Interest Income Provision for Gratuity Dividend Income Loss on Sale /Discarding of Fixed Assets B OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES Changes in Sundry Debtors Loans and Advances Fixed Deposit with Scheduled Banks under Lien Current Liabilties D Cash generated from Operations Taxes Paid NET CASH FROM OPERATING ACTIVITIES CASH FLOW FROM INVESTING ACTIVITIES Purchase of Fixed assets Purchase of Investments Proceeeds from Sale of Investments Proceeds from sale of Fixed Assets Interest received Dividend received NET CASH USED IN INVESTING ACTIVITIES CASH FLOW FROM FINANCING ACTIVITIES Proceeds from unsecured loans Repayments of unsecured loans NET CASH USED IN FINANCING ACTIVITIES : NET INCREASE/(DECREASE) IN CASH EQUIVALENTS INCREASE /(DECREASE)IN CASH EQUIVALENTS Cash and Cash Equivalents as at the beginning of the year (see Note below) Cash and Cash Equivalents as at the end of the year (see Note below) Note : Cash and Cash Equivalents as per Schedule 6 Less: Fixed Deposits Under Lien Cash and Cash Equivalents as above 396,127,030 264,902,716 131,224,314 217,702,348 131,224,314 (86,478,034) H I=F+G+H (86,478,034) G (2,811,623) (964,434,605) 455,552,451 35,849 39,875,584 26,184,716 (445,597,628) F E=C+D (28,036,035) 22,129,601 (352,716) 200,997,352 194,738,202 496,092,493 (136,972,899) 359,119,594 C=A+B 5,750,406 (39,875,584) 1,340,500 (26,184,716) 1,435,832 (57,533,562) 301,354,291 A 358,887,853
APRIL 1, 2008 TO MARCH 31, 2009 249,456,375 7,761,033 (51,446,226) (6,986) (17,521,090) 81,505 (61,131,764) 188,324,611 59,734,365 (23,913,262) 317,296,630 (180,749,988) 172,367,745 360,692,356 (83,421,201) 277,271,155 (6,698,372) (455,552,451) 281,208,340 133,385 51,446,226 17,521,090 (111,941,782) 1,940,000,000 (1,940,000,000) 165,329,373 52,372,975 217,702,348 165,329,373 482,252,348 264,550,000 217,702,348
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants
NALIN M . S H A H RAJIV B. LALL TAPASIJE MISHRA
FOR AND ON BEHALF OF THE BOARD
Partner
Director
AMOL RANADE
Director
Mumbai | April 21, 2010
82 I D F C A N N U A L R E P O R T 09 –10
Company Secretary
SCHEDULES
SCHEDULE 1 Share Capital
AUTHORISED: 20,000,000 equity shares of Rs 10 each ISSUED, SUBSCRIBED AND PAID-UP: 14,137,200 equity shares of Rs 10 each fully paid (All the above Equity Shares are held by Infrastructure Development Finance Company Limited, the holding company and its nominees)(Previous year 11,309,443 Equity Shares)
ANNEXED TO AND FORMING PART OF THE ACCOUNTS
RUPEES
RUPEES
AS AT MARCH 31, 2010 200,000,000 141,372,000 141,372,000
AS AT MARCH 31, 2009 200,000,000 141,372,000 141,372,000
SCHEDULE 2 Reserves and Surplus
Securities Premium Account General Reserve Profit and Loss Account
RUPEES
RUPEES
AS AT MARCH 31, 2010 142,578,000 40,713,577 982,451,568 1,165,743,145
AS AT MARCH 31, 2009 142,578,000 40,713,577 745,789,782 929,081,359
SCHEDULE 3 Fixed Assets
DESCRIPTION As at April 1, 2009 GROSS BLOCK As at March 31, 2010 Additions Deletions DEPRECIATION AND AMORTISATION As at March 31, 2010 Charge for the year As at April 1, 2009 Deletions As at March 31, 2010
RUPEES
NET BLOCK As at March 31, 2009 950,170 2,845,780 6,128,198 1,072,813 3,606,121
83
TANGIBLE Furniture and Fittings Office Equipments Computer Hardware INTANGIBLE Tenancy Rights Computer Software Total Previous Year 1,083,200 7,115,903 37,768,937 31,545,267 521,841 6,698,372 52,000 1,083,200 7,585,744 10,387 3,509,782 23,165,855 15,664,634 108,320 2,099,232 5,750,406 7,761,033 44,600 6,818,571 259,812 118,707 5,564,414 22,097,690 23,165,855 964,493 2,021,330 14,603,082 6,334,294 5,972,876 17,262,664 - 5,949,294 1,602,115 1,586,463 687,667 385,000 5,988,528 5,384,124 3,127,096 11,134,466 268,353 704,444 2,570,057 5,474,888 708,054 591,029 177,589 3,123,486 13,113,494 207,411 2,865,042 4,134,342
702,495 17,247,836
2,811,623 8,290,252 32,290,308 474,702 37,768,937
10,192,618 14,603,082
I D F C S E C U R I T I E S L I M I T E D ( F O R M E R LY , I D F C - S S K I S E C U R I T I E S L I M I T E D )
SCHEDULE 4 Investments (Unquoted)
I. LONG TERM Equity Shares (Fully paid) NUMBER OF SHARES Subsidiaries (Trade) IDFC Capital Limited (Formerly IDFC -SSKI Limited) IDFC -SSKI Stock Broking Limited Others Bombay Stock Exchange Limited TOTAL LONG TERM INVESTMENTS II CURRENT (NON-TRADE) Mutual Funds Units NUMBER OF UNITS IDFC Money Manager Fund Treasury Plan C Daily Dividend [Net Asset Value Rs.964,434,605; (Previous year Rs.455,552,451)] TOTAL INVESTMENTS 96,428,996.109 FACE VALUE
RUPEES
RUPEES
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
FACE VALUE
RUPEES
6,035,220 1,500,000 130,000
10 10 1
123,304,650 15,000,000 10,000 138,314,650
123,304,650 15,000,000 10,000 138,314,650
10
964,434,605
455,552,451
1,102,749,255
593,867,101
SCHEDULE 5 Sundry Debtors (Unsecured)
CONSIDERED GOOD Over six months Others (See Schedule 15, Note 4) CONSIDERED DOUBTFUL Over six months Less : Provision for Doubtful Debts
RUPEES
RUPEES
RUPEES
AS AT MARCH 31, 2010 40,626 46,107,625 46,148,251 3,299,896 49,448,147 3,299,896 46,148,251
AS AT MARCH 31, 2009 18,112,216 18,112,216 3,299,896 21,412,112 3,299,896 18,112,216
SCHEDULE 6 Cash and Bank Balances
- Cash Balance with Scheduled Banks - in Current Accounts - in Deposit Accounts - in Deposit Accounts (Under Lien)
RUPEES
RUPEES
RUPEES
AS AT MARCH 31, 2010 19,662 29,762,504 101,442,148 264,902,716 396,107,368 396,127,030
AS AT MARCH 31, 2009 16,208 10,988,130 206,698,010 264,550,000 482,236,140 482,252,348
84
I D F C A N N U A L R E P O R T 09 –10
SCHEDULE 7 Loans and Advances (Unsecured)
CONSIDERED GOOD Interest accrued on Deposits Advances recoverable in cash or in kind or for value to be received Deposits with Stock Exchanges Other Deposits Advance payment of Income Tax (Net of provision) CONSIDERED DOUBTFUL Other Deposits Less : Provision for Doubtful Deposits
RUPEES
RUPEES
RUPEES
AS AT MARCH 31, 2010 21,253,637 9,914,079 30,652,200 5,904,920 74,801,851 142,526,687 1,800,000 144,326,687 1,800,000 142,526,687
AS AT MARCH 31, 2009 20,699,588 7,007,729 40,252,200 21,894,920 59,055,019 148,909,456 – 148,909,456 – 148,909,456
SCHEDULE 8 Current Liabilities
Sundry Creditors - Micro and Small Enterprises (See schedule 15, Note 15) Sundry Creditors - Others Other Liabilities
RUPEES
RUPEES
AS AT MARCH 31, 2010 – 362,588,700 30,402,723 392,991,423
AS AT MARCH 31, 2009 8,704 159,215,163 32,770,204 191,994,071
SCHEDULE 9 Provisions
Provision for Employees Benifit (See schedule 15, Note 6)
RUPEES
RUPEES
AS AT MARCH 31, 2010 5,257,273 5,257,273
AS AT MARCH 31, 2009 3,916,773 3,916,773
RUPEES
SCHEDULE 10 Other Income
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Interest on Bank Deposits Tax Deducted at source Rs 5,466,336; (Previous year Rs 10,458,963) Interest on Income Tax Refund Dividend On Current Investments (Non-Trade) Dividend On Long Term Investments (Non-Trade) Gain on Foreign Exchange Fluctuation (Net) Miscellaneous Income 25,664,716 520,000 106,871 66,167,171 39,875,584
APRIL 1, 2008 TO MARCH 31, 2009 49,348,250 2,097,976 17,221,090 300,000 967,774 237,945 70,173,035
RUPEES
SCHEDULE 11 Interest and Other Charges
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Other Interest Other Charges 3,813,215 6,627,725 10,440,940
APRIL 1, 2008 TO MARCH 31, 2009 3,716,864 10,009,706 13,726,570
RUPEES
SCHEDULE 12 Staff Expenses
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Salaries, Wages and Bonus Contribution to Provident and Other Funds (See schedule 15, Note 6) [Including provision for gratuity Rs.19,30,073; (Previous Year Rs.18,26,829)] Staff Welfare Expenses 6,457,231 537,798,479 517,782,313 13,558,935
APRIL 1, 2008 TO MARCH 31, 2009 296,047,102 11,886,506 3,797,969 311,731,577
I D F C S E C U R I T I E S L I M I T E D ( F O R M E R LY , I D F C - S S K I S E C U R I T I E S L I M I T E D )
85
SCHEDULE 13 Establishment Expenses
RUPEES
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Rent Rates & Taxes Electricity Repairs and Maintenance Building Equipment Others Insurance Charges 213,070 1,977,503 976,295 3,166,868 799,344 25,920,368 17,347,863 657,117 3,949,176
APRIL 1, 2008 TO MARCH 31, 2009 25,582,838 4,470,526 140,518 2,606,531 740,201 3,487,250 1,403,137 34,943,751
SCHEDULE 14 Other Expenses
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Travelling and Conveyance Printing and Stationery Postage, Telephone and Fax Advertising and Publicity Membership and Subscription Professional Fees Loss on Foreign Exchange Fluctuation (Net) Loss on Sale / Discarding of Fixed Assets (Net) Other Operating Expenses Loss on Sale of Misdeal Stock (Net) Miscellaneous Expenses Directors’ Commission Directors’ Sitting Fees Auditors’ Remuneration (See schedule 15, Note 8) 29,080,907 2,669,697 11,811,090 13,791,431 31,150,766 9,828,562 341,457 1,435,832 800,834 2,000,564 1,015,051 – 140,000 2,633,904 106,700,095
APRIL 1, 2008 TO MARCH 31, 2009 21,839,360 2,108,874 9,753,455 17,060,868 27,489,189 2,209,492 – 81,505 3,209,137 5,458,325 1,925,733 1,084,000 20,000 2,763,000 95,002,938
86
I D F C A N N U A L R E P O R T 09 –10
SCHEDULE 15: Notes Forming Part of the Accounts
BACKGROUND
IDFC Securities Limited (formerly IDFC - SSKI Securities Limited) is a wholly owned subsidiary of Infrastructure Development Finance Company Limited (“IDFC”).
1 Significant Accounting Policies
A. Accounting convention
These accounts have been prepared in accordance with historical cost convention, applicable Accounting Standards notified by the Companies (Accounting Standards) Rules, 2006 and relevant provisions of the Companies Act, 1956.
B. Use of Estimates
The Company adopts the accrual concept in the preparation of the accounts. The preparation of financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates. Assets and liabilities are recorded at historical cost to the Company. These costs are not adjusted to reflect the changing value in the purchasing power of money.
C. Revenue recognition
(a) Income from brokerage activities is recognised on trade date basis and is net of statutory payments. (b) Interest income is recognised on an accrual basis. (c) Fees are recognised when reasonable right of recovery is established, the revenue can be reliably measured and there is no uncertainty regarding recoverability. (d) Dividend is recognised when the right to receive is established.
D. Fixed assets and Intangible Assets
Fixed assets are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated depreciation. Intangible Assets comprising of system software are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated amortisation. Any technology support cost or annual maintenance cost for such software is charged annually to the Profit and Loss Account. Consideration paid for transfer of tenancy rights is capitalised as an Intangible Asset.
E. Depreciation
¬
Tangible Assets
Depreciation on Fixed Assets, excluding certain electronic items, is provided on the written down value method, at the rates prescribed by Schedule XIV of the Companies Act, 1956. Certain electronic items are depreciated over a period of two years on straight line method based on the Management’s estimate of the useful life of assets. Depreciation on additions during the year is provided on a pro-rata basis. Assets costing less than Rs 5,000 each are written off in the year of capitalisation.
¬
Intangible Assets
Computer software is amortised over a period of 3 years and Tenancy rights are amortised over a period of 10 years by using straight-line method. The Company has regular programme of evaluating useful life of its assets.
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 the carrying value other than temporary in nature is provided for. Current investments are valued at cost or market/fair value, whichever is lower. In case of investments in units of mutual funds, the net asset value of units has been considered as the market value.
G. Misdeal stock
Misdeal stock comprises of stock that has devolved on the Company due to erroneous execution of trades on behalf of the institutional clients in the normal course of business. These securities are valued at lower of cost or market value/realisable value on an individual basis. Any valuation loss based on the above is debited to the Profit and Loss Account.
H. Employee benefits
DEFINED CONTRIBUTION PLANS
The Company’s contribution to Provident Fund is deposited with Regional Provident Fund Commissioner and is charged to the Profit and Loss Account every year.
¬
The Company participates in the Holding Company’s Superannuation policy, for future payments of Superannuation and the Company’s contribution paid / payable during the year is charged to the Profit & Loss Account every year.
¬ I D F C S E C U R I T I E S L I M I T E D ( F O R M E R LY , I D F C - S S K I S E C U R I T I E S L I M I T E D ) 87
DEFINED BENEFIT PLAN
The net present value of the Company’s obligation towards Gratuity to employees is funded and actuarially determined as at the Balance Sheet date based on the Projected Unit Credit Method. Actuarial gains and losses are recognised in the Profit & Loss Account.
¬
OTHER BENEFITS
¬
The employees are required to avail of the leave entitlement during the financial year and are not entitled to any encashment.
I. Income - Tax
The accounting treatment for income-tax in respect of the Company’s income is based on the Accounting Standard 22 on ‘Accounting for Taxes on Income’ as notified by the Companies (Accounting Standards) Rules, 2006. The provision made for income-tax in the accounts comprises both, the current tax and the deferred tax. The deferred tax assets and liabilities for the year, arising on account of timing differences, are recognised in the Profit & Loss Account and the cumulative effect thereof is reflected in the Balance Sheet. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax asset is recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the Company has unabsorbed depreciation or carried forward losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that the same can be realised against future taxable profits.
J. Contingencies
The Company creates a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
K. Foreign Currency Transactions
Foreign currency transactions are accounted at the exchange rates prevailing on the date of the transaction. Foreign currency monetary items outstanding as at the Balance Sheet date are reported using the closing rate. Gains and losses resulting from the settlement of such transactions and translation of monetary assets and liabilities denominated in foreign currencies are recognised in the Profit and Loss Account.
2 Contingent liabilities not provided for in respect of :
PARTICULARS (a) Claims not acknowledged as debts in respect of : Income-tax demands disputed by the Company (net of amounts provided). The matters in dispute are under appeal. The demands have been paid / adjusted and will be received as refund if the matters are decided in favour of the Company (b) Counter guarantees given by Company to various banks 492,300,000 492,300,000 62,401,685 31,351,510 CURRENT YEAR
(RUPEES)
PREVIOUS YEAR
(RUPEES)
3 IDFC Capital Limited (formerly, IDFC – SSKI Limited) has given Guarantee in form of its Fixed Deposit lien with HDFC Bank towards
Overdraft facility for Rs. 291,533,838 (previous year Rs. 300,000,000).
4 Sundry Debtors include Rs. 28,101,773 (Previous Year Rs. NIL) receivable from a Subsidiary Company. 5 The Company has an arrangement with its Wholly Owned Subsidiary, IDFC Capital Limited (formerly IDFC-SSKI Limited) to provide research, financial advisory and other distribution services on some of the assignments/mandates. In consideration of these services, the Company receives a share from the Subsidiary Company in the ratio mutually agreed upon. An amount of Rs.254,042,007 (Previous year Rs 62,297,486) has been shared during the year in respect of the above services and the same has been included under Fee Income (Advisory). 6 Employee Benefits
(i) In accordance with Accounting Standard –AS15 on “Employee Benefits”, notified by the Companies (Accounting Standards) Rules 2006, the following disclosures have been made: The Company has recognised the following amounts in the Profit and Loss Account towards contribution to defined contribution plans which are included under Contribution to Provident and Other Funds:
CURRENT YEAR Rupees Provident Fund Superannuation Fund 10,868,862 760,000 PREVIOUS YEAR Rupees 10,059,677 -
88
I D F C A N N U A L R E P O R T 09 –10
(ii) The details of the Company’s post-retirement benefit plans for gratuity for its employees are given below which is certified by the actuary and relied upon by the auditors:
RUPEES
PARTICULARS CHANGE IN THE BENEFIT OBLIGATIONS: Liability at the beginning of the year Current Service cost Interest Cost Actuarial Gain Liability at the end of the year FAIR VALUE OF PLAN ASSETS: Fair Value of Plan Assets at the beginning of the year Expected Return on Plan Assets Contributions Actuarial loss on Plan Assets Fair Value of Plan Assets at the end of the year Total Actuarial Gain to be recognized ACTUAL RETURN ON PLAN ASSETS: Expected Return on Plan Assets Actuarial loss on Plan Assets Actual Return on Plan Assets AMOUNT RECOGNISED IN THE BALANCE SHEET: Liability at the end of the year Fair Value of Plan Assets at the end of the year Amount recognised in the Balance Sheet under “Provision for Employee Benefits” EXPENSES RECOGNISED IN THE PROFIT & LOSS ACCOUNT UNDER STAFF EXPENSES Current Service cost Interest Cost Expected Return on Plan Assets Net Actuarial Loss to be recognised Expense recognised in the Profit & Loss Account under staff expenses RECONCILIATION OF THE LIABILITY RECOGNISED IN THE BALANCE SHEET Opening Net Liability Expense recognised Contribution by the Company Amount recognised in the Balance Sheet under “Provision for Employee Benefits” Expected Employer’s Contribution next year PARTICULARS EXPERIENCE ADJUSTMENTS Defined Benefit Obligation Plan Assets Deficit / (Surplus) Experience Adjustment on Plan Liabilities Experience Adjustment on Plan Assets PARTICULARS Investment Pattern Insurer Managed Fund Principal Assumptions Discount rate Return on Plan Assets Salary Escalation Rate 8.10 8 8 10,993,766 5,736,494 5,257,273 5,986,757 202,914 AS AT 31.03.10 % 100 AS AT 31.03.10
AS AT 31.03.10 8,745,683 5,304,017 1,123,976 4,179,910 10,993,766 4,828,911 520,924 589,573 202,914 5,736,494 3,976,996 520,924 202,914 318,010 10,993,766 5,736,494 5,257,273 5,304,017 1,123,976 520,924 3,976,996 1,930,073 3,916,773 1,930,073 589,573 5,257,273 8,000,000 AS AT 31.03.09 8,745,683 4,828,911 3,916,772 383,113 12,514 AS AT 31.03.09 % 100 8 8 6
AS AT 31.03.09 6,572,745 2,350,206 736,143 913,411 8,745,683 2,648,986 358,624 1,833,815 12,514 4,828,911 900,897 358,624 12,514 346,110 8,745,683 4,828,911 3,916,773 2,350,206 736,143 358,624 900,897 1,826,829 3,923,759 1,826,829 1,833,815 3,916,773 3,366,000 AS AT 31.03.08 6,572,745 2,648,986 (3,923,759) – –
As the Gratuity fund is managed by Life Insurance Company details of investments are not available with the Company. The estimates of future salary increase, considered in the actuarial valuation takes account of inflation, seniority, promotion and other relevant factors.
I D F C S E C U R I T I E S L I M I T E D ( F O R M E R LY , I D F C - S S K I S E C U R I T I E S L I M I T E D )
89
7 Expenditure in foreign currencies :
RUPEES
PARTICULARS Professional Fees Others Total EARNINGS IN FOREIGN CURRENCIES :
CURRENT YEAR 189,461 8,214,002 8,403,463
PREVIOUS YEAR – 9,180,850 9,180,850
RUPEES
PARTICULARS Advisory Fees Others Total
CURRENT YEAR 25,126,255 106,871 25,233,126
PREVIOUS YEAR 34,177,378 28,924 34,206,302
8 Auditors’ Remuneration:
RUPEES
PARTICULARS Audit Fees Tax Audit Fees Taxation Services Other Services Out of Pocket Expenses Service tax Total Less: Service tax set off claimed
CURRENT YEAR 1,200,000 400,000 200,000 825,000 8,904 271,292 2,905,196 271,292 2,633,904
PREVIOUS YEAR 1,200,000 800,000 200,000 563,000 304,427 3,067,427 304,427 2,763,000
9 Managerial Remuneration:
RUPEES
PARTICULARS Commission to Non-Executive Director Total
CURRENT YEAR -
PREVIOUS YEAR 1,084,000 1,084,000
Computation of Net Profit in accordance with Section 349 of the Companies Act, 1956 in respect of Commission payable to Non- Executive Director.
PARTICULARS Profit Before Tax Add: Directors’ Fees and Commission Provision for Doubtful Debts Net Profit as per Section 349 of the Companies Act, 1956 Maximum permissible commission to all Non-Executive Directors @ 1% Restricted to 1,104,000 1,063,206 2,167,206 251,623,581 2,516,236 1,084,000 CURRENT YEAR RUPEES
PREVIOUS YEAR 249,456,375
10 In accordance with the Accounting Standard 20 on ‘Earnings Per Share’ as notified by the Companies (Accounting Standards) Rules, 2006, the Earnings Per Share has been computed as under:
RUPEES
PARTICULARS Net Profit attributable to equity shareholders (A) Number of equity shares issued (B) Basic and Diluted Earnings per share (EPS) [A/B]
CURRENT YEAR 236,661,786 14,137,200 16.74
PREVIOUS YEAR 164,638,196 14,137,200 11.65
90
I D F C A N N U A L R E P O R T 09 –10
11 Deferred Tax:
As per Accounting Standard 22 relating to ‘Accounting for Taxes on Income’ as notified by the Companies (Accounting Standards) Rules, 2006, the Company has taken debit of Rs. 1,000,000 (Previous Year Debit Rs. 300,000) in the Profit & Loss Account towards deferred tax liability (net) on account of timing differences. The major components of deferred tax assets arising on account of timing differences are:
RUPEES
PARTICULARS DEFERRED TAX ASSET Depreciation Provisions TOTAL DEFERRED TAX ASSET
CURRENT YEAR 3,624,132 3,475,868 7,100,000 7,100,000
PREVIOUS YEAR 5,647,054 2,452,946 8,100,000 8,100,000
12 Segment Reporting:
The Company’s business is to provide broking services to its clients in the capital market in India. All other activities of the Company revolve around the main business. As such, there are no reportable segments as per the Accounting Standard on ‘Segment Reporting’ (AS-17), as notified by the Companies (Accounting Standards) Rules, 2006.
13 Provision for income tax for the year includes interest of Rs.120,076 (previous year Rs.125,905) under section 234C of Income Tax Act,1961. 14 Related party disclosures:
As per the Accounting Standard 18 on ‘Related Party Disclosures’ as notified by the Companies (Accounting Standards) Rules, 2006, the related parties of the Company are as follows:
I. HOLDING COMPANY:
Infrastructure Development Finance Company Limited
II. SUBSIDIARY COMPANIES:
IDFC Capital Limited (formerly, IDFC – SSKI Limited) IDFC – SSKI Stock Broking Limited
III. THERE ARE NO TRANSACTIONS WITH FELLOW SUBSIDIARIES:
The nature and volume of transactions carried out with the above related parties in the ordinary course of business:
RUPEES
NAME OF RELATED PARTY AND NATURE OF RELATIONSHIP (A) HOLDING COMPANY Infrastructure Development Finance Company Limited
PARTICULARS
CURRENT YEAR
PREVIOUS YEAR
Inter Corporate Deposits placed and redeemed Interest paid on Inter Corporate Deposits Brokerage Received
5,819,000,000 2,224,889 5,672,744 254,042,007 28,101,773
1,940,000,000 1,804,932 2,076,845 62,297,486 -
(B) SUBSIDIARY COMPANY IDFC Capital Limited (formerly, IDFC-SSKI Limited) Debtors outstanding balance Fees income
15 There is no interest paid/payable during the year by the Company to suppliers covered under the Micro, Small and Medium Enterprises Development Act, 2006. The above information takes into account only those suppliers who have responded to the enquires made by the Company for this purpose. 16 Prior year comparatives:
The prior year comparatives have been regrouped, recasted and reclassified wherever necessary to confirm with current year’s presentation.
FOR AND ON BEHALF OF THE BOARD
RAJIV B. LALL
TAPASIJE MISHRA
Director
AMOL RANADE
Director
Mumbai | April 21, 2010
Company Secretary
I D F C S E C U R I T I E S L I M I T E D ( F O R M E R LY , I D F C - S S K I S E C U R I T I E S L I M I T E D ) 91
B A L A N C E S H E E T A B ST R A CT
AND COMPANY’S GENERAL BUSINESS PROFILE
I.
REGISTRATION DETAILS Registration No. State Code Balance Sheet Date U 1 3 9 1 1 0 3 2 0 1 0 9 9 9 9 M H 1 9 9 3 P L C 0 7 1 8 6 5
II.
CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000) Public Issue N I L Right Issue N I L
Bonus Issue N III. I L
Private Placement N I L
POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000) Total Liabilities 1 SOURCES OF FUNDS Paid-up Capital 1 4 1 3 7 2 1 1 Reserves and Surplus 6 5 7 4 3 7 0 5 3 6 4 1 7 0 5 Total Assets 3 6 4
Secured Loans N APPLICATION OF FUNDS Net Fixed Assets 1 0 7 1 3 1 1 0 I L
Unsecured Loans N I L
Investments 2 7 4 9
Net Current Assets 1 8 6 5 5 3
Miscelleneous Expenditure N I L
Deferred Tax Asset (Net) 7 IV. 1 0 0
PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000) Turnover / Income 1 0 4 7 2 9 8 6 8 Total Expenditure 8 4 1 0
Profit Before Tax 3 5 8 8 8 8 2 3
Profit After Tax 6 6 6 2
Earnings per Share (in Rs.) 1 V. 6 . 7 4
Dividend % N I L
GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS) Item Code No. (ITC Code) Product Description N I I N L S T I T U T I O N A L B R O K I N G
92
I D F C A N N U A L R E P O R T 09 –10
ST AT E M E N T P U R S U A N T T O S E CT I O N 2 1 2
NAME OF SUBSIDIARY COMPANY IDFC CAPITAL LIMITED IDFC - SSKI STOCK BROKING LIMITED IDFC CAPITAL (SINGAPORE) PTE. LTD.
OF THE COMPANIES ACT, 1956
IDFC FUND OF FUNDS LIMITED
IDFC GENERAL PARTNERS LIMITED
1 2
Financial year of the Subsidiary Companies ended on Equity Shares of Rs.10 each a) Number of Shares b) Extent of Holding
31st March 2010 31st March 2010 31st March 2010 31st March 2010 31st March 2010 6,035,220 100% 1,500,000 100% 6,655,000 100% 6,505,504.18 100% 10,000 100%
3
Net aggregate amount of Profit/ (Losses) of the Subsidiary, so far as they concern members of IDFC Securities Limited i. For the Financial Year of the Subsidiary Nil 281,187,231 Nil 776,662 Nil (110,802,874) Nil (1,153,369) Nil Nil a) Dealt with in the accounts of the Holding Company. b) Not dealt with in the accounts of the Holding Company. ii. For the previous financial years of the Subsidiary since it became the Holding Company’s Subsidiary. a) Dealt with in the accounts of the Holding Company. b) Not dealt with in the accounts of the Holding Company. Nil 145,444,160 Nil 729,645 Nil (110,016,386) Nil Nil Nil Nil
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
RAJIV B. LALL
TAPASIJE MISHRA
Director Mumbai April 21, 2010
Director
I D F C S E C U R I T I E S L I M I T E D ( F O R M E R LY , I D F C - S S K I S E C U R I T I E S L I M I T E D )
93
limited*
? ? ? ? ? ?
IDFC capital
B O A R D O F D I R E CTO R S
Dr. Rajiv B. Lall Mr. Vikram Limaye Mr. L. K. Narayan Mr. Naishadh Paleja Mr. Pathik Gandotra Mr. Mahehdra N. Shah
A U D I TO R S
?
Deloitte Haskins & Sells Chartered Accountants
P R I N C I PA L B A N K E R S
?
HDFC Bank Limited
R E G I ST E R E D O F F I C E
Naman Chambers, C-32, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai 400 051. TEL +91 22 66222600 FAX +91 22 66222501
* Formerly known as IDFC - SSKI Limited
94 I D F C A N N U A L R E P O R T 09 –10
D I R E CT O R S ’ R E P O R T
TO THE MEMBERS
Your directors have pleasure in presenting the Fifteenth Annual Report together with the audited accounts for the year ended March 31, 2010. During the year, IDFC Capital Limited has further floated two wholly owned subsidiary companies namely, IDFC General Partners Limited and IDFC Fund of Funds Limited. As required under the provisions of section 212 of the Companies Act, 1956, a statement of holding company’s interest in the subsidiary companies is attached to this report.
FINANCIAL RESULTS
RUPEES
YEAR ENDED MARCH 31, 2010 Gross Revenue Operating Expenses (including Employee Costs) Profit before Depreciation, Interest and Tax Depreciation/Amortisation Net Profit before Tax Provision for Taxation Current Tax Deferred Tax Fringe Benefit Tax Short provision for Income Tax Profit/ (Loss) after tax 144,700,000 14,750,000 – (616,563) 281,187,231 1,962,346 440,020,668 441,983,014 847,838,496 405,855,482
YEAR ENDED MARCH 31, 2009 464,060,849 258,857,291 205,203,558 3,606,992 201,596,566 70,000,000 (15,100,000) 920,000 332,406 145,444,160
SHAREHOLDERS UPDATE
The Company had shifted its Registered Office from 803/804, Tulsiani Chambers, Nariman Point, Mumbai 400 021 to Naman Chambers, C-32, G- Block, Bandra- Kurla Complex, Bandra (East), Mumbai 400 051 with effect from December 25, 2009. During the financial year, the Company had changed its name from IDFC – SSKI Limited to IDFC Capital Limited by passing special resolution at the Extraordinary General Meeting held on February 16, 2010 and the change of name was effective after obtaining fresh certificate of incorporation consequent to the name change from Registrar of Companies with effect from March 12, 2010. The Company is wholly-owned subsidiary of Infrastructure Development Finance Company Limited (IDFC), the name change was done to reflect parentage of IDFC. The word "Capital" is being used in the name to indicate the important business activity of the Company.
FY2010: OVERVIEW
FY 2010 fee based revenues increased 65% year on year (aggregating to Rs. 85 crore) on the back of a strong rebound across equity capital markets. The pace of corporate fund raising across debt and equity was hectic as the liquidity environment improved. The firm increased its market shares in each of its products. We dominated bulge bracket investment banks and finished the year as the 2nd largest Investment Bank by number of deals (16) and the 3rd largest Investment Bank by equity capital raised (Rs. 15,067 crore) (Prime Database) for the private sector. In Debt syndication we raised over Rs 8,600 crore in 7 transactions and were the 4th largest Lead Arranger of Debt in India for 2009 (Bloomberg).
DIVIDEND
The Directors do not recommend any dividend for the year ended March 31, 2010.
DIRECTORS
Appointment of Mr. L K Narayan as a Director was approved at the Annual General Meeting held on July 13, 2009. Dr. Rajiv Lall and Mr. Vikram Limaye are retiring by rotation and being eligible, offer themselves for re-appointment at the ensuing Annual General Meeting.
AUDIT COMMITTEE
The Audit Committee was re-constituted during the year and the same consists of Mr. Vikram Limaye, Chairman, Mr. L K Narayan and Mr. Mahendra Shah. The Audit Committee met four times during the year under review.
OUTLOOK
The competitive intensity in our industry continues to rise as a number of well capitalized investment banks enter the domestic market. Fees and margins will be under pressure. Manpower costs have been rising and competition for talent is intense. The environment for fund raising is expected to be volatile in FY2011 and determined by macro trends across global equities. Focus in the current year will be to expand the product portfolio and leverage the broader IDFC platform to improve our product offering towards our clients. Knowledge leadership and improved client servicing will be critical for ensuring retaining of our market share in FY2011.
AUDITORS
M/s. Deloitte Haskins & Sells, Chartered Accountants, Mumbai will retire as Auditors of the Company at the ensuing Annual General meeting. Your Directors propose their re-appointment as Auditors of the Company for the financial year ending March 31, 2011. As required under the provisions of Section 224(1B) of the Companies Act, 1956 the Company has obtained a written certificate from the Auditors proposed to be re-appointed to the effect that their reappointment if made will be in conformity with the limits specified in the said section. The shareholders are requested to re-appoint the auditors and authorise the Board to fix their remuneration for the year 2010-11.
SUBSIDIARY COMPANIES
IDFC Capital Limited has wholly owned subsidiary company - IDFC Capital (Singapore) Pte. Ltd.
I D F C C A P I T A L L I M I T E D ( F O R M E R LY , I D F C - S S K I L I M I T E D )
95
FOREIGN EXCHANGE
The particulars regarding foreign exchange earnings and expenditure are furnished at Item No.6 in the Notes to the Accounts.
PERSONNEL AND OTHER MATTERS
As required by the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, names and other particulars of employees are set out in the annexure to the Directors’ Report. Since the Company does not own any manufacturing facility, the disclosure of information on other matters required to be disclosed in terms of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the report of Board of Directors) Rules, 1988, are not applicable and hence not given.
they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and detecting fraud and other irregularities; and
¬ ¬
they have prepared annual accounts on a going concern basis.
ACKNOWLEDGEMENTS
The Directors wishes to thank the clients, Banks, Securities Exchange Board of India and other regulatory and statutory authorities for their continued support to your Company. The Directors also express their gratitude for the unstinted support and guidance received from IDFC, the parent organisation, and also other group companies. The Directors also places on record its appreciation for the sincere efforts of the staff.
DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors confirm that: the applicable accounting standards have been followed in the preparation of the annual accounts and that there are no material departures;
¬
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2010 and the profit of the Company for the year ended on that date;
¬
VIKRAM LIMAYE
NAISHADH PALEJA
Director Mumbai April 21, 2010
Director
96
I D F C A N N U A L R E P O R T 09 –10
AU D I TO RS ’ R E PO RT
TO THE MEMBERS OF IDFC CAPITAL LIMITED
1. We have audited the attached Balance Sheet of IDFC CAPITAL LIMITED (formerly, IDFC – SSKI Limited) (“the Company”) as at March 31, 2010, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditor’s Report) Order, 2003 (CARO) issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. 4. Further to our comments in the Annexure referred to in paragraph 3 above, we report as follows: (a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; (b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books; (c) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account;
FOR DELOITTE HASKINS & SELLS Chartered Accountants (Registration No. 117366W)
NALIN M. SHAH
(d) in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956; (e) in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2010;
(ii) in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date and (iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date. 5. On the basis of the written representations received from the Directors as on 31st March, 2010 taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March, 2010 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956.
Partner Membership No. 15860 Mumbai April 21, 2010
I D F C C A P I T A L L I M I T E D ( F O R M E R LY , I D F C - S S K I L I M I T E D )
97
ANNEXURE
(Referred to in paragraph 3 of our report of even date) (i) Having regard to the nature of the Company’s business/activities/ result and transactions, etc., clauses (ii), (vi), (viii), (x), (xi), (xii), (xiii), (xiv), (xv), (xvi), (xvii), (xviii), (xix) and (xx) of CARO are not applicable. (ii) In respect of its fixed assets: (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of the fixed assets. (b) The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and 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.
TO THE AUDITOR’S REPORT
(vii) According to the information and explanations given to us in respect of statutory dues: (a) The Company has generally been regular in depositing undisputed dues, including Provident Fund, Income-tax, Service Tax, Cess and other material statutory dues applicable to it with the appropriate authorities. (b) There were no undisputed amounts payable in respect of Incometax, Service tax and other material statutory dues in arrears as at 31st March, 2010 for a period of more than six months from the date they became payable. (c) Details of dues of Income-tax which have not been deposited as on 31st March, 2010 on account of disputes are given below:
NATURE OF DUES FORUM WHERE DISPUTE IS PENDING Income Tax Appellate Tribunal PERIOD TO WHICH THE AMOUNT RELATES A.Y. 2002-03 AMOUNT INVOLVED (RUPEES) 188,316
STATUTE
Income Tax Act, 1961
Income Tax
(iii) The Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956. (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 purchases of fixed assets and the sale of services. During the course of our audit, we have not observed any major weakness in such internal control system. (v) To the best of our knowledge and belief and according to the information and explanations given to us, there were no contracts or arrangements that needed to be entered in the Register maintained under Section 301 of the Companies Act, 1956. (vi) In our opinion, the internal audit functions carried out during the year by a firm of Chartered Accountants appointed by the Management have been commensurate with the size of the Company and the nature of its business.
(viii) To the best of our knowledge and according to the information and explanations given to us, no fraud by or on the Company has been noticed or reported during the year.
FOR DELOITTE HASKINS & SELLS Chartered Accountants (Registration No. 117366W)
NALIN M. SHAH
Partner Membership No. 15860 Mumbai April 21, 2010
98
I D F C A N N U A L R E P O R T 09 –10
BALANCE SHEET
RUPEES SCHEDULE RUPEES
AS AT MARCH 31, 2010
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
SOURCES OF FUNDS
Shareholders’ Funds Capital Reserves and Surplus 1 2 60,352,200 777,321,619 837,673,819 60,352,200 496,134,388 556,486,588
APPLICATION OF FUNDS
Fixed Assets Gross Block Less : Depreciation and Amortisation Investments Deferred Tax Asset (See Schedule 14 Note 9) Current Assets, Loans and Advances Sundry Debtors Cash and Bank Balances Loans and Advances Less : Current Liabilities and Provisions Current Liabilities Provisions Net Current Assets Notes to the Accounts Schedules 1 to 14 form an integral part of the Accounts 14 8 9 289,277,128 7,754,015 297,031,143 242,653,351 837,673,819 139,043,228 1,822,886 140,866,114 248,860,194 556,486,588 5 6 7 202,913,006 325,959,039 10,812,449 539,684,494 41,188,184 307,803,319 40,734,805 389,726,308 4 3 9,473,959 6,000,733 3,473,226 587,797,242 3,750,000 13,796,060 9,211,334 4,584,726 284,541,668 18,500,000
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTEE HASKINS & SELLS Chartered Accountants FOR AND ON BEHALF OF THE BOARD
NALIN M . S H A H
VIKRAM LIMAYE
NAISHADH PALEJA
Partner
Director
NARENDRA GANGAN
Director
Mumbai | April 21, 2010
Company Secretary
I D F C C A P I T A L L I M I T E D ( F O R M E R LY , I D F C - S S K I L I M I T E D ) 99
PROFIT AND LOSS ACCOUNT
RUPEES
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
SCHEDULE
APRIL 1, 2009 TO MARCH 31, 2010 813,957,873 10 33,880,623 847,838,496
APRIL 1, 2008 TO MARCH 31, 2009 427,008,350 37,052,499 464,060,849 190,177,424 19,705,208 31,627,673 17,346,986 3,606,992
INCOME
Investment Banking Fees (See Schedule 14 Note 4) Other Income
EXPENDITURE
Staff Expenses Establishment Expenses Other Expenses Provision for Doubtful Debts Depreciation and Amortisation PROFIT BEFORE TAXATION Less : Provision for Taxation Current Tax Add/(Less): Deferred Tax (See Schedule 14 Note 9) Add: Fringe Benefit Tax Add/(Less): Short / (Excess) provision for Income Tax PROFIT AFTER TAXATION Add : Balance as per last Balance Sheet AVAILABLE FOR APPROPRIATION APPROPRIATIONS: Earnings per share (Face Value Rs. 10) (See Schedule 14 Note 8) Basic and Diluted Notes to the Accounts Schedules 1 to 14 form an integral part of the Accounts 14 46.59 24.10 144,700,000 14,750,000 – (616,563) 158,833,437 281,187,231 395,034,388 676,221,619 – 676,221,619 70,000,000 (15,100,000) 920,000 332,406 56,152,406 145,444,160 249,590,228 395,034,388 – 395,034,388 11 12 13 351,201,800 16,242,202 38,064,111 347,369 1,962,346 407,817,828 440,020,668
262,464,283 201,596,566
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTEE HASKINS & SELLS Chartered Accountants FOR AND ON BEHALF OF THE BOARD
NALIN M . S H A H
VIKRAM LIMAYE
NAISHADH PALEJA
Partner
Director
NARENDRA GANGAN
Director
Mumbai | April 21, 2010
100 I D F C A N N U A L R E P O R T 09 –10
Company Secretary
C A S H F L OW ST AT E M E N T
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
CURRENT YEAR
PREVIOUS YEAR 201,596,566 3,606,992 (28,318,774) 428,921 (8,347,143) 5,369 (32,624,635) 168,971,931 63,051,943 (8,346,004) 791,237 (90,571,384) (35,074,208) 133,897,723 (96,908,748) 36,988,975 (895,360) 44,818 (263,956,608) 152,787,061 28,318,774 8,347,143 (75,354,172) (38,365,197) 46,168,516 7,803,319 (38,365,197) 307,803,319 300,000,000 7,803,319
CASH FLOW FROM OPERATING ACTIVITIES:
PROFIT BEFORE TAX Adjustments for Depreciation and Amortisation Interest Income Provision for Gratuity Dividend Income Loss on Sale /Discarding of Fixed Assets B OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES Change in : Sundry Debtors Loans and Advances Fixed Deposit with Scheduled Banks under Lien Current Liabilties D Cash generated from Operations Taxes Paid NET CASH FROM OPERATING ACTIVITIES F E=C+D (161,724,822) 7,522,352 8,466,162 150,233,900 4,497,592 415,122,760 (117,077,718) 298,045,042 (2,048,207) (406,772,336) 103,516,760 28,397,383 5,483,240 G I=F+G (271,423,160) 26,621,882 7,803,319 34,425,201 26,621,882 Note : Cash and Cash Equivalents as per Schedule 6 Less: Fixed Deposits Under Lien Cash and Cash Equivalents as above 325,959,039 291,533,838 34,425,201 C=A+B 1,962,346 (28,397,383) 1,325,414 (5,483,240) 1,197,363 (29,395,500) 410,625,168 A 440,020,668
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Fixed assets Proceeds from Sale of Fixed Assets Purchase of Investments - subsidiary companies Proceeeds from Sale of Investments - others Interest received Dividend received NET CASH USED IN INVESTING ACTIVITIES NET (DECREASE) / INCREASE IN CASH EQUIVALENTS INCREASE /(DECREASE) IN CASH AND EQUIVALENTS Cash and Cash Equivalents as at the beginning of the year (see Note below) Cash and Cash Equivalents as at the end of the year (see Note below)
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTEE HASKINS & SELLS Chartered Accountants FOR AND ON BEHALF OF THE BOARD
NALIN M . S H A H
VIKRAM LIMAYE
NAISHADH PALEJA
Partner
Director
NARENDRA GANGAN
Director
Mumbai | April 21, 2010
Company Secretary
I D F C C A P I T A L L I M I T E D ( F O R M E R LY , I D F C - S S K I L I M I T E D ) 101
SCHEDULES
ANNEXED TO AND FORMING PART OF THE ACCOUNTS
SCHEDULE 1 Capital
AUTHORISED: 7,000,000 equity shares of Rs.10 each ISSUED, SUBSCRIBED AND PAID-UP: 6,035,220 equity shares of Rs.10 each, fully paid-up [All of the above Equity Shares are held by the holding company and its nominees IDFC Securities Limited (Formerly, IDFC - SSKI Securities Ltd.) The Utimate Holding Company is Infrastructure Development Finance Company Limited]
RUPEES
RUPEES
AS AT MARCH 31, 2010 70,000,000 70,000,000 60,352,200
AS AT MARCH 31, 2009 70,000,000 70,000,000 60,352,200
60,352,200
60,352,200
SCHEDULE 2 Reserves and Surplus
Securities Premium Account Profit and Loss Account
RUPEES
RUPEES
AS AT MARCH 31, 2010 101,100,000 676,221,619 777,321,619
AS AT MARCH 31, 2009 101,100,000 395,034,388 496,134,388
SCHEDULE 3 Fixed Assets
DESCRIPTION April 1, 2009 GROSS BLOCK DEPRECIATION AND AMORTISATION April 1, 2009 Charge for
RUPEES
NET BLOCK
March 31,
March 31,
March 31,
March 31,
Additions
Deletions
Deletions
the year
2010
2010
2010
TANGIBLE Furniture & Fixtures Office Equipments Computer Hardware INTANGIBLE Computer Software Total Previous Year 94,276 13,796,060 12,976,960 617,655 2,048,207 895,360 – 6,370,308 711,931 9,473,959 28,412 9,211,334 5,630,415 195,817 1,962,346 3,606,992 – 5,172,947 26,073 224,229 6,000,733 9,211,334 487,702 3,473,226 4,584,726 65,864 4,584,726 5,321,621 3,975,435 4,404,728 – 214,730 1,215,822 5,321,621 961,337 87,350 – 3,228,828 5,533,200 4,156,245 2,304,766 2,721,911 406,012 458,994 901,523 4,562,257 531,416 79,274 – 2,232,344 3,544,160 – 996,484 1,989,040 1,165,376 1,670,669 1,682,817
76,260 13,796,060
102
I D F C A N N U A L R E P O R T 09 –10
2009
As at
As at
As at
As at
As at
As at
SCHEDULE 4 Investments (Unquoted)
I. LONG TERM EQUITY SHARES (FULLY PAID) NUMBER OF SHARES SUBSIDIARIES (TRADE) IDFC Capital (Singapore) Pte Ltd. (3,045,000 Shares purchased during the year) IDFC Fund of Funds Limited IDFC General Partners Limited OTHERS Epsilon Advisors Private Limited SSIPL Retail Private Limited 1,250,000 121,840 INR 10 INR 10 6,505,504.18 10,000 USD 1 USD 1.65 6,655,000 SD1 FACE VALUE
RUPEES
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
216,718,695 303,648,301 769,725 15,135,000 20,585,060 556,856,781
114,364,385 – – 15,135,000 20,585,060 150,084,445
II.
CURRENT (NON-TRADE) MUTUAL FUNDS UNITS NUMBER OF UNITS IDFC Money Manager Fund Treasury Plan C Daily Dividend [Net Asset Value Rs.46,075,461; (Previous Year Rs.149,592,223)] TOTAL INVESTMENTS Less : Provision for Diminution in value of Investments 602,932,242 (15,135,000) 587,797,242 299,676,668 (15,135,000) 284,541,668
RUPEES
FACE VALUE
RUPEES
4,606,855.15
10
46,075,461
149,592,223
SCHEDULE 5 Sundry Debtors (Unsecured)
CONSIDERED GOOD Over six months Others CONSIDERED DOUBTFUL Over six months Less : Provision for Doubtful Debts
RUPEES
RUPEES
AS AT MARCH 31, 2010 67,277 202,845,729 202,913,006 4,789,045 207,702,051 4,789,045 202,913,006
AS AT MARCH 31, 2009 8,276,301 32,911,883 41,188,184 17,346,986 58,535,170 17,346,986 41,188,184
SCHEDULE 6 Cash and Bank Balances
Cash BALANCE WITH SCHEDULED BANKS - in Current Accounts - in Deposit Accounts (See Schedule 14 Note 3)
RUPEES
RUPEES
RUPEES
AS AT MARCH 31, 2010 46,365 34,378,836 291,533,838 325,912,674 325,959,039
AS AT MARCH 31, 2009 13,932 7,789,387 300,000,000 307,789,387 307,803,319
SCHEDULE 7 Loans and Advances (Unsecured considered good)
Interest accrued on Deposits Advance payment of Income Tax (Net of provision) Advances recoverable in cash or in kind or for value to be received Other Deposits
RUPEES
RUPEES
AS AT MARCH 31, 2010 7,178,496 – 3,382,953 251,000 10,812,449
AS AT MARCH 31, 2009 12,461,354 22,400,004 1,873,447 4,000,000 40,734,805
103
I D F C C A P I T A L L I M I T E D ( F O R M E R LY , I D F C - S S K I L I M I T E D )
SCHEDULE 8 Current Liabilities
Sundry Creditors - Other than Micro and Small Enterprises (See Schedule 14 Note 12) Other Liabilities
RUPEES
RUPEES
AS AT MARCH 31, 2010 252,713,173 36,563,955 289,277,128
AS AT MARCH 31, 2009 128,212,431 10,830,797 139,043,228
RUPEES
SCHEDULE 9 Provisions
Provision for Income Tax (Net of Advance Tax) Provision for Employee Benefits (See Schedule 14 Note 5)
RUPEES
AS AT MARCH 31, 2010 4,605,715 3,148,300 7,754,015
AS AT MARCH 31, 2009 – 1,822,886 1,822,886
RUPEES
SCHEDULE 10 Other Income
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Dividend On Current Investments (Non-Trade) Gain On Foreign Exchange Fluctuation (Net) Miscellaneous Income Interest on Bank Deposits [Tax Deducted at source Rs. 32,02,620 (Previous Year Rs. 6,418,070)] 33,880,623 5,483,240 – – 28,397,383
APRIL 1, 2008 TO MARCH 31, 2009 8,347,143 11,768 374,814 28,318,774 37,052,499
RUPEES
SCHEDULE 11 Staff Expenses
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Salaries, Wages and Bonus Contribution to Provident and Other Funds (See Schedule 14 Note 5) [Including Provision for Gratuity Rs.2,180,724; (Previous Year Rs.1,333,821)] Staff Welfare Expenses 1,331,603 351,201,800 340,422,024 9,448,173
APRIL 1, 2008 TO MARCH 31, 2009 181,911,635 7,126,489 1,139,300 190,177,424
RUPEES
SCHEDULE 12 Establishment Expenses
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Rent Rates & Taxes Electricity Repairs and Maintenance Building Equipments Others Insurance Charges 3,365 799,384 249,412 1,052,161 78,670 16,242,202 13,648,800 353,870 1,108,701
APRIL 1, 2008 TO MARCH 31, 2009 17,978,400 2,432 1,024,767 39,888 623,179 25,698 10,844 19,705,208
RUPEES
SCHEDULE 13 Other Expenses
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Travelling and Conveyance Postage, Telephone and Telex Advertising and Publicity Professional Fees Loss on Foreign Exchange Fluctuation(Net) Loss on Sale/Discarding of Fixed Assets (Net) Bank Charges Miscellaneous Expenses Auditors’ Remuneration (See Schedule 14 Note 7) Bad Debts 17,410,259 2,105,443 853,818 7,746,798 7,098 1,197,363 84,458 5,032,063 2,375,000 1,251,811 38,064,111
104 I D F C A N N U A L R E P O R T 09 –10
APRIL 1, 2008 TO MARCH 31, 2009 13,892,695 1,638,880 339,339 9,824,954 5,369 2,444 2,927,435 2,746,269 250,288 31,627,673
SCHEDULE 14: Notes Forming Part of the accounts
Background
IDFC Capital Limited (formerly, IDFC – SSKI Limited) is a wholly-owned subsidiary of IDFC Securities Limited (formerly, IDFC - SSKI Securities Limited). Infrastructure Development Finance Company Limited (“IDFC”) is the ultimate holding Company. The Company is a Category I Merchant Banker registered with the Securities and Exchange Board of India (SEBI).
1 Significant Accounting Policies
A. Accounting convention
These accounts have been prepared in accordance with historical cost convention, applicable Accounting Standards notified by the Companies (Accounting Standards) Rules, 2006 and relevant provisions of the Companies Act, 1956.
B. Use of Estimates
The Company adopts the accrual concept in the preparation of the accounts. The preparation of financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.
C. Inflation
Assets and liabilities are recorded at historical cost to the Company. These costs are not adjusted to reflect the changing value in the purchasing power of money.
D. Revenue recognition
(a) Income from fee-based activities is recognised on the basis of terms of contracts with the clients and when reasonable right of recovery is established and is accounted net of service tax. (b) Interest income is recognised on an accrual basis. (c) Dividend is recognised when the right to receive is established.
E. Fixed assets and Intangible assets
Fixed assets are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated depreciation. Intangible Assets comprising of system software are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated amortisation. Any technology support cost or annual maintenance cost for such software is charged annually to the Profit and Loss Account.
F. Depreciation
¬
Tangible Assets
Depreciation on Fixed Assets, excluding certain electronic items, is provided on the written down value method, at the rates prescribed by Schedule XIV of the Companies Act, 1956. Certain electronic items are depreciated over a period of two years on straight line method based on the Management’s estimate of the useful life of assets. Depreciation on additions during the year is provided on a pro-rata basis. Assets costing less than Rs. 5,000 each are written off in the year of capitalisation.
¬
Intangible Assets
Computer software is amortised over a period of 3 years by using straight-line method. The Company has regular programme of evaluating useful life of its assets.
G. 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 the carrying value other than temporary in nature is provided for. Current investments are valued at cost or market/fair value, whichever is lower. In case of investments in units of mutual funds, the net asset value of units has been considered as the market value.
H. Employee benefits –
DEFINED CONTRIBUTION PLANS
The Company’s contribution to Provident Fund is deposited with Regional Provident Fund Commissioner and is charged to the Profit and Loss Account every year.
¬
I D F C C A P I T A L L I M I T E D ( F O R M E R LY , I D F C - S S K I L I M I T E D )
105
The Company participates in the Ultimate Holding Company’s Superannuation policy, for future payments of Superannuation and the Company’s contribution paid/payable during the year is charged to the Profit and Loss Account every year.
¬
DEFINED BENEFIT PLAN
The net present value of the Company’s obligation towards Gratuity to employees is funded and actuarially determined as at the Balance Sheet date based on the Projected Unit Credit Method. Actuarial gains and losses are recognised in the Profit and Loss Account.
¬
OTHER BENEFITS
¬
The employees are required to avail of the leave entitlement during the financial year and are not entitled to any encashment.
I. Income - Tax
The accounting treatment for income-tax in respect of the Company’s income is based on the Accounting Standard 22 on ‘Accounting for Taxes on Income’ as notified by the Companies (Accounting Standards) Rules, 2006. The provision made for income-tax in the accounts comprises both, the current tax and the deferred tax. The deferred tax assets and liabilities for the year, arising on account of timing differences, are recognised in the Profit and Loss Account and the cumulative effect thereof is reflected in the Balance Sheet. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax asset is recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the Company has unabsorbed depreciation or carried forward losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that the same can be realised against future taxable profits.
J. Contingencies
The Company creates a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
K. Foreign Currency Transactions
Foreign currency transactions are accounted at the exchange rates prevailing on the date of the transaction. Foreign currency monetary items outstanding as at the Balance Sheet date are reported using the closing rate. Gains and losses resulting from the settlement of such transactions and translation of monetary assets and liabilities denominated in foreign currencies are recognised in the Profit and Loss Account.
2 Contingent liabilities not provided for in respect of :
PARTICULARS (a) Claims not acknowledged as debts in respect of : Income-tax demands disputed by the Company (net of amounts provided). The matters in dispute are under appeal. The demands have been paid/adjusted and will be received as refund if the matters are decided in favour of the Company. 188,316 9,167,008 CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
3 Balances in Banks in Fixed Deposits include Rs. 291,533,838 (Previous Year Rs. 300,000,000) which are pledged with HDFC Bank Ltd. for securing short term overdraft facilities to be availed by the Holding Company, IDFC Securities Limited (formerly, IDFC – SSKI Securities Limited) for settlement of institutional trades and margin. 4 (a) The Company has an arrangement with the holding company, IDFC Securities Limited (formerly, IDFC – SSKI Securities Limited) to avail of research, financial advisory and other distribution services on some of the assignment/mandates. In consideration of these services, the Company shares the success fees received from the clients in the ratio mutually agreed upon. An amount of Rs.254,042,007 (Previous year Rs. 62,297,486) has been shared during the year in respect of the above services with the Holding Company.
(b) The Company also has an arrangement with the Ultimate Holding Company, Infrastructure Development Finance Company Limited (IDFC Limited), for its Debt Syndication business on some of the assignments/mandates. In consideration of these services, the Company receives a share from IDFC Limited in the ratio mutually agreed upon. An amount of Rs.112,439,500 (Previous Year Rs. 91,938,719) has been shared during the year in respect of the above services.
5 Employee Benefits –
In accordance with the Accounting Standard –AS15 on “Employee Benefits”, notified by the Companies (Accounting Standards) Rules, 2006, the following disclosures have been made: (i) The Company has recognised the following amounts in the Profit and Loss Account towards contribution to defined contribution plans which are included under Contribution to Provident and Other Funds:
106
I D F C A N N U A L R E P O R T 09 –10
CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
Provident Fund Superannuation Fund
6,704,949 562,500
5,792,668 -
(ii) The details of the Company’s post-retirement benefit plans for gratuity for its employees are given below, which is certified by the actuary and relied upon by the auditors:
RUPEES
PARTICULARS CHANGE IN THE BENEFIT OBLIGATIONS: Liability at the beginning of the year Current Service cost Interest Cost Actuarial Gain Liability at the end of the year FAIR VALUE OF PLAN ASSETS: Fair Value of Plan Assets at the beginning of the year Expected Return on Plan Assets Contributions Actuarial Loss on Plan Assets Fair Value of Plan Assets at the end of the year Total Actuarial Gain to be recognised ACTUAL RETURN ON PLAN ASSETS: Expected Return on Plan Assets Actuarial Loss on Plan Assets Actual Return on Plan Assets AMOUNT RECOGNISED IN THE BALANCE SHEET: Liability at the end of the year Fair Value of Plan Assets at the end of the year Amount recognised in the Balance Sheet under “Provision for Employee Benefits” EXPENSES RECOGNISED IN THE PROFIT AND LOSS ACCOUNT UNDER STAFF EXPENSES Current Service cost Interest Cost Expected Return on Plan Assets Net Actuarial Gain to be recognised Expense recognised in the Profit and Loss Account under staff expenses RECONCILIATION OF THE LIABILITY RECOGNISED IN THE BALANCE SHEET Opening Net Liability Expense recognised Contributions Amount recognised in the Balance Sheet under “Provision for Employee Benefits” Expected Employer’s Contribution next year EXPERIENCE ADJUSTMENTS Defined Benefit Obligation Plan Assets Deficit Experience Adjustment on Plan Liabilities Experience Adjustment on Plan Assets INVESTMENT PATTERN Insurer Managed Fund PRINCIPAL ASSUMPTIONS Discount rate Return on Plan Assets Salary Escalation Rate
AS AT MARCH 31, 2010 3,773,094 3,460,520 578,689 1,709,402 6,102,901 1,950,208 237,575 855,310 88,492 2,954,601 1,620,910 237,575 88,492 149,083 6,102,901 2,954,601 3,148,300 3,460,520 578,689 237,575 1,620,910 2,180,724 1,822,886 2,180,724 855,310 3,148,300 5,000,000 6,102,901 2,954,601 3,148,300 (2,751,189) (88,492) % 100 8.10 8 8
AS AT MARCH 31, 2009 2,303,090 1,251,371 293,243 74,610 3,773,094 909,125 145,122 904,900 8,939 1,950,208 65,671 145,122 8,939 136,183 3,773,094 1,950,208 1,822,886 1,251,371 293,243 145,122 65,671 1,333,821 1,393,965 1,333,821 904,900 1,822,886 2,039,000 3,773,094 1,950,208 1,822,886 (162,937) (8,939) % 100 8 8 6
As the Gratuity fund is managed by life insurance company details of investments are not available with the Company. The estimates of future salary increase, considered in the actuarial valuation takes account of inflation, seniority, promotion and other relevant factors.
I D F C C A P I T A L L I M I T E D ( F O R M E R LY , I D F C - S S K I L I M I T E D ) 107
6 Expenditure in foreign currencies:
RUPEES
PARTICULARS Travelling Expenses Total
CURRENT YEAR 782,990 782,990
PREVIOUS YEAR 93,246 93,246
Earnings in foreign currencies:
RUPEES
PARTICULARS Investment Banking Fees Total
CURRENT YEAR -
PREVIOUS YEAR 5,000,000 5,000,000
7 Auditors’ Remuneration:
RUPEES
PARTICULARS Audit Fees Tax Audit Fees Taxation Services Other Services Out of Pocket Expenses Service tax Total Less: Service tax set off claimed
CURRENT YEAR 1,200,000 400,000 200,000 575,000 244,625 2,619,625 244,625 2,375,000
PREVIOUS YEAR 1,200,000 800,000 200,000 545,000 1,269 302,359 3,048,628 302,359 2,746,269
8 In accordance with the Accounting Standard 20 on ‘Earnings Per Share’ as notified by the Companies (Accounting Standards) Rules, 2006, the Earnings Per Share has been computed as under:
RUPEES
PARTICULARS Net Profit attributable to equity shareholders (A) Number of equity shares issued (B) Basic and Diluted Earnings per share (EPS) [A/B]
CURRENT YEAR 281,187,231 6,035,220 46.59
PREVIOUS YEAR 145,444,160 6,035,220 24.10
9 Deferred Tax:
As per Accounting Standard 22 relating to ‘Accounting for Taxes on Income’ as notified by the Companies (Accounting Standards) Rules, 2006, the Company has taken debit of Rs. 14,750,000 (Previous Year Credit of Rs. 15,100,000) in the Profit & Loss Account towards deferred tax liability (net) on account of timing differences. The major components of deferred tax assets arising on account of timing differences are:
RUPEES
PARTICULARS DEFERRED TAX ASSET Depreciation Provisions Total DEFERRED TAX ASSET
CURRENT YEAR 1,071,083 2,678,917 3,750,000 3,750,000
PREVIOUS YEAR 751,834 17,748,166 18,500,000 18,500,000
10 Segmental Reporting:
The Company is mainly engaged in Merchant Banking business in India, which is considered as the only reportable segment as per Accounting Standard –AS 17 “Segment Reporting” as notified by the Companies (Accounting Standards) Rules, 2006.
11 Related party disclosures:
As per the Accounting Standard 18 on ‘Related Party Disclosures’ as notified by the Companies (Accounting Standards) Rules, 2006, the related parties of the Company are as follows:
I. ULTIMATE HOLDING COMPANY:
Infrastructure Development Finance Company Limited
II. HOLDING COMPANY:
IDFC Securities Limited (formerly, IDFC – SSKI Securities Limited)
108 I D F C A N N U A L R E P O R T 09 –10
III. SUBSIDIARY COMPANIES:
IDFC Capital Singapore Pte. Limited IDFC General Partners Limited (with effect from 30th November, 2009) IDFC Fund of Funds Limited (with effect from 28th October, 2009)
IV. THERE ARE NO TRANSACTIONS WITH FELLOW SUBSIDIARIES.
The nature and volume of transactions carried out with the above related parties in the ordinary course of business:
RUPEES
NAME OF RELATED PARTY AND NATURE OF RELATIONSHIP (A) HOLDING COMPANY
PARTICULARS
CURRENT YEAR
PREVIOUS YEAR
IDFC Securities Limited (formerly, IDFC – SSKI Securities Limited) Fees Paid Creditors and Others Payable (B) ULTIMATE HOLDING COMPANY Infrastructure Development Finance Company Limited Sharing of Fees Other Fees Debtors and Others Receivable
254,042,007 25,291,596 112,439,500 -
62,297,486 91,938,719 138,000 14,881,797
12 There is no interest paid/payable during the year by the Company to suppliers covered under the Micro, Small and Medium Enterprises Development Act, 2006. The above information takes into account only those suppliers who have responded to the enquires made by the Company for this purpose. 13 Prior year comparatives:
The prior year comparatives have been regrouped, recasted and reclassified wherever necessary to confirm with current year’s presentation.
FOR AND ON BEHALF OF THE BOARD
VIKRAM LIMAYE
NAISHADH PALEJA
Director
NARENDRA GANGAN
Director
Mumbai | April 21, 2010
Company Secretary
I D F C C A P I T A L L I M I T E D ( F O R M E R LY , I D F C - S S K I L I M I T E D ) 109
B A L A N C E S H E E T A B ST R A CT
AND COMPANY’S GENERAL BUSINESS PROFILE
I.
REGISTRATION DETAILS Registration No. State Code Balance Sheet Date U 1 3 6 1 1 0 3 2 0 1 0 7 1 9 0 M H 1 9 9 5 P L C 0 9 2 2 2 1
II.
CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000) Public Issue N I L Right Issue N I L
Bonus Issue N III. I L
Private Placement N I L
POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000) Total Liabilities 1 SOURCES OF FUNDS Paid-up Capital 6 0 3 5 2 7 Reserves and Surplus 7 7 3 2 2 1 3 4 7 0 5 1 1 3 4 Total Assets 7 0 5
Secured Loans N APPLICATION OF FUNDS Net Fixed Assets 3 4 7 3 5 8 I L
Unsecured Loans N I L
Investments 7 7 9 7
Net Current Assets 2 4 2 6 5 4
Miscelleneous Expenditure N I L
Deferred Tax Asset (Net) 3 IV. 7 5 0 Total Expenditure 4 0 7 8 1 8
PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000) Turnover / Income 8 4 7 8 3 8
Profit Before Tax 4 4 0 0 2 1 2 8
Profit After Tax 1 1 8 7
Earnings per Share (in Rs.) 4 V. 6 . 5 9
Dividend % N I L
GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS) Item Code No. (ITC Code) Product Description N M I E L R C H A N T B A N K I N G
110
I D F C A N N U A L R E P O R T 09 –10
ST AT E M E N T P U R S U A N T T O S E CT I O N 2 1 2
OF THE COMPANIES ACT, 1956
NAME OF SUBSIDIARY COMPANY 1 2 Financial year of the Subsidiary Companies ended on Equity Shares of Rs.10 each a) Number of Shares b) Extent of Holding 3 Net aggregate amount of Profit/ (Losses) of the Subsidiary, so far as they concern members of IDFC Securities Limited i. For the Financial Year of the Subsidiary a) Dealt with in the accounts of the Holding Company. b) Not dealt with in the accounts of the Holding Company. ii. For the previous financial years of the Subsidiary since it became the Holding Company’s Subsidiary. a) Dealt with in the accounts of the Holding Company. b) Not dealt with in the accounts of the Holding Company.
IDFC CAPITAL (SINGAPORE) PTE. LTD. 31st March 2010 6,655,000 100%
IDFC FUND OF FUNDS LIMITED 31st March 2010 6,505,504.18 100%
IDFC GENERAL PARTNERS LIMITED 31st March 2010 10,000 100%
Nil (110,802,874)
Nil (1,153,369)
Nil Nil
Nil (110,016,386)
Nil Nil
Nil Nil
FOR AND ON BEHALF OF THE BOARD
VIKRAM LIMAYE
NAISHADH PALEJA
Director Mumbai | April 21, 2010
Director
I D F C C A P I T A L L I M I T E D ( F O R M E R LY , I D F C - S S K I L I M I T E D )
111
IDFC - SSKI stock
broking limited
B O A R D O F D I R E CTO R S
? ? ? ?
Mr. Tapasije Mishra Mr. Naishadh Paleja Mr. Pathik Gandotra Mr. Mahehdra N. Shah
A U D I TO R S
?
Deloitte Haskins & Sells Chartered Accountants
P R I N C I PA L B A N K E R S
?
HDFC Bank Limited
R E G I ST E R E D O F F I C E
Naman Chambers, C-32, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai 400 051. TEL +91 22 66222600 FAX +91 22 66222501
112
I D F C A N N U A L R E P O R T 09 –10
D I R E CT O R S ’ R E P O R T
TO THE MEMBERS
Your directors have pleasure in presenting the Eighteenth Annual Report together with the audited accounts for the year ended March 31, 2010. Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are not applicable and hence not given. Since the Company also does not own any manufacturing facility, the disclosure of information on other matters required to be disclosed in terms of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are not applicable and hence not given.
FINANCIAL RESULTS
RUPEES
YEAR ENDED MARCH 31, 2010 Gross Revenue Operating Expenses Net Profit before Tax Provision for Taxation Current Tax Net Profit/(Loss) after tax 350,000 776,662 1,432,017 305,355 1,126,662
YEAR ENDED MARCH 31, 2009 1,438,413 328,768 1,109,645 380,000 729,645
DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors confirm that: the applicable accounting standards have been followed in preparation of annual accounts and there are no material departures;
¬
OPERATIONS
The Company earned gross revenue of Rs.14.32 Lac. The Company has earned a Net profit before tax of Rs 11.27 Lac for the financial year ended March 31, 2010.
they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2010 and the profit of the Company for the year ended on that date;
¬
DIVIDEND
The Directors do not recommend any dividend for the year ended March 31, 2010.
they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and detecting fraud and other irregularities; and
¬ ¬
they have prepared the annual accounts on a going concern basis.
DIRECTORS
Mr. Tapasije Mishra and Mr Mahendra N. Shah are retiring by rotation and being eligible, offer themselves for re-appointment at the ensuing Annual General Meeting. The Board recommends their re-appointment as Directors of the Company.
COMPLIANCE CERTIFICATE
Pursuant to the provisions of Section 383A(1) of the Companies Act, 1956 a certificate from M/s S. S. Rauthan & Associates, Company Secretaries, certifying that the Company has complied with all applicable provisions of the Companies Act, 1956, is attached herewith.
AUDITORS
M/s. Deloitte Haskins & Sells, Chartered Accountants, Mumbai will retire as Auditors of the Company at the ensuing Annual General meeting. Your Directors propose their re-appointment as Auditors of the Company for the financial year ending March 31, 2011. As required under the provisions of Section 224(1B) of the Companies Act, 1956 the Company has obtained a written certificate from the Auditors proposed to be re-appointed to the effect that their re-appointment if made will be in conformity with the limits specified in the said section. The shareholders are requested to re-appoint the auditors and authorise the Board to fix their remuneration for the year 2010-11.
SHAREHOLDERS UPDATE
The Company had shifted its Registered Office from 803/804, Tulsiani Chambers, Nariman Point, Mumbai 400 021 to Naman Chambers, C-32, G- Block, Bandra- Kurla Complex, Bandra (East), Mumbai 400 051 with effect from December 25, 2009.
ACKNOWLEDGEMENTS
The Directors thank the Company’s Bankers and local Authorities for their continued support to the Company. The Directors also express their gratitude for the unstinted support and guidance received from Infrastructure Development Finance Company Limited and other group companies.
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
TAPASIJE MISHRA MAHENDRA N. SHAH
FOREIGN EXCHANGE
There was no income or expenditure in foreign currency during the year under review.
Director Mumbai April 21, 2010
Director
PERSONNEL AND OTHER MATTERS
Since your Company does not have any employee, the provisions of Section 217(2A) of the Companies Act, 1956 read with the
I D F C - S S K I ST O C K B R O K I N G L I M I T E D
113
C O M P L I A N C E C E R T I F I C AT E
To The Members of IDFC - SSKI STOCK BROKING LIMITED MUMBAI.
CIN. U65990MH1992PLC069824 AUTHORISED CAPITAL Rs.2,00,00,000/PAID UP CAPITAL Rs.1,50,00,000/-
12. The Company has not issued any duplicate certificates during the financial year. 13. During the financial year; a. b. c. d. There was no allotment/ transfer/ transmission of securities. The Company has not deposited any amount in a separate bank account as no dividend was declared. The Company has not posted warrants to any member of the Company as no dividend was declared. There was no amounts in unpaid dividend account, application money due for refund, matured deposits, matured debentures and the interest accrued which have remained unclaimed or unpaid for a period of seven years be transferred to Investor Education and Protection Fund. The Company has duly complied with the requirements of Section 217 of the Act.
We have examined the registers, records, books and papers of IDFC – SSKI STOCK BROKING LIMITED (the Company) as required to be maintained under the Companies Act, 1956, (the Act) and the rules made thereunder and also the provisions contained in the Memorandum of Association and Articles of Association of the Company for the financial year ended 31st March, 2010 (financial year). In our opinion, and to the best of our information and according to the examinations carried out by us and explanations furnished to us by the Company, its officers and agents, we certify that in respect of the aforesaid financial year: 1. The Company has kept and maintained all registers as stated in Annexure `A’ to this certificate, as per the provisions of the Act and the rules made there under and all entries therein have been duly recorded. 2. The Company has duly filed the forms and returns as stated in Annexure `B’ to this certificate, with the Registrar of Companies, Regional Director, Central Government, Company Law Board or other authorities within the time prescribed under the Act and the rules made there under. 3. The Company, being a Public Limited Company has the minimum prescribed paid-up capital. 4. The Board of Directors duly met four times respectively on 27th April 2009, 14th July 2009, 14th October 2009 and 21st January 2010 in respect of which meetings proper notices were given and the proceedings were properly recorded and signed including the circular resolutions passed in the Minutes Book maintained for the purpose. 5. The Company was not required to close its Register of Members and/or Transfer Register during the financial year. 6. The Annual General Meeting for the financial year ended on 31st March 2009 was held on 13th July, 2009 after giving due notice to the members of the Company and the resolutions passed thereat were duly recorded in Minutes Book maintained for the purpose. 7. Extra Ordinary General Meeting was held on August 12, 2009 for Alteration of Articles. 8. The Company has not advanced any loan to its Directors or persons or firms or companies referred to under Section 295 of the Act. 9. The Company has not entered into any contracts falling within the purview of Section 297 of the Act. 10. During the financial year under review the Company was not required to make any entries in the register maintained under Section 301 of the Act. 11. As there were no instances falling within the purview of Section 314 of the Act, the Company has not obtained any approvals from the Board of Directors, members or Central Government, as the case may be.
114 I D F C A N N U A L R E P O R T 09 –10
e.
14. The Board of Directors of the Company is duly constituted. There was no appointment of additional directors, alternate directors and directors to fill casual vacancy during the financial year. 15. The Company has not appointed any Managing Director/ Whole Time Director/ Manager during the financial year. 16. The Company has not appointed any sole selling agents during the financial year. 17. The Company was not required to obtain any approvals of the Central Government, Company Law Board, Regional Director, Registrar of Companies and/or such authorities prescribed under the various provisions of the Act. 18. The Directors have disclosed their interest in other firms/ companies to the Board of Directors pursuant to the provisions of the Act and the rules made thereunder. 19. The Company has not issued any shares, debentures or other securities during the financial year. 20. The Company has not bought back any shares during the financial year. 21. There was no redemption of preference shares or debentures during the financial year. 22. There were no transactions necessitating the Company to keep in abeyance the rights to dividend, rights shares and bonus shares pending registration of transfer of shares. 23. The Company has not invited/ accepted any deposits including any unsecured loans falling within the purview of Section 58A during the financial year. 24. The Company has not made any borrowings during the financial year. 25. The Company has not made loans and investments, or given guarantees or provided securities to other bodies corporate during the year. 26. The Company has not altered the provisions of the Memorandum of Association with respect to situation of the Company’s registered office from one state to another during the year under scrutiny.
27. The Company has not altered the provisions of the Memorandum of Association with respect to the objects of the Company during the year under review. 28. The Company has not altered the provisions of the Memorandum of Association with respect to name of the Company during the year under scrutiny. 29. The Company has not altered the provisions of the Memorandum of Association with respect to share capital of the company during the year under scrutiny. 30. The Company has altered its Articles of Association during the financial year 2009-10. 31. There was no prosecutions initiated against or show cause notices received by the Company, during the financial year, for offences under the Act. 32. The Company has not received any money as security from its employees during the financial year.
33. The Company has not deducted any contribution towards Provident Fund during the financial year in terms of Section 418 of the Companies Act, 1956.
FOR S. S. RAUTHAN & ASSOCIATES Company Secretaries
SURJAN SINGH RAUTHAN
(Proprietor) C.P. No.3233
Mumbai April 21, 2010
Annexure – A
Registers as maintained by the Company 1. Register of members under Section 150 and Index of Members under Section 151. 2. Register of Transfers. 3. Register of particulars of contracts in which directors are interested under Section 301. 4. Register of directors, managing director, manager and secretary under Section 303. 5. Register of director’s shareholding under Section 307
4. Form No.23 filed for Alteration of Articles during the financial year. 5. Form No. 32 filed for Cessation of Mr. Mahendra N Shah as an additional Director of the Company u/s 260 of the Companies Act, 1956 at the Annual General Meeting held on 10/07/2008 and Form No. 32 filed for Appointment of Mr. Mahendra N Shah as a Director of the Company u/s 257 of the Companies Act, 1956 w.e.f. 10/07/2008 6. Form No. 23AA filed for maintaining the Books of Account of Company at a place other than Registered Office of the Company. 7. Form No. 18 file for shifting of Registered Office from 803/804 Tulsiani Chambers, Nariman point, Mumbai -400 021 to Naman Chambers, C-32, G–Block, Bandra- Kurla Complex, Bandra (East) – 400 051 w.e.f. 25/12/2009.
Annexure – B
Forms and Returns as filed by the Company with Registrar of Companies, Regional Director, Central Government or other authorities during the financial year ended 31st March 2010. 1. Form No. 20B alongwith Annual Return filed for the year ended 31/03/2009. 2. Form No. 23AC & 23ACA alongwith Balance Sheet and Profit & Loss Account filed for year ended 31/03/2009. 3. Form No. 66 alongwith Compliance Certificate for the year ended 31/03/2009 filed u/s. 383A (1).
FOR S. S. RAUTHAN & ASSOCIATES Company Secretaries
SURJAN SINGH RAUTHAN
(Proprietor) C.P. No.3233 Mumbai April 21, 2010
I D F C - S S K I ST O C K B R O K I N G L I M I T E D
115
AU D I TO RS ’ R E PO RT
To The Members of IDFC - SSKI Stock Broking Limited
1. We have audited the attached Balance Sheet of IDFC - SSKI STOCK BROKING LIMITED (“the Company”) as at March 31, 2010, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditor’s Report) Order, 2003 (CARO) issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. 4. Further to our comments in the Annexure referred to in paragraph 3 above, we report as follows: (a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; (b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books; (c) the Balance Sheet, the Profit and Loss Account 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 Profit and Loss Account and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956; (e) in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (i) (ii) (iii) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2010; in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date and in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.
5. On the basis of the written representations received from the Directors as on 31st March, 2010 taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March, 2010 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956.
FOR DELOITTE HASKINS & SELLS Chartered Accountants (Registration No. 117366W)
NALIN M. SHAH
Partner Membership No. 15860 Mumbai April 21, 2010
116
I D F C A N N U A L R E P O R T 09 –10
ANNEXURE
(Referred to in paragraph 3 of our report of even date) (i) Having regard to the nature of the Company’s business/activities/ result and transactions, etc., clauses (i), (ii), (iv), (vi), (v), (viii), (x), (xi), (xii), (xiii), (xv), (xvi), (xvii), (xviii), (xix) and (xx) of CARO are not applicable. (ii) The Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956. (iii) The Company does not have an internal audit system. (iv) According to the information and explanations given to us in respect of statutory dues: (a) The Company has generally been regular in depositing undisputed dues, including Income-tax and other material statutory dues applicable to it with the appropriate authorities. (b) There were no undisputed amounts payable in respect of Incometax and other material statutory dues in arrears as at 31st March, 2010 for a period of more than six months from the date they became payable. (c) There were no disputed Income Tax, Service Tax and any other material statutory dues which were not deposited as on 31st March, 2010.
FOR DELOITTE HASKINS & SELLS Chartered Accountants (Registration No. 117366W)
NALIN M. SHAH
TO THE AUDITOR’S REPORT
(v) Based on our examination of the records and evaluation of the related internal controls, the Company has maintained proper records of the transactions and contracts in respect of its dealing in mutual funds and timely entries have been made therein. The aforesaid securities have been held by the Company in its own name. (vi) To the best of our knowledge and according to the information and explanations given to us, no fraud by or on the Company has been noticed or reported during the year.
Partner Membership No. 15860 Mumbai April 21, 2010
I D F C - S S K I ST O C K B R O K I N G L I M I T E D
117
BALANCE SHEET
RUPEES SCHEDULE RUPEES
AS AT MARCH 31, 2010
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
SOURCES OF FUNDS
Shareholders’ Funds Capital Reserves and Surplus 1 2 15,000,000 1,780,201 16,780,201 16,780,201 15,000,000 1,003,539 16,003,539 16,003,539 906,453 14,731,496 589,675 10,342,953 Less : Current Liabilities and Provisions Current Liabilities Provision for Income Tax (Net of Advance Tax) Net Current Assets Notes to the Accounts Schedules 1 to 10 form an integral part of the Accounts 10 6 126,845 256,207 383,052 9,959,901 16,780,201 116,665 107,420 224,085 15,097,086 16,003,539 15,321,171
APPLICATION OF FUNDS
Investments Current Assets, Loans and Advances Cash and Bank Balances Loans and Advances 4 5 10,076,369 266,584 3 6,820,300
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants
NALIN M . S H A H MAHENDRA N. SHAH TAPASIJE MISHRA
FOR AND ON BEHALF OF THE BOARD
Partner Mumbai | April 21, 2010
118 I D F C A N N U A L R E P O R T 09 –10
Director
Director
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
SCHEDULE
APRIL 01, 2009 TO MARCH 31, 2010 7 8 1,432,017 – 1,432,017
APRIL 01, 2008 TO MARCH 31, 2009 1,411,270 27,143 1,438,413 328,768 328,768 1,109,645 380,000 729,645 273,894 1,003,539 0.49
INCOME
Operating Income Other Income
EXPENDITURE
Establishment & Other Expenses PROFIT BEFORE TAXATION Less : Provision for Taxation Current Tax PROFIT AFTER TAXATION Add : Balance as per last Balance Sheet Balance Carried forward Earnings per share (Face Value Rs. 10) ( See Schedule 10 Note II.1 ) Basic and Diluted Notes to the Accounts Schedules 1 to 10 form an integral part of the Accounts 10 350,000 776,662 1,003,539 1,780,201 0.52 9 305,355 305,355 1,126,662
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants
NALIN M . S H A H MAHENDRA N. SHAH TAPASIJE MISHRA
FOR AND ON BEHALF OF THE BOARD
Partner Mumbai | April 21, 2010
Director
Director
I D F C - S S K I ST O C K B R O K I N G L I M I T E D
119
C A S H F L OW ST AT E M E N T
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
FOR THE YEAR ENDED MARCH 31, 2010
FOR THE YEAR ENDED MARCH 31, 2009 1,109,645 1,109,645 (428,898) (28,168) (457,066) 652,579 (315,089) 337,490 (906,453) (906,453) (568,963) 15,300,459 14,731,496 (568,963)
A.
CASH FLOW FROM OPERATING ACTIVITIES
Profit before Taxation OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES Changes in : Current Assets, Loans & Advances Current Liabilities 323,091 10,180 333,271 1,459,933 Direct Taxes paid NET CASH FROM OPERATING ACTIVITIES (201,213) 1,258,720 (5,913,846) (5,913,846) (4,655,127) 14,731,496 10,076,369 (4,655,127) 1,126,662 1,126,662
B.
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Investments NET CASH USED IN INVESTING ACTIVITIES Net Decrease in Cash and Cash Equivalents (A+B) Cash and Cash Equivalents as at the beginning of the year as per Schedule 4 Cash and Cash Equivalents as at the end of the year as per Schedule 4
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants
NALIN M . S H A H MAHENDRA N. SHAH TAPASIJE MISHRA
FOR AND ON BEHALF OF THE BOARD
Partner Mumbai | April 21, 2010
120 I D F C A N N U A L R E P O R T 09 –10
Director
Director
SCHEDULES
SCHEDULE 1 Capital
AUTHORISED: 2,000,000 equity shares of Rs. 10 each ISSUED, SUBSCRIBED AND PAID-UP: 1,500,000 equity shares of Rs. 10 each fully paid All the above shares are held by IDFC Securities Limited (Formerly known as IDFC - SSKI Securities Limited). The ultimate holding company is Infrastructure Development Finance Company Limited.
ANNEXED TO AND FORMING PART OF THE ACCOUNTS
RUPEES
RUPEES
AS AT MARCH 31, 2010 20,000,000 20,000,000 15,000,000
AS AT MARCH 31, 2009 20,000,000 20,000,000 15,000,000
15,000,000
15,000,000
SCHEDULE 2 Reserves and Surplus
Profit and Loss Account
RUPEES
RUPEES
AS AT MARCH 31, 2010 1,780,201 1,780,201
AS AT MARCH 31, 2009 1,003,539 1,003,539
SCHEDULE 3 Investments (Non-Trade Unquoted)
RUPEES
RUPEES
AS AT MARCH 31, 2010 I. CURRENT NUMBER OF UNITS IDFC Money Manager Fund Treasury Plan A Daily Dividend [Net Asset Value Rs.6,820,300 (Previous Year Rs.906,453)] 6,820,300 677295.67 FACE VALUE
RUPEES
AS AT MARCH 31, 2009
MUTUAL FUNDS
10
6,820,300
906,453 906,453
SCHEDULE 4 Cash and Bank Balances
- Cash BALANCE WITH SCHEDULED BANKS - in Current Account - in Deposit Account
RUPEES
RUPEES
RUPEES
AS AT MARCH 31, 2010 6,275 170,094 9,900,000 10,070,094 10,076,369
AS AT MARCH 31, 2009 7,335 24,161 14,700,000 14,724,161 14,731,496
SCHEDULE 5 Loans and Advances (Unsecured)
Interest accrued on Deposits
RUPEES
RUPEES
AS AT MARCH 31, 2010 266,584 266,584
AS AT MARCH 31, 2009 589,675 589,675
I D F C - S S K I ST O C K B R O K I N G L I M I T E D
121
SCHEDULE 6 Current Liabilities
Sundry Creditors – Other than Micro and Small Enterprises (See Schedule 10 Note II.5) Other Liabilities
RUPEES
RUPEES
AS AT MARCH 31, 2010 110,300 16,545 126,845
AS AT MARCH 31, 2009 97,803 18,862 116,665
SCHEDULE 7 Operating Income
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Interest on Deposits (Tax Deducted at Source Rs.143,883 Previous Year Rs.290,214/-) Dividend On Current Investment ( Non-Trade ) Profit on Sale of Investments 113,253 594 1,432,017 1,318,170
APRIL 1, 2008 TO MARCH 31, 2009 1,404,817 6,453 1,411,270
SCHEDULE 8 Other Income
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Miscellaneous Income Interest on Income Tax Refund -
APRIL 1, 2008 TO MARCH 31, 2009 25,277 1,866 27,143
SCHEDULE 9 Establishment & Other Expenses
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Rates and Taxes Professional Fees Filling Fees Miscellaneous Expenses Auditors’ Remuneration ( See Schedule 10 Note II.2 ) 2,000 18,545 9,000 60 275,750 305,355
APRIL 1, 2008 TO MARCH 31, 2009 140 43,355 – 6,433 278,840 328,768
122
I D F C A N N U A L R E P O R T 09 –10
SCHEDULE: 10 Notes to the Accounts
Background
The Company is a wholly-owned subsidiary of IDFC Securities Limited (Formerly known as IDFC-SSKI Securities Limited). Infrastructure Development Finance Company Limited (“IDFC”) is the ultimate holding company.
I Significant Accounting Policies
I.1 Accounting convention
The accompanying financial statements are prepared under the historical cost convention on an accrual basis of accounting and comply with the accounting standards as notified by the Companies (Accounting Standards) Rules, 2006 and in accordance with the generally accepted accounting principles (‘GAAP’) and the provisions of the Companies Act, 1956 as adopted consistently by the Company.
I.2 Use of Estimates
The Company adopts the accrual concept in the preparation of the accounts. The preparation of financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.
I.3 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 the carrying value other than temporary in nature is provided for. Current investments are valued at cost or market/fair value, whichever is lower. In case of investments in units of mutual funds, the net asset value of units has been considered as the market value.
I.4 Revenue recognition
I.4.1 Interest income is recognised on an accrual basis. I.4.2 Dividend is recognised when the right to receive is established.
I.5 Taxation
The accounting treatment for income-tax in respect of the Company’s income is based on the Accounting Standard 22 on ‘Accounting for Taxes on Income’ as notified by the Companies (Accounting Standards) Rules, 2006. The provision made for income-tax in the accounts comprises both, the current tax and the deferred tax. The deferred tax assets and liabilities for the year, arising on account of timing differences, are recognised in the Profit and Loss Account and the cumulative effect thereof is reflected in the Balance Sheet. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.
II Notes to Accounts
II.1 Basic & Diluted Earnings Per Share:
RUPEES
PARTICULARS Net Profit attributable to equity shareholders (A) Number of equity shares issued (B) Basic and Diluted Earnings per share (EPS) [A/B]
CURRENT YEAR 776,662 1,500,000 0.52
PREVIOUS YEAR 729,645 1,500,000 0.49
II.2 Auditors’ remuneration:
RUPEES
PARTICULARS Audit Fees Other Services Service Tax Total
CURRENT YEAR 100,000 150,000 25,750 275,750
PREVIOUS YEAR 100,000 150,000 28,840 278,840
I D F C - S S K I ST O C K B R O K I N G L I M I T E D
123
II.3 Related party disclosures
Related party disclosures, as required by Accounting Standard –AS18 “Related Parties Disclosures” as notified by the Companies (Accounting Standards) Rules, 2006.
I. HOLDING COMPANY:
IDFC Securities Limited (Formerly Known as IDFC-SSKI Securities Limited)
II. ULTIMATE HOLDING COMPANY:
Infrastructure Development Finance Company Limited
II.4 Since the Company is engaged only in investing activities, there are no separate reportable segments as per Accounting Standard 17 on
‘Segment Reporting’ as notified by the Companies (Accounting Standards) Rules, 2006.
II.5 There is no interest paid/payable during the year by the Company to suppliers covered under the Micro, Small and Medium Enterprises
Development Act, 2006. The above information takes into account only those suppliers who have responded to the enquires made by the Company for this purpose.
II.6 Prior year comparatives
The prior year comparatives have been regrouped, recasted and reclassified wherever necessary to ensure conformity with current year’s presentation.
FOR AND ON BEHALF OF THE BOARD
MAHENDRA N. SHAH
TAPASIJE MISHRA
Director Mumbai | April 21, 2010
124 I D F C A N N U A L R E P O R T 09 –10
Director
B A L A N C E S H E E T A B ST R A CT
AND COMPANY’S GENERAL BUSINESS PROFILE
I.
REGISTRATION DETAILS Registration No. State Code Balance Sheet Date U 5 3 6 5 1 0 3 2 0 1 0 5 9 9 0 M H 1 9 9 2 P L C 0 6 9 8 2 4
II.
CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000) Public Issue N I L Right Issue N I L
Bonus Issue N III. I L
Private Placement N I L
POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000) Total Liabilities 1 SOURCES OF FUNDS Paid-up Capital 1 5 0 0 0 Reserves and Surplus 1 7 8 0 7 1 6 3 1 7 Total Assets 1 6 3
Secured Loans N APPLICATION OF FUNDS Net Fixed Assets N I L I L
Unsecured Loans N I L
Investments 6 8 2 0
Net Current Assets 9 9 6 0
Miscelleneous Expenditure N I L
Deferred Tax Asset N IV. I L Total Expenditure 3 0 5
PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000) Turnover / Income 1 4 3 2
Profit Before Tax 1 1 2 7
Profit After Tax 7 7 7
Earnings per Share (in Rs.) 0 V. . 5 2
Dividend % N I L
GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS) Item Code No. (ITC Code) Product Description N T I R L A D I N G I N S E C U R I T I E S
I D F C - S S K I ST O C K B R O K I N G L I M I T E D
125
IDFC capital
company limited
B O A R D O F D I R E CTO R S
?
? ?
Mr. A. K. T. Chari Chairman Mr. Sadashiv Rao Mr. Mahendra N. Shah
A U D I TO R S
?
Deloitte Haskins & Sells Chartered Accountants
P R I N C I PA L B A N K E R S
?
HDFC Bank Limited
R E G I ST E R E D O F F I C E
Naman Chambers, C-32, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai 400051. TEL +91 22 42222000 FAX +91 22 26540354
126
I D F C A N N U A L R E P O R T 09 –10
D I R E CT O R S ’ R E P O R T
TO THE MEMBERS
Your directors have pleasure in presenting the Third Annual Report together with the audited accounts for the year ended March 31, 2010.
FOREIGN EXCHANGE EARNINGS AND EXPENDITURE
There was no income or expenditure in foreign currency during the period under review.
PERSONNEL AND OTHER MATTERS
Since your Company does not have any employees, the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are not applicable and hence not given. Since the Company does not own any manufacturing facility, the disclosure of information on other matters required to be disclosed in terms of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1998, are not applicable and hence not given.
PRINCIPAL ACTIVITIES
Your Company’s principal activity is to act as a capital and investment company.
FINANCIAL RESULTS
Your Company is yet to commence full fledged operations. During the year under review, the Company has incurred a loss of Rs.144,275/-.
DIVIDEND
The Directors do not recommend any dividend for the year ended March 31, 2010.
PUBLIC DEPOSITS
During the period under review, your Company has not accepted public deposits under the provisions of Section 58-A of the Companies Act, 1956.
DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors confirm that: the applicable accounting standards have been followed in preparation of annual accounts and there are no material departures;
¬
DIRECTORS
During the year, Dr. Rajiv B. Lall resigned from the Directorship of the Company with effect from October 12, 2009. The Board wishes to place on record its sincere appreciation for his valuable and guidance contribution to the Company. In accordance with the provisions of the Articles of Association of the Company and Companies Act, 1956, Mr. Sadashiv Rao would retire at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.
they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2010 and the loss of the Company for the year ended on that date;
¬
they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and detecting fraud and other irregularities; and
¬ ¬
they have prepared the annual accounts on a going concern basis.
AUDITORS
M/s. Deloitte Haskins & Sells, Ahmedabad will retire as the statutory auditors of the Company at the ensuing Annual General Meeting. The Board of Directors, at its meeting held on April 22, 2010, has proposed the re-appointment of M/s. Deloitte Haskins & Sells, Ahmedabad as statutory auditors to audit the financials of the Company for the year ending March 31, 2011. M/s. Deloitte Haskins & Sells, Ahmedabad have confirmed that their re-appointment, if made, would be in conformity with the provisions of Sections 224 and 226 of the Companies Act, 1956 as also indicated their willingness to be appointed. You are requested to consider their re-appointment.
ACKNOWLEDGEMENTS
The Directors also express their gratitude for the unstinted support and guidance received from Infrastructure Development Finance Company Limited and other group companies.
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
A. K. T. CHARI
Chairman Mumbai April 22, 2010
I D FC CA P I TA L CO M PA N Y L I M I T E D
127
AU D I TO RS ’ R E PO RT
To The Members of IDFC Capital Company Limited
1. We have audited the attached Balance Sheet of IDFC CAPITAL COMPANY LIMITED (“the Company”) as at March 31, 2010, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditor’s Report) Order, 2003 (CARO) issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. 4. Without qualifying our opinion, we invite attention to the Note No. 6 of Schedule 4 regarding the preparation of accounts on a going concern basis. 5. Further to our comments in the Annexure referred to in paragraph 3 above, we report as follows: (a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; (b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books; (c) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account;
FOR DELOITTE HASKINS & SELLS Chartered Accountants (Registration No.117365W)
(d) in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956; (e) in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2010;
(ii) in the case of the Profit and Loss Account, of the loss of the Company for the year ended on that date and (iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date. 6. On the basis of the written representations received from the Directors as on 31st March, 2010 taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March, 2010 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956.
Z. F. BILLIMORIA
Partner (Membership No. 42791)
Mumbai April 22, 2010
128
I D F C A N N U A L R E P O R T 09 –10
ANNEXURE
(Referred to in paragraph 3 of our report of even date) (i) Having regard to the nature of the Company’s business/ activities/result/transactions etc., clauses (i), (ii), (iii), (vi), (vii), (viii), (x), (xi), (xii), (xiii),(xiv), (xv), (xvi), (xvii), (xviii), (xix) and (xx) of CARO are not applicable. (ii) The Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956. (iii) To the best of our knowledge and belief and according to information and explanation given to us, there were no contracts or arrangements required to be entered in the register maintained in pursuance of section 301 of the Companies Act, 1956. (iv) According to the information and explanations given to us in respect of statutory dues: (a) The Company has been regular in depositing undisputed dues, including Income-tax and other material statutory dues applicable to it with the appropriate authorities.
TO THE AUDITOR’S REPORT
(b) There were no undisputed amounts payable in respect of Incometax and other material statutory dues in arrears as at 31st March, 2010 for a period of more than six months from the date they became payable. (v) To the best of our knowledge and according to the information and explanations given to us, no fraud by and on the Company has been noticed or reported during the year.
FOR DELOITTE HASKINS & SELLS Chartered Accountants (Registration No.117365W)
Z. F. BILLIMORIA
Partner (Membership No. 42791) Mumbai April 22, 2010
I D FC CA P I TA L CO M PA N Y L I M I T E D
129
BALANCE SHEET
RUPEES SCHEDULE RUPEES
AS AT MARCH 31, 2010
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
SOURCES OF FUNDS
Shareholders’ Funds Share Capital 1 500,000 500,000 500,000 500,000
APPLICATION OF FUNDS
Current Assets, Loans and Advances Bank Balance Less:Current Liabilities Net Current Liabilities Profit and Loss Account Notes to the Accounts. Schedules 1 to 4 form an integral part of the Accounts 4 2 3 184,241 891,060 (706,819) 1,206,819 500,000 328,516 891,060 (562,544) 1,062,544 500,000
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants
Z. F. B I L L I M O R I A SADASHIV S. RAO MAHENDRA N. SHAH
FOR AND ON BEHALF OF THE BOARD
Partner Mumbai | April 22, 2010
130 I D F C A N N U A L R E P O R T 09 –10
Director
Director
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
SCHEDULE
APRIL 1, 2009 TO MARCH 31, 2010 5,000 1,400 50,000 75,000 – 12,875 144,275 1,062,544 1,206,819 (2.89) 4
APRIL 1, 2008 TO MARCH 31, 2009 19,798 50,000 75,000 10,000 15,656 170,454 892,090 1,062,544 (3.41)
EXPENDITURE
Professional Fees Rates and Taxes Auditors’ Remuneration Audit Fees Other Matters Company Law Matters Service Tax Loss for the year Balance Loss Brought Forward Balance Loss Carried to Balance Sheet Basic and Diluted Earnings Per Share (Face value Rs.10) (See Schedule 4 Note 4) Notes to the Accounts Schedules 1 to 4 form an integral part of the Accounts
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants
Z. F. B I L L I M O R I A SADASHIV S. RAO MAHENDRA N. SHAH
FOR AND ON BEHALF OF THE BOARD
Partner Mumbai | April 22, 2010
Director
Director
I D FC CA P I TA L CO M PA N Y L I M I T E D
131
C A S H F L OW ST AT E M E N T
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010
APRIL 1, 2008 TO MARCH 31, 2009 (170,454)
A.
CASH FLOW FROM OPERATING ACTIVITIES
Loss before tax Adjustments for : Changes in : Current Liabilities NET CASH USED IN OPERATING ACTIVITIES (A) (B) (C) – (144,275) – – (144,275) 328,516 184,241 (144,275) (1,030) (171,484) – – (171,484) 500,000 328,516 (171,484) (144,275)
B. C.
CASH FLOW FROM INVESTING ACTIVITIES
NET CASH FROM INVESTING ACTIVITIES
CASH FLOW FROM FINANCING ACTIVITIES
NET CASH FROM FINANCING ACTIVITIES Net decrease in cash and cash equivalents (A+B+C) Cash and cash equivalents as at the beginning of the year (as per Schedule 2) Cash and cash equivalents as at the end of the year (as per Schedule 2)
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants
Z. F. B I L L I M O R I A SADASHIV S. RAO MAHENDRA N. SHAH
FOR AND ON BEHALF OF THE BOARD
Partner Mumbai | April 22, 2010
132 I D F C A N N U A L R E P O R T 09 –10
Director
Director
SCHEDULES
ANNEXED TO AND FORMING PART OF THE ACCOUNTS
SCHEDULE 1 Share Capital
AUTHORISED: 10,000,000 Equity shares of Rs.10 each ISSUED, SUBSCRIBED & PAID UP 50,000 Equity shares of Rs.10 each, fully paid-up (All the above shares are held by Infrastructure Development Finance Company Limited, the holding company and its nominees)
RUPEES
RUPEES
AS AT MARCH 31, 2010 100,000,000 500,000
AS AT MARCH 31, 2009 100,000,000 500,000
500,000
500,000
SCHEDULE 2 Bank Balance
Balance with Scheduled Bank in Current Account
RUPEES
RUPEES
AS AT MARCH 31, 2010 184,241 184,241
AS AT MARCH 31, 2009 328,516 328,516
SCHEDULE 3 Current Liabilities
Sundry Creditors - Other than Micro and Small Enterprises (See Schedule 4 Note 5) Other Liabilities
RUPEES
RUPEES
AS AT MARCH 31, 2010 885,545 5,515 891,060
AS AT MARCH 31, 2009 884,812 6,248 891,060
I D FC CA P I TA L CO M PA N Y L I M I T E D
133
SCHEDULE 4 Notes Forming Part of the Accounts
1 Significant Accounting Policies
A. Basis of Preparation
The Company adopts the accrual concept in the preparation of accounts. The preparation of financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.
B. Income Tax
The accounting treatment for income-tax in respect of the Company’s income is based on the Accounting Standard 22 on ‘Accounting for Taxes on Income’ as notified by the Companies (Accounting Standards) Rules, 2006. The provision made for income-tax in the accounts comprises both, the current tax and the deferred tax. The deferred tax assets and liabilities for the year, arising on account of timing differences, are recognised in the Profit and Loss Account and the cumulative effect thereof is reflected in the Balance Sheet. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the Company has unabsorbed depreciation or carry forward tax losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that the same can be realised against future taxable profits.
2 The Company is yet to commence its commercial operations. Accordingly, there are no separate reportable segments as per Accounting Standard 17 on ‘Segment Reporting’ as notified by the Companies (Accounting Standards) Rules, 2006. 3 As per the Accounting Standard 18 on ‘Related Party Disclosures’ as notified by the Companies (Accounting Standards) Rules, 2006, the related parties of the Company are as follows:
(a) Relationship: Holding Company: Infrastructure Development Finance Company Limited (b) The nature and volume of transactions carried out with the above related party in the ordinary course of business are as follows:
NAME OF THE RELATED PARTY Infrastructure Development Finance Company Limited PARTICULARS Amount Payable CURRENT YEAR
(RUPEES)
PREVIOUS YEAR
(RUPEES)
835,910
835,910
4 In accordance with the Accounting Standard 20 on ‘Earnings Per Share’ as notified by the Companies (Accounting Standards) Rules, 2006; the Earnings Per Share is as under:
PARTICULARS Loss After Tax (Rs.) Weighted average number of equity shares (Nos.) Basic and Diluted Earnings Per Share (Rs.) Nominal Value Per Share (Rs.) CURRENT YEAR (144,275) 50,000 (2.89) 10.00 PREVIOUS YEAR (170,454) 50,000 (3.41) 10.00
5 The Company has no amounts due to any micro, small and medium enterprises as defined under Micro Small and Medium Enterprises Development Act, 2006 as on March 31, 2010. 6 The accounts of the Company have been prepared on a going concern basis. The Company continues to be a going concern in view of the commitment and financial support from its holding company, Infrastructure Development Finance Company Limited, regarding the amounts due to it and other liabilities as and when they fall due for payment 7 The figures for the previous year have been regrouped / rearranged wherever necessary.
FOR AND ON BEHALF OF THE BOARD
SADASHIV S. RAO
MAHENDRA N. SHAH
Director Mumbai | April 22, 2010
134 I D F C A N N U A L R E P O R T 09 –10
Director
B A L A N C E S H E E T A B ST R A CT
AND COMPANY’S GENERAL BUSINESS PROFILE
I.
REGISTRATION DETAILS Registration No. State Code Balance Sheet Date U 1 3 6 1 1 0 3 2 0 1 0 5 9 9 3 M H 2 0 0 7 P L C 1 7 5 3 3 5
II.
CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000) Public Issue N I L Right Issue N I L
Bonus Issue N III. I L
Private Placement N I L
POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000) Total Liabilities 1 SOURCES OF FUNDS Paid-up Capital 5 0 0 Reserves and Surplus N I L 8 4 Total Assets 1 8 4
Secured Loans N APPLICATION OF FUNDS Net Fixed Assets N I L I L
Unsecured Loans N I L
Investments N I L
Net Current Assets (7 0 7)
Deferred Tax Asset N I L
Profit and Loss Account 1 IV. 2 0 7
PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000) Turnover / Income N I L Total Expenditure 1 4 4
Profit Before Tax (1 4 4)
Profit After Tax (1 4 4)
Earnings per Share (in Rs.) (2 V. . 8 9)
Dividend % N I L
GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS) Item Code No. (ITC Code) Product Description N I I N L V E S T M E N T C O M P A N Y
I D FC CA P I TA L CO M PA N Y L I M I T E D
135
IDFC ppp
trusteeship company limited
B O A R D O F D I R E CTO R S
?
? ?
Mr. Anil Baijal Chairman Mr. Cherian Thomas Mr. Mahendra N. Shah
A U D I TO R S
?
Deloitte Haskins & Sells Chartered Accountants
P R I N C I PA L B A N K E R S
?
HDFC Bank Limited
R E G I ST E R E D O F F I C E
Naman Chambers, C-32, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai 400051. TEL +91 22 42222000 FAX +91 22 26540354
136
I D F C A N N U A L R E P O R T 09 –10
D I R E CT O R S ’ R E P O R T
TO THE MEMBERS
Your directors have pleasure in presenting the Third Annual Report together with the audited accounts for the year ended March 31, 2010. Sections 224 and 226 of the Companies Act, 1956 as also indicated their willingness to be appointed. You are requested to consider their reappointment.
FOREIGN EXCHANGE EARNINGS AND EXPENDITURE
There was no income or expenditure in foreign currency during the period under review.
PRINCIPAL ACTIVITIES
Your Company’s principal activity is to act as trustee in general and particular for investment fund, debt fund, mutual fund, venture capital fund or any other pool or portfolio of securities and to set up, constitute, promote, settle and executive trusts and/or companies or other entities and to act as, or, exercise powers of trustees, executers, administrators, receivers, managers, treasurers, attorneys, nominees and agent to the debenture holders. During the year, your Company has been appointed as a Trustee to PPP Capacity Building Trust. This trust would be set up under IDFC Foundation, a division proposed to be set up by Infrastructure Development Finance Company Limited, which shall undertake initiatives on the matters of research/advisory on policy, PPP advisory & capacity building and CSR.
PERSONNEL AND OTHER MATTERS
Since your Company does not have any employees, the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) rules, 1988, are not applicable and hence not given. Since the Company does not own any manufacturing facility, the disclosure of information on other matters required to be disclosed in terms of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1998, are not applicable and hence not given.
DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors confirm that: the applicable accounting standards have been followed in preparation of annual accounts and there are no material departures;
¬
FINANCIAL RESULTS
Your Company is yet to commence full fledged operations. During the year under review, the Company has incurred a loss of Rs.135,234/-.
DIVIDEND
Your Directors do not recommend any dividend for the period ended March 31, 2010.
PUBLIC DEPOSITS
During the period under review, your Company has not accepted public deposits under Section 58-A of the Companies Act, 1956.
they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2010 and the loss of the Company for the year ended on that date;
¬
DIRECTORS
In terms of the provisions of the Articles of Association of the Company, Mr. Cherian Thomas would retire at the ensuing Annual General Meeting and being eligible, offers himself for reappointment.
they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and detecting fraud and other irregularities; and
¬ ¬
they have prepared the annual accounts on a going concern basis.
ACKNOWLEDGEMENTS
The Directors also express their gratitude for the unstinted support and guidance received from Infrastructure Development Finance Company Limited and other group companies.
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
ANIL BAIJAL
AUDITORS
M/s. Deloitte Haskins & Sells, Ahmedabad will retire as the statutory auditors of the Company at the ensuing Annual General Meeting. The Board of Directors, at its meeting held on April 22, 2010, has proposed the reappointment of M/s. Deloitte Haskins & Sells, Ahmedabad as statutory auditors for the financial year ending March 31, 2011. M/s. Deloitte Haskins & Sells, Ahmedabad have confirmed that their reappointment, if made, would be in conformity with the provisions of
Chairman Mumbai April 22, 2010
I D F C P P P T R U ST E E S H I P C O M P A N Y L I M I T E D
137
AU D I TO RS ’ R E PO RT
To The Members of IDFC PPP TRUSTEESHIP COMPANY LIMITED
1. We have audited the attached Balance Sheet of IDFC PPP TRUSTEESHIP COMPANY LIMITED (“the Company”) as at March 31, 2010, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditor’s Report) Order, 2003 (CARO) issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. 4. Further to our comments in the Annexure referred to in paragraph 3 above, we report as follows: (a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; (b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books; (c) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account;
FOR DELOITTE HASKINS & SELLS Chartered Accountants (Registration No.117365W)
Z. F. BILLIMORIA
(d) in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956; (e) in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (i) (ii) (iii) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2010; in the case of the Profit and Loss Account, of the loss of the Company for the year ended on that date and in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.
5. On the basis of the written representations received from the Directors as on 31st March, 2010 taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March, 2010 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956.
Partner (Membership No. 42791) Mumbai April 22, 2010
138
I D F C A N N U A L R E P O R T 09 –10
ANNEXURE
TO THE AUDITOR’S REPORT
(Referred to in paragraph 3 of our report of even date) (i) Having regard to the nature of the Company’s business/ activities/result/transactions etc., clauses (i), (ii), (vi), (vii), (viii), (x), (xi), (xii), (xiii), (xiv), (xv), (xvi), (xvii), (xviii), (xix) and (xx) of CARO are not applicable. (ii) The Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956. (iii) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to the sale of services. During the course of our audit, we have not observed any major weakness in such internal control system. (iv) To The best of our knowledge and belief and according to information and explanation given to us, there were no contracts or arrangements required to be entered in the register maintained in pursuance of section 301 of the Companies Act, 1956. (v) According to the information and explanations given to us in respect of statutory dues:
(a) The Company has been regular in depositing undisputed dues, including Income-tax and other material statutory dues applicable to it with the appropriate authorities. (b) There were no undisputed amounts payable in respect of Income-tax and other material statutory dues in arrears as at 31st March, 2010 for a period of more than six months from the date they became payable. (vi) To the best of our knowledge and according to the information and explanations given to us, no fraud by and on the Company has been noticed or reported during the year.
FOR DELOITTE HASKINS & SELLS Chartered Accountants (Registration No.117365W)
Z. F. BILLIMORIA
Partner (Membership No. 42791) Mumbai April 22, 2010
I D F C P P P T R U ST E E S H I P C O M P A N Y L I M I T E D
139
BALANCE SHEET
RUPEES SCHEDULE RUPEES
AS AT MARCH 31, 2010
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
SOURCES OF FUNDS
Shareholders’ Funds Share Capital 1 500,000 500,000 500,000 500,000
APPLICATION OF FUNDS
Current Assets, Loans and Advances Bank Balance Less:Current Liabilities Net Current Assets Profit and Loss Account Notes to the Accounts. Schedules 1 to 4 form an integral part of the Accounts 4 2 3 136,844 55,150 81,694 418,306 500,000 272,078 55,150 216,928 283,072 500,000
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants
Z. F. B I L L I M O R I A CHERIAN THOMAS MAHENDRA N. SHAH
FOR AND ON BEHALF OF THE BOARD
Partner
Director
Director
Mumbai | April 22, 2010
140 I D F C A N N U A L R E P O R T 09 –10
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
SCHEDULE
APRIL 1, 2009 TO MARCH 31, 2010 9,041 9,041 5,000 1,400 50,000 75,000 12,875 144,275 135,234 283,072 418,306 (2.70) 4
APRIL 1, 2008 TO MARCH 31, 2009 18,582 50,000 75,000 10,000 15,656 169,238 169,238 113,834 283,072 (3.38)
INCOME
Trusteeship Fees Total
EXPENDITURE
Professional Fees Rates and Taxes Auditors’ Remuneration Audit Fees Other Matters Company Law Matters Service Tax Loss for the year Balance Loss Brought Forward Balance Loss Carried to Balance Sheet Basic and Diluted Earnings Per Share (Face value Rs.10) (See Schedule 4 Note 4) Notes to the Accounts. Schedules 1 to 4 form an integral part of the Accounts
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants
Z. F. B I L L I M O R I A CHERIAN THOMAS MAHENDRA N. SHAH
FOR AND ON BEHALF OF THE BOARD
Partner
Director
Director
Mumbai | April 22, 2010
I D F C P P P T R U ST E E S H I P C O M P A N Y L I M I T E D 141
C A S H F L OW ST AT E M E N T
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010
APRIL 1, 2008 TO MARCH 31, 2009 (169,238)
A.
CASH FLOW FROM OPERATING ACTIVITIES
Loss before tax Adjustments for : Changes in : Current Liabilities NET CASH USED IN OPERATING ACTIVITIES (A) (B) (C) (135,234) (135,234) 272,078 136,844 (135,234) (58,684) (227,922) (227,922) 500,000 272,078 (227,922) (135,234)
B. C.
CASH FLOW FROM INVESTING ACTIVITIES
NET CASH FROM INVESTING ACTIVITIES
CASH FLOW FROM FINANCING ACTIVITIES
NET CASH FROM FINANCING ACTIVITIES Net decrease in cash and cash equivalents (A+B+C) Cash and cash equivalents as at the beginning of the year (as per Schedule 2) Cash and cash equivalents as at the end of the year (as per Schedule 2)
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants
Z. F. B I L L I M O R I A CHERIAN THOMAS MAHENDRA N. SHAH
FOR AND ON BEHALF OF THE BOARD
Partner
Director
Director
Mumbai | April 22, 2010
142 I D F C A N N U A L R E P O R T 09 –10
SCHEDULES
ANNEXED TO AND FORMING PART OF THE ACCOUNTS
SCHEDULE 1 Share Capital
AUTHORISED: 100,000 Equity shares of Rs.10 each ISSUED, SUBSCRIBED & PAID UP 50,000 Equity shares of Rs.10 each, fully paid-up (All the above shares are held by Infrastructure Development Finance Company Limited, the holding company and its nominees)
RUPEES
RUPEES
AS AT MARCH 31, 2010 1,000,000 500,000
AS AT MARCH 31, 2009 1,000,000 500,000
500,000
500,000
SCHEDULE 2 Bank Balance
Balance with Scheduled Bank in Current Account
RUPEES
RUPEES
AS AT MARCH 31, 2010 136,844 136,844
AS AT MARCH 31, 2009 272,078 272,078
SCHEDULE 3 Current Liabilities
Sundry Creditors - Other than Micro and Small Enterprises (See Schedule 4 Note 5) Other Liabilities
RUPEES
RUPEES
AS AT MARCH 31, 2010 49,635 5,515 55,150
AS AT MARCH 31, 2009 48,902 6,248 55,150
I D F C P P P T R U ST E E S H I P C O M P A N Y L I M I T E D
143
SCHEDULE 4 Notes Forming Part of the Accounts
1 SIGNIFICANT ACCOUNTING POLICIES
A. Basis of Preparation
The Company adopts the accrual concept in the preparation of accounts. The preparation of financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.
B. Revenue Recognition
Trusteeship fees are accounted for on accrual basis.
C. Income Tax
The accounting treatment for income-tax in respect of the Company’s income is based on the Accounting Standard 22 on ‘Accounting for Taxes on Income’ as notified by the Companies (Accounting Standards) Rules, 2006. The provision made for income-tax in the accounts comprises both, the current tax and the deferred tax. The deferred tax assets and liabilities for the year, arising on account of timing differences, are recognised in the Profit and Loss Account and the cumulative effect thereof is reflected in the Balance Sheet. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the Company has unabsorbed depreciation or carry forward tax losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that the same can be realised against future taxable profits.
2 The Company is engaged in the business of providing trusteeship services in India. As such there is no separate reportable segment as per Accounting Standard 17 on ‘Segment Reporting’ as notified by the Companies (Accounting Standards) Rules, 2006. 3 As per the Accounting Standard 18 on ‘Related Party Disclosures’ as notified by the Companies (Accounting Standards) Rules, 2006, the related parties of the Company are as follows:
(a) Relationship: Holding Company: Infrastructure Development Finance Company Limited Enterprise Controlled by the Holding Company: India PPP Capacity Building Trust (b) The nature and volume of transactions carried out with the above related party in the ordinary course of business are as follows:
NAME OF THE RELATED PARTY India PPP Capacity Building Trust PARTICULARS Trusteeship Fees CURRENT YEAR
(RUPEES)
PREVIOUS YEAR
(RUPEES)
9,041
Nil
4 In accordance with the Accounting Standard 20 on ‘Earnings Per Share’ as notified by the Companies (Accounting Standards) Rules, 2006; the Earnings Per Share is as under:
PARTICULARS Loss After Tax (Rs.) Weighted average number of equity shares (Nos.) Basic and Diluted Earnings Per Share (Rs.) Nominal Value Per Share (Rs.) CURRENT YEAR (135,234) 50,000 (2.70) 10.00 PREVIOUS YEAR (169,238) 50,000 (3.38) 10.00
5 The Company has no amounts due to any micro, small and medium enterprises as defined under Micro Small and Medium Enterprises
Development Act, 2006 as on March 31, 2010.
6 The figures for the previous year have been regrouped / rearranged wherever necessary.
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants
Z. F. B I L L I M O R I A CHERIAN THOMAS MAHENDRA N. SHAH
FOR AND ON BEHALF OF THE BOARD
Partner
Director
Director
Mumbai | April 22, 2010
144 I D F C A N N U A L R E P O R T 09 –10
B A L A N C E S H E E T A B ST R A CT
AND COMPANY’S GENERAL BUSINESS PROFILE
I.
REGISTRATION DETAILS Registration No. State Code Balance Sheet Date U 1 3 6 1 1 0 3 2 0 1 0 7 1 9 0 M H 2 0 0 7 P L C 1 7 4 8 6 7
II.
CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000) Public Issue N I L Right Issue N I L
Bonus Issue N III. I L
Private Placement N I L
POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000) Total Liabilities 1 SOURCES OF FUNDS Paid-up Capital 5 0 0 Reserves and Surplus N I L 3 7 Total Assets 1 3 7
Secured Loans N APPLICATION OF FUNDS Net Fixed Assets N I L I L
Unsecured Loans N I L
Investments N I L
Net Current Assets 8 2
Deferred Tax Asset N I L
Profit and Loss Account 4 IV. 1 8
PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000) Turnover / Income 9 Profit Before Tax (1 3 5) Total Expenditure 1 4 4
Profit After Tax (1 3 5)
Earnings per Share (in Rs.) (2 V. . 7 0)
Dividend % N I L
GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS) Item Code No. (ITC Code) Product Description N T I R L U S T E E S E R V I C E S
I D F C P P P T R U ST E E S H I P C O M P A N Y L I M I T E D
145
IDFC projects
limited
?
B O A R D O F D I R E CTO R S
? ? ? ?
Dr. Rajiv B. Lall Chairman Mr. Vikram Limaye Mr. A. K. T. Chari Mr. Sadashiv Rao Mr. Mahendra N. Shah
A U D I TO R S
?
Deloitte Haskins & Sells Chartered Accountants
P R I N C I PA L B A N K E R S
?
HDFC Bank Limited
R E G I ST E R E D O F F I C E
Naman Chambers, C-32, G-Block, Bandra-Kurla Complex, Bandra(East), Mumbai 400051. TEL +91 22 42222000 FAX +91 22 26540354
146
I D F C A N N U A L R E P O R T 09 –10
D I R E CT O R S ’ R E P O R T
TO THE MEMBERS
Your Directors have pleasure in presenting the Third Annual Report together with the audited accounts for the year ended March 31, 2010.
AUDIT COMMITTEE
The Audit Committee consists of three Directors Mr. Vikram Limaye, Mr. Sadashiv Rao and Mr. Mahendra N Shah. The functions of the Committee include reviewing the half yearly and annual financial statements, internal control systems and significant accounting policies of the Company and discussing the audit findings and recommendations of the internal and statutory auditors of the Company.
PRINCIPAL ACTIVITIES
Your Company’s principal activity is to design, develop, engineer, finance, construct, operate and maintain infrastructure projects.
OPERATIONAL REVIEW
Your Company has continued to focus on projects in power sector and road sector. A team of professionals has also been put in place to pursue projects in these sectors. Your Company acquired 51% stake in Dheeru Powergen Private Limited (DPPL). DPPL is in the process of setting up a 1050 MW coalfired thermal power plant at District Korba, State of Chhattisgarh, India (the “Project”). The Project has made substantial progress during the year. It has received coal linkage for the entire capacity. The environment clearance from Ministry of Environment and Forests has been obtained. The water requirement for the Project has been tied up. Land for the Project is in advanced stages of acquisition. The Project has received open access and the Bulk Power Transmission Agreement has been signed with Power Grid Corporation of India Limited. The International Competitive Bidding process for BTG has begun and bids are expected in April 2010. Your Company submitted pre-qualification application for 17 National Highway Authority of India (NHAI) road projects. It has been shortlisted to the RFP stage in 7 projects and expects to be short listed for the remaining projects. Your Company has forged partnerships with PLUS Expressways Malaysia, Punj Lloyd Limited and Simplex Infrastructures Limited. Your Company also submitted the financial bid for one project but did not win the same. Your Company submitted the Concept Paper on the Peninsular Region Industrial Development (PRIDe) Corridor (the erstwhile Chennai-Bengaluru-Mumbai Industrial Corridor) to the Department of Industrial Policy & Promotion.
AUDITORS
M/s. Deloitte Haskins & Sells, will retire as the statutory auditors of the Company at the ensuing Annual General Meeting. The Board of Directors, at its meeting held on April 19, 2010 for the financial year ending March 31, 2010 has proposed the re-appointment of M/s. Deloitte Haskins & Sells, as statutory auditors to audit the financials of the Company for the year ending March 31, 2011. M/s. Deloitte Haskins & Sells, have confirmed that their re-appointment, if made, would be in conformity with the provisions of Sections 224 and 226 of the Companies Act, 1956 as also indicated their willingness to be appointed. You are requested to consider their appointment.
FOREIGN EXCHANGE EARNINGS AND EXPENDITURE
There was no income or expenditure in foreign currency during the period under review.
PERSONNEL AND OTHER MATTERS
As required by the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, names and other particulars of the employees are set out in the annexure to the Directors’ Report. Since the Company does not own any manufacturing facility, the disclosure of information on other matters required to be disclosed in terms of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1998, are not applicable and hence not given.
FINANCIAL RESULTS
During the period under review, the Company has incurred a loss of Rs. 8.38 Crore.
DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors confirm that: the applicable accounting standards have been followed in preparation of annual accounts and there are no material departures;
¬
DIVIDEND
The Directors do not recommend any dividend for the year ended March 31, 2010.
PUBLIC DEPOSITS
During the year under review, your Company has not accepted public deposits under the provisions of section 58-A of the Companies Act, 1956.
they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2010 and the loss of the Company for the year ended on that date;
¬
DIRECTORS
In accordance with the provisions of the Articles of Association and Companies Act, 1956, Dr. Rajiv B. Lall and Mr. Vikram Limaye would retire at the ensuing Annual General Meeting and being eligible, offers themselves for re-appointment.
they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and detecting fraud and other irregularities; and
¬ ¬
they have prepared the annual accounts on a going concern basis.
I D F C P R O J E CT S L I M I T E D 147
SUBSIDIARY COMPANY
Dheeru Powergen Private Limited is the Subsidiary Company of IDFC Projects Limited which is a stand-alone infrastructure developer. Statement pursuant to Section 212 of the Companies Act, 1956, relating to of Dheeru Powergen Private Limited, is attached hereto.
ACKNOWLEDGEMENTS
The Board also express their gratitude for the unstinted support and guidance received from Infrastructure Development Finance Company Limited and other group companies, NHAI and Gujarat Government. The Board would also like to express their sincere thanks and appreciation to all employees for their commendable teamwork, exemplary professionalism and enthusiastic contribution during the year.
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
RAJIV B . L A L L
Chairman
Mumbai April 19, 2010
148
I D F C A N N U A L R E P O R T 09 –10
AU D I TO RS ’ R E PO RT
TO THE MEMBERS OF IDFC PROJECTS LIMITED
1. We have audited the attached Balance Sheet of IDFC PROJECTS LIMITED (“the Company”) as at March 31, 2010, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditor’s Report) Order, 2003 (CARO) issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. 4. Further to our comments in the Annexure referred to in paragraph 3 above, we report as follows: (a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; (b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books; (c) the Balance Sheet, the Profit and Loss Account 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 Profit and Loss Account and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956; (e) in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2010;
(ii) in the case of the Profit and Loss Account, of the loss of the Company for the year ended on that date and (iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date. 5. On the basis of the written representations received from the Directors as on 31st March, 2010 taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March, 2010 from being appointed as a director in terms of Section 274(1) (g) of the Companies Act, 1956.
FOR DELOITTE HASKINS & SELLS Chartered Accountants (Registration No. 117366W)
NALIN M. SHAH
Partner Membership No. 15860 Mumbai April 19, 2010
I D F C P R O J E CT S L I M I T E D
149
ANNEXURE
(Referred to in paragraph 3 of our report of even date) (i) Having regard to the nature of the Company’s business/ activities/result/transactions etc., clauses (i)(c), (ii), (viii), (x), (xi), (xii), (xiii), (xiv), (xvi), (xvii), (xix) and (xx) of CARO are not applicable. (ii) In respect of its fixed assets: (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of the fixed assets. (b) The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanation given to us, no material discrepancies were noticed on such verification. (iii) In respect of loans, secured or unsecured, granted by the Company to companies, firms or other parties covered in the Register under Section 301 of the Companies Act, 1956, according to the information and explanations given to us: (a) The Company has granted loan aggregating Rs. 30,000,000 to 1 party during the year. At the year-end, there was no outstanding balance of this loan and the maximum amount involved during the year was Rs. 30,000,000 (1 party). (b) The rate of interest and other terms and conditions of such loans are, in our opinion, prima facie not prejudicial to the interests of the Company. (c) The receipts of principal amounts and interest have been regular/as per stipulation.
TO THE AUDITOR’S REPORT
(viii) In our opinion, the internal audit functions carried out during the year by a firm appointed by the Management have been commensurate with the size of the Company and the nature of its business. (ix) According to the information and explanations given to us in respect of statutory dues: (a) The Company has been regular in depositing undisputed dues, including Provident Fund, Income Tax, Service Tax, Cess and other material statutory dues applicable to it with the appropriate authorities. (b) There were no undisputed amounts payable on account of the above dues outstanding as at 31st March, 2010 for a period of more than six months from the date they became payable. (c) There were no disputed Income Tax, Service Tax and any other material statutory dues which were not deposited as on 31st March, 2010.
(x) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by others from banks and financial institutions are not prima facie prejudicial to the interests of the Company. (xi) According to the information and explanations given to us, the Company has made preferential allotment of shares to a party covered in the Register maintained under Section 301 of the Companies Act, 1956 at a price which is prima facie not prejudicial to the interests of the Company. (xii) To the best of our knowledge and according to the information and explanations given to us, no fraud by or on the Company has been noticed or reported during the year.
(iv) The Company has not taken any loans, secured or unsecured, from companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956. (v) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of fixed assets and the sale of services. During the course of our audit, we have not observed any major weakness in such internal control system. (vi) To the best of our knowledge and belief and according to the information and explanations given to us, there were no contracts or arrangements that needed to be entered in the Register maintained under Section 301 of the Companies Act, 1956. (vii) According to the information and explanations given to us, the Company has not accepted any deposit from the public during the year.
FOR DELOITTE HASKINS & SELLS Chartered Accountants (Registration No. 117366W)
NALIN M. SHAH
Partner Membership No. 15860
Mumbai April 19, 2010
150
I D F C A N N U A L R E P O R T 09 –10
BALANCE SHEET
RUPEES SCHEDULE RUPEES
AS AT MARCH 31, 2010
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
SOURCES OF FUNDS
Shareholders’ Funds Share Capital 1 340,500,000 340,500,000 90,500,000 90,500,000
APPLICATION OF FUNDS
Fixed Assets Gross Block Less: Accumulated Depreciation Net Block Investments Current Assets, Loans and Advances Sundry Debtors Cash and Bank Balance Loans and Advances Less: Current Liabilities and Provisions Current Liabilities Provisions Net Current Liabilities Profit and Loss Account Notes forming part of the Accounts Schedules 1 to 12 form an integral part of the Accounts 12 4 5 6 7 156,522,334 2,482,309 159,004,643 (119,412,647) 179,098,247 340,500,000 10,954,186 1,948,053 12,902,239 (5,226,543) 95,300,178 90,500,000 9,501,803 3,036,092 27,054,101 39,591,996 1,762,533 1,020,650 4,892,513 7,675,696 3 2 1,266,448 451,248 815,200 279,999,200 555,215 128,850 426,365 -
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants
NALIN M . S H A H RAJIV B. LALL VIKRAM LIMAYE
FOR AND ON BEHALF OF THE BOARD
Partner
Chairman
V. NARAYANAN
Director
Mumbai | April 19, 2010
Company Secretary & Manager
I D F C P R O J E CT S L I M I T E D 151
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
SCHEDULE
APRIL 1, 2009 TO MARCH 31, 2010 8 10,465,733 10,465,733
APRIL 1, 2008 TO MARCH 31, 2009 3,952,039 3,952,039 52,844,508 3,421,857 28,471,758 6,392,114 128,850 91,259,087 87,307,048 800,000 88,107,048 7,193,130 95,300,178 (20.35)
INCOME
Operating Income
EXPENDITURE
Staff Expenses Establishment Expenses Other Expenses Provision for Doubtful Advances Depreciation & Amortisation LOSS BEFORE TAX Provision for Tax Fringe Benefit Tax 83,798,069 95,300,178 179,098,247 (6.63) 12 LOSS AFTER TAX Balance Brought Forward LOSS CARRIED TO BALANCE SHEET Basic and Diluted Earnings Per Share (Face value Rs.10) (See Schedule 12 Note 8) Notes forming part of the Accounts Schedules 1 to 12 form an integral part of the Accounts 9 10 11 73,886,403 1,358,286 18,696,715 322,398 94,263,802 83,798,069
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants
NALIN M . S H A H RAJIV B. LALL VIKRAM LIMAYE
FOR AND ON BEHALF OF THE BOARD
Partner
Chairman
V. NARAYANAN
Director
Mumbai | April 19, 2010
152 I D F C A N N U A L R E P O R T 09 –10
Company Secretary & Manager
C A S H F L OW ST AT E M E N T
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
FOR THE YEAR ENDED MARCH 31, 2010
FOR THE YEAR ENDED MARCH 31, 2009 (87,307,048) 128,850 1,948,053 6,392,114 (892,039) 4,641 (79,725,429) (12,985,795) 3,761,056 (88,950,168) (861,365) (89,811,533) (555,215) 892,039 (61,892,039) 61,887,398 332,183 90,000,000 90,000,000 520,650 500,000 1,020,650 520,650
A.
CASH FLOW FROM OPERATING ACTIVITIES
Loss before taxation Adjustments for : Depreciation Provision for Employee Benefits Provision for Doubtful Advances Dividend Received Loss on Sale of Investments Operating loss before Working Capital Changes Changes in : Current Assets , Loans and Advances Current Liabilities Cash generated from Operations Direct Taxes Paid NET CASH FROM / (USED IN) OPERATING ACTIVITIES (A) (29,530,992) 145,568,148 33,095,742 (369,866) 32,725,875 (711,233) – (279,999,200) – (B) (280,710,433) 250,000,000 (C) 250,000,000 2,015,442 1,020,650 3,036,092 2,015,442 322,398 534,256 – – – (82,941,415) (83,798,069)
B.
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Fixed Assets Dividend Received Purchase of Investments Sale Proceeds of Investments NET CASH FROM / (USED IN) INVESTING ACTIVITIES
C.
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from Issue of Share Capital NET CASH FROM FINANCING ACTIVITIES Net increase in cash and cash equivalents (A+B+C) Cash and cash equivalents as at the beginning of the year (as per Schedule 5) Cash and cash equivalents as at the end of the year (as per Schedule 5)
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants
NALIN M . S H A H RAJIV B. LALL VIKRAM LIMAYE
FOR AND ON BEHALF OF THE BOARD
Partner
Chairman
V. NARAYANAN
Director
Mumbai | April 19, 2010
Company Secretary & Manager
I D F C P R O J E CT S L I M I T E D 153
SCHEDULES
ANNEXED TO AND FORMING PART OF THE ACCOUNTS
SCHEDULE 1 Share Capital
AUTHORISED: 100,000,000 Equity Shares of Rs.10/- each ISSUED, SUBSCRIBED AND PAID UP 34,050,000 (Previous Year 90,500,00) Equity Shares of Rs.10/- each, fully paid-up [Of the above, 25,000,100 (Previous Year 100) Equity Shares are held by Infrastructure Development Finance Company Limited (IDFC), the holding company with effect from February 04, 2010 and 9,049,900 (Previous Year 9,049,900) Equity Shares are held by IDFC Finance Limited, a wholly owned Subsidiary of IDFC which was the holding company up to February 03, 2010]
RUPEES
RUPEES
AS AT MARCH 31, 2010 1,000,000,000 340,500,000
AS AT MARCH 31, 2009 1,000,000,000 90,500,000
340,500,000
90,500,000
SCHEDULE 2 Fixed Assets
DESCRIPTION April 1, 2009 GROSS BLOCK March 31, 2010 DEPRECIATION AND AMORTISATION March 31, 2010 Charge for the April 1, 2009 March 31, 2010
RUPEES
NET BLOCK March 31, 2009 – 426,365 – – – – –
Additions
Deletions
Deletions
As at
As at
As at
As at
As at
TANGIBLE Furniture and Fittings Office Equipment Computers INTANGIBLE Computer Software Total Previous Year – 555,215 – 459,953 711,233 555,215 – – – 459,953 1,266,448 555,215 – 128,850 – 94,140 322,398 128,850 – – – 94,140 451,248 128,850 365,813 815,200 426,365 46,798 444,709 63,708 6,375 157,657 87,248 – – – 53,173 602,366 150,956 8,238 103,533 17,079 13,354 170,780 44,124 – – – 21,592 274,313 61,203 31,581 328,053 89,753 38,560 341,176 46,629
SCHEDULE 3 Investments
LONG TERM (TRADE) A EQUITY SHARES (FULLY PAID) UNQUOTED SUBSIDARIES Dheeru Powergen Private Limited B REDEEMABLE PREFERENCE SHARES (FULLY PAID-UNQUOTED) SUBSIDARIES Dheeru Powergen Private Limited C BONDS (FULLY PAID-UNQUOTED) SUBSIDARIES 0.00% Dheeru Powergen Private Limited (Convertible) 1,815,053 100 78,516 100 5,100 10 NUMBER OF SHARES FACE VALUE
RUPEES
RUPEES
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
90,642,300
7,851,600
181,505,300 279,999,200
154
I D F C A N N U A L R E P O R T 09 –10
As at
year
SCHEDULE 4 Sundry Debtors
(See Schedule 12 Note 2) (Unsecured, considered good) Over six months Others
RUPEES
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
3,475,321 6,026,482 9,501,803
– 1,762,533 1,762,533
SCHEDULE 5 Cash and Bank Balance
Cash Balance with Scheduled Bank in Current Accounts
RUPEES
RUPEES
AS AT MARCH 31, 2010 15,126 3,020,966 3,036,092
AS AT MARCH 31, 2009 – 1,020,650 1,020,650
SCHEDULE 6 Loans and Advances (Unsecured)
CONSIDERED GOOD Advances Recoverable in Cash or in Kind or for Value to be Received Advance Payment of Tax Advance Payment of Fringe Benefit Tax (Net of Provisions) Advance against Investments CONSIDERED DOUBTFUL Advance Recoverable in Cash or in Kind or for Value to be Received Less: Provision for Doubtful Advances
RUPEES
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
26,622,070 376,231 55,000 800
4,831,148 6,365 55,000 –
6,392,114 33,446,215 6,392,114 27,054,101
6,392,114 11,284,627 6,392,114 4,892,513
SCHEDULE 7 Current Liabilities and Provisions
CURRENT LIABILITIES Sundry Creditors - Other than Micro and Small Enterprises (See Schedule 12 Note 12) Other Liabilities PROVISIONS Provision for Employee Benefits (See Schedule 12 Note 9(II))
RUPEES
RUPEES
AS AT MARCH 31, 2010 154,910,553 1,611,781 156,522,334 2,482,309 2,482,309
AS AT MARCH 31, 2009 9,185,304 1,768,882 10,954,186 1,948,053 1,948,053
I D F C P R O J E CT S L I M I T E D
155
SCHEDULE 8 Operating Income
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Fees Dividend on Current Investments (non-trade) Interest on loan (Tax Deducted at Source Rs. 134,569; Previous Year Nil) 9,120,051 – 1,345,682 10,465,733
APRIL 1, 2008 TO MARCH 31, 2009 3,060,000 892,039 – 3,952,039
SCHEDULE 9 Staff Expenses
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Salaries Contribution to Provident and Other Funds (See Schedule 12 Note 9(I)) Staff Training and Welfare Expenses 69,780,474 2,363,978 1,741,951 73,886,403
APRIL 1, 2008 TO MARCH 31, 2009 47,643,346 4,349,413 851,749 52,844,508
SCHEDULE 10 Establishment Expenses
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Rent Rates & Taxes Electricity Expenses Repairs and Maintenance - Others 878,507 3,800 85,530 390,449 1,358,286
APRIL 1, 2008 TO MARCH 31, 2009 2,729,751 85,558 494,504 112,044 3,421,857
SCHEDULE 11 Other Expenses
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Travelling and Conveyance Postage, Telephone and Fax Printing and Stationery Professional Fees Tender Charges Membership and Subscriptions Loss on Sale of Current Investments Office Maintenance Advertisement & Publicity Books & Periodicals Business Development Expenses Miscellaneous Expenses Guarantee Commission Loss on Foreign Exchange Fluctuation Auditors’ Remuneration (See Schedule 12 Note 4) 4,717,944 699,393 192,256 5,399,349 1,252,300 295,506 – 134,326 8,000 9,070 223,913 595,609 4,013,227 39,312 1,116,510 18,696,715
APRIL 1, 2008 TO MARCH 31, 2009 10,211,340 948,452 361,843 13,921,937 815,000 178,468 4,641 667,752 131,318 114,977 316,624 299,966 – – 499,440 28,471,758
156
I D F C A N N U A L R E P O R T 09 –10
SCHEDULE 12 Notes Forming Part of the Accounts
1 Significant Accounting Policies
A. Account Convention
These accounts have been prepared in accordance with historical cost convention, applicable Accounting Standards notified by the Companies (Accounting Standards) Rules, 2006, relevant provisions of the Companies Act, 1956.
B. System of Accounting
The Company adopts the accrual concept in the preparation of accounts. The preparation of financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.
C. Inflation
Assets and liabilities are recorded at historical cost to the Company. These costs are not adjusted to reflect the changing value in the purchasing power of money.
D. Fixed Assets
Fixed assets are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated depreciation.
E. Intangible Assets
Intangible Assets Comprising of system software are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated amortisation. Any technology support cost or annual maintenance cost for such software is charged annually to the Profit and Loss Account.
F. Depreciation & Amortisation
¬
Tangible Assets Depreciation on Fixed Assets, excluding certain electronic items, is provided on the written down value method, at the rates prescribed by Schedule XIV of the Companies Act, 1956. Certain electronic items are depreciated over a period of two years on straight line method based on the Management’s estimate of the useful life of assets. Depreciation on additions during the year is provided on a pro-rata basis. Assets costing less than Rs. 5,000 each are written off in the year of capitalisation.
¬
Intangible Assets Intangible Assets consisting of computers software are being amortised over a period of three years on straight line method.
G. Operating Leases
Leases of assets under which all the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the Profit and Loss Account, on a straight line basis, over the lease term.
H. 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 the carrying value other than temporary in nature is provided for. Current investments are valued at cost or market/fair value, whichever is lower. In case of investments in units of mutual funds, the net asset value of units has been considered as the market value.
I. Revenue Recognition
a) Fees are recognised when reasonable right of recovery is established, the revenue can be reliably measured and there is no uncertainty regarding recoverability. b) Dividend is recognised when the right to receive is established. c) Interest Income is recognised on accrual basis.
J. Foreign Currency Transactions
Foreign currency transactions are accounted at the exchange rates prevailing on the date of the transaction.
K. Provisions and Contingencies
The Company creates a provision when there is a present obligation as a result of past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
I D F C P R O J E CT S L I M I T E D 157
L. Income-Tax
The accounting treatment for income-tax in respect of the Company’s income is based on the Accounting Standard 22 on ‘Accounting for Taxes on Income’ as notified by the Companies (Accounting Standards) Rules, 2006. The provision made for income-tax in the accounts comprises both, the current tax and the deferred tax. The deferred tax assets and liabilities for the year, arising on account of timing differences, are recognised in the Profit and Loss Account and the cumulative effect thereof is reflected in the Balance Sheet. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the Company has unabsorbed depreciation or carry forward tax losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that the same can be realised against future taxable profits.
M. Employee Benefits:
DEFINED CONTRIBUTION PLAN
The Company’s contribution to Provident Fund is deposited with the prescribed authorities and is charged to the Profit and Loss Account. The Company participates in the holding company’s superannuation policy and the Company’s contribution paid / payable during the year is charged to the Profit and Loss Account.
¬ ¬
DEFINED BENEFIT PLAN
The net present value of the Company’s obligation towards Gratuity to employees is unfunded and actuarially determined as at the Balance Sheet date based on the projected unit credit method. Actuarial gains and losses are recognised in the Profit and Loss Account.
¬
OTHER LONG TERM EMPLOYEE BENEFIT
Liability for compensated absences in respect of sick leave which is of a long term nature is actuarially determined as at the Balance Sheet date based on the projected unit credit method.
¬
2 Sundry Debtors include Rs. 9,119,778; (Previous Year Rs. Nil) and Loans and Advances include Rs.14,812,404; (Previous Year Rs.Nil) due from a private company in which Directors are interested as directors. 3 Contingent Liabilities not provided for in respect of :
PARTICULARS (a) Capital Commitments (Net of advance) (b) Guarantees Issued As a part of project assistance, the Company has provided the following guarantees: Financial Guarantees 432,525,600 – CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
1,224,000,000
–
4 Auditors’ Remuneration
CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
Audit Fees Tax Audit Fees Other Matters Company Law Matters Out of pocket expenses Service Tax Less: Service tax set off claimed
400,000 250,000 465,000 – 1,510 58,355 1,174,865 58,355 1,116,510
300,000 – 140,000 10,000 – 49,440 499,440 – 499,440
5 The primary mandate of the Company is to conceive, develop, execute and manage infrastructure projects in India. All other activities revolve around the main business. The Company does not have any geographical segments. As such, there are no separate reportable segments as per Accounting Standard 17 on ‘Segment Reporting’ as notified by the Companies (Accounting Standards) Rules, 2006.
158
I D F C A N N U A L R E P O R T 09 –10
6 As per the Accounting Standard 18 on ‘Related Party Disclosures’ as notified by the Companies (Accounting Standards) Rules, 2006, the related parties of the Company are as follows:
(a) Relationships:
I. HOLDING COMPANY:
Infrastructure Development Finance Company Limited (With effect from February 4, 2010) IDFC Finance Limited (up to February 3, 2010)
II. FELLOW SUBSIDIARY (WITH WHOM THERE ARE TRANSACTIONS):
IDFC Finance Limited (With effect from February 4, 2010)
III. SUBSIDIARY COMPANY :
Dheeru Powergen Private limited (with effect from February 5, 2010)
IV. KEY MANAGEMENT PERSONNEL:
Mr. V. Narayanan – Manager (b) The nature and volume of transactions carried out with the above related parties in the ordinary course of business are as follows:
NAME OF THE RELATED PARTY Infrastructure Development Finance Company Limited PARTICULARS Advances taken and repaid Subscription towards Equity Share Capital Sundry Creditors – Balance Outstanding Bank Guarantee Commission charges IDFC Finance Limited Dheeru Powergen Private Limited Subscription towards Equity Share Capital Loan Given and Repaid Subscription towards Equity Share Capital Subscription towards Preference Share Capital Bonds application money Subscription towards Bonds Sundry Debtors – Balance Outstanding Bank Guarantee commission charged Upfront Fees charged Interest charged Advances Recoverable - Balance outstanding Mr. V. Narayanan Remuneration CURRENT YEAR
(RUPEES)
PREVIOUS YEAR
(RUPEES)
– 250,000,000 116,538,500 4,103,677 – 30,000,000 90,642,300 7,851,600 800 181,505,300 9,119,778 6,730,368 2,029,480 1,345,682 14,812,404 –
20,000,000 – 1,503,615 – 90,000,000 – – – – – – – – – – –
7 Personnel expenses amounting to Rs. Nil (Previous Year Rs.24,587,615) include reimbursement of cost of employees of Infrastructure Development Finance Company Limited, the holding Company, on deputation to the Company. 8 Earnings Per Share:
In accordance with the Accounting Standard 20 on “Earnings Per Share” as notified under the Companies (Accounting Standards) Rules, 2006 the Earning Per Share has been computed as under:
PARTICULARS (a) Loss after taxation (Rs.) (b) Weighted average number of equity shares (c) Earnings Per Share (Rs.) (a)/(b) (Basic and Diluted) CURRENT YEAR (83,798,069) 12,639,041 (6.63) PREVIOUS YEAR (88,107,048) 4,329,452 (20.35)
9 In accordance with Accounting Standard 15 on “Employee Benefits” as notified by the Companies (Accounting Standards) Rules, 2006 the following disclosures have been made:
I. The Company has recognised the following amounts in the Profit and Loss Account towards contribution to defined contribution plans which are included under Contribution to Provident and Other Funds:
CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
Provident Fund Superannuation Fund
1,408,644 955,334
1,665,793 1,314,094
159
I D F C P R O J E CT S L I M I T E D
II. The details of the Company’s unfunded employee benefit plans for gratuity for its employees are given below which is as certified by the actuary and relied upon by the auditors:
CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
CHANGE IN THE DEFINED BENEFIT OBLIGATIONS: Liability at the beginning of the year Current Service Cost Interest Cost Benefits Paid Actuarial Gain Liability at the end of the year AMOUNT RECOGNISED IN THE BALANCE SHEET: Liability at the end of the year Amount recognised in the Balance Sheet under “Provision for Employee Benefits” EXPENSE RECOGNISED IN THE PROFIT AND LOSS ACCOUNT: Current Service Cost Interest Cost Net Actuarial Gain to be recognised Expense recognised in the Profit and Loss Account under staff expenses RECONCILIATION OF THE LIABILITY RECOGNISED IN THE BALANCE SHEET: Opening Net Liability Expense recognised Contribution by the Company Amount recognised in the Balance Sheet under “Provision for Employee Benefits” EXPECTED EMPLOYER’S CONTRIBUTION NEXT YEAR EXPERIENCE ADJUSTMENTS: Defined Benefit Obligation PRINCIPAL ASSUMPTIONS: Discount Rate Salary Escalation Rate (p.a.) 1,795,308 % 8.10 8.00 1,369,526 % 8.00 7.00 1,369,526 664,506 (238,724) 1,795,308 700,126 – 1,369,526 – 1,369,526 754,850 990,846 158,636 (484,976) 664,506 1,369,526 – – 1,369,526 1,795,308 1,795,308 1,369,526 1,369,526 1,369,526 990,846 158,636 (238,724) (484,976) 1,795,308 – 1,369,526 – – – 1,369,526
The estimate of future salary increase, considered in the actuarial valuation takes account of inflation, seniority, promotion and other relevant factors.
10 In accordance with the Accounting Standard 19 on ‘Leases’ as notified by the Companies (Accounting Standards) Rules, 2006, the following disclosure in respect of Operating Leases is made:
The Company has taken vehicles for certain employees under Operating Leases, which expire between August 2009 to October 2012 (Previous Year August 2008 to October 2012). The committed lease rentals in the future are:
PARTICULARS Not later than one year Later than one year and not later than five years CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
875,004 1,227,894
516,352 2,102,898
11 Expenditure incurred in foreign currency:
PARTICULARS Foreign Travel CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
330,674
1,046,836
12 No interest has been paid / payable by the Company during the year to the “suppliers” covered under the Micro, Small and Medium Enterprises Development Act, 2006. The above information takes into account only those suppliers who have responded to inquires made by the Company for this purpose. 13 The figures for the previous year have been regrouped / rearranged wherever necessary.
FOR AND ON BEHALF OF THE BOARD
RAJIV B. LALL VIKRAM LIMAYE
Chairman
V. NARAYANAN
Director
Mumbai | April 19, 2010
160 I D F C A N N U A L R E P O R T 09 –10
Company Secretary & Manager
B A L A N C E S H E E T A B ST R A CT
AND COMPANY’S GENERAL BUSINESS PROFILE
I.
REGISTRATION DETAILS Registration No. State Code Balance Sheet Date U 1 3 4 1 1 0 3 2 0 1 0 5 2 0 3 M H 2 0 0 7 P L C 1 7 6 6 4 0
II.
CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000) Public Issue N I L Right Issue N I L
Bonus Issue N III. I L
Private Placement N I L
POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000) Total Liabilities 3 SOURCES OF FUNDS Paid-up Capital 3 4 0 5 0 0 Reserves and Surplus N I L 2 0 4 0 6 3 2 0 Total Assets 4 0 6
Secured Loans N APPLICATION OF FUNDS Net Fixed Assets 8 1 5 2 7 I L
Unsecured Loans N I L
Investments 9 9 9 9
Net Current Assets (1 1 9 4 1 2)
Deferred Tax Asset N I L
Profit and Loss Account 1 IV. 7 9 0 9 8
PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000) Turnover / Income 1 0 4 6 6 9 Total Expenditure 4 2 6 4
Profit Before Tax (8 3 7 9 8) (8
Profit After Tax 3 7 9 8)
Earnings per Share (in Rs.) (6 V. . 6 3)
Dividend % N I L
GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS) Item Code No. (ITC Code) Product Description N I A I N N L F D R A F S I T N R A U N C C T I U N R G E D E V E L O P M E N T
I D F C P R O J E CT S L I M I T E D
161
ST AT E M E N T P U R S U A N T T O S E CT I O N 2 1 2
OF THE COMPANIES ACT, 1956
NAME OF SUBSIDIARY COMPANY 1 2 Financial year of the Subsidiary Companies ended on Equity Shares of Rs.10 each a) Number of Shares b) Extent of Holding 3 The Net aggregate of profits of the Subsidiary Company so far as these concern members of IDFC Projects Limited i. For the Financial Year of the Subsidiary a) Dealt with in the accounts of the Holding Company b) Not dealt with in the accounts of the Holding Company ii. For the previous financial years of the Subsidiary since it became the Holding Company’s Subsidiary a) Dealt with in the accounts of the Holding Company b) Not dealt with in the accounts of the Holding Company
DHEERU POWERGEN PRIVATE LIMITED 31st March 2010 5100 51%
Nil Nil Nil Nil
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
RAJIV B. LALL
VIKRAM LIMAYE
Chairman Mumbai | April 19, 2010
162 I D F C A N N U A L R E P O R T 09 –10
Director
IDFC asset
management company limited
B O A R D O F D I R E CTO R S
?
? ?
Dr. Rajiv B. Lall Chairman Mr. Pradip Madhavji Mrs. Bakul Patel
A U D I TO R S
?
M. P. Chitale & Co Chartered Accountants
P R I N C I PA L B A N K E R S
?
HDFC Bank Limited Standard Chartered Bank
R E G I ST E R E D O F F I C E
One India Bulls Centre, 841 Jupiter Mills Compound, Senapati Bapat Marg, Elphinstone Road (West), Mumbai 400 013. TEL +91 22 66289999 FAX +91 22 24215051/52/53
I D FC ASSS E T M A N AG E M E N T CO M PA N Y L I M I T E D
163
D I R E CT O R S ’ R E P O R T
TO THE MEMBERS
We are pleased to present the Tenth Annual Report to the Members, along with the audited Profit and Loss Account for the period ended March 31, 2010 and the Balance Sheet as at March 31, 2010. ? Close ended schemes launched during the period under review: In addition to the above open ended schemes, Six Close-Ended income Schemes in the form of Fixed Maturity Plans (FMP’s) were launched. These comprised of IDFC Fixed Maturity Plan – Thirteen Months Series I, IDFC Fixed Maturity Plan –Fifteen Months Series 3, IDFC Fixed Maturity Plan – Seventeen Months Series 1, IDFC FMPHalf Yearly Series 9 and IDFC Fixed Maturity Plan – Fourteen Months Series 1. These Fixed Maturity Plans collected approximately Rs 1027.85 crores.
FINANCIAL RESULTS
RUPEES
PARTICULARS Gross Income Profit before Interest, Depreciation & Tax Depreciation Profit before Tax Provision for Tax Deferred Tax Liability Fringe Benefit Tax Profit after Tax Balance brought forward from previous year Amount available for Appropriation Balance carried to Balance Sheet
YEAR ENDED MARCH 31, 2010 1,069,714,808 60,238,451 27,826,751 32,411,700 9,000,000 (4,519,346) – 27,931,046 282,863,881 310,794,927 310,794,927
YEAR ENDED MARCH 31, 2009 683,074,465 111,125,086 11,711,459 99,413,627 38,500,000 (3,775,654) 4,600,000 60,089,281 222,774, 600 282,863,881 282,863,881
AWARDS & RECOGNITION
IDFC Premier Equity Fund – Plan A has been ranked as a Seven Star Fund by ICRA in the category of ‘Open Ended Equity Diversified Defensive’ schemes for its 3 years performance till December 31, 2009. The rank is an outcome of an objective and comparative analysis against various parameters, including: risk adjusted return, fund size, company concentration and liquidity. The ranking methodology did not take into account entry and exit loads imposed by the Fund. There were 81 schemes considered in ‘Open Ended Equity Diversified - Defensive’ category for the ranking exercise. The rank is neither a certificate of statutory compliance nor any guarantee on the future performance of IDFC Premier Equity Fund – Plan A. IDFC Government Securities Fund – ST – Plan A has been ranked as a Five Star Fund by ICRA in the category of ‘Open Ended Gilt’ schemes for its 1 year performance till December 31, 2009. The rank is an outcome of an objective and comparative analysis against various parameters, including: risk adjusted return, fund size and average maturity. The ranking methodology did not take into account entry and exit loads imposed by the Fund. There were 30 schemes considered in ‘Open Ended Gilt’ category for the ranking exercise. The rank is neither a certificate of statutory compliance nor any guarantee on the future performance of IDFC Government Securities Fund – ST – Plan A. IDFC Premier Equity Fund ranked as Best Fund over Past 3 Years period ending Dec. 31, 2009, India Equity by Lipper, a global ranking agency for mutual funds in Lipper Fund Awards, India, 2010. Business Standard, a leading newspaper in India voted IDFC Mutual Fund as the “Equity Fund Managers of the Year” for the year 2009. Business World, a leading business magazine in India voted Kenneth Andrade (Head – Investments) as the “Smartest Fund Manager of the Year” for the year 2009. IDFC Premier Equity Fund rated as the “Best Mid-cap and Small-cap Fund” over Past 3 Years period ending Dec. 31, 2009 by Business World, a leading business magazine in India IDFC AMC rated as the “Best Performing Fund House” by the Economic Times (ET) Quarterly Mutual Fund Tracker for Q1 and Q2 of FY 09-10. IDFC Imperial Equity Fund and IDFC Dynamic Bond Fund ranked in the “Platinum Category” which is the highest ranking given to schemes in Q1 and Q2 2009.
OPERATIONS OF IDFC MUTUAL FUND
The Company is the Investment Manager of the schemes of IDFC Mutual Fund (IDFC MF). The Assets under Management of IDFC Mutual Fund were Rs. 19,979 Crore (including AUM of Fund of Funds Schemes) as on March 31, 2010.
NEW SCHEMES LAUNCH
? Open ended schemes launched during the period under review: IDFC Asset Allocation Fund of Fund, an open ended Fund of Funds Scheme was launched on January 04, 2010. The investment objective of the scheme is to generate capital appreciation through investment in different mutual fund schemes primarily local funds based on a defined asset allocation model. It has 3 plans – Aggressive Plan, Conservative Plan and Moderate Plan. The Aggressive Plan collected a total of Rs. 613,484,254.26 during the New Fund Offer. The Conservative Plan collected a total of Rs 301,262,457.31during the New Fund Offer. The Moderate Plan collected a total of Rs. 404,381,577.08 during the New Fund Offer. IDFC Monthly Income Plan Fund of Fund, an open ended Fund of Fund scheme was launched on January 11, 2010. This scheme collected a total of Rs. 2,113,409,943.68 during the New Fund Offer. The primary objective of the Scheme is to generate regular returns through investment primarily in debt oriented Mutual Fund schemes (such as Income and Liquid funds). The secondary objective of the Scheme is to generate long-term capital appreciation by investing a portion of the Scheme’s assets in equity oriented MF schemes. Monthly Income is not assumed and the same is subject to availability of distributable surplus.
164
I D F C A N N U A L R E P O R T 09 –10
NEW BUSINESSES
? Portfolio Management Services: During the year under review, the Company acquired 100% of the equity share capital of IDFC Investment Advisors Limited (IDFC IA) from Infrastructure Development Finance Company Limited (IDFC). IDFC IA is a Portfolio Manager, registered with the Securities and Exchange Board of India (SEBI) to carry out Portfolio Management Services pursuant to SEBI (Portfolio Managers) Regulations, 1993. ? Pension Fund Management During the year under review, the Company acquired 50.00001% of the equity share capital of IDFC Pension Fund Management Company Limited (IDFC PFM). IDFC PFM is one of the six pension fund managers selected by the Pension Fund Regulatory and Development Authority (PFRDA) to manage the New Pension System (NPS) launched by the Government of India for all citizens of India other than government employees covered under NPS. IDFC PFM was incorporated on March 31, 2009 and the Pension Fund Regulatory & Development Authority issued the Certificate of Commencement of Business on May 01, 2009. Tier I and Tier II schemes are managed by IDFC PFM.
SHARE CAPITAL
No further equity or preference share capital was issued by the company during the year.
FIXED DEPOSITS
The Company has not accepted any Fixed Deposits from the public.
PARTICULARS OF EMPLOYEES
As required under the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of employees is annexed to this Report.
STATUTORY DISCLOSURE OF PARTICULARS
The requirements of disclosure, in terms of Section 217 (1)(e) of the Companies Act, 1956, read with Companies (Disclosure of particulars in the report of Board of Directors) Rules, pertaining to steps taken regarding conservation of energy & technology absorption, do not apply to the Company. There were no foreign exchange earnings by the Company during the period under review. The details of expenditure in foreign currency are given in note 8 of Schedule 16.
DIVIDEND
Due to inadequacy of profits, the Board of Directors do not recommend the declaration of dividend.
DIRECTORS RESPONSIBILITY STATEMENT
Based on the representation made by the management, the directors, pursuant to the provisions of Section 217 (2AA) the Directors wish to state: 1. that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; 2. that they have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit or loss of the company for that period; 3. that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and 4. that they have prepared the annual accounts on a going concern basis.
DIRECTORS
In accordance with the provisions of the Companies Act, 1956 and the Company’s Articles of Association, Mr. Pradip Madhavji retires by rotation and is eligible for re-appointment. Mr. R. H. Patil resigned from the directorship of the Company with effect from April 12, 2010. The Board wishes to place on record its sincere appreciation for his guidence and valuable contribution to the Company.
AUDITORS
M/s M. P. Chitale and Co., Chartered Accountants and Statutory Auditors of the Company would be retiring at the conclusion of the forthcoming Annual General Meeting and are eligible for reappointment. The auditors have confirmed their eligibility and willingness to accept the office if re-appointed. The Members are requested to consider their re-appointment, at a remuneration to be decided by the Board of Directors, for the financial year ending March 31, 2011 as set out in the Notice convening the Annual General Meeting.
ACKNOWLEDGEMENT
The Board places on record its gratitude to the Government of India, Securities & Exchange Board of India, Reserve Bank of India, Association of Mutual Funds of India, other regulatory authorities and institutions, investors in the Mutual Fund schemes and to the Members for their continued guidance and support and expresses its sincere appreciation to all the employees for their commendable teamwork and enthusiastic contribution during the year.
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
RAJIV B. LALL
AUDIT COMMITTEE
The Audit Committee consists of three members, Mr. Pradip Madhavji, Chairman, Dr. R.H. Patil and Mrs. Bakul Patel. The Committee met four times during the year under review. The functions of the Committee includes reviewing the financial statements, internal control systems and significant accounting policies of the Company and discussing the audit findings and recommendatintons of the internal and statutory auditors of the Company.
CONVERSION INTO PUBLIC COMPANY
The Company has been converted into a Public Company. The Registrar of Companies, Maharashtra has issued a Fresh Certificate of Incorporation consequent upon change of name on conversion to Public Limited Company dated June 5, 2009.
Chairman Mumbai April 20, 2010
I D FC ASSS E T M A N AG E M E N T CO M PA N Y L I M I T E D 165
AU D I TO RS ’ R E PO RT
To The Members of IDFC Asset Management Company Limited
We have audited the attached Balance Sheet of IDFC Asset Management Company Limited as at March 31, 2010 and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. (1) As required by the Companies Auditors Report Order (CARO) 2003, issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956, we enclose as Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order. (2) Further to our comments in the Annexure referred to in paragraph (1) above, we state that: (a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit; (b) In our opinion, proper books of account as required by law have been kept by the Company, so far as appears from our examination of those books; (c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with in this report are in agreement with the books of account; (d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in Section 211 (3C) of the Companies Act, 1956 to the extent applicable; (e) On the basis of written representation received by the Company from the directors, we report that none of the directors is disqualified as on March 31, 2010 from being appointed as a director in terms of clause (g) of sub section (1) of section 274 of the Companies Act, 1956; (f) In our opinion and to the best of our information and according to the explanations given to us, the accounts read with notes thereon give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (i) in so far as it relates to the Balance Sheet, of the state of affairs of the Company as at March 31, 2010,
(ii) in so far as it relates to the Profit and Loss Account, of the profit of the Company for the year ended on that date, and (iii) in so far as it relates to the Cash Flow Statement of the Company for the year ended on that date.
FOR M. P. CHITALE & CO. Chartered Accountants
VIDYA BARJE
Partner M. No. 104994 Firm Registration No. 101851W
Mumbai April 21, 2010
166
I D F C A N N U A L R E P O R T 09 –10
ANNEXURE
TO THE AUDITOR’S REPORT
Annexure referred to in paragraph 1 of the report of even date of the Auditors to the members of IDFC Asset Management Company Limited
(i) (a) The Company has maintained proper records, showing full particulars including quantitative details and situation of Fixed Assets. (b) The fixed assets were physically verified during the year by the Management in accordance with a program of verification, which in our opinion provides for the physical verification of all the fixed assets at reasonable intervals and discrepancies observed during the verification have been properly dealt with in the books of account. (c) The Company has not disposed of substantial part of fixed assets during the year.
dues outstanding as at March 31, 2010 for a period of more than six months from the date they became payable. (x) The Company does not have accumulated losses at the end of the financial year and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year. (xi) In our opinion and according to the information and explanations given to us, during the year, the Company has not taken any loan and no amounts were due towards principal or interest to financial institution, bank or debenture holders during the year. (xii) According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. (xiii) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other securities. (xiv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions. (xv) According to the information and explanations given to us, the Company has not taken any term loan. (xvi) According to the information and explanations given to us, during the year, the Company has not raised any funds. (xvii) The Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under section 301 of the Act. (xviii) According to the information and explanations given to us, the Company has not issued any debentures up to 31st March 2010. (xix) The Company has not raised money from public issue. (xx) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year. (xxi) Considering the nature of the business and the services rendered by the Company, clauses (ii) and (xiii) under Clause 4 of the CARO are not applicable.
FOR M. P. CHITALE & CO. Chartered Accountants
VIDYA BARJE
(ii) The Company has not granted any loans to Companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. (iii) The Company has not taken any loans from Companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. (iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business for purchase of fixed assets and for the services rendered. (v) In our opinion and according to the information and explanations given to us, there are no transactions that need to be entered into a register in pursuance of section 301 of the Companies Act, 1956. (vi) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public. (vii) Company has an internal audit system commensurate with its size and nature of business. (viii) Central Government has not prescribed maintenance of cost records under Section 209 (1) (d) of the Companies Act, 1956. (ix) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income-tax, Sales-tax, Wealth tax, Service Tax, Customs duty, Excise duty, cess and any other statutory dues as applicable with the appropriate authorities. According to the information and explanations given to us, 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, Customs duty, Excise duty, cess and any other statutory
Partner M. No. 104994 Firm Registration No. 101851W Mumbai April 21, 2010
I D FC ASSS E T M A N AG E M E N T CO M PA N Y L I M I T E D
167
BALANCE SHEET
RUPEES SCHEDULE RUPEES
AS AT MARCH 31, 2010
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
SOURCES OF FUNDS
Shareholders’ Funds Share Capital Reserves and Surplus Total 1 2 224,025,020 339,144,927 563,169,947 563,169,947 3 143,886,697 56,248,738 87,637,959 Add: Capital Work-in-Progress Investments Deferred Tax Asset Current Assets, Loans and Advances Interest accrued on Fixed Deposit Sundry Debtors Cash and Bank Balances Loans and Advances Less: Current Liabilities and Provisions Current Liabilities Provisions Net Current Assets Total Notes to the Accounts Schedules 1 to 16 form an integral part of the Accounts 16 8 9 488,047,611 3,718,700 491,766,311 (194,440,647) 563,169,947 109,150,063 3,482,044 112,632,107 150,544,567 535,238,901 5 6 7 77,376 17,599,296 26,536,713 253,112,279 297,325,664 1,050 11,495,650 6,595,056 245,084,918 263,176,674 4 3,511,753 91,149,712 659,483,882 6,977,000 85,746,190 40,533,211 45,212,979 3,288,684 48,501,663 333,735,017 2,457,654 224,025,020 311,213,881 535,238,901 535,238,901
APPLICATION OF FUNDS
Fixed Assets Gross Block Less: Depreciation & Amortisation
IN TERMS OF OUR REPORT OF EVEN DATE FOR M.P. CHITALE & CO. Chartered Accountants
VIDYA V . B A R J E BAKUL PATEL PRADIP MADHAVJI
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Partner
Director
UTTARA DEKA
Director
Mumbai | April 20, 2010
168 I D F C A N N U A L R E P O R T 09 –10
Company Secretary
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
SCHEDULE
APRIL 1, 2009 TO MARCH 31, 2010 10 11 12 13 14 15 1,058,850,803 1,174,816 427,457,377 123,942,231 456,901,933 – 27,826,751 1,037,303,108 21,547,695 9,000,000 4,519,346 – 4,480,654 17,067,041 10,864,005 282,863,881 310,794,927 – 310,794,927 10.70 16
JANUARY 1, 2008 TO MARCH 31, 2009 683,074,465 6,172,183 213,639,474 93,000,677 251,245,347 7,891,698 11,711,459 583,660,838 99,413,627 38,500,000 3,775,654 4,600,000 39,324,346 60,089,281 – 222,774,600 282,863,881 – 282,863,881 23.02
INCOME
Operating and Other Income
EXPENDITURE
Interest & Other Charges Staff Expenses Establishment Expenses Other Expenses Provisions and Contingencies Depreciation & Amortisation PROFIT BEFORE TAXATION Less : Provision for Taxation Current Tax Less: Deferred Tax Add: Fringe Benefit Tax PROFIT AFTER TAXATION Add : Prior Period Income Add : Balance as per last Balance Sheet AVAILABLE FOR APPROPRIATION Appropriations BALANCE CARRIED FORWARD Earnings per share (Face Value Rs. 10) (Basic) Notes to the Accounts Schedules 1 to 16 form an integral part of the Accounts
IN TERMS OF OUR REPORT OF EVEN DATE FOR M.P. CHITALE & CO. Chartered Accountants
VIDYA V . B A R J E BAKUL PATEL PRADIP MADHAVJI
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Partner
Director
UTTARA DEKA
Director
Mumbai | April 20, 2010
Company Secretary
I D FC ASSS E T M A N AG E M E N T CO M PA N Y L I M I T E D 169
C A S H F L OW ST AT E M E N T
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010
JANUARY 1, 2008 TO MARCH 31, 2009 99,413,627 11,710,317 3,482,044 7,891,698 3,145,507 125,643,193 (95,985,985) 36,609,224 (59,376,761)
A. CASH FLOW FROM OPERATING ACTIVITIES
Profit/(Loss) Before Taxation Adjustments for Add: Depreciation & Amortisation Add: Provision for Retirement Benefits Add: Provision for diminution in value of Investments Add: Lease Escalation Charge Add: Fixed Assets Writte Off Add: Prior Period Income Operating Profit before Working Capital Changes (Increase)/Decrease Current Assets, Loan & Advances Debtors 69,112,739 (6,103,646) 63,009,093 Increase/(Decrease) in Current Liabilities - Expenses/Tax Payable Direct taxes Paid NET CASH FROM/(USED IN) OPERATING ACTIVITIES (A) 369,864,030 432,873,123 (86,216,424) 413,857,218 (160,000,010) (76,058,393) (236,058,403) 177,798,815 347,171,770 524,970,585 (177,798,815) Note to Cash Flow Statement : CASH & CASH EQUIVALENTS Cash and Bank Balance as per Schedule 6 Less: Fixed Deposit under Lien Add: Investment at cost as per Schedule 4 END OF THE PERIOD 26,536,713 1,050,000 499,483,872 524,970,585 BEGINNING OF THE PERIOD 6,595,056 1,050,000 341,626,714 347,171,770 (72,016,817) (131,393,578) (81,725,097) (87,475,482) (1,050,000) (45,100,969) (46,150,969) (34,734,353) (34,734,353) (168,360,804) 515,532,574 347,171,770 168,360,804 27,826,751 236,656 (7,891,698) 9,033,517 5,583,593 10,864,005 67,200,519 21,547,695
B. CASH FLOW FROM INVESTING ACTIVITIES
Investment in Subsidiaries Fixed Deposit under lien Purchase of Fixed Asset including Capital Work-in-Progress (Net of deletions) NET CASH USED IN INVESTING ACTIVITIES (B)
C. CASH FLOW FROM FINANCING ACTIVITIES
Dividend Paid (including Dividend Tax) NET CASH USED IN FINANCING ACTIVITIES (C) NET INFLOW/(OUTFLOW) DURING THE PERIOD (A)+(B)+(C) Cash and cash equivalents as at the beginning of the period as per Note below Cash and cash equivalents as at the end of the period as per Note below
IN TERMS OF OUR REPORT OF EVEN DATE FOR M.P. CHITALE & CO. Chartered Accountants
VIDYA V . B A R J E BAKUL PATEL PRADIP MADHAVJI
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Partner
Director
UTTARA DEKA
Director
Mumbai | April 20, 2010
170 I D F C A N N U A L R E P O R T 09 –10
Company Secretary
SCHEDULES
ANNEXED TO AND FORMING PART OF THE ACCOUNTS
SCHEDULE 1 Share Capital
AUTHORISED: 4,000,000 Equity shares of Rs. 10/- each 21,000,000 15% Non participating, non convertible , cumulative redeemable Preference shares of Rs. 10/- each ISSUED, SUBSCRIBED AND PAID-UP: 2,610,002 Equity shares of Rs. 10/- each (Note: All the above equity shares are fully paid shares and are held by Infrastructure Development Finance Company Ltd., the holding company) 19,792,500 15% Non participating, non convertible, cumulative redeemable Preference shares of Rs. 10/- each Redeemable on 2nd January, 2020. (Note: All the above preference shares are fully paid shares and are held by Infrastructure Development Finance Company Ltd., the holding company)
RUPEES
RUPEES
AS AT MARCH 31, 2010 40,000,000 210,000,000 26,100,020
AS AT MARCH 31, 2009 40,000,000 210,000,000 26,100,020
197,925,000
197,925,000
224,025,020
224,025,020
SCHEDULE 2 Reserves and Surplus
General Reserve Profit and Loss Account
RUPEES
RUPEES
AS AT MARCH 31, 2010 28,350,000 310,794,927 339,144,927
AS AT MARCH 31, 2009 28,350,000 282,863,881 311,213,881
SCHEDULE 3 Fixed Assets
DESCRIPTION April 1, 2009 GROSS BLOCK March 31, DEPRECIATION & AMORTISATION April 1, 2009 March 31,
RUPEES
NET BLOCK March 31, March 31,
Additions
Additions
Deletions
Deletions
As at
2010
2010
2010
TANGIBLE Computer Hardware Furnitures and Fixtures Office Equipments INTANGIBLE Computer Software LEASEHOLD IMPROVEMENT Total Previous Period 11,762,779 15,054,517 85,746,190 43,933,905 11,100,095 38,075,362 75,835,324 41,837,275 5,449,452 22,862,874 47,680,427 7,736,922 1,722,875 40,533,211 28,822,894 4,188,627 10,998,988 27,826,752 11,711,459 – 2,142,101 12,111,225 1,142 11,925,549 10,579,762 56,248,738 40,533,211 10,937,325 37,100,665 87,637,959 45,212,979 4,025,857 13,331,642 45,212,979 36,033,926 2,772,799 20,122,169 6,761,943 11,273,723 8,624,201 7,407,147 672,201 4,166,017 35,388,722 13,374,321 24,580,353 24,696,190 1,098,744 5,278,480 6,540,190 2,694,689 3,404,258 6,854,028 531,664 2,583,432 24,382,352 3,261,769 6,099,306 11,006,370 10,112,552 18,481,047 11,337,736 1,674,055 14,843,689
17,694,817 143,886,697 24,990 85,746,190
I D FC ASSS E T M A N AG E M E N T CO M PA N Y L I M I T E D
171
2009
As at
As at
As at
As at
As at
SCHEDULE 4 Investments
I. LONG TERM A. Equity Shares (Fully paid, Unquoted) Subsidiaries IDFC Investment Advisors Limited IDFC Pension Fund Management Company Limited TOTAL LONG TERM INVESTMENTS (A) II. CURRENT A. Mutual Funds (Unquoted) IDFC-SSIF-ST - Plan C-Monthly Dividend IDFC Money Manager Fund- Treasury Plan C-Daily Dividend IDFC SSIF IP - Plan B Dividend IDFC Money Manager Fund- Treasury Plan BDaily Dividend TOTAL CURRENT INVESTMENTS (A) GRAND TOTAL (I + II) Less : Provision for Diminution in Value of Investments Aggregate amount of Unquoted Investments Cost Market Value 49,940,896 10 Number of Units Face Value Rupees 10,000,000 6,000,001 10 10 Number of Shares Face Value Rupees
RUPEES
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
100,000,000 60,000,010 160,000,010
-
499,483,872 499,483,872 659,483,882 659,483,882 659,483,882 659,483,882
53,542,195 113,084,519 100,000,000 75,000,000 341,626,714 341,626,714 7,891,697 333,735,017 341,626,714 333,735,017
SCHEDULE 5 Sundry Debtors (Unsecured, Considered Good)
Debtors
RUPEES
RUPEES
AS AT MARCH 31, 2010 17,599,296 17,599,296
AS AT MARCH 31, 2009 11,495,650 11,495,650
SCHEDULE 6 Cash and Bank Balances
Cash (including Cheques on hand) Balances with Scheduled Banks - in Current Accounts - in Deposit Accounts
RUPEES
RUPEES
AS AT MARCH 31, 2010 894,805 24,591,908 1,050,000 25,641,908 26,536,713
AS AT MARCH 31, 2009 120,669 5,424,387 1,050,000 6,474,387 6,595,056
SCHEDULE 7 Loans and Advances (Unsecured, Considered Good)
Advances recoverable in cash or in kind or for value to be received Advances to IDFC Group Companies (Refer Note 13) - Advances to Subsidiaries - Others Other Deposits Advance payment of Income Tax (Net of provision)
RUPEES
RUPEES
AS AT MARCH 31, 2010 15,419,835 974,799 87,337,735 149,379,910 253,112,279
AS AT MARCH 31, 2009 55,590,838 3,354,790 568,360 113,407,444 72,163,486 245,084,918
172
I D F C A N N U A L R E P O R T 09 –10
SCHEDULE 8 Current Liabilities
Sundry Creditors - Other than Micro, Small and Medium Enterprises Other Liabilities
RUPEES
RUPEES
AS AT MARCH 31, 2010 481,086,884 6,960,727 488,047,611
AS AT MARCH 31, 2009 107,818,062 1,332,001 109,150,063
SCHEDULE 9 Provisions
Provision for Retirement Benefits
RUPEES
RUPEES
AS AT MARCH 31, 2010 3,718,700 3,718,700
AS AT MARCH 31, 2009 3,482,044 3,482,044
RUPEES
SCHEDULE 10 Operating and Other Income
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Operating Income Management Fees Other Income Dividend on Investments Profit/(Loss) on sale of Investments Provision for Diminution in Value of Investment written back Interest on Income Tax Refund Miscellaneous Income 11,772,561 (5,524,366) 7,891,698 2,265,473 277,925 16,683,291 1,058,850,803 1,042,167,512 1,042,167,512
JANUARY 1, 2008 TO MARCH 31, 2009 637,045,996 637,045,996 32,759,053 9,086,534 4,182,882 46,028,469 683,074,465
SCHEDULE 11 Interest & Other Charges
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 On Security Deposit Other Charges 17,742 1,157,074 1,174,816
JANUARY 1, 2008 TO MARCH 31, 2009 4,510,375 1,661,808 6,172,183
SCHEDULE 12 Staff Expenses
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Salaries Contribution to Provident and Other Funds Staff Welfare Expenses 409,144,508 7,453,856 10,859,013 427,457,377
JANUARY 1, 2008 TO MARCH 31, 2009 203,664,247 5,243,889 4,731,338 213,639,474
I D FC ASSS E T M A N AG E M E N T CO M PA N Y L I M I T E D
173
SCHEDULE 13 Establishment Expenses
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Rent Rates & Taxes Electricity Repairs and Maintenance Buildings Equipments Others Insurance Charges 795,555 730,576 15,792,807 17,318,938 1,869,261 123,942,231 89,922,321 4,672,010 10,159,701
JANUARY 1, 2008 TO MARCH 31, 2009 66,237,187 3,461,473 1,735,367 20,364,192 25,561,032 1,202,458 93,000,677
RUPEES
SCHEDULE 14 Other Expenses
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Travelling and Conveyance Printing and Stationery Postage, Telephone and Fax Advertising and Publicity (Refer Note 5) Brokerage expenses Scheme Issue Expenses (Refer Note 4) Operational Costs (Refer Note 6) Professional Fees Directors’ Fees Internet Expenses Filing Fees Fixed Assets Write Off Miscellaneous Expenses Auditors’ Remuneration (Refer Note 3) 22,982,042 12,523,043 16,169,485 61,024,742 106,591,967 125,566,732 22,940,387 62,438,737 210,000 11,096,058 3,111,328 5,575,293 5,742,299 929,820 456,901,933
JANUARY 1, 2008 TO MARCH 31, 2009 12,823,539 11,011,590 18,090,039 30,005,041 46,454,033 45,743,329 8,025,046 59,842,620 320,000 10,407,555 7,670,445 852,110 251,245,347
RUPEES
SCHEDULE 15 Provisions and Contingencies
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Provision for Diminution in Value of Investments -
JANUARY 1, 2008 TO MARCH 31, 2009 7,891,698 7,891,698
174
I D F C A N N U A L R E P O R T 09 –10
SCHEDULE 16 Notes Forming part of the Accounts
1 Significant Accounting Policies
A. System of Accounting
The Company adopts the accrual concept in the preparation of the accounts. The preparation of financial statements as per this policy 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. Future results could differ from these estimates.
B. Inflation
Assets and liabilities are recorded at historical cost to the Company. These costs are not adjusted to reflect the changing value in the purchasing power of money.
C. Investments
Long Term Investments’ are carried at acquisition cost. A provision is made for diminution, other than temporary, on an individual basis. Current Investments’ are carried at the lower of cost or fair value on an individual basis.
D. Fixed Assets
Fixed assets are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated depreciation. Leasehold Improvements are shown at historical cost less accumulated amortisation.
E. Intangible Assets
Intangible Assets comprising of system software and licenses purchased, are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated depreciation. Any expenses on such software for support and maintenance payable annually are charged to revenue account.
F. Depreciation & Amortisation
¬
DEPRECIATION ON FIXED ASSETS
Depreciation is charged at the rates prescribed in Schedule XIV of the Companies Act, 1956 as per WDV Method. Any asset costing Rs.5,000/or less is written off in the year of its purchase. Depreciation on additions during the year is provided on a pro-rata basis.
¬
DEPRECIATION ON INTANGIBLE ASSETS AMORTISATION OF LEASEHOLD IMPROVEMENTS
Intangible assets consisting of computer software are depreciated at 33.33% per annum on SLM basis.
¬
Leasehold Improvements are amortised over the balance period of extended lease term or five years whichever is earlier.
G. Foreign Currency Transactions
The transactions in Foreign exchange are accounted at exchange rate prevailing on the date of transactions. Any exchange gains or losses arising from the settlement of such transactions are recognised in the Profit and Loss Account. Receivables/Payables in foreign currency at the year end are translated at the year end exchange rate.
H. Operating Leases
Leases of assets under which all the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases. Rental charges over the term of such leases, after taking in to account the escalation clause, are charged to the Profit and Loss Account on a straight line basis over the extended lease term.
I. Retirement Benefits
The net present value of the Company’s obligation towards Gratuity to employees is actuarially determined as at the Balance Sheet date and actuarial gains and losses are recognised in the Profit and Loss Account. ¬ The Company has taken a superannuation policy, for future payment of superannuation and the Company’s contribution paid/payable during the year is charged to Profit and Loss Account. ¬ The Company’s contribution to Provident Fund is deposited with Regional Provident Fund Commissioner and is charged to Profit and Loss Account every year.
¬
I D FC ASSS E T M A N AG E M E N T CO M PA N Y L I M I T E D
175
J. Income-Tax
The accounting treatment for income-tax in respect of the Company’s income is based on the Accounting Standard 22 on ‘Accounting for Taxes on Income’ issued by the Institute of Chartered Accountants of India. The provision made for income-tax in the accounts comprises both, the current tax and deferred tax. The deferred tax assets and liabilities for the year, arising on account of timing differences, are recognised in the Profit and Loss Account and the cumulative effect thereof is reflected in the Balance Sheet.
K. Revenue Recognition
Revenue is recognised when no significant uncertainty as regards to its measurement and collection exists.
L. Provisions
A provision is recognised when the Company has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
2 Managerial Remuneration:
APRIL 1, 2009 TO MARCH 31, 2010
RUPEES
JANUARY 1, 2008 TO OCTOBER 20, 2008
RUPEES
(i) (ii) (iii)
Salary Contribution to Provident and Other Funds Perquisites
1,633,600 81,600 56,568 1,771,768
25,418,307 387,809 523,339 26,329,455
3 Auditors’ Remuneration :
APRIL 1, 2009 TO MARCH 31, 2010
RUPEES
JANUARY 1, 2008 TO MARCH 31, 2009
RUPEES
Audit Fees Tax Audit Fees Other Services Out of Pocket Expenses
450,000 200,000 265,000 14,820 929,820
450,000 300,000 95,370 6,740 852,110
4 Scheme Issue Expenses are the expenses incurred by the Company towards launching schemes and plans of the Mutual Fund during the year. 5 Advertising and Publicity Expenses includes cost of advertising, publicity, marketing of various schemes of IDFC Mutual Fund. 6 Operational Costs include interest charged by bank to the Mutual Fund on account of temporary borrowings or overdrafts and payments made to investors of Mutual Fund on account of delay in payment of redemption proceeds which are borne by the Company. 7 Service Tax Credit of Rs. 2,219,857/- (Previous Year – Rs. 7,028,650/-), would be claimed against future Service Tax Liability. 8 Expenditure in foreign currencies:
APRIL 1, 2009 TO MARCH 31, 2010
RUPEES
JANUARY 1, 2008 TO MARCH 31, 2009
RUPEES
Advertising Media Filing Fees Foreign Travel Hotel Accommodation Staff Training Expenses Staff welfare Road shows & Events Telephone- Cellular
51,694 678,984 170,260 20,418 145,286 – – –
– – 113,724 255,848 – 43,761 91,745 10,377
9 Earnings in foreign currencies: NIL (Previous Year Nil) 10 The Company is planning to expand its operations for which it anticipates significant working capital requirements. With the aim to conserve cash resources, the Company has not proposed any dividend for the period April 1, 2009 to March 31, 2010 on 15% cumulative redeemable preference shares allotted during 1999-00 amounting to Rs. 29,688,750/-. The consent letter for waiver of dividend has been received from IDFC Limited, sole shareholder of the preference shares.
176 I D F C A N N U A L R E P O R T 09 –10
11 As per Accounting Standard 15 on ‘Employee Benefits’ as notified by the Companies (Accounting Standards) Rules, 2006, the following disclosures are made as required :
i. The Company has recognised the following amounts in the Profit and Loss Account towards defined contribution plans which are included in Personnel Costs for the period 1st April, 2009 to 31st March, 2010:
PARTICULARS Provident Fund Superannuation CURRENT PERIOD
RUPEES
PREVIOUS PERIOD
RUPEES
7,453,856 519,131
5,243,889 1,481,326
ii. The details of the Company’s post – retirement benefit plans for gratuity for its employees are given below which is certified by the actuary and relied upon by the auditors:
PARTICULARS CHANGE IN THE DEFINED BENEFIT OBLIGATIONS: Liability at the beginning of the year Current Service Cost Interest Cost Benefits Paid Actuarial Loss Liability as at the end of the year FAIR VALUE OF PLAN ASSETS : Fair Value of Plan Assets at the beginning of the year Expected Return on Plan Assets Contributions Benefits Paid Actuarial Loss on Plan Assets Fair Value of Plan Assets at the end of the year Total Actuarial Loss to be recognised ACTUAL RETURN ON PLAN ASSETS : Expected Return on Plan Assets Actuarial Loss on Plan Assets Actuarial Return on Plan Assets AMOUNT RECOGNISED IN THE BALANCE SHEET : Liability at the end of the year Fair Value of Plan Assets at the end of the year Amount recognised in the Balance Sheet under “Provision for Retirement Benefits” EXPENSE RECOGNISED IN THE PROFIT AND LOSS ACCOUNT : Current Service Cost Interest Cost Expected Return on Plan Assets Net Actuarial Loss to be recognised Expense recognised in the Profit and Loss Account under Personnel Costs RECONCILIATION OF THE LIABILITY RECOGNISED IN THE BALANCE SHEET : Opening Net Liability Expense recognised Contribution by the Company Amount recognised in the Balance Sheet under “Provision for Retirement Benefit” PRINCIPAL ASSUMPTIONS : Discount Rate Expected Rate of Return on Assets Salary Escalation Rate 2,000,718 1,717,982 3,718,700 CURRENT PERIOD % 8.10% 8.00% 2,000,718 2,000,718 PREVIOUS PERIOD % 6.65 % 7.00 % 2,143,480 275,309 (700,807) 1,717,982 2,000,718 2,000,718 3,718,700 3,718,700 2,000,718 2,000,718 2,000,718 2,143,480 275,309 (700,807) 3,718,700 2,000,718 2,000,718 CURRENT PERIOD
RUPEES
PREVIOUS PERIOD
RUPEES
I D FC ASSS E T M A N AG E M E N T CO M PA N Y L I M I T E D
177
12 The Company is an Asset Management Company to IDFC Mutual Fund business. During the year ended 31st March, 2010, the Company was engaged in only one business segment and as such there are no separate reportable segments, as required by Accounting Standard 17 on ‘Segment Reporting’ issued by the Institute of Chartered Accountants of India. 13 As per the Accounting Standard 18 on ‘Related Party Disclosures’ issued by the Institute of Chartered Accountants of India, the related parties of the Company are as follows:
I. HOLDING COMPANY:
Infrastructure Development Finance Company Limited
II. SUBSIDIARIES:
IDFC Investment Advisors Limited IDFC Pension Fund Management Company Limited
III. FELLOW SUBSIDIARIES:
IDFC AMC Trustee Company Limited IDFC Private Equity Company Limited
IV. KEY MANAGEMENT PERSONNEL:
Mr. Naval Bir Kumar – President & CEO Mrs. Jyothi Krishnan – Compliance Officer & Manager The nature and volume of transactions carried out with the above related parties in the ordinary course of business are as follows:
NAME OF RELATED PARTY AND NATURE OF RELATIONSHIP I. HOLDING COMPANY Infrastructure Development Finance Company Limited Advances taken and repaid (Net of advances given) Purchase of Shares of IDFC Investment Advisors Limited Purchase of Fixed Assets Transfer of Fixed Assets Deputation Charges paid Advances given Advances Recoverable – Balance outstanding II. SUBSIDIARIES IDFC Investment Advisors Limited Advances Given and recovered Purchase of Shares Advances Recoverable – Balance outstanding IDFC Pension Fund Management Company Limited Advances Given and recovered Purchase of Shares Advances Recoverable – Balance outstanding III. FELLOW SUBSIDIARIES IDFC AMC Trustee Company Limited IDFC Private Equity Company Limited IV KEY MANAGEMENT PERSONNEL: Mr. Naval Bir Kumar Remuneration paid Reimbursement of Business Expenses Rent paid Security Deposit paid Payment to relatives Mrs. Jyothi Krishnan Remuneration paid 11,354,555 761,843 250,000 720,444 1,771,768 29,576,536 670,912 375,000 30,000,000 3,262,881 Advances given and recovered Advances Recoverable – Balance outstanding Transfer of Fixed Asset 152,032 351,217 40,000 55,250 4,222,728 20,000,000 2,469,162 60,000,010 974,799 2,407,975 946,815 921,424 80,000,000 14,486,458 2,759,128 439,795 5,430,657 256,999 528,359 PARTICULARS CURRENT PERIOD PREVIOUS PERIOD
178
I D F C A N N U A L R E P O R T 09 –10
14 In accordance with the Accounting Standard 19 on ‘Leases’ issued by the Institute of Chartered Accountants of India, the following disclosure in respect of Operating Leases is made:
The Company has taken a copier machine under irrevocable rental agreement (expiring on 31st May, 2011) from En Em Business Solutions. The committed rentals in the future are :
¬
PARTICULARS Not later than one year Later than one year and not later than five years
¬
RUPEES 49,000/-
The Company has taken vehicles for three employees under Cancellable Operating Leases from LeasePlan India Limited, which expire between October 2012 to December 2013. Staff Expenses include rental expenses of Rs.1,368,949 (Previous Year Rs. 488,489) paid to LeasePlan India Limited. ¬ The Company has entered in to Lease agreements for Office Premises and Residential Premises as per detailed below :
SR. NO. LOCATION OFFICE PREMISES 1 2 3 4 5 6 7 Ahmedabad Amritsar Bangalore Baroda Bhopal Bhubaneshwar Chandigarh Pranav Multitech Pvt. Ltd. Ajit Singh S. M. Kamal Pasha West Coast Contractors Pvt Ltd D. G. Enterprise Manisha Surekha Rahul Mahajan - 25% Praveen Mahajan - 25% Sandeep Mahajan - 25% Sahil Mahajan - 12.5% Siddharth Mahajan - 12.5% 8 9 10 Chennai Cochin Coimbatore Maalavika Hotels Private Limited Fathima Zackeria R. Malaiyappan, R. Rajarathnam & R. Balashanmugam 11 12 13 Dehradun Goa Guwahati EBD Business Centre Suzette Indresh Advani Aakash Jhunjhunwala Bimla Devi Jhunjhunwala Srinarayan Jhunjhunwala 14 15 16 17 18 19 Hyderabad Indore Jaipur Jallandar Jamshedpur Kanpur Anand Yemul – 50% Sai Suman Yemul – 50% Priya Baj Surjit Kaur – 50% Gurpreet Singh – 50% Surjit Singh Arora Corporate Inn Deep Management & Eco Consultants P. Ltd. – 50% Rachit Prakash – 25% Tripti Srivastava – 25% 20 21 22 Kolkata Lucknow Ludhiana Oswal Holdings Sahej Promoters Pvt. Ltd. Manjit Kaur Deol - 29.25% Mohinder Singh Deol - 27.75% Surjit Kaur Sekhon - 17.50% Jatinder Pal Singh Sekhon - 11.50% Gauravjit Singh Deol - 5% Gurbir Singh Deol - 5% Gurdial Singh Sekhon - 4% Increase by 15% after every 3 Years. Total Lease 14 Years. Increase by 15% after 3 Years. Total Lease 6 Years. Increase by 20% after 3 Years. Total Lease 6 Years. Increase by 10% after 1 Year. Total Lease 3 Years. Increase by 15% after 3 Years. Total Lease 9 Years. Increase by 15% after every 3 Years. Total Lease 9 Years. Increase by 15% after 3 Years. Total Lease 9 Years. Increase by 15% after every 3 Years. Total Lease 9 Years. Increase by 5.5% after every 1 Year. Total Lease 7 Years. Increase by 10% after 11 Months. Total Lease 22 Months. No Escalation. Increase by 15% after 3 Years. Total Lease 6 Years. Increase by 15% after every 3 Years. Total Lease 9 Years. Lease terminated w.e.f April 5, 2010. Increase by 15% after 3 Years. Total Lease 6 Years. Increase by 22.5% after every 3 Years. Total Lease 9 Years. Increase by 15% after every 3 Years. Total Lease 9 Years. Increase by 8% after every 1 Year. Total Lease 3 Years. Increase by 10% after every 3 Years. Total Lease 9 Years. Increase by 15% after 3 Years. Total Lease 9 Years. No Escalation. Increase by 15% after 3 Years. Total Lease 6 Years. Increase by 7.5% after 1 Year. Total Lease 6 Years. NAME OF THE LESSOR ESCALATION CLAUSE
I D FC ASSS E T M A N AG E M E N T CO M PA N Y L I M I T E D
179
SR. NO. LOCATION OFFICE PREMISES 23 24 25 26 27 28 29 30 31 32 33 Mangalore Mumbai-Churchgate Nagpur Nasik New Delhi Patna Pune Raipur Rajkot Surat
NAME OF THE LESSOR Raj Business Centre Ashu Engineers & Plastics Pvt. Ltd. Fortune Business Centre Madan’s Services Deepa Kiran Kaur & Others Sushma Khemka Prashant Kumar Kapse Amritpal Kaur Anil Dhulia (HUF) - 50% Usha Dhulia - 50% Kirti Kumar K. Shroff – 50% Pratik Kirtikumar Shroff – 25% Samir K. Shroff – 25%
ESCALATION CLAUSE No Escalation. Increase by 15% after 3 Years. Total Lease 5 Years. Increase by 15% after 3 Years. Total Lease 5 Years. No Escalation. No Escalation. Increase by 15% after every 3 Years. Total Lease 9 Years. Increase by 15% after 3 Years. Total Lease 6 Years. Increase by 20% after 5 Years. Total Lease 10 Years. Increase by 5% after 1 Year. Total Lease 6 Years. Increase by 15% after 1 Year. Total Lease 6 Years. Increase by 15% after 3 Years. Total Lease 5 Years.
Mumbai-Eplhinstone IndiaBulls Properties Pvt. Ltd.
34 35 1 2 3 4 5 6
Varanasi Vishakhapatnam Delhi Mumbai Mumbai Mumbai Mumbai Mumbai
Satya Narain Agrawal Vastav Consultancy Services Rishi Gupta C.K. Mirchandani Nilima A. Kamani Ram Swaroop Sodhani Sumit Banerjee Sapna Rajgarhia & Satish Rajgarhia
No Escalation. No Escalation. No Escalation. No Escalation. No Escalation. No Escalation. No Escalation. No Escalation.
RESIDENTIAL PREMISES
15 In compliance with the Accounting Standard 22 relating to ‘Accounting for Taxes on Income’ issued by the Institute of Chartered Accountants of India, the Company has taken credit in the Profit and Loss Account towards deferred tax asset (net) on account of timing differences. The major components of deferred tax assets and liabilities arising on account of timing differences are:
APRIL 1, 2009 TO MARCH 31, 2010
RUPEES
JANUARY 1, 2008 TO MARCH 31, 2009
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010
RUPEES
JANUARY 1, 2008 TO MARCH 31, 2009
RUPEES
Assets (a) (b) (c) Depreciation Provisions Others Net Deferred Tax Asset/(Liability) 1,573,000 1,264,000 4,140,000 6,977,000 6,977,000 3,362,432 1,069,158 4,431,590 2,457,654
Liabilities 1,973,936 1,973,936
16 The earning per share in accordance with the Accounting Standard 20 on ‘Earning Per Share’ issued by the Institute of Chartered Accountants of India is as under:
PARTICULARS Profit/(Loss) after Tax and prior period items (Rs.) Less: Proposed dividend on Preference Shares(Rs.) Less: Tax on dividend on Preference Shares (Rs.) Profit attributable to Equity shareholders (Rs.) No. of Shares Earnings per share in (Rs.) APRIL 1, 2009 TO MARCH 31, 2010 27,931,045 27,931,045 2,610,002 10.70 JANUARY 1, 2008 TO MARCH 31, 2009 60,089,281 60,089,281 2,610,002 23.02
180
I D F C A N N U A L R E P O R T 09 –10
17 Details of Movement in Provisions, in terms of Accounting Standard 29 issued by the Institute of Chartered Accountants of India, is as under:
NATURE OF PROVISION OPENING BALANCE AS ON 01/04/2009
RUPEES
PROVISIONS MADE DURING THE YEAR
RUPEES
PROVISIONS REVERSED / ADJUSTED
RUPEES
CLOSING BALANCE AS ON 31/03/2010
RUPEES
Provision for Diminution in Value of Investments Provision for Income Tax Provision for Deferred Tax (Asset)/ Liability Provision for Fringe Benefit Tax
7,891,698 276,925,601 (2,457,654) 12,072,000
– 9,000,000 (7,201,734) –
7,891,698 – 2,682,388 –
– 285,925,601 (6,977,000) 12,072,000
18 Estimated amount of contracts remaining to be executed on capital account and not provided for Rs.2,763,000/(Previous Year 23,743,564/-) 19 Contingent liabilities not provided for in respect of :
APRIL 1, 2009 TO MARCH 31, 2010
RUPEES
JANUARY 1, 2008 TO MARCH 31, 2009
RUPEES
(a)
Claims not acknowledged as debts in respect of Income-tax demand, disputed by the Company in respect of A.Y. 2005-06. The matters in dispute are under appeal. Amount of Rs. 1,500,000 has been paid against the demand. 3,037,298 1,000,000 3,037,298 1,000,000
(b)
Bank guarantees issued on behalf of the Company
20 No interest has been paid/payable by the Company during the year to the “suppliers” covered under the Micro, Small and Medium Enterprises Development Act, 2006. The above information is based on the records available with the Company. 21 Previous year’s figures have been regrouped wherever necessary. Since the current period is for 12 months from April 1, 2009 to March 31, 2010, the figures for current period are not comparable with previous period viz., 15 months from January 1, 2008 to March 31, 2009.
IN TERMS OF OUR REPORT OF EVEN DATE FOR M.P. CHITALE & CO. Chartered Accountants
VIDYA V . B A R J E BAKUL PATEL PRADIP MADHAVJI
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Partner
Director
UTTARA DEKA
Director
Mumbai | April 20, 2010
Company Secretary
I D FC ASSS E T M A N AG E M E N T CO M PA N Y L I M I T E D 181
B A L A N C E S H E E T A B ST R A CT
AND COMPANY’S GENERAL BUSINESS PROFILE
I.
REGISTRATION DETAILS Registration No. State Code Balance Sheet Date U 1 3 6 1 1 0 3 2 0 1 0 5 9 9 3 M H 1 9 9 9 P T C 1 2 3 1 9 1
II.
CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000) Public Issue N I L Right Issue N I L
Bonus Issue N III. I L
Private Placement N I L
POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000) Total Liabilities 1 SOURCES OF FUNDS Paid-up Capital 2 2 4 0 2 5 3 Reserves and Surplus 3 9 1 4 5 0 5 4 9 3 6 1 0 5 4 Total Assets 9 3 6
Secured Loans N APPLICATION OF FUNDS Net Fixed Assets 9 1 1 5 0 6 5 I L
Unsecured Loans N I L
Investments 9 4 8 4
Net Current Assets (1 IV. 9 4 4 4 1)
Deferred Tax Asset 6 9 7 7
PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000) Turnover / Income 1 0 6 9 7 1 5 1 0 3 Total Expenditure 7 3 0 3
Profit Before Tax 3 2 4 1 2 2
Profit After Tax 7 9 3 1
Earnings per Share (in Rs.) 1 V. 0 . 7 0
Dividend % N I L
GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS) Item Code No. (ITC Code) Product Description N A I S L S E T M A N A G E M E N T
182
I D F C A N N U A L R E P O R T 09 –10
ST AT E M E N T P U R S U A N T T O S E CT I O N 2 1 2
OF THE COMPANIES ACT, 1956
NAME OF SUBSIDIARY COMPANIES
IDFC INVESTMENT ADVISORS LIMITED
RUPEES
IDFC PENSION FUND MANAGEMENT COMPANY LIMITED
RUPEES
The financial year of the Subsidiary Companies ended on Number of shares in the Subsidiary Companies held by IDFC Asset Management Company Limited at the above date. Holding Company’s interest in percentage The net aggregate of profits of the Subsidiary Companies so far as these concern the members of IDFC Asset Management Company Limited. (i) dealt with in the accounts of IDFC Asset Management Company Limited amounted to: (a) for subsidiaries’ financial year ended on March 31, 2010 (b) for previous financial years of the subsidiaries since these became subsidiaries of IDFC Asset Management Company Limited (ii) not dealt with in the accounts of IDFC Asset Management Company Limited amounted to: (a) for subsidiaries’ financial year ended on March 31, 2010 (b) for previous financial years of the subsidiaries since these became subsidiaries of IDFC Asset Management Company Limited.
March 31, 2010 10,000,000 shares of Rs. 10 each 100.00%
March 31, 2010 6,000,001 shares of Rs. 10 each 50.01%
-
-
69,469,803 -
(638,164) -
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
BAKUL PATEL
PRADIP MADHAVJI
Director Mumbai | April 20, 2010
Director
I D FC ASSS E T M A N AG E M E N T CO M PA N Y L I M I T E D
183
IDFC amc trustee
company limited
B O A R D O F D I R E CTO R S
?
? ? ?
Mr. Vikram Limaye Chairman Mr. Jamsheed Kanga Mr. D. M. Sukthankar Mr. U. Sundararajan
A U D I TO R S
?
M. P. Chitale & Co Chartered Accountants
P R I N C I PA L B A N K E R S
?
Standard Chartered Bank
R E G I ST E R E D O F F I C E
One India Bulls Centre, 841 Jupiter Mills Compound, Senapati Bapat Marg, Elphinstone Road (West), Mumbai 400 013. TEL +91 22 66289999 FAX +91 22 24215051/52/53
184
I D F C A N N U A L R E P O R T 09 –10
D I R E CT O R S ’ R E P O R T
TO THE MEMBERS
We are pleased to present the Tenth Annual Report to the Members, along with the Audited Profit and Loss Account for the year ended March 31, 2010 and the Balance Sheet as at March 31, 2010.
AWARDS & RECOGNITION
IDFC Premier Equity Fund – Plan A has been ranked as a Seven Star Fund by ICRA in the category of ‘Open Ended Equity Diversified - Defensive’ schemes for its 3 years performance till December 31, 2009. The rank is an outcome of an objective and comparative analysis against various parameters, including: risk adjusted return, fund size, company concentration and liquidity. The ranking methodology did not take into account entry and exit loads imposed by the Fund. There were 81 schemes considered in ‘Open Ended Equity Diversified - Defensive’ category for the ranking exercise. The rank is neither a certificate of statutory compliance nor any guarantee on the future performance of IDFC Premier Equity Fund – Plan A. IDFC Government Securities Fund – ST – Plan A has been ranked as a Five Star Fund by ICRA in the category of ‘Open Ended Gilt’ schemes for its 1 year performance till December 31, 2009. The rank is an outcome of an objective and comparative analysis against various parameters, including: risk adjusted return, fund size and average maturity. The ranking methodology did not take into account entry and exit loads imposed by the Fund. There were 30 schemes considered in ‘Open Ended Gilt’ category for the ranking exercise. The rank is neither a certificate of statutory compliance nor any guarantee on the future performance of IDFC Government Securities Fund – ST – Plan A. IDFC Premier Equity Fund ranked as Best Fund over Past 3 Years period ending Dec. 31, 2009, India Equity by Lipper, a global ranking agency for mutual funds in Lipper Fund Awards, India, 2010. Business Standard, a leading newspaper in India voted IDFC Mutual Fund as the “Equity Fund Managers of the Year” for the year 2009. Business World, a leading business magazine in India voted Kenneth Andrade (Head – Investments) as the “Smartest Fund Manager of the Year” for the year 2009. IDFC Premier Equity Fund rated as the “Best Mid-cap and Small-cap Fund” over Past 3 Years period ending Dec. 31, 2009 by Business World, a leading business magazine in India IDFC AMC rated as the “Best Performing Fund House” by the Economic Times (ET) Quarterly Mutual Fund Tracker for Q1 and Q2 of FY 09-10. IDFC Imperial Equity Fund and IDFC Dynamic Bond Fund ranked in the “Platinum Category” which is the highest ranking given to schemes in Q1 and Q2 2009.
FINANCIAL RESULTS
RUPEES
YEAR ENDED MARCH 31, 2010 Gross Income Profit before Tax Provision for Tax Profit after Tax 500,000 218,647 68,000 150,647
YEAR ENDED MARCH 31, 2009 625,000 324,232 115,000 209,232
OPERATIONS OF IDFC MUTUAL FUND
The Company is the Trustee to the schemes of IDFC Mutual Fund (IDFC MF). The Assets under Management of IDFC Mutual Fund were Rs. 19,979 Crores (including AUM of Fund of Funds Schemes) as on March 31, 2010:
NEW SCHEMES LAUNCH
? Open ended schemes launched during the period under review: IDFC Asset Allocation Fund of Fund, an open ended Fund of Funds Scheme was launched on January 04, 2010. The investment objective of the scheme is to generate capital appreciation through investment in different mutual fund schemes primarily local funds based on a defined asset allocation model. It has 3 plans – Aggressive Plan, Conservative Plan and Moderate Plan. The Aggressive Plan collected a total of Rs. 613,484,254.26 during the New Fund Offer. The Conservative Plan collected a total of Rs 301,262,457.31during the New Fund Offer. The Moderate Plan collected a total of Rs. 404,381,577.08 during the New Fund Offer. IDFC Monthly Income Plan Fund of Fund, an open ended Fund of Fund scheme was launched on January 11, 2010. This scheme collected a total of Rs. 2,113,409,943.68 during the New Fund Offer. The primary objective of the Scheme is to generate regular returns through investment primarily in debt oriented Mutual Fund schemes (such as Income and Liquid funds). The secondary objective of the Scheme is to generate long-term capital appreciation by investing a portion of the Scheme’s assets in equity oriented MF schemes. Monthly Income is not assumed and the same is subject to availability of distributable surplus. ? Close ended schemes launched during the period under review: In addition to the above open ended schemes, Six Close-Ended income Schemes in the form of Fixed Maturity Plans (FMP’s) were launched. These comprised of IDFC Fixed Maturity Plan – Thirteen Months Series I, IDFC Fixed Maturity Plan –Fifteen Months Series 3, IDFC Fixed Maturity Plan – Seventeen Months Series 1, IDFC FMP-Half Yearly Series 9 and IDFC Fixed Maturity Plan – Fourteen Months Series 1. These Fixed Maturity Plans collected approximately Rs 1027.85 crores.
DIVIDEND
The Board of Directors of the Company do not recommend the payment of dividend for the current year.
DIRECTORS
In accordance with the provisions of the Companies Act, 1956 and the Company’s Articles of Association, Mr. U Sundararajan retires by rotation and is eligible for re-appointment.
I D F C A M C T R U ST E E C O M P A N Y L I M I T E D
185
AUDITORS
M/s M. P. Chitale and Co., Chartered Accountants and Statutory Auditors of the Company would be retiring at the conclusion of the forthcoming Annual General Meeting and are eligible for reappointment. The auditors have confirmed their eligibility and willingness to accept the office if re-appointed. The Members are requested to consider their re-appointment, at a remuneration to be decided by the Board of Directors, for the financial year ending March 31, 2011 as set out in the Notice convening the Annual General Meeting.
There was no foreign exchange earning or outgo during the period under review. The Board of Directors of the Company met seven times during the year and four meetings of the Audit Committee were convened during the year.
DIRECTORS RESPONSIBILITY STATEMENT
Based on the representation made by the management, the Directors, pursuant to the provisions of Section 217 (2AA) wish to state: 1. that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; 2. that they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit or loss of the company for that period; 3. that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and 4. that they have prepared the annual accounts on a going concern basis.
AUDIT COMMITTEE
The Audit Committee consists of two members, Mr. Jamsheed Kanga, Chairman and Mr. Vikram Limaye. The Committee met four times during the year under review. The functions of the Committee includes reviewing the financial statements, internal control systems and significant accounting policies of the Company and discussing the audit findings and recommendatintons of the internal and statutory auditors of the Company.
CONVERSION INTO PUBLIC COMPANY
The Company has been converted into a Public Company. The Registrar of Companies, Maharashtra has issued a Fresh Certificate of Incorporation consequent upon change of name on conversion to Public Limited Company dated June 23, 2009.
CAPITAL
No further equity share capital was issued by the company during the year.
ACKNOWLEDGEMENT
The Board places on record its gratitude to the Government of India, Securities and Exchange Board of India, Reserve Bank of India, Association of Mutual Funds in India, other regulatory authorities and institutions, the investors of IDFC Mutual Fund and to the Members for their continued guidance and support during the year.
FIXED DEPOSITS
The company has not accepted any Fixed Deposits from the public.
PARTICULARS OF EMPLOYEES
Since your Company does not have any employee, the provisions of Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, are not applicable and hence not given.
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
STATUTORY DISCLOSURE OF PARTICULARS
The requirements of disclosure, in terms of Section 217 (1)(e) of the Companies Act, 1956 pertaining to steps taken regarding conservation of energy and technology absorption do not apply to the Company.
VIKRAM LIMAYE
Chairman Mumbai April 20, 2010
186
I D F C A N N U A L R E P O R T 09 –10
AU D I TO RS ’ R E PO RT
To The Members of IDFC AMC Trustee Company Limited
We have audited the attached Balance Sheet of IDFC AMC Trustee Company Limited as at March 31, 2010 and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. (1) As required by the Companies Auditors Report Order (CARO) 2003, issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956, we enclose as Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order. (2) We state that: (a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit; (b) In our opinion, proper books of account as required by law have been kept by the Company, so far as appears from our examination of those books; (c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with in this report are in agreement with the books of account; (d) In our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in Section 211 (3C) of the Companies Act, 1956 to the extent applicable. (e) On the basis of written representation received by the Company from the directors, we report that none of the directors is disqualified as on 31st March 2010 from being appointed as a director in terms of clause (g) of sub section (1) of section 274 of the Companies Act, 1956. (f) In our opinion and to the best of our information and according to the explanations given to us, the accounts read with notes thereon give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (i) in so far as it relates to the Balance Sheet, of the state of affairs of the Company as at March 31, 2010,
(ii) in so far as it relates to the Profit and Loss Account, of the profit of the Company for the year ended on that date and (iii) in so far as it relates to the Cash Flow Statement of the Company for the year ended on that date.
FOR M. P. CHITALE & CO. Chartered Accountants
VIDYA BARJE
Partner M. No. 104994 Firm Registration No. 101851W Mumbai April 21, 2010
I D F C A M C T R U ST E E C O M P A N Y L I M I T E D
187
ANNEXURE
Annexure referred to in paragraph 1 of the report of even date of the Auditors to the members of IDFC AMC Trustee Company Limited
(i) The Company has no fixed assets. (ii) The Company has not granted any loans to Companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. (iii) The Company has not taken any loans from Companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. (iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business for purchase of fixed assets and for the services rendered. (v) In our opinion and according to the information and explanations given to us, there are no transactions that need to be entered into a register in pursuance of section 301 of the Companies Act, 1956. (vi) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public. (vii) The Company’s paid-up capital and reserves does not exceed Rs. 50 lakhs and the turnover of the Company does not exceed five crores rupees for a period of immediately preceding three consecutive financial years and hence, the Company is not required to have a formal Internal Audit System. (viii) Central Government has not prescribed maintenance of cost records under Section 209 (1) (d) of the Companies Act, 1956. (ix) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income-tax, Sales-tax, Wealth tax, Service Tax, Customs duty, Excise duty, cess and any other statutory dues as applicable with the appropriate authorities. According to the information and explanations given to us, 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, Customs duty, Excise duty, cess and any other statutory dues outstanding as at March 31, 2010 for a period of more than six months from the date they became payable. (x) The Company does not have accumulated losses at the end of the financial year and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.
TO THE AUDITOR’S REPORT
(xi) In our opinion and according to the information and explanations given to us, during the period, the Company has not taken any loan and no amounts were due towards principal or interest to financial institution, bank or debenture holders during the period. (xii) According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. (xiii) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other securities. (xiv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions. (xv) According to the information and explanations given to us, the Company has not taken any term loan. (xvi) According to the information and explanations given to us, during the year, the Company has not raised any funds. (xvii) The Company has not made any preferential allotment of shares to parties and Companies covered in the Register maintained under section 301 of the Act. (xviii) According to the information and explanations given to us, the Company has not issued any debentures up to 31st March 2010. (xix) The Company has not raised money from public issue. (xx) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the period. (xxi) Considering the nature of the business and the services rendered by the Company, clauses (ii) and (xiii) under Clause 4 of the CARO are not applicable.
FOR M. P. CHITALE & CO. Chartered Accountants
VIDYA BARJE
Partner M. No. 104994 Firm Registration No. 101851W Mumbai April 21, 2010
188
I D F C A N N U A L R E P O R T 09 –10
BALANCE SHEET
RUPEES SCHEDULE RUPEES
AS AT MARCH 31, 2010
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
SOURCES OF FUNDS
Shareholders’ Funds Capital Reserves and Surplus Total 1 2 500,000 522,230 1,022,230 1,022,230 3 551,500 550,201 306,616 1,408,317 Less: Current Liabilities & Provisions Net Current Assets Total Notes to the Accounts Schedules 1 to 6 form an integral part of the Accounts 6 4 386,087 1,022,230 1,022,230 496,628 426,442 310,162 1,233,232 361,649 871,583 871,583 500,000 371,583 871,583 871,583
APPLICATION OF FUNDS
Current Assets, Loans and Advances Sundry Debtors Cash and Bank Balances Loans and Advances
IN TERMS OF OUR REPORT OF EVEN DATE FOR M.P. CHITALE & CO. Chartered Accountants FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
VIDYA V . B A R J E
U. SUNDARARAJAN
JAMSHEED KANGA
Partner Mumbai | April 20, 2010
Director
Director
I D F C A M C T R U ST E E C O M P A N Y L I M I T E D
189
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
SCHEDULE
APRIL 1, 2009 TO MARCH 31, 2010 500,000 5 281,353 218,647 68,000 150,647 371,583 522,230 3.01 6
JANUARY 1, 2008 TO MARCH 31, 2009 625,000 300,768 324,232 115,000 209,232 162,351 371,583 4.18
INCOME
Trusteeship Fees
EXPENDITURE
Operating Expenses PROFIT BEFORE TAX Less: Provision for tax PROFIT AFTER TAX Add: Balance as per last Balance Sheet BALANCE CARRIED FORWARD Earnings per Share (Face Value Rs. 10) (Basic) Notes to the Accounts Schedules 1 to 6 form an integral part of the Accounts
IN TERMS OF OUR REPORT OF EVEN DATE FOR M.P. CHITALE & CO. Chartered Accountants FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
VIDYA V . B A R J E
U. SUNDARARAJAN
JAMSHEED KANGA
Partner Mumbai | April 20, 2010
190 I D F C A N N U A L R E P O R T 09 –10
Director
Director
C A S H F L OW ST AT E M E N T
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
RUPEES
PARTICULARS
APRIL 1, 2009 TO MARCH 31, 2010 218,647 (23,171) (43,562) 151,914 (28,155) 123,759 123,759 426,442 550,201 (123,759)
JANUARY 1, 2008 TO MARCH 31, 2009 324,232 (173,752) (61,273) 89,207 (120,340) (31,133) 400,000 368,867 57,575 426,442 (368,867)
A. CASH FLOW FROM OPERATING ACTIVITIES
Profit Before Tax Changes in : Current Assets & Loans and Advances Current Liabilities Direct Taxes Paid NET CASH FLOW FROM/(USED IN) OPERATING ACTIVITIES (A)
B. CASH FLOW FROM FINANCING ACTIVITIES
NET CASH FROM FINANCING ACTIVITIES Increase in Share Capital (B) NET CHANGE IN CASH & CASH EQUIVALENTS (A)+(B) Cash & Cash Equivalents as at the beginning of the period (As per Schedule 3) Cash & Cash Equivalents as at the end of the period (As per Schedule 3)
IN TERMS OF OUR REPORT OF EVEN DATE FOR M.P. CHITALE & CO. Chartered Accountants FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
VIDYA V . B A R J E
U. SUNDARARAJAN
JAMSHEED KANGA
Partner Mumbai | April 20, 2010
Director
Director
I D F C A M C T R U ST E E C O M P A N Y L I M I T E D
191
SCHEDULES
ANNEXED TO AND FORMING PART OF THE ACCOUNTS
SCHEDULE 1 Share Capital
AUTHORISED 50,000 Equity shares of Rs. 10/- each ISSUED, SUBSCRIBED & PAID-UP 50,000 Equity shares of Rs. 10/- each (All the above shares are held by Infrastructure Development Finance Company Limited, the Holding Company and its nominees)
RUPEES
RUPEES
AS AT MARCH 31, 2010 500,000
AS AT MARCH 31, 2009 500,000
500,000 500,000
500,000 500,000
SCHEDULE 2 Reserves and Surplus
Profit and Loss Account
RUPEES
RUPEES
AS AT MARCH 31, 2010 522,230 522,230
AS AT MARCH 31, 2009 371,583 371,583
SCHEDULE 3 Current Assets, Loans and Advances
CURRENT ASSETS Sundry Debtors (Considered Good) Trusteeship Fees Receivable Over Six Months Others CASH AND BANK BALANCES Balances with Scheduled Banks - in Current Accounts LOANS AND ADVANCES Advance Income Tax and TDS Others
RUPEES
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
275,752 275,748 551,500 550,201 1,101,701 287,579 19,037 306,616
249,076 247,552 496,628 426,442 923,070 259,424 50,738 310,162
SCHEDULE 4 Current Liabilities and Provisions
Sundry Creditors Funds received from IDFC towards corpus Others Provision for taxation
RUPEES
RUPEES
AS AT MARCH 31, 2010 30,000 68,087 288,000 386,087
AS AT MARCH 31, 2009 30,000 111,649 220,000 361,649
192
I D F C A N N U A L R E P O R T 09 –10
SCHEDULE 5 Operating expenses
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Sitting Fees Bank Charges Miscellaneous Expenses Professional and Consultancy charges Stamp Duty and Registration Fees Printing and Stationery Audit Fees Advertising Car hire 180,000 6 – 48,499 2,300 – 29,224 – 21,324 281,353
JANUARY 1, 2008 TO MARCH 31, 2009 240,000 10 638 26,797 3,000 3,175 20,618 6,530 – 300,768
I D F C A M C T R U ST E E C O M P A N Y L I M I T E D
193
SCHEDULE: 6 Notes Forming Part of the Accounts
1 Significant Accounting Policies:
A. Method of Accounting
The accounts are prepared under the historical cost convention and on the going concern basis, with revenues recognised and expenses accounted on their accrual.
B. Revenue Recognition
Revenue is recognised when no significant uncertainty as to measurability and collectibility exists.
2 Earnings and expenditure in foreign currency: Nil 3 Contingent Liabilities not provided for:
Nil
4 As on the Balance sheet date there was no amount exceeding Rs.1 Lac, due to any small-scale Industrial undertaking, outstanding for more than 30 days. 5 The earning per share, in terms of Accounting Standard 20 issued by the Institute of Chartered Accountants of India, is as under:
PARTICULARS Profit after tax Profit attributable to Equity shareholders No. of Shares Earnings per share CURRENT PERIOD
RUPEES
PREVIOUS PERIOD
RUPEES
150,647 150,647 50,000 3.01
209,232 209,232 50,000 4.18
6 Deferred tax asset/liability does not arise since there is no difference in accounting profit and tax profit on account of timing differences. 7 The Company is engaged in the business of providing trusteeship services. As such there is no separate reportable primary business segment or geographical segment as required by Accounting Standard 17 on “Segment Reporting” issued by the Institute of Chartered Accountants of India. 8 As per the Accounting Standard 18 on “Related Party Disclosures” issued by the Institute of Chartered Accountants of India, the related parties of the Company are as follows:
I. HOLDING COMPANY:
Infrastructure Development Finance Company Limited
II. FELLOW SUBSIDIARY:
IDFC Asset Management Company Limited The nature and volume of transactions carried out with the above related parties in the ordinary course of business are as follows:
NAME OF RELATED PARTY & NATURE OF RELATIONSHIP Fellow Subsidiary IDFC Asset Management Company Limited Advances taken and Repaid Advances payable-Balance 152,032 351,217 40,000 PARTICULARS CURRENT PERIOD
RUPEES
PREVIOUS PERIOD
RUPEES
9 Details of Movement in Provisions, in terms of Accounting Standard 29 issued by the Institute of Chartered Accountants of India, is as under:
NATURE OF PROVISION OPENING BALANCE AS ON 01/04/2009 220,000 PROVISIONS MADE DURING THE YEAR 68,000 PROVISIONS REVERSED / ADJUSTED CLOSING BALANCE AS ON 31/03/2010 288,000
Provision for Income Tax
10 Previous period’s figures have been regrouped wherever necessary. Since the current period is for 12 months from April 01, 2009 to March 31, 2010, the figures for current period are not comparable with previous period viz., 15 months from January 01, 2008 to March 31, 2009.
FOR M.P. CHITALE & CO. Chartered Accountants
VIDYA V . B A R J E
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
U. SUNDARARAJAN
JAMSHEED KANGA
Partner Mumbai | April 20, 2010
194 I D F C A N N U A L R E P O R T 09 –10
Director
Director
B A L A N C E S H E E T A B ST R A CT
AND COMPANY’S GENERAL BUSINESS PROFILE
I.
REGISTRATION DETAILS Registration No. State Code Balance Sheet Date U 1 3 6 1 1 0 3 2 0 1 0 9 9 9 0 M H 1 9 9 9 P T C 1 2 3 1 9 0
II.
CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000) Public Issue N I L Right Issue N I L
Bonus Issue N III. I L
Private Placement N I L
POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000) Total Liabilities 1 SOURCES OF FUNDS Paid-up Capital 5 0 0 Reserves and Surplus 5 2 2 4 0 8 1 Total Assets 4 0 8
Secured Loans N APPLICATION OF FUNDS Net Fixed Assets N I L I L
Unsecured Loans N I L
Investments N I L
Net Current Assets 1 IV. 0 2 2
Deferred Tax Asset N I L
PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000) Turnover / Income 5 0 0 Total Expenditure 2 8 1
Profit Before Tax 2 1 9
Profit After Tax 1 5 1
Earnings per Share (in Rs.) 3 V. . 0 1
Dividend % N I L
GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS) Item Code No. (ITC Code) Product Description N T I R L U S T E E S H I P S E R V I C E S
I D F C A M C T R U ST E E C O M P A N Y L I M I T E D
195
IDFC pension fund
management company limited
B O A R D O F D I R E CTO R S
?
? ? ? ? ?
Mr. Vikram Limaye Chairman Mr. Naval Bir Kumar Mr. L. K. Narayan Mr. Bharat S. Raut Mr. Bharat Shah Dr. T. C. Nair
A U D I TO R S
?
Haribhakti & Co. Chartered Accountants
P R I N C I PA L B A N K E R S
?
HDFC Bank Limited
R E G I ST E R E D O F F I C E
One India Bulls Centre, 841 Jupiter Mills Compound, Senapati Bapat Marg, Elphinstone Road (West), Mumbai 400 013. TEL +91 22 66289999 FAX +91 22 24215052
D I R E CT O R S ’ R E P O R T
TO THE MEMBERS
We are pleased to present the First Annual Report to the Members, along with the Audited Profit and Loss Account for the period March 31, 2009 (date of incorporation) to March 31, 2010 and the Balance Sheet as at March 31, 2010.
DIVIDEND
Due to inadequacy of profits, the Board of Directors have not recommended any dividend for the year ended March 31, 2010.
DIRECTORS
In accordance with the provisions of the Companies Act, 1956 and the Company’s Articles of Association, the directors of the Company appointed by the Board of Directors during the year would hold office till the conclusion of the forthcoming Annual General Meeting. The members are requested to consider their appointment as directors of the Company.
PRINCIPAL ACTIVITIES
The Company is one of the six pension fund managers selected by the Pension Fund Regulatory and Development Authority (PFRDA) to manage the New Pension System (NPS) launched by the Government of India for all citizens of India other than government employees covered under NPS. The Company was incorporated on March 31, 2009 and the Registrar of Companies, Maharashtra issued the Certificate of Commencement of Business on April 20, 2009. The Pension Fund Regulatory & Development Authority issued the Certificate of Commencement of Business on May 01, 2009. The Company is now a subsidiary of IDFC Asset Management Company Limited (IDFC AMC). The Company is yet to commence full-fledged operations.
AUDITORS
M/s. Haribhakti & Co., Chartered Accountants will hold the office of the statutory auditors of the Company up to the ensuing Annual General Meeting. It is proposed to appoint M/s. M. P. Chitale as the statutory auditors in place of M/s. Haribhakti & Co to audit the accounts of the Company for the financial year ending March 31, 2011. M/s. M. P. Chitale & Co., have confirmed that their appointment, if made, would be in conformity with the provisions of Sections 224 and 226 of the Companies Act, 1956 and has also indicated their willingness to be appointed. You are requested to consider their appointment.
FINANCIAL RESULTS
RUPEES
YEAR ENDED MARCH 31, 2010 Gross Income Profit before Tax Provision for Tax Profit after Tax 3,937,255 (1,728,486) (452,413) (1,276,073)
AUDIT COMMITTEE
The Audit Committee consists of three members, Mr. Bharat S. Raut, Chairman, Dr. T. C. Nair and Mr. L. K. Narayan. The Committee met two times during the year under review. The functions of the Committee includes reviewing the financial statements, internal control systems and significant accounting policies of the Company and discussing the audit findings and recommendatintons of the internal and statutory auditors of the Company.
OPERATIONAL OVERVIEW
During the period under review, PFRDA launched Tier I & II NPS.
DATA AS ON MARCH 31, 2010 PORTFOLIOS AUM ADDED IN THE MONTH
RUPEES
CUMULATIVE MARKET VALUE
RUPEES
ALLOCATION
SHARE CAPITAL
46.90% 25.36% 23.93% 1.58% 0.83% 1.40% 100%
Scheme E Scheme G Scheme C Scheme E Tier II Scheme G Tier II Scheme C Tier II Total PERFORMANCE SCHEME Nifty Scheme E Scheme G Scheme C Scheme E Tier II Scheme G Tier II Scheme C Tier II
56,362.37 24,880.23 36,545.68 33,139.61 24,907.98 37,329.43 213,165.30
1,662,743.31 898,994.63 848,423.41 56,114.11 29,514.97 49,554.23 3,545,344.66
During the year, the Authorized Capital of the Company was increased from Rs. 10 crore to Rs 20 crore. The issued, subscribed and paid up equity share capital was increased from Rs. 10 crore to Rs. 12 crores by issuing further 20 lakhs equity shares to the existing shareholders, namely, Infrastructure Development Finance Company Limited (IDFC) and IDFC AMC (sponsors to the Company). IDFC and IDFC AMC contributed a sum of Rs. 1 crore each to the share capital of the Company making the paid up capital Rs. 12 crore.
1 MONTH (ABSOLUTE) 6.64% 8.10% 1.16% 1.23% 7.82% 0.38% 0.38%
* SINCE INCEPTION (ABSOLUTE) 43.65% 23.51% 2.48% 9.86% 0.23% 0.91% 0.91%
FIXED DEPOSITS
The company has not accepted any Fixed Deposits from the public.
PARTICULARS OF EMPLOYEES
Since your Company does not have any employee, the provisions of Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, are not applicable and hence not given.
Inception Date is May 1, 2009
I D FC P E N S I O N FU N D M A N AG E M E N T CO M PA N Y
LT D .
197
STATUTORY DISCLOSURE OF PARTICULARS
Since the Company does not own any manufacturing facility, the disclosure of information on other matters required to be disclosed in terms of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1998, are not applicable and hence not given. There was no income or expenditure in foreign currency during the period under review.
provisions of this Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; 4. that they have prepared the annual accounts on a going concern basis.
ACKNOWLEDGEMENT
The Board places on record its gratitude to the Government of India, the Pension Fund Regulatory & Development Authority, other regulatory authorities and institutions, investors in the Pension Fund schemes and to the Members for their continued guidance and support. The Company would also like to express its gratitude for the unstinted support and guidance received from Infrastructure Development Finance Company Limited and other group companies.
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
DIRECTORS RESPONSIBILITY STATEMENT
Based on the representation made by the management, the directors, pursuant to the provisions of Section 217 (2AA) the Directors wish to state. 1. that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; 2. that they have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the company for that period; 3. that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the
VIKRAM LIMAYE
Chairman Mumbai April 21, 2010
198
I D F C A N N U A L R E P O R T 09 –10
AU D I TO RS ’ R E PO RT
To The Members of IDFC Pension Fund Management Company Limited
We have audited the attached Balance Sheet of IDFC PENSION FUND MANAGEMENT COMPANY LIMITED as at March 31, 2010, the related Profit and Loss Account for the period ended on that date annexed thereto and the Cash Flow Statement for the period ended on that date, which we have signed under reference to this report. These Financial Statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these Financial Statements based on our audit. We conducted our audit in accordance with Auditing Standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the Financial Statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Financial Statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the Financial Statements. We believe that our audit provides a reasonable basis for our opinion. (I) As required by the Companies (Auditors’ Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, on the basis of such checks of the books and records as we considered appropriate and the information and explanations given to us during the course of the audit, we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order, to the extent they are applicable to the Company. (II) Further to our comments in the Annexure referred to in paragraph I above, we report as under: (a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit; (b) in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of such books; (c) the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;
(d) in our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of the Section 211 of the Companies Act, 1956 to the extent they are applicable to the Company; (e) On the basis of the written representations received from the directors of the Company as on March 31, 2010 and taken on record by the Board of Directors of the Company, we report that none of the directors is disqualified as on March 31, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956; (f) in our opinion and to the best of our information and according to the explanations given to us, the said Balance Sheet, the Profit and Loss Account and Cash Flow Statement read together with Notes thereon give the information required by the Companies Act, 1956 in the manner so required, and give a true and fair view in conformity with the accounting principles generally accepted in India: (i) in so far it relates to the Balance Sheet, of the state of affairs of the Company as at March 31, 2010,
(ii) in the case of the Profit and Loss Account, of the Loss of the Company for the period ended on that date and (iii) in the case of Cash Flow Statement, of the cash flows for the period ended on that date.
FOR HARIBHAKTI & CO. Chartered Accountants Firm Membership No. 103523W
RAKESH RATHI
Partner Membership No. 45228 Mumbai April 21, 2010
I D FC P E N S I O N FU N D M A N AG E M E N T CO M PA N Y
LT D .
199
ANNEXURE
ANNEXURE REFERRED TO IN PARAGRAPH I OF OUR REPORT OF EVEN DATE TO THE MEMBERS OF IDFC PENSION FUND MANAGEMENT COMPANY LIMITED ON THE ACCOUNTS FOR THE PERIOD ENDED MARCH 31, 2010.
1. The Company has maintained proper records showing full particulars and situation of fixed assets. 2. The Company has physically verified the fixed assets in accordance with a programme of verification, which in our opinion provides for physical verification of all fixed assets at reasonable intervals. We have been informed that the physical verification of fixed assets was carried out in the current period and discrepancies noticed on such verification have been dealt with in the books of account. 3. The Company has not disposed off a substantial part of the fixed assets during the period. 4. The Company has neither granted nor taken any loans, secured or unsecured from Companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956. 5. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and nature of its business with regards to purchase of fixed assets and sale of services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls. 6. Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the Company has not entered into any transactions that need to be entered in the register maintained under Section 301 of the Companies Act, 1956. 7. The Company has not accepted any deposits from the public. 8. In our opinion, the Company has an adequate internal audit system commensurate with the size of the Company and nature of its business. 9. We are informed that no cost records are required to be maintained by the Company under Section 209(1) (d) of the Companies Act, 1956. 10. According to the information and explanation given to us, the Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, income-tax, service tax and any other statutory dues applicable to it. 11. According to the information and explanations given to us, no undisputed amounts payable in respect of income tax and service tax were outstanding as at March 31, 2010 for a period of more than six months from the date they became payable.
TO THE AUDITORS’ REPORT
12. According to the information and explanations given to us, there are no dues of Income Tax, Service Tax and Cess which have not been deposited on account of any dispute. 13. The Company has accumulated losses as at March 31, 2010 and has incurred cash losses during the period covered by our audit. 14. The Company has not taken any loan from Financial Institution, Bank and the Company has not issued any Debentures. 15. The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. 16. The Company has not dealt or traded in shares, securities, debentures and other investments during the period. 17. The Company has not given any guarantee for loans taken by others from Bank or Financial Institutions. 18. The Company has not taken term loans during the period. 19. According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, funds raised on short-term basis have, prima facie, not been used during the period for long-term investment. 20. The Company has not made any preferential allotment of shares to the parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956 during the period. 21. The Company has not issued any Debentures during the period. 22. The Company has not raised any money by public issue during the period. 23. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on the Company or by the Company has been noticed or reported during the course of our audit. 24. The clause (ii), (iii) and (xiii) of para 4 are not reported upon as these are not applicable to the Company.
FOR HARIBHAKTI & CO. Chartered Accountants Firm Membership No. 103523W
RAKESH RATHI
Partner Membership No. 45228 Mumbai April 21, 2010
200
I D F C A N N U A L R E P O R T 09 –10
BALANCE SHEET
AS AT MARCH 31, 2010
RUPEES SCHEDULE
RUPEES
AS AT MARCH 31, 2010
SOURCES OF FUNDS
Shareholders’ Funds Share Capital 1 120,000,000 120,000,000
APPLICATION OF FUNDS
Fixed Assets Gross Block Less: Accumulated Depreciation & Amortisation Net Block Investments Deferred Tax Asset (Refer Note 4) Current Assets, Loans and Advances Cash and Bank Balances Loans and Advances Less: Current Liabilities and Provisions Current Liabilities Provisions Net Current Assets/(Liabilities) Debit Balance in Profit and Loss Account Notes to the Financial Statements 10 4 5 6 1,157,110 1,005,370 2,162,480 (893,568) 1,276,073 120,000,000 The Schedules referred to above and the Notes to Accounts form an integral part of the Balance Sheet 245,716 1,023,196 1,268,912 3 2 140,000 2,173 137,827 119,027,255 452,413
AS PER OUR REPORT OF EVEN DATE FOR HARIBHAKTI & CO. Chartered Accountants
RAKES H R AT H I
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF IDFC PENSION FUND MANAGEMENT COMPANY LTD.
BHARAT S. RAUT L. K. NARAYAN
Partner
Membe r s h i p N o . 4 5 2 2 8
Director
Director
Mumbai | April 21, 2010
I D FC P E N S I O N FU N D M A N AG E M E N T CO M PA N Y LT D . 201
PROFIT AND LOSS ACCOUNT
FOR THE PERIOD ENDED MARCH 31, 2010
RUPEES
SCHEDULE
MARCH 31, 2009 TO MARCH 31, 2010 – 7 3,937,255 3,937,255
INCOME
Management Fees (Refer Note 8) Other Income
EXPENDITURE
Personnel Expenses (Refer Note 7) Operating and Other Expenses Depreciation & Amortisation PROFIT/(LOSS) BEFORE TAX Provision for Tax - Current Tax - Deferred Tax PROFIT/(LOSS) AFTER TAX Net Loss Balance Carried to Balance Sheet Loss per share Basic and Diluted (Face value Rs.10) Notes to the Financial Statements The Schedules referred to above and the Notes to Accounts form an integral part of the Profit and Loss Account 10 (0.12) – (452,413) (1,276,073) (1,276,073) (1,276,073) 8 9 2,320,648 3,342,920 2,173 5,665,741 (1,728,486)
AS PER OUR REPORT OF EVEN DATE FOR HARIBHAKTI & CO. Chartered Accountants
RAKES H R AT H I
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF IDFC PENSION FUND MANAGEMENT COMPANY LTD.
BHARAT S. RAUT L. K. NARAYAN
Partner
Membe r s h i p N o . 4 5 2 2 8
Director
Director
Mumbai | April 21, 2010
202 I D F C A N N U A L R E P O R T 09 –10
C A S H F L OW ST AT E M E N T
FOR THE PERIOD ENDED MARCH 31, 2010
RUPEES
MARCH 31, 2009 TO MARCH 31, 2010
A.
CASH FLOW FROM OPERATING ACTIVITIES
Profit / (Loss) Before Tax and Prior Period Item Adjustments for: Depreciation & Amortisation Dividend Earned Operating loss before Working Capital Changes Movements in working capital : (Increase) / Decrease in Loans and Advances Increase / (Decrease) in Current Liabilities Increase / (Decrease) in Provisions Cash generated from Operations Income Taxes Paid (Including Fringe Benefit Tax) NET CASH USED IN OPERATING ACTIVITIES (A) (1,023,196) 1,157,110 1,005,370 (4,524,284) (4,524,284) (140,000) 3,937,255 (121,937,255) 2,910,000 (B) (115,230,000) 120,000,000 (C) (A)+(B)+(C) 120,000,000 245,716 245,716 2,173 (3,937,255) (5,663,568) (1,728,486)
B.
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Fixed Assets Dividend Earned Purchase of Investments Sale Proceeds of Investments NET CASH USED IN INVESTING ACTIVITIES
C.
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from Issue of Share Capital NET CASH FROM FINANCING ACTIVITIES Net change in Cash and Cash Equivalents Cash and Cash Equivalents as at the beginning of the year Cash and Cash Equivalents as at the end of the year
AS PER OUR REPORT OF EVEN DATE FOR HARIBHAKTI & CO. Chartered Accountants
RAKES H R AT H I
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF IDFC PENSION FUND MANAGEMENT COMPANY LTD.
BHARAT S. RAUT L. K. NARAYAN
Partner
Memb e r s h i p N o . 4 5 2 2 8
Director
Director
Mumbai | April 21, 2010
I D FC P E N S I O N FU N D M A N AG E M E N T CO M PA N Y LT D . 203
SCHEDULES
SCHEDULE 1 Share Capital
AUTHORISED: 20,000,000 Equity shares of Rs.10/- each ISSUED, SUBSCRIBED AND PAID UP 12,000,000 Equity shares of Rs.10/- each, fully paid up
ANNEXED TO AND FORMING PART OF THE ACCOUNTS
RUPEES
AS AT MARCH 31, 2010 200,000,000 120,000,000
(50.01 % shares are held by IDFC Asset Management Company Limited & 49.99 % shares are held by Infrastructure Development Finance Company Limited respectively )
SCHEDULE 2 Fixed Assets
DESCRIPTION March 31, GROSS BLOCK March 31, Additions Deletions DEPRECIATION & AMORTISATION the period AmortisaMarch 31, March 31, ciation & tion for DepreMarch 31,
RUPEES
NET BLOCK March 30,
2009
2010
2009
2010
2010
INTANGIBLES Computer Software Total 140,000 140,000 140,000 140,000 2,173 2,173 2,173 2,173 137,827 137,827 -
SCHEDULE 3 Investments- (Current)(At lower of cost or market value)
(Unquoted, Non-Trade) Mutual Fund Units 11,900,940.312 units of Face Value of Rs 10 (Cost Rs.10.0015) each in IDFC Money Manager Fund - Treasury Plan -Inst Plan C (Daily Dividend Reinvestment Plan) Market value Rs. 119,027,255/-
RUPEES
AS AT MARCH 31, 2010
119,027,255 119,027,255
SCHEDULE 4 Cash and Bank Balances
Balance with a Scheduled Bank - on Current Account
RUPEES
AS AT MARCH 31, 2010 245,716 245,716
SCHEDULE 5 Loans and Advances
(Unsecured, considered good) Advance Recoverable in Cash or in Kind or for value to be received Service Tax Input Credit
RUPEES
AS AT MARCH 31, 2010 690,926 332,270 1,023,196
204
I D F C A N N U A L R E P O R T 09 –10
2009
As at
As at
As at
As at
As at
As at
SCHEDULE 6 Current Liabilities and Provisions
CURRENT LIABILITIES Sundry Creditors for Expenses (Other than Micro, Medium and Small Enterprises) Payables to Inter company Statutory Dues PROVISIONS Provision for Bonus
RUPEES
AS AT MARCH 31, 2010 60,000 974,799 122,311 1,157,110 1,005,370 1,005,370 2,162,480
SCHEDULE 7 Other Income
RUPEES
MARCH 31, 2009 TO MARCH 31, 2010 Dividend from Units of Mutual Fund 3,937,255 3,937,255
SCHEDULE 8 Personnel Expenses
RUPEES
MARCH 31, 2009 TO MARCH 31, 2010 Salaries and Bonus Contribution to Provident Fund 2,266,263 54,385 2,320,648
SCHEDULE 9 Operating and Other Expenses
RUPEES
MARCH 31, 2009 TO MARCH 31, 2010 Professional Fees & Custodian Fees Directors’ Sitting Fees Computer Software Expenses Notary & Franking Expenses Stamp Duty Fees Registration Expenses Miscellaneous Expenses Auditors’ Remuneration Audit Fees Other Services 50,000 95,000 3,342,920 748,881 70,000 134,959 552,915 220,300 1,420,874 49,991
I D FC P E N S I O N FU N D M A N AG E M E N T CO M PA N Y
LT D .
205
SCHEDULE 10: Accounting Policies & Notes to the Financial Statements
1 Nature of Operations:
IDFC Pension Fund Management Company Limited (“the Company”) was incorporated on March 31, 2009 with IDFC Asset Management Company Limited Holding (50.01%) & Infrastructure Development Finance Company Limited Holding (49.99%). The Company is one of the Pension Fund Managers appointed by the Pension Fund Regulatory and Development Authority (PFRDA) to manage retirement funds under the New Pension Scheme (NPS) open to individuals in the private sector & manages the investment portfolio of IDFC Pension Fund.
2 Statement of Significant Accounting Policies:
A. Basis of Preparation
The financial statements have been prepared to comply in all material respects with the notified accounting standard by Companies Accounting Standards Rules, 2006 and the relevant provisions of the Companies Act, 1956 (‘the Act’). The financial statements have been prepared under the historical cost convention on an accrual basis except in case of assets for which provision for impairment is made and revaluation is carried out.
B. Use of Estimates
The preparation of financial statements, in conformity with generally accepted accounting principles, require management to make estimates and assumptions that are considered in the reported amounts of assets and liabilities (including contingent liabilities) at the date of the financial statements and the results of operations during the reporting period. Although these estimates are based upon management’s best knowledge of current events and actions, actual results could differ from these estimates.
C. Fixed Assets
Fixed assets are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated depreciation. ¬ Any additions, alterations, remodelling or renovations performed on a leased property in the form of false ceiling, partitions, flooring, structural or civil work, electrical work, acquiring furniture and fixtures attached to the walls along with professional fees paid for the same and any other expenditure of such kind that increases the property’s value or gives an enduring benefit are capitalised as Leasehold Improvements. ¬ Leasehold Improvements are shown at historical cost less accumulated amortisation. ¬ Intangible Assets comprising of system software and licenses purchased, are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated depreciation. Any expenses on such software for support and maintenance payable annually are charged to revenue account.
¬
D. Depreciation and Amortisation
DEPRECIATION ON FIXED ASSETS Depreciation is charged at the rates prescribed in Schedule XIV of the Companies Act, 1956 as per Written Down Value Method. Any asset costing Rs. 5,000/- or less is written off in the year of its purchase. Depreciation on additions during the year is provided on a pro-rata basis.
¬
DEPRECIATION ON INTANGIBLE ASSETS Depreciation on intangible assets is charged @ 33.33% per annum on straight line basis from the date of acquisition.
¬
AMORTISATION OF LEASEHOLD IMPROVEMENTS Leasehold Improvements are amortised over the balance period of extended lease term or five years whichever is earlier.
¬
E. Investments
Investments that are readily realizable and intended to be held for short-term are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost and market value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognise a decline other than temporary in the value of the investments.
F. Revenue Recognition
Revenue is recognized when no significant uncertainty as regards to its measurement and collection exists.
G. Foreign Currency Transactions
The transactions in Foreign exchange are accounted at exchange rate prevailing on the date of transactions. Any exchange gains or losses arising from the settlement of such transactions are recognized in the Profit and Loss Account. Receivable/ Payable in foreign currency at the year end are translated at the year end exchange rate.
H. Operating Leases
Leases of assets under which all the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases. Rental charges over the term of such leases, after taking in to account the escalation clause, are charged to the Profit and Loss Account on a straight line basis over the extended lease term.
206
I D F C A N N U A L R E P O R T 09 –10
I. Income-Tax
The provision made for income-tax in the accounts comprises both, the current tax and deferred tax and is based on the Accounting Standard 22 on ‘Accounting for Taxes on Income’ issued by the Institute of Chartered Accountants of India. The deferred tax assets and liabilities for the year, arising on account of timing differences, are recognized in the Profit and Loss Account and the cumulative effect thereof is reflected in the Balance Sheet.
J. Provisions, Contingent Assets and Contingent Liabilities
A provision is recognised when the Company has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent assets and contingent liabilities are not provided for in the accounts but contingent liabilities are disclosed by way of notes.
3 Cash and Cash Equivalents
Cash and cash equivalents in the Balance Sheet comprise cash at bank and in hand and short-term investments (FD) with an original maturity of three months or less.
4 Deferred Tax (Net)
In view of tax losses incurred by the Company, the deferred tax asset on preliminary expenditure and difference in depreciation in the block of Fixed Assets as per Tax and Financial books has been created. The deferred tax balances are set out below:
AS AT MARCH 31, 2010
RUPEES
DEFERRED TAX LIABILITY Differences in depreciation and other differences in block of fixed assets as per tax and financial books GROSS DEFERRED TAX LIABILITY Effect of preliminary expenditure debited to profit and loss account in the current year / period but allowed for tax purposes in following years GROSS DEFERRED TAX ASSET NET DEFERRED TAX ASSET 465,950 452,413 13,537 13,537 465,950
5 Segment Information
The Company is engaged in the business of acting as advisors and fund managers of IDFC Pension Fund.During the year the Company was engaged in only one business segment and no geographical segments. As such, there are no separate reportable segments as per Accounting Standards 17 on ‘Segment Reporting’ issued by Institute of Chartered Accountants of India.
6 Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or loss for the period/year attributable to equity shareholders by the weighted average number of equity shares outstanding during the period/year. The relevant details as are as follows:
PARTICULARS Net Loss (Rs.) Weighted average number of equity shares (Nos.) Basic Loss Per Share (Rs.) Face Value Per Share (Rs.) MARCH 31, 2009 TO MARCH 31, 2010 (1,276,073) 10,876,712 (0.12) 10.00
7 The Company does not have any employee on its payroll. Personnel expenses include salaries, allowances, bonus, reimbursements and
contribution to provident fund charged by IDFC Asset Management Company Limited, the Holding Company on account of employees on deputation to the Company.
8 Management Fees
During the year Management Fees has not been recognized since Management fees on Asset under Management is not significant.
I D FC P E N S I O N FU N D M A N AG E M E N T CO M PA N Y
LT D .
207
9 Investment
Company has purchased and sold / redeemed the following investments during the Period:
TYPE OF INVESTMENT Units of Mutual Fund PURCHASE (UNITS) 11,798,230.26 PURCHASE (VALUE) 118,000,000.00 SALE / REDEMPTION (UNITS) 290,956.35 SALE / REDEMPTION (VALUE) 2,910,000.00
10 Related Party Disclosures Under Accounting Standard 18:
(a) Relationships:
HOLDING COMPANY:
IDFC Asset Management Company Limited
ULTIMATE HOLDING COMPANY:
Infrastructure Development Finance Company Limited
FELLOW SUBSIDIARIES:
IDFC Investment Advisors Limited (b) The following transactions were carried out with the related parties in the ordinary course of business during the period:
RUPEES
NAME OF THE RELATED PARTY AND NATURE OF RELATIONSHIP IDFC Asset Management Company Limited (Holding Company)
PARTICULARS Reimbursement of expenses Subscription towards Equity Share Capital
MARCH 31, 2009 TO MARCH 31, 2010 3,438,476 60,000,010 59,999,990
Infrastructure Development Finance Company Limited
Subscription towards Equity Share Capital
(c) Following are the balances outstanding as at the year end:
RUPEES
NAME OF THE RELATED PARTY AND NATURE OF RELATIONSHIP Payable to IDFC Asset Management Company Limited (Holding Company)
AS AT MARCH 31, 2010 974,799
11 Sundry Creditors do not include any amount payable to Small Scale Industrial Undertakings and Micro, Small and Medium Enterprises. Under the Micro, Small and Medium Enterprises Development Act, 2006, (MSMEDA), which came into force from October 02, 2006, certain disclosures, are required to be made relating to Micro, Small and Medium Enterprises. On the basis of the information and records available with the management, the following disclosures are made for the amounts due to the Micro, Small and Medium enterprises, who are registered with the competent authorities.
PARTICULARS Principal amount remaining unpaid to any supplier as at the period end Interest due thereon Amount of Interest paid by the Company in terms of Section 16 of the MSMEDA, along with the amount of the payment made to the supplier beyond the appointed day during the accounting period Amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed day during the period) but without adding the interest specified under the MSMEDA Amount of interest accrued and remaining unpaid at the end of the accounting period Nil Nil AMOUNT Nil Nil Nil
12 There are no contingent liabilities as at March 31, 2010. 13 There are no contracts remaining to be executed on capital account and not provided for as at March 31, 2010. 14 This being first year audit, previous year’s figures have not been given.
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF IDFC PENSION FUND MANAGEMENT COMPANY LTD.
BHARAT S. RAUT L. K. NARAYAN
Director Mumbai | April 21, 2010
208 I D F C A N N U A L R E P O R T 09 –10
Director
B A L A N C E S H E E T A B ST R A CT
AND COMPANY’S GENERAL BUSINESS PROFILE
I.
REGISTRATION DETAILS Registration No. State Code Balance Sheet Date U 1 3 6 1 1 0 3 2 0 1 0 6 0 0 0 M H 2 0 0 9 P L C 1 9 1 3 5 0
II.
CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000) Public Issue N I L Right Issue N I L
Bonus Issue N III. I L 1
Private Placement 2 0 0 0 0
POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000) Total Liabilities 1 SOURCES OF FUNDS Paid-up Capital 1 2 0 0 0 0 Reserves and Surplus N I L 2 0 8 8 6 1 2 0 Total Assets 8 8 6
Secured Loans N APPLICATION OF FUNDS Net Fixed Assets 1 3 8 1 1 I L
Unsecured Loans N I L
Investments 9 0 2 7
Net Current Assets (8 9 4)
Deferred Tax Asset 4 5 2
Profit & Loss Account (1 IV. 2 7 7) Total Expenditure 5 6 6 5
PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000) Turnover / Income 3 9 3 7
Loss Before Tax 1 7 2 8
Loss After Tax 1 2 7 6
Loss per Share (in Rs.) (0 V. . 1 2)
Dividend % N I L
GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS) Item Code No. (ITC Code) Product Description N A I S L S E T M A N A G E M E N T
I D FC P E N S I O N FU N D M A N AG E M E N T CO M PA N Y
LT D .
209
IDFC capital
(singapore) pte. ltd
D I R E CTO R S
? ? ?
Dr. Rajiv B. Lall Ms. Veronica Louise John Ms. Ng Sok Keow Victoria Suzanne
A U D I TO R S
?
Deloitte & Touche LLP Chartered Accountants
R E G I ST E R E D O F F I C E
One Finlayson Green #16-02, Singapore 049246. TEL +65 6499 0718 FAX +65 65363359
210
I D F C A N N U A L R E P O R T 09 –10
R E P O R T O F T H E D I R E CT O R S
The directors present their report together with the audited financial statements of the company for the financial year ended March 31, 2010.
4. DIRECTORS’ RECEIPT AND ENTITLEMENT TO CONTRACTUAL BENEFITS
Since the beginning of the financial year, no director has received or become entitled to receive a benefit which is required to be disclosed under Section 201(8) of the Singapore Companies Act, by reason of a contract made by the company or a related corporation with the director or with a firm of which he is a member, or with a company in which he has a substantial financial interest except for salaries, bonuses and other benefits as disclosed in the financial statements.
1. DIRECTORS
The directors of the company in office at the date of this report are: Veronica Louise John Ng Sok Keow Victoria Suzanne Rajiv Behari Lall (Appointed on July 27, 2009)
5. SHARE OPTIONS
(a) Options to take up unissued shares During the financial year, no options to take up unissued shares of the company were granted. (b) Options exercised During the financial year, there were no shares of the company issued by virtue of the exercise of an option to take up unissued shares. (c) Unissued shares under option At the end of the financial year, there were no unissued shares of the company under options.
2. ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE BENEFITS BY MEANS OF THE ACQUISITION OF SHARES AND DEBENTURES
Neither at the end of the financial year nor at any time during the financial year did there subsist any arrangement whose object is to enable the directors of the company to acquire benefits by means of the acquisition of shares or debentures in the company or any other body corporate.
3. DIRECTORS’ INTERESTS IN SHARES AND DEBENTURES
The directors of the company holding office at the end of the financial year had no interests in the share capital and debentures of the company and related corporations as recorded in the register of directors’ shareholdings kept by the company under Section 164 of the Singapore Companies Act except as follows:
SHAREHOLDINGS REGISTERED IN NAME OF DIRECTOR SHAREHOLDINGS IN WHICH DIRECTORS ARE DEEMED TO HAVE AN INTEREST At beginning of year At end of year
6. AUDITORS
The auditors, Deloitte & Touche LLP, have expressed their willingness to accept re-appointment.
ON BEHALF OF THE DIRECTORS
Name of directors and companies in which interests are held Ultimate holding company Infrastructure Development Finance Company Limited (Ordinary shares) Rajiv Behari Lall
At beginning of year
At end of year
-------------------------Veronica Louise John
-------------------------------------Ng Sok Keow Victoria Suzanne
Singapore 686,656 2,129,984 April 13, 2010
I D F C C A P I T A L ( S I N G A P O R E ) P T E . LT D .
211
ST AT E M E N T O F D I R E CT O R S
In the opinion of the directors, the financial statements of the company are drawn up so as to give a true and fair view of the state of affairs of the company as at March 31, 2010 and of the results, changes in equity and cash flows of the company for the financial year then ended and at the date of this statement, there are reasonable grounds to believe that the company will be able to pay its debts as and when they fall due.
ON BEHALF OF THE DIRECTORS
-------------------------Veronica Louise John
-------------------------------------Ng Sok Keow Victoria Suzanne
Singapore April 13, 2010
212
I D F C A N N U A L R E P O R T 09 –10
I N D E P E N D E N T AU D I TO RS ’ R E PO RT
INDEPENDENT AUDITORS’ REPORT TO THE MEMBER OF IDFC CAPITAL (SINGAPORE) PTE. LTD.
We have audited the accompanying financial statements of IDFC Capital (Singapore) Pte. Ltd. (the “company”) which comprise the statement of financial position as at March 31, 2010 and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 6 to 24. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Singapore Companies Act, Cap. 50 (the “Act”) and Singapore Financial Reporting Standards. This responsibility includes: devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss account and balance sheet and to maintain accountability of assets; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, (a) the financial statements of the company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the company as at March 31, 2010 and of the results, changes in equity and cash flows of the company for the year ended on that date; and (b) the accounting and other records required by the Act to be kept by the company have been properly kept in accordance with the provisions of the Act.
Public Accountants and Certified Public Accountants Singapore April 13, 2010
I D F C C A P I T A L ( S I N G A P O R E ) P T E . LT D .
213
ST AT E M E N T O F F I N A N C I A L P O S I T I O N
US$ NOTE
MARCH 31, 2010
US$
2010
2009
ASSETS
CURRENT ASSETS Cash and cash equivalents Other receivables Total current assets NON-CURRENT ASSET Plant and equipment Total assets 9 144,397 655,976 224,977 679,727 7 8 373,406 138,173 511,579 373,938 80,812 454,750
LIABILITIES AND NET EQUITY
CURRENT LIABILITY Other payables CAPITAL AND RESERVES Share capital Accumulated losses Net equity Total liabilities and net equity 11 4,690,742 (4,502,897) 187,845 655,976 2,574,092 (2,159,301) 414,791 679,727 10 468,131 264,936
See accompanying notes to financial statements.
214
I D F C A N N U A L R E P O R T 09 –10
ST AT E M E N T O F C O M P R E H E N S I V E I N C O M E
YEAR ENDED MARCH 31, 2010
US$
US$
APRIL 1, 2009 TO MARCH 31, 2010
NOTE
JANUARY 2, 2008 (DATE OF INCORPORATION) TO MARCH 31, 2009
Revenue Other operating income Staff costs Professional fees Depreciation expense Other operating expenses LOSS BEFORE INCOME TAX Income tax LOSS FOR THE YEAR/PERIOD AND COMPREHENSIVE LOSS FOR THE YEAR/PERIOD
12 13 14
212,329 547,645 (1,533,856) (739,830) (79,337)
1,190 (606,992) (844,493) (83,138) (625,868) (2,159,301) – (2,159,301)
15 16
(750,547) (2,343,596) – (2,343,596)
See accompanying notes to financial statements.
I D F C C A P I T A L ( S I N G A P O R E ) P T E . LT D .
215
ST AT E M E N T O F C H A N G E S I N E Q U I TY
YEAR ENDED MARCH 31, 2010
SHARE CAPITAL US$ Balance at date of incorporation on January 2, 2008 Issuance of share capital Comprehensive loss for the period Balance at March 31, 2009 Issuance of share capital Comprehensive loss for the year Balance at March 31, 2010 1 2,574,091 – 2,574,092 2,116,650 4,690,742
ACCUMULATED LOSSES US$ (2,159,301) (2,159,301) (2,343,596) (4,502,897)
TOTAL US$
1 2,574,091 (2,159,301) 414,791 2,116,650 (2,343,596) 187,845
See accompanying notes to financial statements.
216
I D F C A N N U A L R E P O R T 09 –10
C A S H F L OW S ST AT E M E N T
YEAR ENDED MARCH 31, 2010
US$ APRIL 1, 2009 TO MARCH 31, 2010
US$ JANUARY 2, 2008 (DATE OF INCORPORATION) TO MARCH 31, 2009 (2,159,301) 83,138 (2,076,163) (80,812) 264,936 (1,892,039) (308,115) 2,574,092 373,938 373,938
OPERATING ACTIVITIES Loss before income tax Adjustment for: Loss on disposal of plant and equipment Depreciation expense Operating cash flows before movements in working capital Other receivables Other payables Net cash used in operating activities INVESTING ACTIVITY Purchase of plant and equipment, representing net cash used in investing activity FINANCING ACTIVITY Proceeds from issuance of shares, representing net cash from financing activity Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents as at the beginning of the year/period CASH AND CASH EQUIVALENTS AS AT THE END OF THE YEAR/PERIOD 2,116,650 (532) 373,938 373,406 (16,360) 125 79,337 (2,264,134) (39,883) 203,195 (2,100,822) (2,343,596)
See accompanying notes to financial statements.
I D F C C A P I T A L ( S I N G A P O R E ) P T E . LT D .
217
Notes to Financial Statements March 31, 2010 1 General
The company (Registration Number 200800200R) is incorporated in Singapore with its principal place of business at One Finlayson Green #16-02, Singapore 049246 and its registered office at 1 Temasek Avenue, #27 -01 Millenia Tower, Singapore 039192. The financial statements are expressed in United States dollars. The principal activity of the company is to establish funds, act as advisor and manager of funds, and to provide advice in relation to the setting up of funds. The financial statements of the company for the year ended March 31, 2010 were authorised for issue by the Board of Directors on April 13, 2010.
2 Summary of Significant Accounting Policies
BASIS OF ACCOUNTING - The financial statements are prepared in accordance with the historical cost convention, except as disclosed in
the accounting policies below, and are drawn up in accordance with the provisions of the Singapore Companies Act and Singapore Financial Reporting Standards (“FRS”).
ADOPTION OF NEW AND REVISED STANDARDS - In the current financial year, the company has adopted all the new and revised FRSs and
Interpretations of FRS (“INT FRS”) that are relevant to its operations and effective for annual periods beginning on or after April 1, 2009. The adoption of these new/revised FRSs and INT FRSs does not result in changes to the company’s accounting policies and has no material effect on the amounts reported for the current or prior years except as disclosed below:
FRS 1 - PRESENTATION OF FINANCIAL STATEMENTS (REVISED)
FRS 1 (2008) has introduced terminology changes (including revised titles for the financial statements) and changes in the format and content of the financial statements. In addition, the revised Standard requires the presentation of a third statement of financial position at the beginning of the earliest comparative period presented if the entity applies new accounting policies retrospectively or makes retrospective restatement or reclassifies items in the financial statements. At the date of authorisation of these financial statements, the following FRSs, INT FRSs and amendments to FRS that are relevant to the company were issued but not effective:
¬
Improvements to Financial Reporting Standards (issued in June 2009)
Consequential amendments were also made to various standards as a result of these new/revised standards. The management anticipates that the adoption of the above FRSs, INT FRSs and amendments to FRS that were issued but effective only in future periods will not have a material impact on the financial statements of the company in the period of their initial adoption.
FINANCIAL INSTRUMENT - Financial assets and financial liabilities are recognised on the company’s statement of financial position when the
company becomes a party to the contractual provisions of the instrument.
EFFECTIVE INTEREST RATE METHOD
The effective interest rate method is a method of calculating the amortised cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial instrument, or where appropriate, a shorter period. Income and expense is recognised on an effective interest rate basis for debt instruments.
FINANCIAL ASSETS
Loans and receivables Other receivables that have fixed or determinable payments that are not quoted in an active market are classified as “loans and receivables”. Loans and receivable are measured at amortised cost using the effective interest method less impairment. Interest is recognised by applying the effective interest rate method, except for short-term balances when the recognition of interest would be immaterial. Impairment of financial assets Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted. Objective evidence of impairment could include:
¬ ¬ ¬
significant financial difficulty of the issuer or counterparty; or default or delinquency in interest or principal payments; or it becoming probable that the borrower will enter bankruptcy or financial re-organisation.
218
I D F C A N N U A L R E P O R T 09 –10
For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables where the carrying amount is reduced through the use of an allowance account. When a trade receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised. Derecognition of financial assets The company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the company retains substantially all the risks and rewards of ownership of a transferred financial asset, the company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
FINANCIAL LIABILITIES AND EQUITY INSTRUMENTS
Classification as debt or equity Financial liabilities and equity instruments issued by the company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs. Financial liabilities Other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, using the effective interest rate method, with interest expense recognised on an effective yield basis. Derecognition of financial liabilities The company derecognises financial liabilities when, and only when, the company’s obligations are discharged, cancelled or they expire.
PLANT AND EQUIPMENT – Plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses.
Depreciation is charged so as to write off the cost of assets, using the written down value method, on the following bases: Leasehold improvements Computers Office equipment Furniture and fittings 33.33% or 36 months 40.00% 13.91% 18.10%
Fully depreciated assets still in use are retained in the financial statements. The estimated useful lives, residual values and depreciation method are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis. The gain or loss arising on disposal or retirement of an item of plant and equipment is determined as the difference between the sales proceeds and the carrying amounts of the asset and is recognised in profit or loss.
IMPAIRMENT OF NON-FINANCIAL ASSETS - At the end of each reporting period, the company reviews the carrying amounts of its non-financial
assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in the profit or loss.
I D F C C A P I T A L ( S I N G A P O R E ) P T E . LT D .
219
When an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
PROVISIONS - Provisions are recognised when the company has a present obligation (legal or constructive) as a result of a past event, it is prob-
able that the company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
LEASES - Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership
to the lessee. All other leases are classified as operating leases. Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred. In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
REVENUE RECOGNITION – revenue is measured at the fair value of the consideration, received or receivable. Revenue is recognised as follows:
Fee income Advisory fee income are recognised over the period the services are rendered based on the applicable rates and terms stated in the respective investment management agreements. Where the investment advisory fee is performance-based, the revenue is only recognised when the amount of revenue can be measured reliably and the criteria defined by the performance fee agreements have been met.
RETIREMENT BENEFIT COSTS - Payments to defined contribution retirement benefit plans are charged as an expense as they fall due. Pay-
ments made to state-managed retirement benefit schemes, such as the Singapore Central Provident Fund, are dealt with as payments to defined contribution plans where the company’s obligations under the plans are equivalent to those arising in a defined contribution retirement benefit plan.
INCOME TAX - Income tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are not taxable or tax deductible. The company’s liability for current tax is determined using tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. Deferred tax is recognised on the differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised based on the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and the company intends to settle its current tax assets and liabilities on a net basis. Current and deferred tax are recognised as an expense or income in profit or loss, except when they relate to items credited or debited outside profit or loss (either in other comprehensive income or directly in equity), in which case the tax is also recognised outside profit and loss (either in other comprehensive income or directly in equity, respectively).
FOREIGN CURRENCY TRANSACTIONS - The financial statements of the company are measured and presented in the currency of the primary
economic environment in which the entity operates (its functional currency). The financial statements of the company are presented in United States dollars, which is the functional currency of the company. Transactions in currencies other than the company’s functional currency are recorded at the rate of exchange prevailing on the date of the transaction. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the end of each reporting period. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the
220
I D F C A N N U A L R E P O R T 09 –10
rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences arising on the settlement of monetary items, and on retranslation of monetary items are included in profit or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised in other comprehensive income. For such non-monetary items, any exchange component of that gain or loss is also recognised in other comprehensive income.
CASH AND CASH EQUIVALENTS - Cash and bank balances comprise cash at bank and are subject to an insignificant risk of changes in value.
3 Critical Accounting Judgements and Key Sources of Estimation Uncertainty
In the application of the company’s accounting policies, which are described in Note 2, management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. (i) Critical judgements in applying the company’s accounting policies The management is of the opinion that there is no instance of application of judgements which are expected to have a significant effect on the amounts recognised in the financial statements. (ii) Key sources of estimation uncertainty The management is of the opinion that there are no key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
4 Financial Instruments, Financial Risks and Capital Risks Management
The following table sets out the financial instruments as at the end of the reporting period: a) Categories of financial instruments
2010
US$
2009
US$
FINANCIAL ASSETS Loans and receivables (including cash and bank balances) FINANCIAL LIABILITIES At amortised cost 468,131 264,936 489,022 450,491
b) Credit risk The company does not have any significant credit risk exposure as at the end of the reporting period. The company places its cash with creditworthy financial institutions. The maximum exposure to credit risk in the event that the counterparties fail to perform their obligations as at the end of the reporting period is the carrying amount of the financial assets as stated in the statement of financial position. c) Interest rate risk The company does not have any interest bearing assets and liabilities, hence it is not exposed to interest rate risk. d) Foreign currency risk The company’s foreign currency exposures arise mainly from the exchange rate movements of the Singapore dollar against the United States dollar. Those exposures are managed primarily by using natural hedges that arise from offsetting assets and liabilities that are denominated in foreign currencies.
I D F C C A P I T A L ( S I N G A P O R E ) P T E . LT D .
221
At the end of the reporting period, the carrying amounts of monetary assets and monetary liabilities denominated in currencies other than the company’s functional currency are as follows:
SINGAPORE
DOLLAR
STERLING
POUND
HONG KONG
DOLLAR
INDIAN
RUPEE
$ 2010 ASSETS Cash and cash equivalents Other receivables Total LIABILITY Other payables Net currency exposure 2009 ASSETS Cash and cash equivalents Other receivables Total LIABILITY Other payables Net currency exposure 120,214 307,540 351,201 76,553 427,754 227,988 (61,192) 51,475 115,321 166,796
$
$
$
10,839 (10,839)
-
-
46,358 (46,358)
5,419 (5,419)
398 (398)
Foreign currency sensitivity The following table details the sensitivity to a 10% increase and decrease in the relevant foreign currencies against the functional currency of the company. The sensitivity rate of 10% represents management’s assessment of the possible change in foreign exchange rates. If the relevant foreign currency weakens by 10% against the functional currency of the company, loss will increase (decrease) by:
SINGAPORE
DOLLAR
STERLING
POUND
HONG KONG
DOLLAR
INDIAN
RUPEE
IMPACT 2010 $ Loss (6,119) 2009 $ 30,754
IMPACT 2010 $ (1,084) 2009 $ (4,636)
IMPACT 2010 $ 2009 $ (542)
IMPACT 2010 $ 2009 $ (40)
In management’s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk as the year end exposure does not reflect the exposure during the year. e) Liquidity risk The company maintains sufficient cash and bank balances to fund its daily operating requirement. In addition, the company also relies on the holding company to fund any shortfall in liquidity requirement. f) Capital risk The company reviews its capital structure at least annually to ensure that the company will be able to continue as a going concern. The capital structure of the company comprises only issued capital. The company’s overall strategy remains unchanged from 2009. g) Fair values of financial assets and financial liabilities The carrying amounts of financial assets and financial liabilities approximate their respective fair values due to the relatively short-term maturity of these financial instruments. The company had no financial assets or liabilities carried at fair value in 2009 and 2010.
5 Holding Company and Related Company Transactions
The company is a wholly-owned subsidiary of IDFC Capital Limited formerly known as IDFC-SSKI Limited, incorporated in India. The company’s ultimate holding company is Infrastructure Development Finance Company Limited, incorporated in India. Related companies in these financial statements refer to members of the ultimate holding company’s group of companies. Some of the company’s transactions and arrangements are between members of the group and the effect of these on the basis determined between the parties is reflected in these financial statements. The intercompany balances are unsecured, interest-free and repayable on demand unless otherwise stated.
222
I D F C A N N U A L R E P O R T 09 –10
6 Other Related Party Transactions
Related parties are entities with common direct or indirect shareholders and/or directors. Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial and operating decisions. Some of the company’s transactions and arrangements are with related parties and the effect of these on the basis determined between the parties is reflected in these financial statements. The balances are unsecured, interest-free and repayable on demand unless otherwise stated. The remuneration of directors and other members of key management during the period was as follows:
APRIL 1, 2009 TO MARCH 31, 2010 JANUARY 2, 2008 (DATE OF INCORPORATION) TO MARCH 31, 2009
US$
US$
Short-term benefits Post-employment benefits
395,952 7,758
394,842 5,908
7 Cash and Cash Equivalents
2010
US$
2009
US$
Cash at bank
373,406
373,938
The carrying amounts of cash and cash equivalents approximate their fair values.
8 Other Receivables
2010
US$
2009
US$
Prepayment Deposits Others Total
22,557 81,931 33,685 138,173
4,259 76,516 37 80,812
9 Plant and Equipment
LEASEHOLD IMPROVEMENTS
US$
COMPUTERS
US$
OFFICE EQUIPMENT
US$
FURNITURE AND FITTINGS
US$
TOTAL US$
US$
COST: At January 2, 2008 (date of incorporation) Additions At March 31, 2009 Additions Adjustments Disposals At March 31, 2010 ACCUMULATED DEPRECIATION: At January 2, 2008 (date of incorporation) Depreciation At March 31, 2009 Depreciation Disposals At March 31, 2010 CARRYING AMOUNT: At March 31, 2010 At March 31, 2009 54,002 108,820 33,111 47,822 14,364 12,415 42,920 55,920 144,397 224,977 47,150 47,150 47,067 94,217 24,073 24,073 21,536 45,609 1,338 1,338 1,926 (29) 3,235 10,577 10,577 8,808 19,385 83,138 83,138 79,337 (29) 162,446 155,970 155,970 (7,751) 148,219 71,895 71,895 11,172 (4,347) 78,720 13,753 13,753 5,188 (1,188) (154) 17,599 66,497 66,497 (4,192) 62,305 308,115 308,115 16,360 (17,478) (154) 306,843
I D F C C A P I T A L ( S I N G A P O R E ) P T E . LT D .
223
10 Other Payables
2010 US$ Accruals Others Total 388,765 79,366 468,131 2009 US$ 149,266 115,670 264,936
Accrued expenses principally comprise amounts outstanding for ongoing costs.
11 Share Capital
2010 NUMBER OF ORDINARY SHARES ISSUED AND PAID UP: At the beginning of the year/ Issued at date of incorporation Issued for cash At the end of the year/period 3,610,000 3,045,000 6,655,000 1 3,609,999 3,610,000 2,574,092 2,116,650 4,690,742 1 2,574,091 2,574,092 2009 2010
US$
2009
US$
Fully paid ordinary shares, which have no par value, carry one vote per share and carry a right to dividends as and when declared by the company.
12 Revenue
2010
US$
2009
US$
Advisory fee income from a related company (Note 5)
212,329
-
13 Other Operating Income
2010
US$
2009
US$
Reimbursement of organisational expenses from a related company (Note 5) Others
541,269 6,376 547,645
1,190 1,190
14 Staff Costs
2010
US$
2009
US$
INCLUDED IN STAFF COSTS ARE: Costs of defined contribution plans 21,684 10,282
15 Other Operating Expenses
APRIL 1, 2009 TO MARCH 31, 2010 JANUARY 2, 2008 (DATE OF INCORPORATION) TO MARCH 31, 2009
US$
US$
Establishment expenses Travelling expenses Corporate communication expense Net foreign exchange (gain)/loss General administrative expenses Total
330,952 236,360 21,932 (6,791) 168,094 750,547
260,941 122,797 58,323 74,432 109,375 625,868
224
I D F C A N N U A L R E P O R T 09 –10
16 Income Tax
The company has been awarded a concessionary tax rate of 10% under the Financial Sector Incentive Scheme (“FSIS”) by the Monetary Authority of Singapore (“MAS”) which is effective from September 14, 2009 for a period of 5 years. This award is subject to an annual review by the MAS of compliance with stipulated terms and conditions including implementation of business plan and projections outlined in the company’s application to the MAS. The income tax benefit varied from the amount of income tax expense determined by applying the Singapore income tax rate of 17% (2009 : 17%) to profit before income tax as a result of the following differences:
APRIL 1, 2009 TO MARCH 31, 2010 JANUARY 2, 2008 (DATE OF INCORPORATION) TO MARCH 31, 2009
US$
US$
Loss before income tax Tax benefit at the statutory tax rate of 17% Effect of concessionary tax rates Effects of expenses that are not deductible in determining taxable profit Effects of unused tax losses not recognised as deferred tax assets
(2,343,596) (398,411) 104,461 5,762 288,188 -
(2,159,301) (367,081) 21,545 345,536 -
Subject to the agreement by the tax authorities, at the end of the reporting period, the company has unutilised tax losses of US$ 4,334,549 (2009 : US$ 2,032,564) available for offset against future profit. No deferred tax asset of US$ 633,724 (2008 : US$ 345,536) has been recognised in respect of the tax losses due to the unpredictability of future profit streams. The unrecognised tax losses may be carried forward indefinitely subject to the conditions imposed by law including the retention of majority shareholders as defined.
17 Operating Lease Commitments
APRIL 1, 2009 TO MARCH 31, 2010 JANUARY 2, 2008 (DATE OF INCORPORATION) TO MARCH 31, 2009
US$
US$
Minimum lease payments under operating leases
319,455
245,584
At the end of the reporting period, the company has outstanding commitments under non-cancellable operating leases, which fall due as follows:
2010
US$
2009
US$
Within one year In the second to fifth years inclusive
365,604 9,347
301,580 348,531
Operating lease payments represent rentals payable by the company for rental of office premises and equipment. Leases are negotiated for an average term of three years, with an option to renew for another 3 years subject to terms and conditions then prevailing.
18 Comparative Figures
The financial statements for 2009 cover the financial period from January 2, 2008 (date of incorporation) to March 31, 2009. The financial statements for 2010 cover the twelve months period ended March 31, 2010.
I D F C C A P I T A L ( S I N G A P O R E ) P T E . LT D .
225
IDFC fund of
funds limited
D I R E CTO R S
? ?
Mr. K. Brennan Mr. M. Davy
A U D I TO R S
?
Deloitte LLP Chartered Accountants
R E G I ST E R E D O F F I C E
Alexander House, 13-15 Victoria Road, St Peter Port, Guernsey, Channel Islands, GY1 1HU.
226
I D F C A N N U A L R E P O R T 09 –10
R E P O R T O F T H E D I R E CT O R S
The Directors present their Report and the Audited financial statements of IDFC Fund of Funds Limited (“the Company”) for the period from incorporation on June 26, 2009 to March 31, 2010. make judgements and estimates that are reasonable and prudent; and prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. The Directors confirm that they have complied with the above requirements in preparing the financial statements.
¬ ¬
HISTORY
The Company was incorporated in Guernsey on June 26, 2009 and commenced activity on October 28, 2009.
ACTIVITIES
The Company is a Limited Partner of Emerging Markets Private Equity Fund, L.P. (the “Partnership”), a Limited Partnership registered in Guernsey. The Company is to invest in the Partnership as Founder Partner with a commitment of USD50,000,000.
The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with The Companies (Guernsey) Law, 2008. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
RESULTS AND DIVIDENDS
The results for the period are set out in the Statement of Comprehensive Income on page 7. No dividend was declared during the period, in accordance with Clause 13 of the Articles of Association.
GOING CONCERN
The Company receives financial support from IDFC Capital Limited (previously known as IDFC SSKI Limited) as necessary to continue as a going concern. This support is in the form of capital invested in the Company to enable it to meet its commitments as stated in Note 12. On this basis, the Company is deemed to be a going concern.
DIRECTORS
The directors of the Company during the period were: K Brennan (appointed on 26.6.2009) M Davy (appointed on 30.11.2009) J Jones (resigned on 30.11.2009)
INDEPENDENT AUDITORS
Deloitte LLP has been invited to act as Independent Auditors to the Company and to hold office until The First Annual General Meeting. So far as the Directors are aware, there is no relevant audit information of which the Company’s auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the Company’s auditors are aware of that information. This confirmation is given and should be interpreted in accordance with the provisions of Section 249 of The Companies (Guernsey) Law, 2008.
SECRETARY
The Secretary of the Company who has served for the whole period is International Private Equity Services Limited.
DIRECTORS’ RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS
The Directors are responsible for preparing financial statements for each financial period which give a true and fair view, in accordance with The Companies (Guernsey) Law, 2008 and International Financial Reporting Standards (“IFRS”), of the state of affairs of the Company and of the Statement of Comprehensive Income of the Company for that period. In preparing those financial statements, the Directors are required to: select suitable accounting policies and then apply them consistently;
¬
BARRY MCCLAY AS ALTERNATE DIRECTOR TO KEVIN BRENNAN KAREN HAITH AS ALTERNATE DIRECTOR TO MICHEL DAVY
April 22, 2010
IDFC FUND OF FUNDS LIMITED
227
I N D E P E N D E N T AU D I TO RS ’ R E PO RT
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF IDFC FUND OF FUNDS LIMITED
We have audited the financial statements of IDFC Fund of Funds Limited for the period from incorporation on 26 June 2009 to 31 March 2010 which comprise the Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity and Statement of Cash Flows and the related notes 1 to 13. These financial statements have been prepared under the accounting policies set out therein. This report is made solely to the Company’s members, as a body, in accordance with Section 262 of The Companies (Guernsey) Law, 2008. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditors As described in the statement of directors’ responsibilities, the Company’s directors are responsible for the preparation of the financial statements in accordance with applicable Guernsey Law and International Financial Reporting Standards (“IFRS”). Our responsibility is to audit the financial statements in accordance with relevant Guernsey legal and regulatory requirements and International Standards on Auditing (UK and Ireland). We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with The Companies (Guernsey) Law, 2008. We also report to you if, in our opinion, the Company has not kept proper accounting records, or if we have not received all the information and explanations we require for our audit. We read the directors’ report for the above period and consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. Basis of audit opinion We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Company’s circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. Opinion In our opinion the financial statements give a true and fair view, in accordance with International Financial Reporting Standards, of the state of the Company’s affairs as at March 31, 2010 and of its profit for the period then ended and have been properly prepared in accordance with The Companies (Guernsey) Law, 2008.
DELOITTE LLP Chartered Accountants
St. Peter Port, Guernsey April 23, 2010
228
I D F C A N N U A L R E P O R T 09 –10
ST AT E M E N T O F C O M P R E H E N S I V E I N C O M E
FOR THE PERIOD FROM INCORPORATION ON JUNE 26, 2009 TO MARCH 31, 2010
USD
USD
NOTES
? 2
JUNE 26, 2009 TO MARCH 31, 2010 – –
INCOME
Bank Interest
EXPENDITURE
Provision for Impairment Administration fee Directors’ fees Audit fees Disbursements Sundry expenses Gain on foreign exchange Total Comprehensive loss for the period 2 5&6 3 1,865,448 15,620 1,637 7,548 322 405 (1,137) (1,889,843) (1,889,843)
See accompanying notes to financial statements.
IDFC FUND OF FUNDS LIMITED
229
ST AT E M E N T O F F I N A N C I A L P O S I T I O N
USD NOTES
AS AT MARCH 31, 2010
USD
? 3 7
2010
2010 4,203,702
NON CURRENT ASSETS Investment in Subsidiary CURRENT ASSETS Prepayments Cash and cash equivalents Total Current Assets Total Assets EQUITY AND LIABILITIES Share capital Reserves 10 CURRENT LIABILITIES Trade and other payables Total Equity and Liabilities 8 26,720 26,720 4,642,381 9 6,505,504 (1,889,843) 4,615,661 2,325 436,354 438,679 4,642,381
See accompanying notes to financial statements.
230
I D F C A N N U A L R E P O R T 09 –10
ST AT E M E N T O F C H A N G E S I N E Q U I TY
USD
FOR THE PERIOD FROM INCORPORATION ON JUNE 26, 2009 TO MARCH 31, 2010
USD
USD
SHARE CAPITAL At June 26, 2009 Issue of Shares Total Comprehensive loss for the period At March 31, 2010 – 6,505,504 – 6,505,504
DEFICIT – – (1,889,843) (1,889,843)
TOTAL – 6,505,504 (1,889,843) 4,615,661
See accompanying notes to financial statements.
IDFC FUND OF FUNDS LIMITED
231
ST AT E M E N T O F C A S H F L OW S
FOR THE PERIOD FROM INCORPORATION ON JUNE 26, 2009 TO MARCH 31, 2010
USD
USD
JUNE 26, 2009 TO MARCH 31, 2010
CASH FLOWS FROM OPERATING ACTIVITIES
Investments Operating expenses paid NET CASH (OUTFLOW) FROM OPERATING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Advance from the Partnership Proceeds from issue of shares Prepayments NET CASH INFLOW FROM FINANCING ACTIVITIES NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 17,130 6,505,504 (2,325) 6,520,309 436,354 – 436,354 (6,069,150) (14,805) (6,083,955)
See accompanying notes to financial statements.
232
I D F C A N N U A L R E P O R T 09 –10
N O T E S T O T H E F I N A N C I A L ST AT E M E N T S
1 Principal Activities
IDFC Fund of Funds Limited (the “Company”) is a company incorporated in Guernsey on June 26, 2009.
FOR THE PERIOD ENDED 31 MARCH 2010
The principal activity of the Company is to invest into Emerging Markets Private Equity Fund, L.P. (the “Partnership”), a Limited Partnership registered in Guernsey.
2 Principal Accounting Policies
The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the Company’s financial statements.
ADOPTION OF NEW AND REVISED STANDARDS
In the current year, the following new and revised Standards and Interpretations have been adopted and have affected the amounts reported in these financial statements
IAS 1 (revised 2007) Presentation of Financial Statements IAS 1(2007) has introduced a number of changes in the format and content of the financial statements. In addition, the revised Standard requires the presentation of a third balance sheet to show the financial effect of the non adoption of any standard.
At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective (and in some cases had not yet been adopted by the EU): Amendment to IFRS 1 (Jan 2010) IFRS 9 IAS 24 Limited Exemption from Comparative IFRS 7 Disclosures for First Time Adopters Financial Instruments Related Party Disclosures
The Directors do not expect that the adoption of these Standards and Interpretations in future periods will have a material impact on the financial statements of the Company.
BASIS OF ACCOUNTING
The financial statements have been prepared under the historical cost convention and in accordance with applicable International Financial Reporting standards.
GOING CONCERN
The Company receives financial support from IDFC Capital Limited (previously known as IDFC SSKI Limited) as necessary to continue as a going concern. This support is in the form of capital invested in the Company to enable it to meet its commitment as stated in Note 12. On this basis, the Company is deemed to be a going concern.
BANK INTEREST
Bank interest is accounted for on an accrual basis.
FOREIGN EXCHANGE
Monetary assets and liabilities in currencies other than USD are translated into USD at the rate of exchange ruling at the balance sheet date. Transactions in currencies other than USD are translated into USD at the rate of exchange ruling at the date of the transaction. Foreign exchange gains and losses resulting from settlement of such transactions and from the translation at year end exchange rates are recognised in the Statement of Comprehensive Income for the period.
3 Investment in Subsidiary
The Company investments relate to its interests which is an amount of USD 50,000,000 as commitment in the Partnership and comprise of (i) investments in portfolio companies through Emerging Markets Private Equity Fund, L.P. and (ii) other funding provided to the Partnership. The investments relates to the capital contributed to the Partnership as the sole capital partner as at 31/03/10. The Company has elected not to prepare consolidated financial statement because it is itself a wholly owned subsidiary of Infrastructure Development Finance Company Limited whose consolidated accounts are available for public use at KRM Tower, 8th Floor, No.1 Harrington Road, Chetpet, Chennai – 600 031. The investment held in the Partnership has been accounted for at cost less provision for impairment with the provision being the difference between the capital contributed less the Net Asset Value of the Partnership.
IDFC FUND OF FUNDS LIMITED
233
2010 INVESTMENTS Cost at 26 June 2009 Additions Provision for impairments Cost at 31 March 2010
USD
– 6,069,150 (1,865,448) 4,203,702
4 Taxation
The Company has been taxed in Guernsey at the standard rate of 0%.
5 Material Agreements
ADMINISTRATION SERVICES AGREEMENT
Under the Secretarial and Administration Agreement dated 28 October 2009, International Private Equity Services Limited, provides secretarial, directors and administrative services to the Company and is entitled to receive administration fees, directors’ fees and reimbursement of expenses as may be determined from time to time by the parties.
6 Information Regarding Directors and Employees
The average monthly number of employees (including directors)
2010
NUMBER
Directors
2 2
There were no other employees apart from the directors.
2010
USD
Director’s fee paid
1,299
7 Prepayments
2010
USD
Directors’ fees prepaid
2,325 2,325
8 Trade and Other Payables
2010
USD
Administration fee accrual Audit fees accrual Sundry creditors Advance from Emerging Markets Private Equity Fund, L.P.
1,634 7,548 408 17,130 26,720
9 Share Capital
2010
USD
Issued and fully paid Share Capital of $1 each
6,505,504 6,505,504
10 Statement of Movement in Equity Shareholders’ Fund
2010
USD
Opening equity shareholders’ funds Share Capital issued (Loss) for period Closing equity shareholders’ funds
– 6,505,504 (1,889,843) 4,615,661
234
I D F C A N N U A L R E P O R T 09 –10
11 Controlling Party
The ultimate controlling party of the Company is considered to be IDFC Capital Limited previously know as IDFC SSKI Limited who owns 100% of the Company.
12 Commitments
CONTRIBUTION FROM IDFC CAPITAL LIMITED
USD
Commitments Drawdowns as at March 31, 2010 Undrawn Commitment CONTRIBUTION IN EMERGING MARKETS PRIVATE EQUITY FUND L.P.
50,000,000 (6,505,504) 43,494,496
USD
Commitments Drawdowns as at March 31, 2010 Undrawn Commitment
50,000,000 (6,069,150) 43,930,850
13 Post Balance Sheet Events
On March 22, 2010, a drawdown notice amounting to USD436,353 with value date April 1, 2010 was received from the Partnership being for the financing of ongoing expenses, second quarter management fee and future investment. On April 12, 2010, a drawdown notice amounting to USD396,034 with value date April 22, 2010 was received from the Partnership being for the financing of follow-on investment in ASEAN China Investment Limited and audit fees.
IDFC FUND OF FUNDS LIMITED
235
IDFC general
partners limited
D I R E CTO R S
? ? ?
Mr. K. Brennan Mr. M. Davy Mr. K. Dorrian
A U D I TO R S
?
Deloitte LLP Chartered Accountants
R E G I ST E R E D O F F I C E
Alexander House, 13-15 Victoria Road, St Peter Port, Guernsey, Channel Islands, GY1 1HU.
236
I D F C A N N U A L R E P O R T 09 –10
R E P O R T O F T H E D I R E CT O R S
The Directors present their Report and the Audited financial statements of IDFC General Partners Limited (“the Company”) for the period from incorporation on June 26, 2009 to March 31, 2010. The Directors confirm that they have complied with the above requirements in preparing the financial statements. The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with The Companies (Guernsey) Law, 2008. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
HISTORY
The Company was incorporated in Guernsey on June 26, 2009 and commenced activity on October 28, 2009.
ACTIVITIES
The Company is the General Partner of a private equity fund, Emerging Markets Private Equity Fund, L.P. (the “Partnership”), a Limited Partnership registered in Guernsey.
GOING CONCERN
Pursuant to the Amended and Restated Limited Partnership Agreement dated October 28, 2009 of the Partnership, the expenses of the Company are borne by the Partnership in lieu of payment of fees. On this basis it is therefore deemed that the Company is a going concern.
RESULTS AND DIVIDENDS
No dividend was declared during the period, in accordance with Clause 13 of the Articles of Association.
DIRECTORS
The Directors of the Company during the period were as set out on page 2.
INDEPENDENT AUDITORS
Deloitte LLP has been invited to act as Independent Auditors to the Company and to hold office until the First Annual General Meeting. So far as the directors are aware, there is no relevant audit information of which the Company’s auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the Company’s auditors are aware of that information. This confirmation is given and should be interpreted in accordance with the provisions of Section 249 of The Companies (Guernsey) Law, 2008 and International Financial Reporting Standard.
SECRETARY
The Secretary of the Company who has served for the whole period is International Private Equity Services Limited.
DIRECTORS’ RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS
The directors are responsible for preparing financial statements for each financial period which give a true and fair view, in accordance with The Companies (Guernsey) Law, 2008 and International Financial Reporting Standard (“IFRS”), of the state of affairs of the Company for that period. In preparing those financial statements, the directors are required to: select suitable accounting policies and then apply them consistently; ¬ make judgements and estimates that are reasonable and prudent; and ¬ prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
¬
BARRY MCCLAY AS ALTERNATE DIRECTOR TO KEVIN BRENNAN KAREN HAITH AS ALTERNATE DIRECTOR TO MICHEL DAVY
April 22, 2010
I D FC G E N E R A L PA RT N E RS L I M I T E D
237
I N D E P E N D E N T AU D I TO RS ’ R E PO RT
misstatements or material inconsistencies with the financial statements. Basis of audit opinion We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Company’s circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. Opinion In our opinion, the financial statements give a true and fair view, in accordance with International Financial Reporting Standards, of the state of the Company’s affairs as at March 31, 2010 and of its result for the period from June 26, 2009 to March 31, 2010 and have been properly prepared in accordance with The Companies (Guernsey) Law, 2008.
DELOITTE LLP Chartered Accountants
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF IDFC GENERAL PARTNERS LIMITED
We have audited the financial statements of IDFC General Partners Limited for the period from incorporation on June 26, 2009 to March 31, 2010 which comprise the Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity, Statement of Cash Flows and the related notes 1 to 10. These financial statements have been prepared under the accounting policies set out therein. This report is made solely to the Company’s members, as a body, in accordance with Section 262 of The Companies (Guernsey) Law, 2008. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditors As described in the statement of directors’ responsibilities, the Company’s directors are responsible for the preparation of the financial statements in accordance with applicable Guernsey Law and International Financial Reporting Standards (“IFRS”). Our responsibility is to audit the financial statements in accordance with relevant Guernsey legal and regulatory requirements and International Standards on Auditing (UK and Ireland). We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with The Companies (Guernsey) Law, 2008. We also report to you if, in our opinion, the Company has not kept proper accounting records, or if we have not received all the information and explanations we require for our audit. We read the directors’ report for the above period and consider the implications for our report if we become aware of any apparent
St. Peter Port, Guernsey April 23, 2010
238
I D F C A N N U A L R E P O R T 09 –10
ST AT E M E N T O F C O M P R E H E N S I V E I N C O M E
FOR THE PERIOD FROM INCORPORATION ON JUNE 26, 2009 TO MARCH 31, 2010
USD
USD
NOTES
JUNE 26, 2009 TO MARCH 31, 2010 1 5 -
EXPENDITURE
Administration fee Directors’ fees Audit fees Bank charges Disbursements Sundry expenses Gain on foreign exchange Total Comprehensive loss for the period
See accompanying notes to financial statements.
I D FC G E N E R A L PA RT N E RS L I M I T E D
239
ST AT E M E N T O F F I N A N C I A L P O S I T I O N
USD NOTES
MARCH 31, 2010
USD
2010 2 5 16,489 11
2010
CURRENT ASSETS
Cash and cash equivalents Trade and other receivables Total Current Assets Total Assets Equity and Liabilities Share capital Total Equity and Liabilities 6 16,500 16,500 16,500
16,500 16,500
The Financial Statements on pages 7 to 14 were approved by the Board of Directors on April 22, 2010 and are signed on their behalf by:
BARRY MCCLAY AS ALTERNATE DIRECTOR TO KEVIN BRENNAN KAREN HAITH AS ALTERNATE DIRECTOR TO MICHEL DAVY
Directors of IDFC General Partners Limited
240
I D F C A N N U A L R E P O R T 09 –10
ST AT E M E N T O F C H A N G E S I N E Q U I TY
USD
FOR THE PERIOD FROM INCORPORATION ON JUNE 26, 2009 TO MARCH 31, 2010
USD
USD
SHARE CAPITAL At June 26, 2009 Issue of Shares Results of Statement of Financial Position At March 31, 2010 16,500 16,500
DEFICIT -
TOTAL 16,500 16,500
See accompanying notes to financial statements.
I D FC G E N E R A L PA RT N E RS L I M I T E D
241
ST AT E M E N T O F C A S H F L OW S
FOR THE PERIOD FROM INCORPORATION ON JUNE 26, 2009 TO MARCH 31, 2010
USD
USD
26 JUNE 2009 TO 31 MARCH 2010
CASH FLOWS FROM OPERATING ACTIVITIES
Trade & Other receivables NET CASH (OUTFLOW) FROM OPERATING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares NET CASH INFLOW FROM FINANCING ACTIVITIES NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 16,500 16,500 16,489 16,489 (11) (11)
See accompanying notes to financial statements.
242
I D F C A N N U A L R E P O R T 09 –10
N O T E S T O T H E F I N A N C I A L ST AT E M E N T S
1 Principal Activities
FOR THE PERIOD ENDED MARCH 31, 2010
IDFC General Partners Limited (the “Company”) is a company incorporated in Guernsey on June 26, 2009. The principal activity of the Company is to act as General Partner to Emerging Markets Private Equity Fund, L.P. (the “Partnership”), a Limited Partnership registered in Guernsey.
2 Principal Accounting Policies
The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the Company’s financial statements.
ADOPTION OF NEW AND REVISED STANDARDS
In the current year, the following new and revised Standards and Interpretations have been adopted and have affected the amounts reported in these financial statements.
IAS 1 (revised 2007) Presentation of Financial Statements IAS 1(2007) has introduced a number of changes in the format and content of the financial statements. In addition, the revised Standard requires the presentation of a third balance sheet to show the financial effect of the nonadoption of any standard.
At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective (and in some cases had not yet been adopted by the EU): Amendment to IFRS 1 (January 2010) Limited Exemption from Comparative IFRS 7 Disclosures for First Time Adopters IFRS 9 IAS 24 Financial Instruments Related Party Disclosures
The General Partner does not expect that the adoption of these Standards and Interpretations in future periods will have a material impact on the financial statements of the Partnership.
BASIS OF ACCOUNTING
The financial statements have been prepared under the historical cost convention and in accordance with applicable International Financial Reporting Standards.
GOING CONCERN
Pursuant to the Amended and Restated Limited Partnership Agreement dated October 28, 2009 of the Partnership, the expenses of the Company are borne by the Partnership in lieu of payment of fees. On this basis it is therefore deemed that the Company is a going concern.
BANK INTEREST
Bank interest is accounted for on an accruals basis.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less and bank overdrafts.
FOREIGN EXCHANGE
Monetary assets and liabilities in currencies other than USD are translated into USD at the rate of exchange ruling at the balance sheet date. Transactions in currencies other than USD are translated into USD at the rate of exchange ruling at the date of the transaction. Foreign exchange gains and losses resulting from settlement of such transactions and from the translation at year end exchange rates are recognised in the Statement of Comprehensive Income for the period.
3 Taxation
The Company has been taxed in Guernsey at the standard rate of 0%.
I D FC G E N E R A L PA RT N E RS L I M I T E D
243
4 Material Agreements
GENERAL PARTNER EXPENSES
The expenses of the Company are borne by Emerging Markets Private Equity Fund, L.P. (the “Partnership”) in lieu of payment of fees from that partnership as provided for in the Amended and Restated Limited Partnership Agreement dated October 28, 2009. In this respect an amount of USD90,902 has been recorded in the Partnership’s financial statements for the period from incorporation on June 26, 2009 to March 31, 2010.
FUNCTIONS OF THE COMPANY
Section 6 of the Limited Partnership Agreement of the Partnership defines the functions of the Company in its capacity as the General Partner as being:
¬ ¬ ¬ ¬ ¬
the admittance of Limited Partners; consent to the transfer of interest between existing partners; or the transfer of interest to additional partners; the maintenance of proper books and records in accordance with IFRS and Guernsey law; and any further incidental business as required by the furtherance of the aims of the Limited Partnership Agreement.
Pursuant to Section 6.5, the expenses of the Partnership shall include but without limitation the costs and expenses of the General Partner, Investment Manager, Investment Consultant and any of their Associates in connection with or related to the formation of the Partnership; and all operational, statutory and regulatory costs and expenses of the General Partner. To the extent that any of the fees, costs and expenses referred to above have been borne by the General Partner, such persons shall be entitled to be reimbursed out of the Partnership’s Assets.
ADMINISTRATION SERVICES AGREEMENT
Under the Secretarial and Administration Agreement dated October 28, 2009, International Private Equity Services Limited, provides secretarial, directors and administrative services to the Company and is entitled to receive administration fees, directors’ fees and reimbursement of expenses as may be determined from time to time by the parties.
5 Trade and Other Receivables
2010
USD
Due from the Partnership
11 11
6 Share Capital
2010
USD
AUTHORISED: 10,000 Ordinary Shares of $1.65 each 16,500 16,500 2010
USD
ISSUED AND CALLED: 10,000 Ordinary Shares of $1.65 each 16,500 16,500
244
I D F C A N N U A L R E P O R T 09 –10
7 Information Regarding Directors and Employees
The average monthly number of employees (including directors) was:
2010
NUMBER
Directors
3 3
There were no other employees apart from the directors.
2010
USD
Director’s fee paid by the Partnership
16,848
8 Statement of Movement in Equity Shareholders’ Funds
2010
USD
Opening equity shareholders’ funds Share Capital issued Closing equity shareholders’ funds
16,500 16,500
9 Controlling Party
The ultimate controlling party of the Company is considered to be IDFC Capital Limited previously known as IDFC SSKI Limited who owns 100% of the Company.
10 Post Balance Sheet Events
There were no material post balance sheet events.
I D FC G E N E R A L PA RT N E RS L I M I T E D
245
Dheeru powergen private limited
B O A R D O F D I R E CTO R S
?
? ? ? ? ?
Dr. Rajiv B. Lall Chairman Mr. Chandrasekar Suppiah Mr. Hamdan Mohamad Mr. A. K. T. Chari Mr. Pradeep Singh Mr. Athar Shahab
A U D I TO R S
?
K. S. Rao & Associates Chartered Accountants
P R I N C I PA L B A N K E R S
?
HDFC Bank Limited
R E G I ST E R E D O F F I C E
4th Floor, Central Plaza, #6-3-902/A Raj Bhavan Road, Somajiguda, Hyderabad- 500082, Andhra Pradesh.
246
I D F C A N N U A L R E P O R T 09 –10
D I R E CT O R S ’ R E P O R T
TO THE MEMBERS
Your directors have pleasure in presenting the Seventh Annual Report together with the audited accounts for the year ended March 31, 2010. effect from February 5, 2010 and they hold the office up to the date of ensuing Annual General Meeting.
AUDITORS
M/s. K. S. Rao & Associates, Chartered Accountants will retire as the statutory auditors of the Company at the ensuing Annual General Meeting. The Board at its meeting held on April 15, 2010 has proposed their re-appointment as Auditors to audit the accounts of the Company for the financial year ending March 31, 2011. M/s. K. S. Rao & Associates, the retiring Auditors, have confirmed that their re-appointment, if made, would be in conformity with the provisions of Sections 224 and 226 of the Companies Act, 1956 and has also indicated their willingness to be re-appointed.
OPERATIONAL REVIEW
The Company is in the process of setting up a 1050 MW coal-fired thermal power plant at District Korba, State of Chhattisgarh, India (the “Project”). The Project has made substantial progress during the year. It has received coal linkage for the entire capacity. The environment clearance from Ministry of Environment and Forests has been obtained. The water requirement for the Project has been tied up. Land for the Project is in advanced stages of acquisition. The Project has received open access and the Bulk Power Transmission Agreement has been signed with Power Grid Corporation of India Limited. During the year, IDFC Projects Limited has acquired 51% of the Company and consequently the Company has become a subsidiary of IDFC Projects Limited w.e.f. February 5, 2010.
FOREIGN EXCHANGE EARNINGS AND EXPENDITURE
The particulars regarding foreign exchange earning and expenditure are furnished at item no. 5(b) in the notes to accounts. Since, the Company has not started any manufacturing facilities, the other particulars in the Companies (Disclosure of Particulars as required under the Report of the Board of Directors) Rules, 1998 are not given in this report.
FINANCIAL RESULTS
RUPEES
PERSONNEL AND OTHER MATTERS
There were no employees who were in receipt of remuneration in excess of limits prescribed under the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, during the year under review. Since the Company has not started any manufacturing facility, the disclosure of information on other matters required to be disclosed in terms of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1998, are not given in this report.
FOR THE YEAR ENDED MARCH 31, 2010 Total Income Less: Total Expenses Profit / (Loss) before Tax Less: Provision for Tax Profit / (Loss) after Tax Add/Less: Profit/(Loss) Balance brought forward Profit/(Loss) carried forward (14,042,823) 9,511,633 21,939,810 (12,428,177) 2,505,975 (14.934,152) 891,329
FOR THE YEAR ENDED MARCH 31, 2009 1,339,861 49,950 1,289,9 11 398,582 891,329 Nil 891,329
DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors confirm that: the applicable accounting standards have been followed in preparation of annual accounts and there are no material departures;
¬
DIVIDEND
The Directors do not recommend any dividend for the year ended March 31, 2010.
PUBLIC DEPOSITS
During the year under review, your Company has not accepted public deposits under Section 58-A of the Companies Act, 1956.
DIRECTORS
During the year, Mr. Venkatachalam Gedupudi and Mr. K. Narayanswami resigned from the Directorship of the Company with effect from February 5, 2010. The Board wishes to place on record its sincere appreciation for their valuable guidance and contribution to the Company. The Board at its meeting held on February 5, 2010 appointed Dr. Rajiv B Lall, Mr. A. K. T. Chari, Mr. Pradeep Singh and Mr. Athar Shahab (nominees of IDFC Projects Limited, Holding Company) and Mr. Chandrasekhar Suppiah & Mr. Hamdan Mohamad (Nominees of Ranhill Dheeru Singapore Pte. Limited) as additional Directors with
they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2010 and the loss of the Company for the year ended on that date;
¬
they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and detecting fraud and other irregularities; and
¬ ¬
they have prepared the annual accounts on a going concern basis.
COMPLIANCE CERTIFICATE
Pursuant to the provisions of section 383A(1) the Companies Act, 1956, a certificate from a Practising Company Secretary, certifying that the Company has complied with all applicable provisions of the Companies Act, 1956 is attached herewith.
D H E E R U P O W E R G E N P R I VAT E L I M I T E D
247
ACKNOWLEDGEMENTS
The Board wishes to thank the Government of India, Government of Chattisgarh and other Agencies for their support. The Board would also like to express its gratitude for the unstinted support and guidance received from IDFC Group and Ranhil Group. The Board would also like to express their sincere thanks and appreciation to all the employees for their commendable teamwork, exemplary professionalism and enthusiastic contribution during the year.
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
RAJIV B . L A L L
Chairman Mumbai May 20, 2010
248
I D F C A N N U A L R E P O R T 09 –10
C O M P L I A N C E C E R T I F I C AT E
The Members, Dheeru Powergen Private Limited Andhra Pradesh
CIN. U40109AP2003PTC040899 NOMINAL CAPITAL Rs. 5,00,00,000/PAID UP CAPITAL Rs. 1,97,29,000/-
10. The Company has made necessary entries in the register maintained under section 301 of the Act during the period. 11. As there were no instances of falling within the purview of section 314 of the Act, the Company has not obtained any approvals from the Board of Directors, members or central Government. 12. The Company has not issued any duplicate share Certificates during the period. 13. (i) The Company has delivered the certificates of securities in respect of lodgment thereof for transfer and allotments during the financial year ended 31st March 2010.
I have examined the registers, records, books and papers of Dheeru Powergen Private Limited (the Company) as required to be maintained under the Companies Act, 1956 (the Act) and the rules made there under and also the provisions contained in the Memorandum and Articles of Association of the Company for the financial year ended 31st March 2010. In my opinion and to the best of my information and according to the examinations carried out by me and explanations furnished to me by the Company and its officers, I certify that in respect of the aforesaid period: 1. The Company has maintained all registers as stated in Annexure “A” to this certificate, as per the provisions of the Act and the rules made thereunder and all entries therein have been duly recorded. 2. The Company has duly filed the forms and returns as stated in Annexure “B” to this Certificate, with the Registrar of Companies. 3. The Company being a Private Limited Company has the minimum prescribed Capital and its maximum number of Members during the said period was 3 (Three) excluding its past and present employees and the Company during the year under scrutiny: (i) has not invited public to subscribe for its shares or debentures; and
(ii) The Company was not required to deposit any amount in a separate Bank Account as no dividend was declared during the period. (iii) The Company was not required to post warrants to any member of the Company as no dividend was declared during the period. (iv) The Company has duly complied with the requirements of section 217 of the Act. 14. The Board of Directors of the Company is duly constituted and that the appointments of Directors, additional directors, alternate directors and directors to fill casual vacancies if any, during the year ended 31st March 2010 have been duly made. 15. The Company has not appointed any Managing Director/whole time Director/ Manager during the year. 16. The Company has not appointed any sole selling agents during the year. 17. The Company was not required to obtain any approval of the Central Government, Company Law Board, Regional Director, Registrar or such other authorities as may be prescribed under the various provisions of the Act. 18. The Directors have disclosed their interest in other firms/ Companies to the Board of Directors pursuant to the provisions of the Act and the rules made thereunder. 19. The Company has issued 78516 Preference shares during the financial year ended 31.03.2010 and has complied with the provisions of the Act. 20. The Company has not bought back any shares during the year. 21. The Company has redeemed 78516 Preference shares during the year and has made the necessary compliance under the Act. 22. There were no transactions necessitating the Company to keep in abeyance the rights to dividend, rights shares and bonus shares pending registration of transfer of shares. 23. The Company has not invited/accepted any deposits including any unsecured loans falling within the purview of section 58A during the period. 24. The borrowings, if any, made by the Company during the financial year 31-03-2010 do not attract the provisions of section 293(1) (d) of the Act. However the Company being subsidiary of a Public
(ii) has not invited or accepted deposits from persons other than its members, Directors or their relatives. 4. The Board of Directors duly met Twelve times respectively on 0904-09, 20-04-09, 16-05-09, 17-05-09, 18-05-09, 30-07-09, 09-08-09, 08-10-09, 01-11-09, 19-01-10, 05-02-10 and 05-02-10 in respects of which proper notices were given and the proceedings were duly recorded and signed in the minutes book maintained for the purpose. 5. The Company was not required to close its Register of Members during the period. 6. The Annual General Meeting for the financial year ended 31-032009 was held on 2nd May 2009 after giving due notice to members of the Company and the resolutions passed thereat were duly recorded in the Minutes Book maintained for the purpose. 7. Two extra-ordinary general meetings were held during the financial year ended on 3-03-2010 on 17th May 2009 and 5th February 2010 after giving due notice to members of the Company and the resolutions passed thereat were duly recorded in the Minutes Book maintained for the purpose. 8. The Company being a private Company, section 295 of the Act is not applicable. 9. The Company has not entered into any contract/s with the Companies in which any of the directors were interested, during the period, hence the compliance under section 297 of the Act were not necessary during the said period.
D H E E R U P O W E R G E N P R I VAT E L I M I T E D
249
Limited Company has passed necessary special resolution under the provisions of section 293(1)(d) of the Act. 25. The Company has not made any loans or advances or given guarantees or provided securities to other body corporate in compliance of the provisions of the Act and was not required to make any entries in the register kept for the purpose. 26. The company has not altered the provisions of the Memorandum with respect to the situation of the registered office from one state to another during the period under scrutiny. 27. The company has not altered the provisions of the Memorandum with respect to the objects of the Company during the period under scrutiny. 28. The company has not altered the provisions of the Memorandum with respect to the name of the Company during the period under scrutiny. 29. The company has altered the provisions of the Memorandum with respect to the Share Capital of the Company during the period under scrutiny and has complied with the provisions of the Act. 30. The Company has altered its Articles of Association during the year ended 31st March 2010 and has made due compliances.
31. As undertaken by the management there was no prosecution initiated against or show cause notices received by the Company and no fines or penalties or any other punishment was imposed on the Company during the period, for offenses under the Act. 32. The Company has not received any money as security from its employees during the period. 33. The Company is not required to deposit any contribution to Provident Fund with the prescribed authorities pursuant to section 418 of the Act as it is not applicable to the company.
FOR SGS ASSOCIATES Company Secretaries
D. P. GUPTA
(Proprietor) C. P. No. 1509 New Delhi May 15, 2010
250
I D F C A N N U A L R E P O R T 09 –10
Annexure – A
Statutory Registers maintained by the Company 1. Register of Members 2. Register of Preference Shareholders 3. Register of Directors 4. Register of Director Shareholding
5. Register of transfer. 6. Register of contracts 7. Register of Allotment 8. Minutes of the Board Meetings 9. Minutes of Annual / Extraordinary General meetings 10. Minutes of the Committee of Directors meetings
Annexure B
Forms and Returns as filed by the Company with the Registrar of companies, Regional Director, Central Government or other authorities during the period ending 31st March 2010.
S.N. FORM NO./RETURN FILED FILED UNDER SECTION FOR DATE OF FILING WHETHER FILED WITHIN PRESCRIBED TIME No No No No No No Yes IF DELAY IN FILING WHETHER REQUISITE ADDITIONAL FEE PAID. Yes Yes Yes Yes Yes Yes N.A.
1 2 3 4. 5 6 7.
Form 32 Form 32 Form 5 Form 23 FORM 23 AC AND 23-ACA FORM 20-B Form 23
303 303 97 31 220 159 31
Resignation of Director Appointment of Director Increase in Authorised Capital Amendment in Articles of Association Balance Sheet as at 31-03-09 Annual Return Made Upto 02-05-09 • • • • • Alteration of Articles of Association Issue of Preference Shares Redemption of Preference Shares Issue of Debentures Borrowing in excess of paid up capital and free reserves
24.6.2009 23.6.2009 23.6.2009 23.6.2009 5.11.2009 5.11.2009 3.3.2010
8. 9. 10. 11.
Form 32 Form 5 Form 18 Form 23-AA
303 97 146 163
Appointment of Directors Redemption of Preference shares and re-classification of Preference shares Change of Registered Office of the Company within Local Limits of the City For keeping the Books of Accounts at a place other then the Registered Office of the Company.
3.3.2010 3.3.2010 19.2.2010 19.2.2010
Yes Yes Yes Yes
N.A. N.A. N.A. N.A.
12.
Form 2
75
Allotment of Preference shares
8.3.2010
Yes
N.A.
D H E E R U P O W E R G E N P R I VAT E L I M I T E D
251
AU D I TO RS ’ R E PO RT
To The Members of Dheeru Powergen Private Limited
We have audited the attached Balance Sheet of DHEERU POWERGEN PRIVATE LIMITED as at March 31, 2010, the annexed Profit and Loss Account for the year ended on that date. The financial Statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audit. 1. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statements. We believe that our audit provides a reasonable basis for our option. 2. As required by Companies (Auditor’s Report) Order, 2003 and the Companies (Auditors Report) (Amendment) Order, 2004 issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956, we enclose in the annexure a statement on the matters specified in Paragraphs 4 and 5 of the said order. 3. Further to our comments in the annexure referred to above, we report that: a) We have obtained all the information and explanations, which, to the best of our knowledge and belief, were necessary for the purpose of our audit: In our opinion proper books of accounts, as required by Law have been kept by the Company so far as it appears from our examination of the Books of the Company: The Balance Sheet and Profit and Loss Account and the Cash Flow Statement dealt with by this report is in agreement with the books of account of the Company:
d)
In our opinion, the Balance Sheet and Profit and Loss account and the cash flow statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956: Based on the representations made by the Directors as March 31, 2010 and taken on Record by the Board of Directors of the Company and the information and explanations given to us, none of the Directors is, as at March 31, 2010, prima facie disqualified from being appointed as a Director in terms of clause (g) of subsection (1) of Section 274 of the Companies Act, 1956: In our opinion and to the best of our information and according to the explanations given to us, the said financial statements, read with the Notes thereon, give the information required by the Companies, Act 1956, in the manner so required and present a true and fair view in conformity with the Accounting Principles generally accepted in India: i. ii. iii. In the case of Balance Sheet, the state of affairs of the company as on March 31, 2010. In the case of Profit and Loss Account the loss for the year ended as on March 31, 2010. In the case of Cash Flow Statement, of the cash flows of the Company for the year ended on that date.
e)
f)
FOR K S RAO & ASSOCIATES Chartered Accountants
K. SRINIVAS RAO
b)
Proprietor (Membership No. 213480) Delhi April 15, 2010
c)
252
I D F C A N N U A L R E P O R T 09 –10
ANNEXURE
(Referred to in Paragraph 2 of our Auditors’ Report of even date on the financial statements for the year ended March 31, 2010 of Dheeru Powergen Private Limited)
In terms of the information and explanations given to us and the books and records examined by us in the normal course of audit and to the best of our knowledge and belief, we state as under: i) (a) According to the information and explanations given to us the Company has maintained Proper records showing full particulars including quantitative details and situation of fixed assets. (b) According to the information and explanations given to us the Company has physically verified during the year its fixed assets. We have been informed that no material discrepancies were noticed on such physical verification. (c) According to the information and explanations given to us the Company has not disposed off substantial part of fixed assets during the year, which will affect its status as going concern.
TO THE AUDITOR’S REPORT
vi) In our opinion and according the information and explanations given to us, during the year under review the company has not accepted any deposits from the public within the purview of Section 58A of the Companies Act, 1956 and Rules made there under. vii) In our opinion the Company has an in built internal audit system. In our opinion the scope and coverage of the internal audit is commensurate with the size of the Company and nature of its business. viii) In our opinion and according to the information and explanations given to us the Central Government has not prescribed the maintenance of cost records by the company as specified in sub section (1) of section 209 of the companies Act, 1956. ix) a) According to the information and explanations given to us and according to the books and records examined by us except in some instance, the company has been generally regular in depositing with the appropriate authorities the undisputed statutory dues including provident fund, employee’s state Insurance, income tax, sales tax, excise duty, service tax, cess and other material statutory dues applicable to it. According to the information furnished to us and as per records of the Company examined by us there were no dues, as at the Balance Sheet date, of sales tax/income tax/ custom tax/excise duty/service tax/cess/that have not been deposited on account of any dispute.
ii)
(a) As per the books of account and information provided to us, there were no Inventories in the Company during the year, as such the physically verification by the Management during the year at reasonable intervals does not arise. (b) As there were no Inventories during the year, our opinion on the procedures of physical verification of inventory followed by the Management does not arise. (c) As there were no Inventories during the year, our opinion on maintenance of proper record of inventory, the discrepancies noticed on physical verification with books of account, etc. does not arise.
b)
x) In our opinion and according to the information and explanations given to us and according to the books of account examined by us the there are accumulated losses at the end of the financial year. xi) Based on our audit procedures and on the information and explanation given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to the financial institutions, banks. xii) According to the information and explanations given to us by the management and according to the records of the Company examined by us the company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. xiii) In our opinion and according to the information and explanations furnished to us the company is not a chit, nidhi or mutual benefit fund/society. xiv) According to the information and explanations furnished to us the Company is not dealing in shares, securities debentures and other investments. xv) In our opinion and 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. xvi) In our opinion and according to the information and explanations furnished to us the term loans have been applied for the purpose for which they were raised.
iii) According to the information and explanations given to us the Company has not granted/taken any loan, secured or unsecured to/from the parties covered in the register maintained under Section 301 of the Companies Act, 1956. iv) In our opinion there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and for the sale of goods and services. In our opinion according the information and explanations given to us there is no continuing failure to correct major weaknesses in internal control during the year. v) a) In our opinion and according to the information and explanations given to us the contracts or arrangements that need to be entered into a register in pursuance of Section 301 of the Companies Act, 1956 have been properly so entered. In our opinion and according to the information and explanations given to us, the transactions that need to be entered into a register in pursuance of Section 301 of the Companies Act, 1956 have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.
b)
D H E E R U P O W E R G E N P R I VAT E L I M I T E D
253
xvii) On the basis of an overall examination of the Balance sheet of the Company, we are of the opinion and according to the information and explanations given to us, there are no funds raised on short-term basis, which have been used for long term investments. xviii) According to the information and explanations furnished to us the Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956 during the year under review. xix) According to the information and explanations given to us the Company has issued the Zero Coupon Compulsory Convertible debentures during the year. xx) The Company has not raised any money by public issues during the year and hence commenting under this clause does not arise.
xxi) Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year.
FOR K S RAO & ASSOCIATES Chartered Accountants
K. SRINIVAS RAO
Proprietor (Membership No. 213480) Delhi April 15, 2010
254
I D F C A N N U A L R E P O R T 09 –10
BALANCE SHEET
RUPEES SCHEDULES RUPEES
AS AT MARCH 31, 2010
RUPEES
AS AT 31-03-2010
AS AT 31-3-2009
SOURCES OF FUNDS
Shareholders’ Funds Share Capital Share Application Money Reserves & Surplus Loan Funds Unsecured Total 2 245,277,400 265,006,400 3 51,344,354 98,978 51,245,376 4 5 6 7 8 26,880,453 2,505,975 29,386,428 Net Current Assets Profit and Loss account Miscellaneous Expenditure (to the extent not written off or adjusted) Preliminary Expenses Total Notes forming part of the Accounts Schedules 1 to 14 form an integral part of the Accounts 14 13 – 265,006,400 199,800 205,617,654 106,195,457 14,042,823 7,698,665 950,564 8,649,229 121,748,678 – – 128,723,728 6,858,157 135,581,885 Less: Current Liabilities and Provisions Liabilities Provisions 93,522,744 16,110,303 63,514 16,046,789 67,622,388 5,600,000 123,448,977 1,348,929 130,397,906 – 205,617,654 1 19,729,000 – – 19,729,000 19,729,000 184,997,325 891,329 205,617,654
APPLICATION OF FUNDS
Fixed Assets Gross Block Less: Accumulated Depreciation Net Block Preoperative Expenses pending for allocation Current Assets, Loans and Advances Sundry Debtors Cash and Bank balances Loans & Advances
IN TERMS OF OUR REPORT OF EVEN DATE K S RAO & ASSOCIATES Chartered Accountants
K. SRI N I VAS R AO PRADEEP SINGH ATHAR SHAHAB
FOR AND ON BEHALF OF THE BOARD
Proprietor Delhi | April 15, 2010
Director
Director
D H E E R U P O W E R G E N P R I VAT E L I M I T E D
255
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
SCHEDULE
APRIL 1, 2009 TO MARCH 31, 2010
APRIL 1, 2008 TO MARCH 31, 2009
INCOME
Operating and Other Income 9 9,511,633 9,511,633 1,339,861 1,339,861 – – – 49,950 – 49,950 1,289,911 398,582 – 891,329 – 891,329
EXPENDITURE
Staff Expenses Establishment Expenses Other Expenses Preliminary Expenses Depreciation PROFIT/(LOSS) BEFORE TAX Provision for Tax - For Income tax - For Deferred Tax PROFIT/(LOSS) AFTER TAX Balance brought forward PROFIT/(LOSS) CARRIED TO BALANCE SHEET Notes forming part of the Accounts Schedules 1 to 14 form an integral part of the Accounts In terms of our report of even date. 14 2,505,975 – (14,934,152) 891,329 (14,042,823) 10 11 12 13 3,202,571 756,418 17,745,557 199,800 35,464 21,939,810 (12,428,177)
IN TERMS OF OUR REPORT OF EVEN DATE K S RAO & ASSOCIATES Chartered Accountants
K. SRI N I VAS R AO PRADEEP SINGH ATHAR SHAHAB
FOR AND ON BEHALF OF THE BOARD
Proprietor Delhi | April 15, 2010
Director
Director
256
I D F C A N N U A L R E P O R T 09 –10
C A S H F L OW ST AT E M E N T
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
FOR THE YEAR ENDED MARCH 31, 2010
A.
CASH FLOW FROM OPERATING ACTIVITIES
Loss before taxation Adjustments for : Depreciation Preliminary expenses written off Operating loss before Working Capital Changes Changes in : Current Assets and Loans and Advances Current Liabilities Pre operative expenses Cash generated from Operations Direct Taxes Paid NET CASH USED IN OPERATING ACTIVITIES (A) 90,773 20,737,199 (25,900,356) (17,265,297) (2,505,975) (19,771,272) (35,234,051) (B) (35,234,051) (184,997,326) 245,277,400 (C) 60,280,074 5,274,751 123,448,977 128,723,728 5,274,751 35,464 199,800 (12,192,913) (12,428,177)
B.
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Fixed Assets NET CASH USED IN INVESTING ACTIVITIES
C.
CASH FLOW FROM FINANCING ACTIVITIES
Refund of share application money Proceeds from Borrowings NET CASH FROM FINANCING ACTIVITIES NET INCREASE IN CASH AND CASH EQUIVALENTS (A+B+C) Cash and cash equivalents as at the beginning of the year (as per Schedule 6) Cash and cash equivalents as at the end of the year (as per Schedule 6)
IN TERMS OF OUR REPORT OF EVEN DATE K S RAO & ASSOCIATES Chartered Accountants
K. SRI N I VAS R AO PRADEEP SINGH ATHAR SHAHAB
FOR AND ON BEHALF OF THE BOARD
Proprietor Delhi | April 15, 2010
Director
Director
D H E E R U P O W E R G E N P R I VAT E L I M I T E D
257
SCHEDULES
SCHEDULE 1 Share Capital
AUTHORISED 50,000 Equity Shares of Rs.10 each 495,000 Preference Shares of Rs. 100 each ISSUED, SUBSCRIBED AND PAID UP 10,000 (Previous Year 10,000) equity shares of Rs.10 each fully paid up 196,290 (Previous Year 196,290) preference Shares of Rs. 100 each fully paid up
ANNEXED TO AND FORMING PART OF THE ACCOUNTS
RUPEES
RUPEES
AS AT 31-03-2010 500,000 49,500,000 50,000,000 100,000 19,629,000 19,729,000
AS AT 31-3-2009 100,000 19,900,000 20,000,000 100,000 19,629,000 19,729,000
SCHEDULE 2 Loans Funds (Unsecured)
Debentures (Convertible) The Company has issued 2,452,774 Zero Coupon compulsory Convertible Debentures of Rs. 100 each these debentures will be converted to equity in 5 years from February 5, 2010 or the completion of Milestone IV whichever is earlier based on NAV methodology
RUPEES
RUPEES
AS AT 31-03-2010 245,277,400
AS AT 31-3-2009 –
245,277,400
–
SCHEDULE 3 Fixed Assets
DESCRIPTION As at April GROSS BLOCK As at April March 31, Additions Deletions DEPRECIATION March 31, March 31, Additions Deletions
RUPEES
NET BLOCK March 31,
1, 2009
1, 2009
2010
2010
2010
TANGIBLES Freehold Land Furniture and Fittings Office Equipment Computer Hardware Total
Previous Year
15,946,516 34,700,000 – 163,787 –
163,787
– – – – –
–
50,646,516 211,246 467,392 19,200 51,344,354
16,110,303
– – 63,514 – 63,514
40,731
– 5,996 28,353 1,115 35,464
22,783*
– – – – –
–
– 50,646,516 15,946,516 5,996 91,867 1,115
63,514
211,246 303,605 19,200
15,946,516
205,250 375,525 18,085
16,046,789
100,273 –
16,110,303 35,234,051
98,978 51,245,376 16,046,789
* Shown under Pre-operative expenses pending for allocation during previous year.
258
I D F C A N N U A L R E P O R T 09 –10
2009 –
As at
As at
As at
As at
SCHEDULE 4 Pre-operative expenses pending for allocation
Brought Forward from Previous Year Advertisement & Publicity Bank Guarantee Commission Expenses Water Commitment Charges Auditors Remuneration -Statutory Audit Bank Charges Postage, Telephone and Fax Professional Fees Depreciation Miscellaneous Expenses Printing & Stationery Insurance Project Development Expenses Salaries & Wages Gratuity, Leave encashment & Bonus Travelling & Conveyance Survey Expenses Rates & Taxes Rent & Utilities Staff Welfare Meeting Expenses Interest CSR Expenses Meting expenses FBT 2008-09 FBT 2007-08
RUPEES
RUPEES
AS AT 31-03-2010 67,622,388 777,840 10,157,446 – – – – 10,558,083 – 125,000 – – 969,614 – – 843,594 621,155 – – – – 1,442,424 100,000 404,788 (99,588) – 93,522,744
AS AT 31-3-2009 51,181,412 47,545 1,314,781 675,000 40,000 24,223 122,244 3,196,793 22,783 713,462 124,286 7,547 961,526 3,022,000 417,000 3,620,741 52,000 100,000 1,738,072 7,377 32,733 2,060 – – 134,982 63,821 67,622,388
SCHEDULE 5 Sundry Debtors (Unsecured)
Considered Good-Less than Six months
RUPEES
RUPEES
AS AT 31-03-2010 – –
AS AT 31-3-2009 5,600,000 5,600,000
SCHEDULE 6 Cash and Bank Balances
Cash Balances with a Scheduled Banks - In Current Accounts - In Deposit Account
RUPEES
RUPEES
AS AT 31-03-2010 47,948 6,508,729 122,167,051 128,723,728
AS AT 31-3-2009 – 3,448,977 120,000,000 123,448,977
SCHEDULE 7 Loans and Advances
Interest Accrued on Deposit Advances Against Land Advances Recoverable in cash or in kind or for value to be received Advance payment of Fringe Benefit Tax Advance payment of Taxes
RUPEES
RUPEES
AS AT 31-03-2010 – 4,247,805 94,309 10,068 2,505,975 6,858,157
AS AT 31-3-2009 1,188,054 – – 9,068 151,807 1,348,929
D H E E R U P O W E R G E N P R I VAT E L I M I T E D
259
SCHEDULE 8 Current Liabilities and Provisions
LIABILITIES Sundry Creditors (See schedule 14 Note 7) Other Liabilities Directors Reimbursement Ranhill India Private Limited PROVISIONS Provision for Fringe Benefit Tax AY 2008-2009 Provision for Income Tax Gratuity & Bonus payable
RUPEES
RUPEES
AS AT 31-03-2010 11,640,266 15,240,187 – – 26,880,453 – 2,505,975 – 2,505,975
AS AT 31-3-2009 95,880 4,244 6,659,777 938,764 7,698,665 134,982 398,582 417,000 950,564
RUPEES
SCHEDULE 9 Operating and Other Income
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Interest (Tax Deducted at Source INR 969,162 Previous Year INR 151,807) Tender Income Miscellaneous Income 400,000 30,001 9,511,633 9,081,632
APRIL 1, 2008 TO MARCH 31, 2009 1,339,861 – – 1,339,861
RUPEES
SCHEDULE 10 Personnel Expenses
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Salaries Staff Welfare Expenses 3,062,484 140,087 3,202,571
APRIL 1, 2008 TO MARCH 31, 2009 – – –
RUPEES
SCHEDULE 11 Establishment Expenses
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Rent Rates & Taxes Electricity Expenses 415,000 267,946 73,472 756,418
APRIL 1, 2008 TO MARCH 31, 2009 – – – –
RUPEES
SCHEDULE 12 Other Expenses
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Travelling and Conveyance Postage, Telephone and Fax Printing and Stationery Professional Fees Office Maintenance Expenses Advertisement & Publicity Expenses Business Development Expenses Miscellaneous Expenses Auditor’s Remuneration ( See Schedule 14 Note 3) Bank Charges Interest 5,871,947 119,827 113,041 9,557,122 109,524 125,856 76,239 1,374,117 85,000 23,136 289,748 17,745,557
APRIL 1, 2008 TO MARCH 31, 2009 – – – – – – – – – – – –
RUPEES
SCHEDULE 13 Preliminary Expenses (to the extent not written off or Adjusted)
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Opening Balance Less: Written off during the year ( See Schedule 14 Note 8) Balance carried forward
260 I D F C A N N U A L R E P O R T 09 –10
APRIL 1, 2008 TO MARCH 31, 2009 249,750 49,950 199,800
199,800 199,800 –
SCHEDULE 14 Notes Forming Part of the Accounts
1 Significant Accounting Policies
A. Basis of Preparation
The Company adopts the accrual concept in the preparation of accounts. The preparation of financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.
B. Fixed Assets
Fixed assets are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated depreciation.
C. Depreciation
Depreciation on Fixed Assets, excluding certain electronic items, is provided on the written down value method, at the rates prescribed by Schedule XIV of the Companies Act, 1956. Certain electronic items are depreciated over a period of two years on straight line method based on the Management’s estimate of the useful life of assets. Depreciation on additions during the year is provided on a pro-rata basis. Assets costing less than Rs. 5,000 each are written off in the year of capitalisation.
D. Investments
There are no investments during the year.
E. Revenue Recognition
Interest income is recognized on accrual basis.
F. Provisions and Contingencies
The Company creates a provision when there is a present obligation as a result of past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
G. Foreign Currency Transactions
Foreign currency transactions are recorded at the exchange rate prevailing on the date of the transactions.
H. Income-Tax
The accounting treatment for income-tax in respect of the Company’s income is based on the Accounting Standard 22 on ‘Accounting for Taxes on Income’ as notified by the Companies (Accounting Standards) Rules, 2006. The provision made for income-tax in the accounts comprises both, the current tax and the deferred tax. The deferred tax assets and liabilities for the year, arising on account of timing differences, are recognised in the Profit and Loss Account and the cumulative effect thereof is reflected in the Balance Sheet. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the Company has unabsorbed depreciation or carry forward tax losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that the same can be realised against future taxable profits.
I. Employee Benefits
During the year company has paid Gratuity and Leave encashment to the eligible employees and thus no provision is made.
2 Contingent Liabilities not provided for in respect of
PARTICULARS (a) Capital Commitments (b) Guarantees Issued For Securing coal Linkages, the Company has provided the following guarantees. 1. Financial Guarantees 96,079,200 120,000,000 CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
38,230,242
–
D H E E R U P O W E R G E N P R I VAT E L I M I T E D
261
3 Auditors’ Remuneration
CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
Audit Fees Other Services Total
80,000 5,000 85,000
40,000 40,000
4 As per the Accounting Standard 18 on ‘Related Party Disclosures’ as notified by the Companies (Accounting Standards) Rules, 2006, the related parties of the Company are as follows:
(a) Relationships:
I. ULTIMATE HOLDING COMPANY:
Infrastructure Development Finance Company Limited
II. HOLDING COMPANY:
IDFC Projects Limited (with effect from February 5, 2010) Ranhill Dheeru Malaysia SDN BHD. (Till February 4, 2010)
III. KEY MANAGEMENT PERSONNEL:
Mr. S. Narayanaswamy, Director (Till February 4, 2010) (b) The nature and volume of transactions carried out with the above related parties in the ordinary course of business are as follows:
NAME OF THE RELATED PARTY PARTICULARS Loans taken and repaid Subscription towards Preference Share Capital Subscription towards Debentures Debentures application money IDFC Projects Limited Sundry Creditors-Balance Outstanding Advance Received - Balance Outstanding Bank Guarantee commission charges Upfront fees charges Interest charges Share Application money Ranhill Dheeru Malaysia SDN BHD Refund of Share Application Money Redemption of Preference Share Capital CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
30,000,000 7,851,600 181,505,300 800 9,119,778 14,812,404 6,730,368 2,029,480 1,345,682 5518,623 190,515,948 7,851,600
– – – – – – – – 152,540,595 – –
5 Disclosures pursuant to Part II to Schedule VI of the Companies Act, 1956:
(a) Managerial Remuneration under section 198 of the Companies Act, 1956:
PARTICULARS Salary and Other Allowances CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
1,140,000
1,080,000
As no commission is payable to Directors, the computation of Net Profits in accordance with Section 309 (5) read with Section 349 of the Companies Act, 1956 has not been furnished. (b) Expenditure incurred in foreign currency.
PARTICULARS Travelling Expenses Others Total CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
868,469 78,486 946,955
307,938 27,968 335,906
262
I D F C A N N U A L R E P O R T 09 –10
6 As the company is yet to start its operations, the additional information pursuant paragraphs, 3, 4A, 4B and 4C of part II of Schedule VI to the Companies Act, 1956 has not been provided. 7 The Company has no amounts due to any micro, small and medium enterprises as defined under Micro Small and Medium Enterprises Development Act, 2006 as on March 31, 2010. 8 During the year entire preliminary expenses of Rs. 199,800 has been written off. 9 Previous year figures have been regrouped / reclassified wherever necessary.
K S RAO & ASSOCIATES Chartered Accountants
K. SRI N I VAS R AO
FOR AND ON BEHALF OF THE BOARD
PRADEEP SINGH
ATHAR SHAHAB
Proprietor Delhi | April 15, 2010
Director
Director
D H E E R U P O W E R G E N P R I VAT E L I M I T E D
263
B A L A N C E S H E E T A B ST R A CT
AND COMPANY’S GENERAL BUSINESS PROFILE
I.
REGISTRATION DETAILS Registration No. State Code Balance Sheet Date U 0 3 4 1 1 0 3 2 0 1 0 0 1 0 9 A P 2 0 0 3 P T C 0 4 0 8 9 9
II.
CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000) Public Issue N I L Right Issue N I L
Bonus Issue N III. I L
Private Placement N I L
POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000) Total Liabilities 2 SOURCES OF FUNDS Paid-up Capital 1 9 7 2 9 Reserves and Surplus N I L 8 0 3 5 0 2 8 0 Total Assets 3 5 0
Secured Loans N APPLICATION OF FUNDS Net Fixed Assets* 1 4 4 7 6 8 I L 2 4
Unsecured Loans 5 2 7 7
Investments N I L
Net Current Assets 1 0 6 1 9 5
Deferred Tax Asset N I L
Profit and Loss Account 1 IV. 4 0 4 3
PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000) Turnover / Income 9 5 1 2 2 Total Expenditure 1 9 4 0
Profit Before Tax (1 2 4 2 8) (1
Profit After Tax 4 9 3 4)
Earnings per Share (in Rs.) – V. GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS) Item Code No. (ITC Code) Product Description N P I O L W E R G E N E R A T I O N
Dividend % N I L
* Includes preoperative expenses pending for allocation.
264 I D F C A N N U A L R E P O R T 09 –10
Design Itu Chaudhuri Design | www.icdindia.com Printed at Repro India Ltd.
This Annual Report is printed on ECO-FRIENDLY Paper
doc_760797393.pdf
The report for the financial year 2009 - 2010 of IDFC.
I D F C S U B S I D I A R I E S A N N U A L R E P O R T 09 - 10
CONTENTS
I D F C P R I VAT E E Q U I T Y C O M PA N Y L I M I T E D I D F C T R U ST E E C O M PA N Y LIMITED IDFC INVESTMENT ADVISORS LIMITED IDFC PROJECT EQUITY C O M PA N Y L I M I T E D
02
IDFC FINANCE LIMITED IDFC SECURITIES LIMITED I D F C C A P I TA L L I M I T E D
63 75
18
94 112
28
IDFC SSKI STOCK BROKING LIMITED
46
I D F C C A P I TA L C O M PA N Y LIMITED
126
IDFC PPP TRUSTEESHIP C O M PA N Y L I M I T E D IDFC PROJECTS LIMITED IDFC ASSET M A N AG E M E N T C O M PA N Y LIMITED IDFC AMC TRUSTEE C O M PA N Y L I M I T E D IDFC PENSION FUND MANAGEMENT LIMITED
136
I D F C C A P I TA L (SINGAPORE) PTE LIMITED IDFC FUND OF FUNDS LIMITED IDFC GENERAL PA RT N E R S L I M I T E D
210
146 163
226
236
184
DHEERU POWERGEN P R I VAT E L I M I T E D
246
196
IDFC private
equity company limited
B O A R D O F D I R E CTO R S
?
? ? ? ? ?
Dr. Rajiv B. Lall Chairman Mr. Vikram Limaye Mr. Kishor Chaukar Mr. N. S. Raghavan Mr. Jaithirth Rao Mr. Dominic Price
A U D I TO R S
?
Deloitte Haskins & Sells Chartered Accountants
P R I N C I PA L B A N K E R S
?
HDFC Bank Limited
R E G I ST E R E D O F F I C E
Naman Chambers, C-32, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai 400 051. TEL +91 22 42222000 FAX +91 22 26523803
2
I D F C A N N U A L R E P O R T 09 –10
D I R E CT O R S ’ R E P O R T
TO THE MEMBERS
Your directors have pleasure in presenting the Eighth Annual Report together with the audited accounts for the year ended March 31, 2010. recommended confirmation of the said interim dividend as final dividend for the year.
OPERATIONAL REVIEW
Your Company continues to be committed to the development of infrastructure in the country and manages three funds – India Development Fund, IDFC Private Equity Fund II and IDFC Private Equity Fund III having a total capital commitment of INR 59.92 billion. Your Company closed only two deals during the year and these deals were related to earlier deals done by IDFC Private Equity Fund II. No ‘new’ deal was closed during the year. This was primarily driven by the fact that, in our view, valuations were too high. Your Company, therefore, focused a lot of its efforts on managing the existing portfolio and on completing exits to reduce the size of the portfolio. As a result, there were 5 liquidity events (including 3 full exits and 1 partial exit) during the year and also fully exited our holding in one company that we had taken public earlier Your Company won three awards this year: INFRASTRUCTURE INVESTOR AWARDS 2009 i. Asian Infrastructure Fund Manager of the Year. ii. Asian Infrastructure Deal of the Year. PRIVATE EQUITY INTERNATIONAL AWARDS 2009 Best Private Equity Firm in India.
PARTICULARS REGARDING CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND EXPENDITURE
Since the Company does not carry out any manufacturing activity, the particulars regarding conservation of energy, technology absorption and other particulars as required by the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1998 are not applicable. The Company has no earnings in Foreign Exchange. The particulars regarding foreign exchange expenditure are furnished at Item No. 6 in the Notes to Accounts.
PARTICULARS OF EMPLOYEES’ REMUNERATION
The Company has eleven employees in receipt of remuneration of more than Rs.24 lakh per annum. In accordance with the provisions of Section 217 (2A) of the Companies Act, 1956 and the rules framed thereunder, the names and other particulars of employees are set out in the Annexure to the Directors’ Report.
DIRECTORS
Mr. Vikram Limaye and Mr. Kishor Chaukar retire by rotation at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment. The Board recommends their re-appointment as Directors of the Company.
RUPEES (IN MILLIONS)
FINANCIAL RESULTS
FOR THE YEAR ENDED MARCH 31, 2010 Total Income Less: Total Expenses Profit before Tax Less: Provision for Tax Profit after Tax Add: Balance Brought Forward Total Available for Appropriation 990.55 285.38 705.17 236.94 468.23 721.89 1,190.12 46.82 600.00 101.97 441.33 FOR THE YEAR ENDED MARCH 31, 2009 983.22 195.81 787.41 271.44 515.97 725.50 1,241.47 51.60 400.00 67.98 721.89
AUDITORS
M/s. Deloitte Haskins & Sells, Chartered Accountants will retire as the statutory auditors of the Company at the ensuing Annual General Meeting. The Board at its meeting held on April 22, 2010 has proposed their re-appointment as Auditors to audit the accounts of the Company for the financial year ending March 31, 2011. M/s. Deloitte Haskins & Sells, the retiring Auditors, have confirmed that their re-appointment, if made, would be in conformity with the provisions of Sections 224 and 226 of the Companies Act, 1956 and also indicated their willingness to be re-appointed. You are requested to consider their re-appointment.
APPROPRIATIONS:
Transfer to General Reserve Interim Dividend Tax on Dividend Balance Carried Forward
DEPOSITS
The Company has not accepted any fixed deposits during the year under review.
AUDIT COMMITTEE
The Audit Committee comprises of the following Directors as its Members: Mr. Dominic Price, Chairman Mr. N.S. Raghavan, Member Mr. Vikram Limaye, Member The Audit Committee met four times during the year.
DIVIDEND
Given the strong financial performance, the Board had approved interim dividend distribution amounting to Rs.600 million resulting in an aggregate dividend rate of 120000% i.e. Rs.12000/- per share. Your Directors have not recommended any further dividend and
I D F C P R I V A T E E Q U I TY C O M P A N Y L I M I T E D
3
DIRECTORS’ RESPONSIBILITY STATEMENT
Based on the information and explanation furnished by the Company, the Directors confirm: the applicable accounting standards have been followed in preparation of annual accounts and there are no material departures;
¬
The Board would like to express its gratitude for the unstinted support and guidance received from Infrastructure Development Finance Company Limited (IDFC), the parent organisation, and also from other group companies. The Board would also like to express their sincere thanks and appreciation to all the employees for their commendable teamwork, exemplary professionalism and enthusiastic contribution during the year.
that they have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2010 and of the profit of the Company for the year ended on that date;
¬
that they have taken proper and sufficient care for the maintenance of adequate accounting records, in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and
¬ ¬
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
that they have prepared the annual accounts on a going concern basis.
RAJIV B. LALL
APPRECIATION
The Board wishes to thank the investors of India Development Fund, IDFC Private Equity Fund II and IDFC Private Equity Fund III, the Ministry of Finance, Reserve Bank of India and Securities and Exchange Board of India for their continued support.
Chairman
Mumbai April 22, 2010
4
I D F C A N N U A L R E P O R T 09 –10
AU D I TO RS ’ R E PO RT
To The Members of IDFC Private Equity Company Limited
1. We have audited the attached Balance Sheet of IDFC PRIVATE EQUITY COMPANY LIMITED (“the Company”) as at March 31, 2010, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditor’s Report) Order, 2003 (CARO) issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. 4. Further to our comments in the Annexure referred to in paragraph 3 above, we report as follows: (a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; (b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination ofthose books; (c) the Balance Sheet, the Profit and Loss Account 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 Profit and Loss Account and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956; (e) in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2010;
(ii) in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date and (iii) in the case ofthe Cash Flow Statement, of the cash flows of the Company for the year ended on that date. 5. On the basis of the written representations received from the Directors as on March 31, 2010 taken on record by the Board of Directors, none of the Directors is disqualified as on March 31, 2010 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956.
FOR DELOITTE HASKINS & SELLS Chartered Accountants (Registration No. 117366W)
NALIN M. SHAH
Partner Membership No. 15860 Mumbai April 22, 2010
I D F C P R I V A T E E Q U I TY C O M P A N Y L I M I T E D
5
ANNEXURE
(Referred to in paragraph 3 of our report of even date) (i) Having regard to the nature ofthe Company’s business / activities / result / transactions, etc. clauses (i)(c), (ii), (viii), (x), (xi), (xii), (xiii), (xiv), (xv), (xvi), (xvii), (xviii), (xix), and (xx) of CARO are not applicable. (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of the fixed assets. (b) The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanations given to us, no material discrepancies were noticed on such verification. (iii) The Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956. (iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of fixed assets and the sale of services. During the course of our audit, we have not observed any major weakness in such internal control system. (v) To the best of our knowledge and belief and according to the information and explanations given to us, there were no contracts or arrangements that needed to be entered in the Register maintained under Section 301 of the Companies Act, 1956. (vi) According to the information and explanations given to us, the Company has not accepted any deposit from the public during the year.
TO THE AUDITORS’ REPORT
(vii) In our opinion, the internal audit functions carried out during the year by a firm of Chartered Accountants appointed by the Management have been commensurate with the size of the Company and the nature of its business. (viii) According to the information and explanations given to us in respect of statutory dues: (a) The Company has been regular in depositing undisputed dues, including Provident Fund, Income-tax, Service Tax, Cess and other material statutory dues applicable to it with the appropriate authorities. (b) There were no undisputed amounts payable in respect of Income-tax and other material statutory dues in arrears as at March 31, 2010 for a period of more than six months from the date they became payable. (c) There were no disputed Income Tax, Service Tax and any other material statutory dues which were not deposited as on March 31, 2010.
(ii) In respect of its fixed assets:
(ix) To the best of our knowledge and according to the information and explanations given to us, no fraud by or on the Company has been noticed or reported during the year.
FOR DELOITTE HASKINS & SELLS Chartered Accountants (Registration No. 117366W)
NALIN M. SHAH
Partner Membership No. 15860 Mumbai April 22, 2010
6
I D F C A N N U A L R E P O R T 09 –10
BALANCE SHEET
RUPEES SCHEDULE
AS AT MARCH 31, 2010
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
SOURCES OF FUNDS
Shareholders’ Funds Capital Reserves and Surplus Deferred Tax Liability (See Schedule 14 Note 10) TOTAL 1 2 500,000 539,750,213 10,612,000 550,862,213 3 548,149,622 40,599,956 507,549,666 4 5 6 7 1,840 – 43,124 321,260,172 57,826,606 379,129,902 Less: Current Liabilities and Provisions Current Liabilities Provisions Net Current Assets TOTAL Notes to the Accounts Schedules 1 to 14 form an integral part of the Accounts. 14 8 9 321,739,710 14,079,485 335,819,195 43,310,707 550,862,213 269,305,975 11,229,263 280,535,238 144,117,702 777,797,207 544,283,104 10,605,439 533,677,665 100,001,840 103,493,773 16,598,846 219,957,618 84,602,703 424,652,940 500,000 773,497,207 3,800,000 777,797,207
APPLICATION OF FUNDS
Fixed Assets Gross Block Less: Depreciation and Amortisation Net Block Investments Current Assets, Loans and Advances Sundry Debtors Interest Accrued on term deposits with banks Cash and Bank Balances Loans and Advances
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants FOR AND ON BEHALF OF THE BOARD
NALIN M . S H A H
RAJIV B. LALL
VIKRAM LIMAYE
Partner
Chairman
Director
Mumbai | April 22, 2010
I D F C P R I V A T E E Q U I TY C O M P A N Y L I M I T E D 7
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
SCHEDULE
APRIL 1, 2009 TO MARCH 31, 2010 10 990,547,242 990,547,242 11 12 13 215,108,063 5,004,478 35,275,178 29,994,517 285,382,236 705,165,006 230,130,000 6,812,000 – 468,223,006 721,899,207 1,190,122,213 46,823,000 600,000,000 101,970,000 441,329,213 1,190,122,213
APRIL 1, 2008 TO MARCH 31, 2009 983,216,965 983,216,965 138,720,160 12,788,079 39,899,280 4,398,536 195,806,055 787,410,910 260,500,000 7,339,608 3,600,000 515,971,302 725,505,905 1,241,477,207 51,598,000 400,000,000 67,980,000 721,899,207 1,241,477,207 10,319.43
INCOME
Operating and Other Income TOTAL
EXPENDITURE
Staff Expenses Establishment Expenses Other Expenses Depreciation & Amortisation TOTAL PROFIT BEFORE TAXATION Less: Provision for Taxation Current Tax Deferred Tax (See Schedule 14 Note 10) Fringe Benefit Tax PROFIT AFTER TAXATION Add: Balance as per last Balance Sheet AVAILABLE FOR APPROPRIATION Appropriations: General Reserve Interim Dividend Tax on Dividend Balance carried forward Earnings per share (Face Value Rs. 10) (See Schedule 14 Note 11) Basic and Diluted Notes to Accounts Schedules 1 to 14 form an integral part of the Accounts 14 9,364.46
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants FOR AND ON BEHALF OF THE BOARD
NALIN M . S H A H
RAJIV B. LALL
VIKRAM LIMAYE
Partner
Chairman
Director
Mumbai | April 22, 2010
8 I D F C A N N U A L R E P O R T 09 –10
C A S H F L OW ST AT E M E N T
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010
APRIL 1, 2008 TO MARCH 31, 2009 787,410,910 4,398,536 3,152,349 (25,888,360) (21,580,536) 747,492,899 (112,861,970) (2,953,604) (270,317,046) 361,360,279 (85,181,677) 1,326,488,360 (1,400,600,000) 21,580,536 (137,712,781) (467,980,000) (467,980,000) (244,332,502) 464,290,120 219,957,618 (244,332,502)
A.
CASH FLOW FROM OPERATING ACTIVITIES
Profit Before Taxation Adjustments for: Depreciation and Amortisation Provision for Employee Benefits Profit on sale of Investments Dividend on Investments Interest Received Operating Profit Before Working Capital Changes Changes in: Current Assets, Loans and Advances Current Liabilities Direct Taxes Paid NET CASH FROM OPERATING ACTIVITIES 142,486,799 52,433,735 (225,791,206) 685,159,899 (3,866,518) (70,000,000) 70,000,000 2,156,753,753 (2,035,605,626) 831,046 118,112,655 (701,970,000) (701,970,000) 101,302,554 219,957,618 321,260,172 101,302,554 29,994,517 2,850,222 (12,905,626) (8,242,502) (831,046) 716,030,571 705,165,006
B.
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Fixed Assets Short term loan given Proceeds of repayment of short term loan Sale Proceeds of Investments Purchase of Investments Interest Received NET CASH FROM / (USED IN) INVESTING ACTIVITIES
C.
CASH FLOWS FROM FINANCING ACTIVITIES
Dividend paid (including dividend tax) NET CASH USED IN FINANCING ACTIVITIES Net Increase / (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents at the beginning of the year as per Schedule 6 Cash and Cash Equivalents at the end of the year as per Schedule 6
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants FOR AND ON BEHALF OF THE BOARD
NALIN M . S H A H
RAJIV B. LALL
VIKRAM LIMAYE
Partner
Chairman
Director
Mumbai | April 22, 2010
I D F C P R I V A T E E Q U I TY C O M P A N Y L I M I T E D 9
SCHEDULES
SCHEDULE 1 Capital
AUTHORISED: 5,000,000 Equity Shares of Rs.10 each ISSUED, SUBSCRIBED AND PAID-UP: 50,000 Equity Shares of Rs.10 each (All the above Equity Shares are held by Infrastructure Development Finance Company Limited, the holding company and its nominees)
ANNEXED TO AND FORMING PART OF THE ACCOUNTS
RUPEES
RUPEES
AS AT MARCH 31, 2010 50,000,000 500,000
AS AT MARCH 31, 2009 50,000,000 500,000
500,000
500,000
SCHEDULE 2 Reserves and Surplus
GENERAL RESERVE Opening Balance Add: Transfer from Profit & Loss Account PROFIT AND LOSS ACCOUNT
RUPEES
RUPEES
AS AT MARCH 31, 2010 51,598,000 46,823,000 98,421,000 441,329,213 539,750,213
AS AT MARCH 31, 2009 – 51,598,000 51,598,000 721,899,207 773,497,207
SCHEDULE 3 Fixed Assets
DESCRIPTION
As at April 1, 2009
RUPEES
GROSS BLOCK
As at March 31, 2010
DEPRECIATION AND AMORTISATION
As at March 31, 2010 On deductions during the year As at April 1, 2009
NET BLOCK
As at March 31, 2010 As at March 31, 2009 522,415,580 1,695,868 8,092,718 403,765 1,069,734 533,677,665
Tangible Buildings Computer Hardware Furniture, Fittings and Office Equipments Vehicles Intangible Computer Software Total Previous year 3,000,201 544,283,104 21,102,256 541,187 3,866,518 530,191,677 – – 7,010,829 3,541,388 548,149,622 544,283,104 1,930,467 10,605,439 13,217,732 999,606 29,994,517 4,398,536 – – 7,010,829 2,930,073 40,599,956 10,605,439 611,315 507,549,666 533,677,665 523,563,116 5,780,017 10,854,110 1,085,660 – 1,757,670 1,567,661 – – – – – 523,563,116 7,537,687 12,421,771 1,085,660 1,147,536 4,084,149 2,761,392 681,895 26,120,779 1,238,889 1,530,708 104,535 – – – – 27,268,315 5,323,038 4,292,100 786,430 496,294,801 2,214,649 8,129,671 299,230
10
I D F C A N N U A L R E P O R T 09 –10
Charge for the year
Additions
Deletions
SCHEDULE 4 Investments
I. LONG TERM (NON-TRADE) VENTURE CAPITAL UNITS (UNQUOTED) IDFC Infrastructure Fund 2 IDFC Private Equity Fund II -Class C II. CURRENT (TRADE) MUTUAL FUNDS (UNQUOTED) Nil Units (Previous Year 9,337,765.659 units) of IDFC Mutual Fund - IDFC Cash Fund - Growth Option ( Net asset Value Rs. Nil; Previous Year Rs. 100,019,609) 184 10 NUMBER OF UNITS FACE VALUE
RUPEES
RUPEES
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
1,840
1,840
– 1,840
100,000,000 100,001,840
SCHEDULE 5 Sundry Debtors (Unsecured and considered good)
Outstanding For Over Six Months Others
RUPEES
RUPEES
AS AT MARCH 31, 2010 – – –
AS AT MARCH 31, 2009 58,948,302 44,545,471 103,493,773
SCHEDULE 6 Cash and Bank Balances
CASH BALANCE WITH SCHEDULED BANKS - In Current Account - In Deposit Account
RUPEES
RUPEES
AS AT MARCH 31, 2010 7,396 2,252,776 319,000,000 321,260,172
AS AT MARCH 31, 2009 6,528 2,451,090 217,500,000 219,957,618
SCHEDULE 7 Loans and Advances (Unsecured and considered good)
Advances recoverable in cash or in kind or for value to be received Deposits Advance payment of Income Tax & Fringe Benefit Tax (Net of provision)
RUPEES
RUPEES
AS AT MARCH 31, 2010 2,659,576 4,688,400 50,478,630 57,826,606
AS AT MARCH 31, 2009 24,877,939 4,907,341 54,817,423 84,602,703
SCHEDULE 8 Current Liabilities
Management Fees Received in Advance Sundry Creditors (Other than Micro and Small Enterprises) (See Schedule 14 Note 12) Other Liabilities
RUPEES
RUPEES
AS AT MARCH 31, 2010 213,640,450 107,863,554 235,706 321,739,710
AS AT MARCH 31, 2009 232,103,686 36,517,852 684,437 269,305,975
SCHEDULE 9 Provisions
Provision for Employee Benefits (See Schedule 14 Note 5)
RUPEES
RUPEES
AS AT MARCH 31, 2010 14,079,485 14,079,485
AS AT MARCH 31, 2009 11,229,263 11,229,263
I D F C P R I V A T E E Q U I TY C O M P A N Y L I M I T E D
11
SCHEDULE 10 Operating and Other Income
RUPEES
RUPEES
APRIL 01, 2009 TO MARCH 31, 2010 OPERATING INCOME Management Fees (Tax deducted at source Rs. 115,929,975/-; Previous Year Rs.123,960,478/-) 968,500,071 OTHER INCOME Interest on Deposits with Banks (Tax deducted at source Rs. 69,726/-; Previous Year Rs.4,888,800/-) Profit on sale/redemption of current investments Interest on Income Tax Refund Dividend on Current Investments (non-trade) Interest Income on Short Term Loans (Tax deducted at source Rs.152,236 /-; Previous Year Rs. Nil) 22,047,171 990,547,242 12,905,626 67,997 8,242,502 671,826 159,220 968,500,071
APRIL 01, 2008 TO MARCH 31, 2009 935,748,069 935,748,069 21,580,536 25,888,360 – – – 47,468,896 983,216,965
SCHEDULE 11 Staff Expenses
RUPEES
RUPEES
APRIL 01, 2009 TO MARCH 31, 2010 Salaries (See Schedule 14 Note 6) Contribution to Provident and Other Funds (See Schedule 14 Note 5) (including Provision for Gratuity Rs.3,253,783/-; Previous Year Rs.7,103,505/-) Staff Welfare Expenses 4,839,202 215,108,063 198,996,909 11,271,952
APRIL 01, 2008 TO MARCH 31, 2009 117,286,322 15,147,896 6,285,942 138,720,160
SCHEDULE 12 Establishment Expenses
RUPEES
RUPEES
APRIL 01, 2009 TO MARCH 31, 2010 Rent (See Schedule 14 Note 9) Rates and Taxes Electricity REPAIRS AND MAINTENANCE Equipments Others Insurance Charges 2,272 1,189,359 143,117 5,004,478 1,320,000 328,897 2,020,833
APRIL 01, 2008 TO MARCH 31, 2009 8,270,939 1,765,709 1,094,873 188,112 1,365,024 103,422 12,788,079
SCHEDULE 13 Other Expenses
RUPEES
RUPEES
APRIL 01, 2009 TO MARCH 31, 2010 Travelling and Conveyance (See Schedule 14 Note 3) Realised Loss on Foreign Currency Transactions Printing and Stationery Postage, Telephone and Fax Advertisement and Publicity Professional Fees Directors’ Fees Auditors’ Remuneration (See Schedule 14 Note 2) Miscellaneous Expenses 15,286,819 27,961 870,595 2,141,780 5,414,573 6,517,036 240,000 1,052,198 3,724,216 35,275,178
APRIL 01, 2008 TO MARCH 31, 2009 13,298,246 – 1,235,952 2,213,149 9,268,160 9,306,879 320,000 1,080,014 3,176,880 39,899,280
12
I D F C A N N U A L R E P O R T 09 –10
SCHEDULE 14 Notes Forming Part of the Accounts
1 Significant Accounting Policies
A. Accounting Convention
These accounts have been prepared in accordance with historical cost convention, applicable Accounting Standards notified by the Companies (Accounting Standards) Rules, 2006 and relevant provisions of the Companies Act, 1956.
B. System of Accounting
The Company adopts the accrual concept in the preparation of the accounts. The preparation of financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.
C. Inflation
Assets and liabilities are recorded at historical cost to the Company. These costs are not adjusted to reflect the changing value in the purchasing power of money.
D. Investments
Long Term Investments are carried at acquisition cost. A provision is made for diminution other than temporary on an individual basis. Current Investments are carried at the lower of cost or fair value on an individual basis.
E. Fixed Assets
Fixed assets are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated depreciation.
F. Intangible Assets
Intangible Assets comprising of system software are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated amortisation. Any expenses on such software for support and maintenance payable annually are charged to the Profit and Loss Account.
G. Depreciation and Amortisation
? Tangible Assets Depreciation for all Fixed Assets, excluding certain electronic items, is provided on the written down value method, at the rates prescribed by Schedule XIV of the Companies Act, 1956. Certain electronic items are depreciated over a period of two years on a straight line method based on the Management’s estimate of useful life of assets. Depreciation on additions during the year is provided on a pro-rata basis. Assets costing less than Rs. 5,000 each are written off in the year of capitalisation. ? Intangible Assets Intangible assets consisting of computer software are being amortised over a period of three years on the straight line method.
H. Operating Leases
Leases of assets under which all the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the Profit and Loss Account, on a straight line basis, over the lease term.
I. Employee Benefits
Defined Contribution Plans The Company’s contribution to Provident Fund is deposited with Regional Provident Fund Commissioner and is charged to the Profit and Loss Account every year.
¬
The Company has taken a superannuation policy for future payment of superannuation and the Company’s contribution paid / payable during the year is charged in the Profit and Loss Account every year.
¬ ¬ ¬
Defined Benefit Plan
The net present value of the Company’s obligation towards Gratuity to employees is unfunded and actuarially determined at the year end based on the projected unit credit method. Actuarial gains and losses are recognised in the Profit and Loss Account.
¬ ¬
Other Long Term Employee Benefit
Liability for compensated absences in respect of sick leave which is of a long term nature is actuarially determined at the year end based on the projected unit credit method.
I D F C P R I V A T E E Q U I TY C O M P A N Y L I M I T E D
13
J. Income-Tax
The accounting treatment for income-tax in respect of the Company’s income is based on the Accounting Standard 22 on ‘Accounting for Taxes on Income’ as notified by the Companies (Accounting Standards) Rules, 2006. The provision made for income-tax in the accounts comprises both, the current tax and the deferred tax. The deferred tax assets and liabilities for the year, arising on account of timing differences, are recognised in the Profit & Loss Account and the cumulative effect thereof is reflected in the Balance Sheet. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax asset is recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax asset can be realised.
K. Revenue Recognition
(a) Management Fees are recognised on accrual basis (b) Interest and other dues are accounted on accrual basis. (c) Dividend is accounted when the right to receive is established.
L. Foreign Currency Transactions
Foreign currency transactions are accounted at the exchange rates prevailing on the date of the transaction. Foreign currency monetary items outstanding as at the Balance Sheet date are reported using the closing rate. Gains and losses resulting from the settlement of such transactions and translation of monetary assets and liabilities denominated in foreign currencies are recognised in the Profit and Loss Account.
2 Auditors’ Remuneration:
PARTICULARS Audit Fees Tax Audit Fees Other Services Out of Pocket Expenses Service Tax Less: Service tax set off CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
600,000 150,000 300,000 2,198 108,376 1,160,574 108,376 1,052,198
600,000 150,000 225,000 11,660 198,414 1,185,074 105,060 1,080,014
3 Expenditure in foreign currencies (on payment basis):
PARTICULARS Travelling Expenses Others CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
899,296 3,026,903
77,763 6,018,217
4 Earnings in foreign currencies:
There are no earnings in foreign currencies.
5 In accordance with the Accounting Standard 15 on “Employee Benefits” as notified by the Companies (Accounting Standards) Rules, 2006, the following disclosures have been made:
i. The Company has recognised the following amounts in the Profit and Loss Account towards contribution to defined contribution plans which are included under Contribution to Provident and Other Funds:
CURRENT YEAR
RUPEES
PARTICULARS Provident Fund Superannuation Fund
PREVIOUS YEAR
RUPEES
3,563,625 4,454,544
3,583,692 4,460,699
14
I D F C A N N U A L R E P O R T 09 –10
ii.
The details of the Company’s post – retirement benefit plans for gratuity for its employees are given below which is certified by the actuary and relied upon by the auditors:
CURRENT YEAR
RUPEES
PARTICULARS CHANGE IN THE DEFINED BENEFIT OBLIGATIONS: Liability at the beginning of the year Current Service Cost Interest Cost Benefits Paid Actuarial Loss / (Gain) Liability at the end of the year AMOUNT RECOGNISED IN THE BALANCE SHEET: Liability at the end of the year Fair Value of Plan Assets at the end of the year Amount recognised in the Balance Sheet under “Provision for Employee Benefits” EXPENSE RECOGNISED IN THE PROFIT AND LOSS ACCOUNT: Current Service Cost Interest Cost Expected Return on Plan Assets Net Actuarial Loss / (Gain) to be recognised Expense recognised in the Profit and Loss Account under staff expenses RECONCILIATION OF THE LIABILITY RECOGNISED IN THE BALANCE SHEET: Opening Net Liability Expense recognised Contribution by the Company Amount recognised in the Balance Sheet under “Provision for Employee Benefits” EXPECTED EMPLOYER’S CONTRIBUTION FOR THE NEXT YEAR EXPERIENCE ADJUSTMENTS: PARTICULARS Defined Benefit Obligation Plan Assets Surplus/(Deficit) Experience Adjustment on Plan Liabilities Experience Adjustment on Plan Assets PARTICULARS PRINCIPAL ASSUMPTIONS Discount Rate (per annum) Salary Escalation rate (per annum) YEAR ENDED MARCH 31, 2010 9,255,401 – (9,255,401) (708,140) – YEAR ENDED MARCH 31, 2009 7,328,873 – (7,328,873) 7,628,333 –
PREVIOUS YEAR
RUPEES
7,328,873 2,299,802 757,377 (1,327,255) 196,604 9,255,401 9,255,401 – 9,255,401 2,299,802 757,377 – 196,604 3,253,783 7,328,873 3,253,783 (1,327,255) 9,255,401 386,750
1,475,176 2,420,569 311,660 (1,249,808) 4,371,276 7,328,873 7,328,873 – 7,328,873 2,420,569 311,660 – 4,371,276 7,103,505 1,475,176 7,103,505 (1,249,808) 7,328,873 323,000
RUPEES
PERIOD ENDED MARCH 31, 2008 1,475,176 – (1,475,176) – –
MARCH 31, 2007 – – – – –
MARCH 31, 2006 – – – – – PREVIOUS YEAR
%
CURRENT YEAR
%
8.10 8.00
8.00 7.00
The estimate of future salary increases takes into account inflation, seniority, promotion and other relevant factors.
6 Salaries include Rs. Nil (Previous year: 18,832,369), being amount paid towards a long term employee benefit scheme applicable to select employees, by way of contribution to Class C units of IDFC Private Equity Fund III. 7 The Company’s main business is to provide asset management services. All other activities revolve around the main business. The Company does not have any geographic segments. As such, there are no separate reportable segments as per Accounting Standard 17 on ‘Segment Reporting’ as notified by the Companies (Accounting Standards) Rules, 2006. 8 As per the Accounting Standard 18 on ‘Related Party Disclosures’ as notified by the Companies (Accounting Standards) Rules, 2006, the related parties of the Company are as follows:
I. II. HOLDING COMPANY:
Infrastructure Development Finance Company Limited
FELLOW SUBSIDIARY (with whom there are transactions): IDFC Asset Management Company Private Limited
III. KEY MANAGEMENT PERSONNEL:
Mr. Luis Miranda – President and CEO
I D F C P R I V A T E E Q U I TY C O M P A N Y L I M I T E D 15
The nature and volume of transactions carried out with the above related parties in the ordinary course of business are as follows:
NAME OF RELATED PARTY AND NATURE OF RELATIONSHIP HOLDING COMPANY Infrastructure Development Finance Company Limited FELLOW SUBSIDIARY IDFC Asset Management Company Private Limited KEY MANAGEMENT PERSONNEL Mr. Luis Miranda Remuneration paid* 31,116,265 28,088,768 Asset purchased – 55,250 Rent recovered Interim Dividend paid – 600,000,000 120,000 400,000,000 PARTICULARS CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
* Excludes contribution of gratuity and insurance premium.
9 In accordance with the Accounting Standard 19 on ‘Leases’ as notified by the Companies (Accounting Standards) Rules, 2006, the following disclosure in respect of Operating Leases is made:
Establishment expenses include gross rental expenses of Rs.1,320,000 (Previous Year Rs. 8,270,939). The committed lease rentals in the future are:
PARTICULARS Not later than one year Later than one year and not later than five years CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
376,129 -
1,320,000 376,129
10 In compliance with the Accounting Standard 22 on ‘Accounting for Taxes on Income’ as notified by the Companies (Accounting Standards) Rules, 2006, the Company has debited an amount of Rs. 6,812,000 to the Profit and Loss Account towards deferred tax liability. (Previous year; Rs.7,339,608). The major components of deferred tax assets and liabilities arising on account of timing differences are:
PARTICULARS (a) (b) Depreciation Provisions NET DEFERRED TAX LIABILITY CURRENT YEAR 4,676,325 PREVIOUS YEAR 3,810,752 CURRENT YEAR 15,288,325 10,612,000 PREVIOUS YEAR 7,610,752 3,800,000
ASSETS (RUPEES) LIABILITIES (RUPEES)
11 Earnings Per Share:
In accordance with the Accounting Standard 20 on ‘Earnings Per Share’, as notified under the Companies (Accounting Standards) Rules, 2006 the Earning Per Share has been computed as under:
PARTICULARS (a) (c) Profit after taxation (Rs.) Earnings Per Share (Rs.) (a)/(b) (Basic and Diluted) (b) Weighted average number of Equity Shares outstanding CURRENT YEAR 468,223,006 50,000 9,364.46 PREVIOUS YEAR 515,971,302 50,000 10,319.43
12 There is no interest paid/payable during the year, by the Company to the “suppliers” covered under the Micro, Small and Medium Enterprises Development Act, 2006. The above information takes into account only those suppliers who have responded to the inquiries made by the Company for this purpose. 13 The figures for the previous year have been regrouped / rearranged wherever necessary.
FOR AND ON BEHALF OF THE BOARD
R A J I V B . LALL VIKRAM LIMAYE
Chairman Mumbai | April 22, 2010
16 I D F C A N N U A L R E P O R T 09 –10
Director
B A L A N C E S H E E T A B ST R A CT
AND COMPANY’S GENERAL BUSINESS PROFILE
I.
REGISTRATION DETAILS Registration No. State Code Balance Sheet Date U 1 3 6 1 1 0 3 2 0 1 0 7 1 9 0 M H 2 0 0 2 P L C 1 3 7 7 9 8
II.
CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000) Public Issue N I L Right Issue N I L
Bonus Issue N III. I L POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000) Total Liabilities 8 SOURCES OF FUNDS Paid-up Capital 5 0 0 5 8 6 6 8 1 8 8
Private Placement N I L
Total Assets 6 6 8 1
Reserves and Surplus 3 9 7 5 0
Secured Loans N I L
Unsecured Loans N I L
Deferred Tax Liability (Net) 1 APPLICATION OF FUNDS Net Fixed Assets 5 0 7 5 5 0 Investments 2 Miscellaneous Expenditure N I L 0 6 1 2
Net Current Assets 4 IV. 3 3 1 0
PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000) Turnover / Income 9 9 0 5 4 7 2 8 Total Expenditure 5 3 8 2
Profit Before Tax 7 0 5 1 6 5 4 6
Profit After Tax 8 2 2 3
Earnings per Share (in Rs.) 9 V. 3 6 4 1 2 0
Dividend % 0 0 0
GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS) Item Code No. (ITC Code) Product Description Item Code No. (ITC Code) Product Description N A N I S I S I N E L S L V R E V S I T C M E E S N T A D V I S O R Y E T M A N A G E M E N T
I D F C P R I V A T E E Q U I TY C O M P A N Y L I M I T E D
17
IDFC trustee
company limited
B O A R D O F D I R E CTO R S
?
? ? ?
Mr. S. B. Mathur Chairman Dr. Rajiv B. Lall Mr. U. Sundararajan Mr. Vikram Limaye
A U D I TO R S
?
Deloitte Haskins & Sells Chartered Accountants
P R I N C I PA L B A N K E R S
?
HDFC Bank Limited
R E G I ST E R E D O F F I C E
Naman Chambers, C-32, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai 400 051. TEL +91 22 422 22000 FAX +91 22 265 40354
18
I D F C A N N U A L R E P O R T 09 –10
D I R E CT O R S ’ R E P O R T
TO THE MEMBERS
Your Directors have pleasure in presenting their Eighth Annual Report with the audited accounts for the year ended March 31, 2010. Ahmedabad, as statutory auditors for the financial year ending March 31, 2011. As required under the provisions of Section 224 of the Companies Act, 1956 the Company has obtained a written confirmation from the Auditors proposed to be appointed to the effect that their appointment, if made, would be in conformity with the provisions of Sections 224 and 226 of the Companies Act, 1956. The shareholders are requested to appoint the auditors and fix their remuneration.
OPERATIONAL REVIEW
The main object of the Company is to act as trustee for various investment funds under the asset management business primarily established by Infrastructure Development Finance Company Limited and its subsidiaries. The Company continues to act as the trustee of India Infrastructure Fund, IDFC Infrastructure Fund 2 – IDFC Private Equity Fund II, IDFC Infrastructure Fund 3 – IDFC Private Equity Fund III, IDFC Project Equity Domestic Investors Trust – I and IDFC Project Equity Domestic Investors Trust – II. During the year under review, the Company has been appointed as Trustee of IDFC Private Equity Employees Fund III Benefits Trust, IDFC Project Equity Employees Benefits Trust and IDFC Employees Benefits Trust.
FOREIGN EXCHANGE EARNINGS AND EXPENDITURE
There was no income or expenditure in foreign currency during the year under review.
PERSONNEL AND OTHER MATTERS
Since your Company does not have any employees, the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are not applicable and hence not given. Since the Company does not own any manufacturing facility, the disclosure of information on other matters required to be disclosed in terms of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1998, are not applicable and hence not given.
FINANCIAL RESULTS
The summary of the financial results for the year under review is as follows:
RUPEES
FISCAL 2010 Gross Income Profit Before Tax Provision for tax Profit After Tax 5,869,823 5,638,553 1,663,000 3,975,553
FISCAL 2009 5,695,162 5,512,692 1,650,000 3,862,692
DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors confirm that: the applicable accounting standards have been followed in preparation of annual accounts and there are no material departures;
¬
DIVIDEND
Your Directors do not recommend payment of dividend for the year ended March 31, 2010.
PUBLIC DEPOSITS
During the year under review, your Company has not accepted public deposits under the provisions of Section 58-A of the Companies Act, 1956.
they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2010 and the profits of the Company for the year ended on that date;
¬
DIRECTORS
In terms of the provisions of the Articles of Association of the Company, Mr. Vikram Limaye and Mr. U. Sundararajan would retire at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.
they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and detecting fraud and other irregularities; and
¬ ¬
they have prepared the annual accounts on a going concern basis.
ACKNOWLEDGEMENTS
Your Company is grateful to Securities and Exchange Board of India for its support and advice during the period under review. The Company would also like to express its gratitude for the unstinted support and guidance received from Infrastructure Development Finance Company Limited and other group companies.
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
S. B. MATHUR
AUDITORS
M/s. B. S. Mehta & Co., Chartered Accountants will retire as the statutory auditors of the Company at the ensuing Annual General Meeting. They have expressed their unwillingness to be reappointed as the statutory auditors and have given the notice in terms of Section 224(2)(b) of the Companies Act, 1956 for the same. The Board of Directors has placed on record its sincere appreciation of the professional service rendered by M/s. B. S. Mehta & Co. as statutory auditors. In view of this, the Board has proposed the appointment of M/s. Deloitte Haskins & Sells, Chartered Accountants,
Chairman Mumbai April 21, 2010
I D F C T R U ST E E C O M P A N Y L I M I T E D
19
AU D I TO RS ’ R E PO RT
To The Members of IDFC Trustee Company Limited
1. We have audited the attached Balance Sheet of IDFC TRUSTEE COMPANY LIMITED (“the Company”) as at March 31, 2010, the annexed Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, which we have signed under reference to this report. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditor’s Report) Order, 2003 (“the Order”) issued by the Company Law Board in terms of Section 227(4A) of the Companies Act, 1956 (“the Act”) and on the basis of such checks as we considered appropriate, we annex hereto a statement on the matters specified in paragraph 4 of the said Order, to the extent applicable. 4. Further to our comments in the Annexure referred to above, we report that: (a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit; (b) In our opinion, proper books of account as required by law, have been kept by the Company, so far as appears from our examination of such books; (c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account; (d) In our opinion, the said Balance Sheet, Profit and Loss Account and Cash Flow Statement comply with the Accounting Standards referred to in Section 211(3C) of the Act, to the extent applicable; (e) On the basis of written representations / information received from Directors as on March 31, 2010 and taken on record by the Board of Directors, none of the Directors are prima facie, disqualified from being appointed as Director in terms of clause (g) of sub-section (1) of Section 274 of the Act; (f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the notes thereon, give the information required by the Act in the manner so required and give a true and fair view: (i) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2010;
(ii) In the case of the Profit and Loss Account, of the profit for the year ended on March 31, 2010; and (iii) In the case of the Cash Flow Statement, of the cash flows for the year ended on March 31, 2010.
FOR B. S. MEHTA & CO. Chartered Accountants Firm Registration No. 106190W
H. G. BUCH
Partner (Membership No.: 33114) Mumbai April 21, 2010
20
I D F C A N N U A L R E P O R T 09 –10
ANNEXURE
Statement referred to in paragraph 3 of our Report to the Members of IDFC TRUSTEE COMPANY LIMITED
i. ii. The Company does not have any fixed assets and hence items (i) (a), (b), & (c) of paragraph 4 of the Order are not applicable. The nature of the Company’s activities is such that requirements of items (ii), (vii) and (viii) of paragraph 4 of the Order are not applicable. a) The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, the information required at items (iii) (b), (c) & (d) of paragraph 4 of the Order is not provided. The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, the information required at items (iii) (f) & (g) of paragraph 4 of the Order is not provided. ix.
TO THE AUDITORS’ REPORT
The Company has not borrowed any sums during the year and hence does not have any dues payable to a financial institution, a bank or debenture holders. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. a) The provisions of any special statute applicable to chit fund / nidhi / mutual fund / societies do not apply to the Company. Accordingly, the information required at items (xiii) (a), (b) (c) & (d) of paragraph 4 of the Order is not provided.
x.
xi.
iii.
b)
b) c)
xii. The Company has not dealt or traded in shares, securities, debentures and other investments. The Company does not hold any shares, securities, debentures and other investments. xiii. As informed to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions. xiv. The Company has not taken any term loans. xv. The Company has not raised any funds on short term basis. xvi. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act. xvii. The Company has not issued any debentures. xviii. The Company has not raised any money by public issue. xix. As informed to us and on the basis of information available with us, no fraud on or by the Company has been noticed or reported during the year.
d) iv.
The Company has not purchased any inventory or fixed assets nor sold any goods during the year. In respect of services rendered during the year it has adequate internal control system commensurate with its size and the nature of its business. There are no transactions exceeding Rs. 5 lakhs in respect of any party entered into during the year that need to be entered into a register in pursuance of Section 301 of the Act. Accordingly, the information required at items (v) (a) & (b) of paragraph 4 of the Order is not provided. The Company has not accepted any deposits from public during the year.
v.
vi.
vii. The Company does not have any employee and hence the provisions of item (ix) (a) of paragraph 4 of the Order in respect of statutory dues of Provident Fund, Employees State Insurance do not apply. No undisputed amounts in respect of Investor Education and Protection Fund, Income tax, Sales tax, Wealth tax, Service tax, Custom duty, Excise duty, Cess and any other statutory dues were outstanding at the year end for a period of more than six months from the date they became payable. viii. The Company has no accumulated losses at the end of the financial year. The Company has not incurred cash loss in the current financial year and in the immediately preceding financial year.
FOR B. S. MEHTA & CO. Chartered Accountants Firm Registration No. 106190W
H. G. BUCH
Partner (Membership No.: 33114) Mumbai April 21, 2010
I D F C T R U ST E E C O M P A N Y L I M I T E D
21
BALANCE SHEET
RUPEES SCHEDULE
AS AT MARCH 31, 2010
RUPEES
RUPEES
MARCH 31, 2010
MARCH 31, 2009
SOURCES OF FUNDS
Shareholders’ Funds Capital Profit and Loss Account 1 500,000 9,692,904 10,192,904 500,000 5,717,351 6,217,351 5,960,656 142,483 177,495 319,978 63,283 437,348 10,192,904 Notes to the Financial Statements The Schedules referred to herein form an integral part of the Balance Sheet 6 256,695 6,217,351
APPLICATION OF FUNDS
Investments Current Assets, Loans and Advances Current Assets Loans and Advances Less: Current Liabilities and Provisions Current Liabilities Net Current Assets 3 4 5 73,274 311,320 199,302 510,622 2 9,755,556
THIS IS THE BALANCE SHEET REFERRED TO IN OUR REPORT OF EVEN DATE. FOR AND ON BEHALF OF
B. S. M E H TA & CO .
FOR AND ON BEHALF OF THE BOARD IDFC TRUSTEE COMPANY LIMITED
Chartered Accountants
H. G. BUC H
Partner Membership No. 033114 Mumbai | April 21, 2010
22 I D F C A N N U A L R E P O R T 09 –10
S. B. MATHUR
Chairman
RAJIV B. LALL
Director
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED MARCH 31, 2010
RUPPES
RUPEES
SCHEDULE
APRIL 1, 2009 TO MARCH 31, 2010 5,600,000 269,823 – 5,869,823
APRIL 1, 2008 TO MARCH 31, 2009 5,482,877 209,759 2,526 5,695,162
INCOME
Trusteeship Fees (TDS Rs. 1,374,807, Previous Year Rs. 1,546,568) Dividend on Mutual Fund Units Interest on Income tax Refunds
EXPENDITURE
Payment to Auditors Audit Fees Tax Audit Fees Other Services Service Tax Filing Fees Other Admin expenses Sitting Fees Professional Fees Loss/(Profit) on Sale of Investments Profit Before Tax Provision for Taxation Current Tax (including interest) 1,663,000 3,975,553 5,717,351 9,692,904 79.51 6 1,650,000 3,862,692 1,854,659 5,717,351 77.25 Profit After Tax Balance Brought Forward Balance Carried to Balance Sheet Earnings Per Share (Face value Rs.10) (See Schedule 6 Note 4) Basic and Diluted Notes to the Financial Statements The Schedules referred to herein form an integral part of the Profit and Loss Account 30,000 15,000 15,000 6,386 1,400 38,561 120,000 5,000 (77) 231,270 5,638,553 20,000 10,000 15,000 4,944 1,200 984 120,000 9,577 765 182,470 5,512,692
THIS IS THE PROFIT AND LOSS ACCOUNT REFERRED TO IN OUR REPORT OF EVEN DATE. FOR AND ON BEHALF OF
B. S. M E H TA & CO .
FOR AND ON BEHALF OF THE BOARD IDFC TRUSTEE COMPANY LIMITED
Chartered Accountants
H. G. BUC H
Partner Membership No. 033114 Mumbai | April 21, 2010
S. B. MATHUR
Chairman
RAJIV B. LALL
Director
I D F C T R U ST E E C O M P A N Y L I M I T E D
23
C A S H F L OW ST AT E M E N T
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
APRIL 01, 2009 TO MARCH 31, 2010
APRIL 01, 2008 TO MARCH 31, 2009 5,512,692 (209,759) 5,302,933 262,172 (1,368) 260,804 (1,931,042) 3,632,695 209,759 (6,695,369) 2,858,758 (3,626,852) – 5,843 15,378 21,221 5,843
A.
CASH FLOW FROM OPERATING ACTIVITIES
Profit Before Tax Adjustments for: Dividend on Current Investments OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES Changes in : Current Assets and Loans and Advances Current Liabilities Income Taxes (Paid) / Received (Net of TDS) Net Cash from Operating Activities (A) (110,300) 9,991 (100,309) (1,684,807) 3,583,614 269,823 (14,325,316) 10,530,416 (B) (C) (A+B+C) (3,525,077) – 58,537 21,221 79,758 58,537 (269,823) 5,368,730 5,638,553
B.
CASH FLOW FROM INVESTING ACTIVITIES
Dividend on Current Investments Purchase of Investments Sale of Investments Net Cash used in Investing Activities
C.
CASH FLOW FROM FINANCING ACTIVITIES
Net Cash (used in)/ from Financing Activities Net change in cash and cash equivalents Cash and cash equivalents as at the April 1, 2009 (as per Schedule 3) Cash and cash equivalents as at the March 31, 2010 (as per Schedule 3)
THIS IS THE CASH FLOW STATEMENT REFERRED TO IN OUR REPORT OF EVEN DATE. FOR AND ON BEHALF OF
B. S. M E H TA & CO .
FOR AND ON BEHALF OF THE BOARD IDFC TRUSTEE COMPANY LIMITED
Chartered Accountants
H. G. BUC H
Partner Membership No. 033114 Mumbai | April 21, 2010
24 I D F C A N N U A L R E P O R T 09 –10
S. B. MATHUR
Chairman
RAJIV B. LALL
Director
SCHEDULES
SCHEDULE 1 Capital
AUTHORISED: 100,000 (Previous Year: 100,000) Equity shares of Rs. 10/- each ISSUED, SUBSCRIBED AND PAID UP: 50,000 (Previous Year: 50,000) Equity Shares of Rs.10/- each fully paid up (All the above shares are held by Infrastructure Development Finance Company Limited, the Holding Company and its nominees)
ANNEXED TO AND FORMING PART OF THE ACCOUNTS
RUPEES
RUPEES
AS AT MARCH 31, 2010 1,000,000 500,000
AS AT MARCH 31, 2009 1,000,000 500,000
500,000
500,000
RUPEES
SCHEDULE 2 Investments (Unquoted, Non-Trade)
(AT LOWER OF COST AND MARKET VALUE)
RUPEES
AS AT MARCH 31, 2010 NUMBER OF FACE VALUE UNITS RUPEES Mutual Fund Units (Current) IDFC Liquid Fund - Daily Dividend IDFC Savings Advantage Fund – Plan A – Growth (Market Value as on March 31, 2010 Rs. 9,775,671) 9,755,556 Note: Market value of Investments in Unquoted Mutual Funds represents the repurchase price of the units issued by the Mutual Funds. – 7560.134 – 1,000 – 9,755,556
AS AT MARCH 31, 2009
5,960,656 – 5,960,656
SCHEDULE 3 Current Assets
Sundry Debtor (Unsecured, Considered Good) More than six months Others Bank Balance Balance with Scheduled Bank in Current Account
RUPEES
RUPEES
AS AT MARCH 31, 2010 176,412 55,150 231,562
AS AT MARCH 31, 2009 65,082 56,180 121,262
79,758 311,320
21,221 142,483
SCHEDULE 4 Loans and Advances
Unsecured, Considered good Advance Payment of Income-Tax (net of provisions)
RUPEES
RUPEES
AS AT MARCH 31, 2010 199,302 199,302
AS AT MARCH 31, 2009 177,495 177,495
SCHEDULE 5 Current Liabilities and Provisions
CURRENT LIABILITIES Sundry Creditors for Expenses (other than Micro, Medium and Small Enterprises) Other Liabilities
RUPEES
RUPEES
AS AT MARCH 31, 2010 49,635 23,639 73,274
AS AT MARCH 31, 2009 49,944 13,339 63,283
I D F C T R U ST E E C O M P A N Y L I M I T E D
25
SCHEDULE 6 Notes to the Financial Statements
1 Significant Accounting Policies
A. System of Accounting
The Company adopts the accrual concept in the preparation of accounts. The preparation of financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.
B. Revenue Recognition
a) Trusteeship fees are accounted for on accrual basis. b) Dividend income is recognised when the right to receive is established.
C. Taxation
The accounting treatment for Income Tax in respect of the Company’s income is based on the Accounting Standard 22 on ‘Accounting for Taxes on Income’ as notified by the Companies (Accounting Standards) Rules, 2006. The provision for Income Tax comprises both current tax and the deferred tax. Deferred tax is recognised, subject to the consideration of prudence in respect of deferred tax asset, on 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.
D. Investments
Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost and market value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognise a decline other than temporary in the value of the investments.
2 The Central Government approval of the application for payment of sitting fees to Directors in excess of Rule 10B of the Companies (Central Government’s) General Rules and Forms, 1956 under Section 310 of The Companies Act, 1956 is awaited. There was no other remuneration to Directors. 3 Information with regard to other matters specified in paragraphs 3, 4A, 4C and 4D of Part II of Schedule VI of the Companies Act, 1956 are either Nil or not applicable to the Company for the year ended March 31, 2010. 4 Earning Per Share
PARTICULARS a) c) d) Profit After Tax (Rs.) Basic & Diluted Earnings Per Share (Rs.) Nominal Value Per Share (Rs.) b) Weighted average number of equity shares (Nos.) CURRENT YEAR 3,975,553 50,000 79.51 10.00 PREVIOUS YEAR 3,862,692 50,000 77.25 10.00
5 Segment Information
The Company is engaged in the business of providing trusteeship services. As such, there is no separate reportable primary business segment or geographical segment as per Accounting Standard 17 on ‘Segment Reporting’ as notified by the Companies (Accounting Standards) Rules, 2006.
6 Related Party Disclosures Under Accounting Standard 18:
A. RELATIONSHIPS: HOLDING COMPANY:
Infrastructure Development Finance Company Limited
7 There are no contingent liabilities as at March 31, 2010. 8 Refer Annexure for additional information pursuant to Part IV of the Schedule VI of the Companies Act, 1956. 9 The figures for the previous year have been regrouped / rearranged wherever necessary.
SIGNATURES TO SCHEDULES 1 TO 6 FORMING PART OF THE FINANCIAL STATEMENTS FOR AND ON BEHALF OF
B.S. M E H TA & CO .
FOR AND ON BEHALF OF THE BOARD IDFC TRUSTEE COMPANY LIMITED
Chartered Accountants
H.G. BUC H
Partner Membership No. 033114 Mumbai | April 21, 2010
26 I D F C A N N U A L R E P O R T 09 –10
S.B. MATHUR
Chairman
RAJIV B. LALL
Director
B A L A N C E S H E E T A B ST R A CT
AND COMPANY’S GENERAL BUSINESS PROFILE
I.
REGISTRATION DETAILS Registration No. State Code Balance Sheet Date U 1 3 6 1 1 0 3 2 0 1 0 5 9 9 0 M H 2 0 0 2 P L C 1 3 7 5 3 3
II.
CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000) Public Issue N I L Right Issue N I L
Bonus Issue N III. I L
Private Placement N I L
POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000) Total Liabilities 1 SOURCES OF FUNDS Paid-up Capital 5 0 0 Reserves and Surplus 9 6 9 3 0 2 6 6 1 0 Total Assets 2 6 6
Secured Loans N APPLICATION OF FUNDS Net Fixed Assets N I L I L
Unsecured Loans N I L
Investments 9 7 5 6
Net Current Assets 4 3 7
Deferred tax Asset N I L
IV. PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000) Turnover / Income 5 8 7 0 Total Expenditure 2 3 1
Profit Before Tax 5 6 3 9
Profit After Tax 3 9 7 5
Earnings per Share (in Rs.) 7 V. 9 . 5 1
Dividend % N I L
GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS) Item Code No. (ITC Code) Product Description N T I R L U S T E E S H I P S E R V I C E S
I D F C T R U ST E E C O M P A N Y L I M I T E D
27
IDFC investment
advisors limited
B O A R D O F D I R E CTO R S
?
? ?
Mr. Vikram Limaye Chairman Mr. Naval Bir Kumar Mr. Mahendra N. Shah
A U D I TO R S
?
S. R. Batliboi & Co. Chartered Accountants
P R I N C I PA L B A N K E R S
?
HDFC Bank Limited
R E G I ST E R E D O F F I C E
Naman Chambers, C-32, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai 400 051. TEL +91 22 42222000 FAX +91 22 26540354
28
I D F C A N N U A L R E P O R T 09 –10
D I R E CT O R S ’ R E P O R T
TO THE MEMBERS
We are pleased to present the Fourth Annual Report to the Members, along with the Audited Profit and Loss Account for the period ended March 31, 2010 and the Balance Sheet as at March 31, 2010. equities. The portfolio shall endeavor to invest in companies that are expected to benefit from agriculture and agri-products related opportunities in India over the next 5 to 6 Years. The fourth PMS product offering was IDFC Farm to Fork Portfolio with an objective of ensuring capital appreciation over the medium term by investing in a diversified pool of listed equities. The portfolio shall endeavor to invest in companies that are expected to benefit from the growth in prices of food and food-related products in India over the next 5 to 6 years. The Company is also acting as Investment Advisor to India Infrastructure Opportunities Fund Ltd (“the Fund”), and its activities are to provide investment advisory services, identify, evaluate investment opportunities to the Fund and to monitor investments of the Fund in the Indian companies.
FINANCIAL RESULTS
RUPEES
PARTICULARS Gross Income Profit before Interest, Depreciation & Tax Provision for Tax Profit after Tax
YEAR ENDED MARCH 31, 2010 272,062,246 76,012,609 5,031,104 69,469,803
YEAR ENDED MARCH 31, 2009 26,149,413 (35,699,453) 301,234 (36,890,708)
PRINCIPAL ACTIVITIES
The Company is registered as a Portfolio Manager with the Securities and Exchange Board of India (SEBI) to carry out Portfolio Management Services pursuant to SEBI (Portfolio Managers) Regulations, 1993. IDFC Hybrid Infrastructure Portfolio (HIP) was the first portfolio offering for domestic retail investors under the PMS platform of the Company. The investment objective of HIP is to invest in permitted securities / instruments issued by companies operating in the Infrastructure space, and endeavor to achieve risk adjusted medium to long term capital appreciation. The proposed investment strategy would be to provide growth capital for business opportunities especially to mid-sized companies with sound track record and reputation and ride the growth curve with them and to optimise Returns through Portfolio Diversification. This PMS offering received overwhelming response from investors. HIP - discretionary portfolio collected approximately Rs.449.98 crs in capital commitment and approx Rs. 134.58 crs of initial contribution. The average portfolio size was approx Rs. 19.16 lacs. The HIP discretionary portfolio has been offered to all IDFC employees, where the minimum commitment amount was Rs. 5 lac. So far, 15 employee accounts have been opened and Rs. 1.35 cr in commitment amount has been received. HIP investors have been given online access wherein they can log into the website for an 24*7 access to Portfolio and Capital Registers. More reports are planned and would be subsequently added to the bouquet of existing Reports. The quarterly newsletters from the Fund Managers would also be made available on the site. The second PMS product offering was IDFC Growth Portfolio (IGP). The investment objective of IGP is to seek to generate capital appreciation over the medium term by investing in a diversified pool of listed equities. This portfolio shall endeavor to invest in companies that are expected to benefit from the consumption boom that is expected to take place in India over the next few years. The third PMS product offering was IDFC Agriculture Opportunities Portfolio (AOP) with an objective of ensuring capital appreciation over the medium term by investing in a diversified pool of listed
DIVIDEND
The Company wishes to plough back profits into the business. In view of this, the Directors do not recommend any dividend for the year ended March 31, 2010.
PUBLIC DEPOSITS
During the year under review, your Company has not accepted deposits under the provisions of Section 58-A of the Companies Act, 1956.
SHARE CAPITAL
Rs. 2 crore equity share capital was issued by the Company during the year.
DIRECTORS
In terms of the provisions of the Articles of Association of the Company and Companies Act, 1956, Mr. Mahendra Shah would retire at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.
AUDIT COMMITTEE
The Audit Committee consists of three Directors, Mr. Mahendra N. Shah as Chairman, Mr. Naval Bir Kumar and Mr. Vikram Limaye. The functions of the Committee include reviewing the half yearly and annual financial statements, internal control systems and significant accounting policies of the Company and discussing the audit findings and recommendations of the internal and statutory auditors of the Company.
AUDITORS
M/s. S. R. Batliboi & Co., Chartered Accountants will retire as the statutory auditors of the Company at the ensuing Annual General Meeting. They have expressed their unwillingness to be reappointed as the statutory auditors and have given the notice in terms of Section 224(2)(b) of the Companies Act, 1956 for the same. The Board of Directors has placed on record its sincere appreciation of the professional service rendered by M/s. S. R. Batliboi & Co. as statutory auditors. In view of this, the Board has proposed the appointment of M/s. M.P. Chitale & Co., as statutory auditors for the financial year ending March 31, 2011.
I D F C I N V E ST M E N T A D V I S O R S L I M I T E D
29
As required under the provisions of Section 224 of the Companies Act, 1956 the Company has obtained a written confirmation from the Auditors proposed to be appointed to the effect that their appointment, if made, would be in conformity with the provisions of Sections 224 and 226 of the Companies Act, 1956. The shareholders are requested to appoint the auditors and fix their remuneration.
the Company as at March 31, 2010 and the loss of the Company for the year ended on that date; they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and detecting fraud and other irregularities; and
¬ ¬
FOREIGN EXCHANGE EARNINGS AND EXPENDITURE
The details of income or expenditure in foreign currency are given in Note No. 11 of Schedule 12 to the Financial Statement.
they have prepared the annual accounts on a going concern basis.
ACKNOWLEDGEMENTS
The Directors thank the investors of India Infrastructure Opportunities Fund, clients of discretionary PMS and regulatory authorities such as The Reserve Bank of India and the Securities and Exchange Board of India for their continued support to the Company. The Directors also express their gratitude for the unstinted support and guidance received from IDFC Asset Management Company Limited and other IDFC group companies.
PERSONNEL AND OTHER MATTERS
As required by the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, names and other particulars of the employees are set out in the annexure to the Directors’ Report. Since the Company does not own any manufacturing facility, the disclosure of information on other matters required to be disclosed in terms of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1998, are not applicable and hence not given.
DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors confirm that: the applicable accounting standards have been followed in preparation of annual accounts and there are no material departures;
¬
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
VIKRAM LIMAYE
they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of
¬
Chairman Mumbai April 20, 2010
30
I D F C A N N U A L R E P O R T 09 –10
AU D I TO RS ’ R E PO RT
To The Members of IDFC Investment Advisors Limited
1. We have audited the attached Balance Sheet of IDFC Investment Advisors Limited (‘the Company’) as at March 31, 2010 and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditor’s Report) Order, 2003 (as amended) (‘Order’) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. 4. Further to our comments in the Annexure referred to above, we report that: (i) 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; (iv) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956. (v) On the basis of the written representations received from the directors, as on March 31, 2010, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956; (vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India; (a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2010; (b) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and (c) in the case of Cash Flow Statement, of the cash flows for the year ended on that date.
FOR S. R. BATLIBOI & CO. Chartered Accountants Firm registration number: 301003E
per SHRAWAN JALAN
(ii) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books; (iii) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;
Partner Membership No. 102102 Mumbai April 20, 2010
I D F C I N V E ST M E N T A D V I S O R S L I M I T E D
31
ANNEXURE
Annexure referred to in paragraph 3 of our report of even date
Re: IDFC Investment Advisors Limited (‘the Company’) (i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. (b) Fixed assets have been physically verified by the management during the year and no material discrepancies were identified on such verification. (c) There was no substantial disposal of fixed assets during the year.
TO THE AUDITOR’S REPORT
comment upon the regularity or otherwise of the company in depositing the same. (b) According to the information and explanations given to us, no undisputed amounts payable in respect of income-tax, service tax, cess and other undisputed material statutory dues applicable to the company, were outstanding, at the year end, for a period of more than six months from the date they became payable. (c) According to the information and explanation given to us, there are no dues of income tax, sales-tax, service tax and cess which have not been deposited on account of any dispute.
NATURE OF DUES AMOUNT PERIOD (RS) TO WHICH THE AMOUNT RELATES 3,224,881 AY 2007-08 FORUM WHERE DISPUTE IS PENDING CIT(A)
(ii) The Company provides investment management services and does not maintain inventories. Therefore, the provisions of clause 4(ii) of the Order are not applicable to the Company. (iii) (a) As informed, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. (b) As informed, the Company has not taken any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. (iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of fixed assets and for the sale of services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas. (v) According to the information and explanations provided by the management, we are of the opinion that there were no particulars of contracts or arrangements referred to in section 301 of the Act that need to be entered into the register maintained under section 301. (vi) The Company has not accepted any deposits from the public. (vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business. (viii) To the best of our knowledge and as explained, the Central Government has not prescribed maintenance of cost records under clause (d) of sub-section (1) of section 209 of the Companies Act, 1956 for the products of the Company. (ix) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including incometax, service tax, cess and other material statutory dues applicable to it. The provisions relating to provident fund, employees’ state insurance, investors’ education and protection fund, sales-tax, wealth-tax, customs duty and excise duty are not applicable to the Company. Further, since the Central Government has till date not prescribed the amount of cess payable under section 441 A of the Companies Act, 1956, we are not in a position to
NAME OF THE STATUTE
Incometax Act, 1961
Non-deduction of tax on payments made to IDFC Ltd.
(x) The Company has been registered for a period of less than five years and hence we are not required to comment on whether or not the accumulated losses at the end of the financial year is fifty per cent or more of its net worth and whether it has incurred cash losses in such financial year and in the immediately preceding financial year. (xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution. The Company has no outstanding dues in respect of banks or debenture holders. (xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. (xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4(xiii) of the Order are not applicable to the Company. (xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to the Company. (xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions. (xvi) The Company did not have any term loans outstanding during the year. (xvii)According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment.
32
I D F C A N N U A L R E P O R T 09 –10
(xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956. (xix) The Company did not have any outstanding debentures during the year. (xx) The Company has not raised money in the year by public issue. (xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.
FOR S. R. BATLIBOI & CO. Chartered Accountants Firm registration number: 301003E
per SH R AWA N J A L A N
Partner Membership No. 102102 Mumbai April 20, 2010
I D F C I N V E ST M E N T A D V I S O R S L I M I T E D
33
BALANCE SHEET
RUPEES SCHEDULE
AS AT MARCH 31, 2010
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
SOURCES OF FUNDS
Shareholders’ Funds Share Capital Reserves and Surplus Deferred Tax Liability (Net) 1 2 3 100,000,000 8,921,109 381,104 109,302,213 80,000,000 80,000,000
APPLICATION OF FUNDS
Fixed Assets Gross Block Less: Accumulated Depreciation and Amortisation Net Block Investments Current Assets, Loans and Advances Sundry Debtors (less than six months) (Unsecured, Considered good) Cash and Bank Balances Loans and Advances (A) Less: Current Liabilities and Provisions Current Liabilities Provisions (B) Net Current Assets Debit Balance in Profit and Loss Account Notes to the Financial Statements The schedules referred to above and notes to accounts form an integral part of the Accounts 14 (A)-(B) 8 59,939,937 22,207,317 82,147,254 63,525,739 109,302,213 12,152,617 4,560,366 16,712,983 3,995,846 60,548,694 80,000,000 6 7 100,046,505 705,336 44,921,152 145,672,993 2,995,226 1,292,068 16,421,535 20,708,829 5 4 9,194,361 3,460,917 5,733,444 40,043,030 3,693,184 1,980,601 1,712,583 13,742,877
AS PER OUR REPORT OF EVEN DATE FOR S.R. BATLIBOI & CO. Chartered Accountants FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF IDFC INVESTMENT ADVISORS LIMITED
per SH R AWA N J A L A N Partne r
NAVAL BIR KUMAR Director
MAHENDRA N. SHAH Director
Membership No. 102102
RAJENDRA L. PATIL
Mumbai | April 20, 2010
34 I D F C A N N U A L R E P O R T 09 –10
Company Secretary
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
SCHEDULE
APRIL 1, 2009 TO MARCH 31, 2010 9 10 269,842,048 2,220,198 272,062,246 11 12 13 4 57,205,940 740,679 138,103,018 1,511,702 197,561,339 74,500,907 4,650,000 381,104 69,469,803 69,469,803 (60,548,694) 8,921,109 7.48 9,282,192 14
APRIL 1, 2008 TO MARCH 31, 2009 24,178,275 1,971,138 26,149,413 30,070,588 9,664,477 14,375,801 890,021 55,000,887 (28,851,474) (108,766) 410,000 (29,152,708) (7,738,000) (36,890,708) (23,657,986) (60,548,694) (6.14) 6,005,479
INCOME
Fee Income Other Income Total
EXPENDITURE
Personnel Expenses Establishment Expenses Operating and Other Expenses Depreciation and Amortisation PROFIT/(LOSS) BEFORE TAX AND PRIOR PERIOD ITEMS Income Taxes Current Tax Deferred Tax Charge / (Credit) Fringe Benefit Tax
PROFIT/(LOSS) AFTER TAX AND BEFORE PRIOR PERIOD ITEMS Prior Period Item Net Profit/(Loss) After Tax Balance Brought Forward Balance Carried to Balance Sheet Earnings/(Loss) per share Basic and Diluted (Face value Rs.10) Number of equity shares in calculating basic earnings per share Notes to the Financial Statements The schedules referred to above and the notes to accounts form an integral part of the Accounts
AS PER OUR REPORT OF EVEN DATE FOR S.R. BATLIBOI & CO. Chartered Accountants FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF IDFC INVESTMENT ADVISORS LIMITED
per SH R AWA N J A L A N Partne r
NAVAL BIR KUMAR Director
MAHENDRA N. SHAH Director
Membership No. 102102
RAJENDRA L. PATIL
Mumbai | April 20, 2010
Company Secretary I D F C I N V E ST M E N T A D V I S O R S L I M I T E D 35
C A S H F L OW ST AT E M E N T
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010
APRIL 1, 2008 TO MARCH 31, 2009 (28,851,474) (7,738,000) 890,021 (860,817) (1,295) (36,561,565) (9,281,069) 25,998,976 (9,390,245) (6,487,899) (35,721,803) (555,745) (36,277,549) (80,594) 860,817 (119,594,786) 106,366,277 (12,448,286) 50,000,000 50,000,000 1,274,165 17,903 1,292,068 1,737 1,290,331 1,292,068
A.
CASH FLOW FROM OPERATING ACTIVITIES
Profit / (Loss) Before Tax and Prior Period Items Adjustments for: Prior Period Item Depreciation/Amortisation Fixed Asset Writen off Dividend Earned Profit on Sale of Investments Operating loss before Working Capital Changes Movements in working capital : (Increase) / Decrease in Loans and Advances (Increase) / Decrease in Sundry Debtors Increase / (Decrease) in Current Liabilities Increase / (Decrease) in Provisions Cash generated from Operations Direct Taxes Paid (Including Fringe Benefit Tax) NET CASH (USED IN)/ FROM OPERATING ACTIVITIES (A) (21,792,405) (97,051,279) 47,787,321 17,804,135 20,587,400 (11,514,397) 9,073,003 (5,559,779) 2,200,153 (160,700,109) 134,400,000 (B) (29,659,735) 20,000,000 (C) (A)+(B+(C) 20,000,000 (586,732) 1,292,068 705,336 705,336 705,336 1,511,702 27,217 (2,200,153) (45) 73,839,628 74,500,907
B.
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Fixed Assets Dividend Earned Purchase of Investments Sale Proceeds of Investments NET CASH (USED IN) / FROM INVESTING ACTIVITIES
C.
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from Issue of Share Capital NET CASH FROM FINANCING ACTIVITIES Net change in Cash and Cash Equivalents Cash and Cash Equivalents as at the beginning of the year Cash and Cash Equivalents as at the end of the year Components of cash and cash equivalents as at March 31, 2010 Cash on hand Balances with Scheduled Bank on Current Account
AS PER OUR REPORT OF EVEN DATE FOR S.R. BATLIBOI & CO. Chartered Accountants FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF IDFC INVESTMENT ADVISORS LIMITED
per SH R AWA N J A L A N Partne r
NAVAL BIR KUMAR Director
MAHENDRA N. SHAH Director
Membership No. 102102
RAJENDRA L. PATIL
Mumbai | April 20, 2010
36 I D F C A N N U A L R E P O R T 09 –10
Company Secretary
SCHEDULES
SCHEDULE 1 Share Capital AUTHORISED:
10,000,000 (Previous Year : 10,000,000) Equity shares of Rs.10/- each
ANNEXED TO AND FORMING PART OF THE ACCOUNTS
RUPEES
RUPEES
AS AT MARCH 31, 2010 100,000,000 100,000,000
AS AT MARCH 31, 2009 100,000,000 80,000,000
ISSUED, SUBSCRIBED AND PAID UP
10,000,000 (Previous Year: 8,000,000) Equity shares of Rs.10/- each, fully paid up (All the above shares are held by IDFC Asset Management Company Limited, the Holding Company and its Nominees) (Previous Year: All the above shares are held by Infrastructure Development Finance Company Limited, the Utilmate Holding Company and its Nominees) 100,000,000 80,000,000
RUPEES
SCHEDULE 2 Reserves & Surplus
Profit and Loss Account Balance as per Last account Transferred from Profit & Loss Account
RUPEES
AS AT MARCH 31, 2010 – 8,921,109 8,921,109
AS AT MARCH 31, 2009 – – –
SCHEDULE 3 Deferred Tax
DEFERRED TAX LIABILITY Effect of preliminary expenditure debited to profit and loss account in the current year / period but allowed for tax purposes in following years Differences in depreciation and other differences in block of fixed assets as per tax and financial books Gross Deferred Tax Liability DEFERRED TAX ASSET Effect of preliminary expenditure debited to profit and loss account in the current year / period but allowed for tax purposes in following years Carry forward unabsorbed tax losses Gross Deferred Tax Asset Net Deferred Tax Liability
RUPEES
RUPEES
AS AT MARCH 31, 2010 33,218 347,886 381,104 – – – – 381,104
AS AT MARCH 31, 2009 – 187,134 187,134 – 50,985 136,149 187,134 –
SCHEDULE 4 - Fixed Assets
DESCRIPTION As at April 1, GROSS BLOCK As at March DEPRECIATION AND AMORTISATION As at April 1, As at March NET BLOCK As at March
RUPEES
As at March
Additions
Additions
Deletions
Deletions
31, 2010
31, 2010
31, 2010
TANGIBLES Furniture and Fittings Office Equipment Computer Hardware INTANGIBLES Computer Software Total Previous Year 1,118,716 3,693,184 3,612,590 5,343,551 5,559,779 80,594 58,602 6,462,267 9,194,361 3,693,184 551,498 1,980,600 1,090,580 1,151,796 1,511,702 890,021 31,385 1,703,294 3,460,917 1,980,601 4,758,973 5,733,444 1,712,583 567,217 1,712,583 73,400 1,011,536 1,489,532 185,950 30,278 7,290 29,508 21,804 66,110 1,167,978 1,498,006 42,445 362,787 1,023,870 5,603 158,272 196,031 3,780 11,138 16,467 44,268 509,921 1,203,434 21,842 658,057 294,572 30,955 648,749 465,662
I D F C I N V E ST M E N T A D V I S O R S L I M I T E D
37
31, 2009
2009
2009
SCHEDULE 5 Investment - (Current) (At lower of cost and market value)
(Unquoted, Non Trade) Units in Mutual Fund 3,976,349.31 units (March 31, 2009: 1,364,693.91 units) of Rs. 10 each in IDFC Money Manager Fund-Treasury Plan -Inst Plan B (Daily Dividend Reinvestment Plan) Net Assets Value: Rs. 40,043,030 (Previous Year: Rs 13,742,877)
RUPEES
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
40,043,030
13,742,877
40,043,030 The following investments were purchased (including Dividend Reinvestment) and sold during the year: 15,957,831.762 units (March 31, 2009: 3,668,839.363 units) of Rs. 10 each in IDFC Money Manager Fund - Treasury Plan - Inst Plan B (Daily Dividend Reinvestment Plan) 13,346,176.372 units (March 31, 2009: 1,062,530.411 units) of Rs. 10 each in IDFC Money Manager Fund - Treasury Plan - Inst Plan B (Daily Dividend Reinvestment Plan)
13,742,877
SCHEDULE 6 Cash and Bank Balances
Cash on Hand Balance with a Scheduled Bank in Current Account
RUPEES
RUPEES
AS AT MARCH 31, 2010 705,336 705,336
AS AT MARCH 31, 2009 1,737 1,290,331 1,292,068
SCHEDULE 7 Loan and Advances
(Unsecured, considered good) Advance Recoverable in Cash or in Kind or for value to be received Service Tax Input Credit Advance Payment of Income Tax (Net of Provisions) (Unsecured, considered doubtful) Advance Recoverable in Cash or in Kind or for value to be received Less: Provisions
RUPEES
RUPEES
RUPEES
AS AT MARCH 31, 2010 23,868,208 7,893,923 13,159,021 44,921,152 44,921,152
AS AT MARCH 31, 2009 933,114 9,036,613 6,451,808 16,421,535 2,811,516 2,811,516 16,421,535
SCHEDULE 8 Current Liabilities and Provisions
CURRENT LIABILITIES Sundry Creditors for Expenses (Other than Micro, Medium and Small Enterprises) Fees Accrued in Advance Statutory Dues PROVISIONS Provision for Fringe Benefit Tax (Net of advance tax) Provision for Leave Encashment Provision for Bonus
RUPEES
RUPEES
AS AT MARCH 31, 2010 30,960,526 27,604,722 1,374,689 59,939,937 107,316 1,200,000 20,900,000 22,207,316 82,147,254
AS AT MARCH 31, 2009 10,309,007 1,555,111 288,499 12,152,617 264,501 720,865 3,575,000 4,560,366 16,712,983
38
I D F C A N N U A L R E P O R T 09 –10
SCHEDULE 9 Fees Income
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Portfolio Management Fees (Service Tax Rs. 13,969,448; Previous Year: Rs. 343,328) (Tax Deducted at Source Rs. 1,457,213; Previous Year: Rs. 167,055) Performance Fees Advisory Fees (Service Tax Rs. 167,731; Previous Year: Rs. 17,764) (Tax Deducted at Source Rs. 161,515; Previous Year: Rs. Nil) 269,842,048 108,292,077 25,924,257 135,625,714
APRIL 1, 2008 TO MARCH 31, 2009 3,070,826
21,107,449
24,178,275
SCHEDULE 10 Other Income
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Dividend from Units of Mutual Fund Foreign Exchange Gains (Net) Profit on Sale of Investments Excess Provision no longer required written back Miscellaneous Income 2,200,153 45 20,000 2,220,198
APRIL 1, 2008 TO MARCH 31, 2009 860,817 189,415 1,295 917,011 2,600 1,971,138
SCHEDULE 11 Personnel Expenses (See Schedule 14 Note 7)
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Salaries and Bonus Contribution to Provident Fund and Other Funds Staff Training and Welfare Expenses 54,940,501 2,049,989 215,450 57,205,940
APRIL 1, 2008 TO MARCH 31, 2009 27,599,947 2,327,792 142,849 30,070,588
SCHEDULE 12 Establishment Expenses
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Lease Rent for Employee Residence Lease Rent for Office Premises Muncipal Taxes for Office Premises Electricity Expenses Repairs and Maintenance - Building Repairs and Maintenance - Others 579,216 8,625 152,838 740,679
APRIL 1, 2008 TO MARCH 31, 2009 8,201,200 601,772 492,300 369,205 9,664,477
I D F C I N V E ST M E N T A D V I S O R S L I M I T E D
39
SCHEDULE 13 Operating And Other Expenses
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Brokerage Expenses Travelling and Conveyance Advertisement and Publicity Postage, Telephone and Telex Printing and Stationery Professional Fees Loss on Foreign Exchange Fluctuation Arzak India Fund (Sharia) Expenses Membership and Subscription Computer Software Expenses Office Maintenance Stamp Duty & Franking Expenses Relocation Expenses Operational Losses Fixed Asset Written off Miscellaneous Expenses AUDITORS’ REMUNERATION Audit Fees Tax Audit Fees Service Tax Out of Pocket Expenses 489,333 67,275 138,103,018 125,522,013 1,344,874 1,078,148 982,686 1,501,423 3,783,537 16,808 2,300,030 417,889 27,750 344,994 26,800 12,813 27,217 159,428
APRIL 1, 2008 TO MARCH 31, 2009 3,118,767 1,492,444 624,026 556,609 1,658,748 472,653 2,811,516 2,187,887 428,472 249,000 211,622 425,000 75,000 56,625 7,432 14,375,801
40
I D F C A N N U A L R E P O R T 09 –10
SCHEDULE 14 Notes Forming Part of the Accounts
1 Nature of Operations
IDFC Investment Advisors Limited (“the Company”) was incorporated on April 3, 2006. The Company entered into an Investment Advisory Agreement with the India Infrastructure Opportunities Fund Ltd. (“the Fund”) on August 14, 2006 to provide investment advisory services, identify and evaluate investment opportunities to the Fund and to monitor investments of the Fund in Indian companies. Under the agreement, the Company is entitled to receive advisory fees computed on the basis of the net assets of the Fund plus a performance fee. During the year the Company has started rendering portfolio management services to the IDFC Hybrid Infrastructure Portfolio (“HIP”), IDFC Growth Portfolio (“IGP”) and IDFC Agriculture Opportunities Portfolio (“AOP”).
2 Statement of Significant Accounting Policies
A. Basis of Preparation
The financial statements have been prepared to comply in all material respects with the Accounting Standards notified by Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956 (‘the Act’). The financial statements have been prepared under the historical cost convention on an accrual basis except in case of assets for which provision for impairment is made and revaluation is carried out. The accounting policies applied by the Company are consistent with those used in the previous year.
B. Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period end. Although these estimates are based upon management’s best knowledge of current events and actions, actual results could differ from these estimates.
C. Fixed Assets and Intangible Assets
Fixed assets are stated at cost less accumulated depreciation and provision for impairment, if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use.
D. Depreciation and Amortisation
Depreciation is provided using the written down value method, at the rates prescribed under schedule XIV of the Companies Act, 1956. Depreciation on additions during the period is provided on a pro-rata basis. Fixed assets having an original cost of less than Rs. 5,000 individually are depreciated fully in the year/period of purchase. Intangible assets are amortised over period of 3 years on straight line method.
E. Impairment
i. The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset’s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
ii.
F. Investments
Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognise a decline other than temporary in the value of the investments.
G. Revenue Recognition
Advisory Fee is measured on a quarterly basis in advance and is computed on the Assets Under Management of the Fund as at last day of the preceding quarter. Performance Fee is recognized on an annual basis on March 31, every year based on terms of the agreement. Fees earned from rendering Portfolio Management Services is recognized as per Portfolio Management Service Agreement. Interest income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable. Dividend income on investments is recognised when unconditional right to receive is established.
I D F C I N V E ST M E N T A D V I S O R S L I M I T E D
41
H. Brokerage Expenses
Brokerage is paid to brokers for IDFC Hybrid Infrastructure Portfolio (“HIP”), IDFC Growth Portfolio (“IGP”) and IDFC Agriculture Opportunities Portfolio (“AOP”) as per the terms of agreement entered into with respective brokers. In case of IDFC Hybrid Infrastructure Portfolio (“HIP”) product, the Company amortises the brokerage expenses (excluding Service tax) of corporate brokers over the tenure of agreement and unamortised brokerage is lying under Loans and Advances. In case of Individual brokers the entire brokerage expenses are charged to Profit & Loss A/c in the year it is incurred. For IDFC Growth Portfolio (“IGP”) and IDFC Agriculture Opportunities Portfolio (“AOP”) the entire brokerage expenses are charged to Profit & Loss A/c in the year it is incurred.
I. Operating Leases
Leases of assets under which all the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases. Payments under operating leases are charged to the Profit and Loss Account, on a straight line basis, over the lease term.
J. Income Taxes
Tax expense comprises of current, deferred and fringe benefit tax. Current income tax and fringe benefit tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act of 1961. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits. At each balance sheet date the Company re-assesses unrecognised deferred tax assets. It recognises unrecognised deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realised. The carrying amount of deferred tax assets are reviewed at each balance sheet date. The Company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.
K. Foreign Currency Transactions
(i) Initial recognition Foreign currency transactions are recorded in Indian Rupees, the Company’s reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. (ii) Conversion Foreign currency monetary items are reported using the closing rate. There are no non-monetary items. (iii) Exchange differences Exchange differences arising on the settlement of monetary items or the Company’s monetary items at rates different from those at which they were initially recorded during the year, or reported in the previous financial statements, are recognised as income or as expense in the year in which they arise.
L. Provisions
A provision is recognised when the Company has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
3 Cash and Cash Equivalents
Cash and cash equivalents in the Balance Sheet comprise of cash at bank and in hand and short-term investments with an original maturity of three months or less.
42
I D F C A N N U A L R E P O R T 09 –10
4 Segment Information
The Company is engaged in the business of providing investment advisory services. During the year, the Company was engaged in only one business segment and no geographical segments. As such, there are no separate reportable segments as per Accounting Standards 17 on ‘Segment Reporting’ issued by Institute of Chartered Accountants of India.
5 Employee residence is obtained on operating lease. There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements. There are no subleases. 6 Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The relevant details as described above are as follows:
PARTICULARS Net Profit /(Loss) (Rs.) Weighted average number of equity shares (Nos.) Basic Profit /(Loss) Per Share (Rs.) Face Value Per Share (Rs.) APRIL 1, 2009 TO MARCH 31, 2010 69,469,803 9,282,192 7.48 10.00 APRIL 1, 2008 TO MARCH 31, 2009 (36,890,708) 6,005,479 (6.14) 10.00
7 The Company does not have any employee on its payroll. Personnel expenses include salaries, allowances, bonus, reimbursements and contribution to provident fund and other funds. These expenses represent reimbursement of cost of employees, to Infrastructure Development Finance Company Limited, the (Ultimate Holding Company) & IDFC Asset Management Company Limited, the (Holding Company), on deputation to the Company. Therefore, all employees related benefits and statutory obligation of such personnel on deputation are charged by the Holding Company & Ultimate Holding Company. 8 Performance Fees
During the year Performance Fees on Advisory Service has been recognized based on return over high water mark from India Infrastructure Opportunities Fund, since there was appreciation in Net Asset Value of the units.
9 Related Party Disclosures Under Accounting Standard 18
(a) Relationships:
ULTIMATE HOLDING COMPANY:
Infrastructure Development Finance Company Limited
HOLDING COMPANY:
IDFC Asset Management Company Limited
FELLOW SUBSIDIARIES:
IDFC AMC Trustee Company Limited IDFC Pension Fund Management Company Limited
KEY MANAGEMENT PERSONNEL:
Mr. Vikram Limaye, Chairman Mr. Naval Bir Kumar, Director (b) The following transactions were carried out with the related parties in the ordinary course of business during the year :
RUPEES
NAME OF THE RELATED PARTY AND NATURE OF RELATIONSHIP Infrastructure Development Finance Company Limited (Ultimate Holding Company)
PARTICULARS Reimbursement of expenses (Based on the debit notes received) Subscription towards Equity Share Capital Management Fee Income Management Fees Received in Advance
APRIL 1, 2009 TO MARCH 31, 2010 38,387,406 1,946,125 5,888,875 100,000,000 6,630,697
APRIL 1, 2008 TO MARCH 31, 2009 48,898,321 50,000,000 24,07,975
IDFC Asset Management Company Limited (Holding Company)
Subscription towards Equity Share Capital Reimbursement of expenses (Based on the debit notes received)
I D F C I N V E ST M E N T A D V I S O R S L I M I T E D
43
(c) Following are the balances outstanding as at the year end:
RUPEES
NAME OF THE RELATED PARTY AND NATURE OF RELATIONSHIP Payable to Infrastructure Development Finance Company Limited (Ultimate Holding Company) IDFC Asset Management Company Limited (Holding Company)
AS AT MARCH 31, 2010 4,137,462 -
AS AT MARCH 31, 2009 3,207,727 24,07,975
10 Other Statutory Information
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 EARNINGS IN FOREIGN CURRENCY Advisory Fees EXPENDITURE IN FOREIGN CURRENCY Travelling Expense Membership and Subscription Charges 98,637 242,940 341,577 132,512,497
APRIL 1, 2008 TO MARCH 31, 2009 20,934,987 133,571 85,576 219,147
11 The Company has no amounts due to any micro, small and medium enterprises as defined under section 7 (1) (a)/ 7 (1) (b)/ 7 (1) of Micro Small and Medium Enterprises Development Act, 2006 as on March 31, 2010. 12 Contingent liabilities not provided for in respect of :
On 24th December, 2009, the Company received an Order from by Commissioner of Income Tax under section 156 of the Income Tax Act, 1961 for Assessment Year 2007-2008 (‘the Order’). The Assessing Officer had assessed the income of Assessment Year 2007-2008 at Rs. 15,194,780 as against loss of Rs. 20,112,503 reported by the Company. Accordingly, the Assessing Officer raised a demand of Rs. 6,624,881 on account of non deduction of tax on the payment made to IDFC Ltd. Subsequently, the Company filed an appeal to the CIT(A) and also made a request to the Commissioner of Income Tax to keep the demand in abeyance till such time the appeal is disposed off. On receipt of directions to pay 50% of the above demand in two installments the Company paid Rs. 3,400,000. Aggrieved by the Order, the Company has filed an appeal to the CIT(A). Pending the submission of the Appeal and subsequent settlement of the same, Rs. 3,224,881 (i.e. Rs. 6,624,881 Less Rs. 3,400,000) is being disclosed as contingent liability.
13 There are no contracts remaining to be executed on capital account and not provided for as at March 31, 2010 (Previous Year Rs. Nil). 14 The figures for the previous year have been regrouped / rearranged wherever necessary to conform to the current year’s classification.
FOR S. R. BATLIBOI & CO. Chartered Accountants
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF IDFC INVESTMENT ADVISORS LIMITED
per SH R AWA N J A L A N Partne r
NAVAL BIR KUMAR Director
MAHENDRA N. SHAH Director
Membership No. 102102
RAJENDRA L. PATIL
Mumbai | April 20, 2010
44 I D F C A N N U A L R E P O R T 09 –10
Company Secretary
B A L A N C E S H E E T A B ST R A CT
AND COMPANY’S GENERAL BUSINESS PROFILE
(Submitted in terms of Part IV of the Companies Act, 1956) I REGISTRATION DETAILS U 1 3 7 1 1 0 3 2 0 1 0 4 9 2 0 M H 2 0 0 6 P L C 1 6 0 9 3 7
Registration No. State Code Balance Sheet Date II
CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000) Public Issue N I L Bonus Issue N I L 2 Right Issue N I L Private Placement 0 0 0 0
III
POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000) Total Liabilities 1 9 1 4 4 9 1 9 1 Total Assets 4 4 9
SOURCES OF FUNDS Paid-up Capital 1 0 0 0 0 0 Reserves and Surplus 8 9 2 1
Secured Loans N I L
Unsecured Loans N I L
Deferred Tax Liability 3 APPLICATION OF FUNDS Net Fixed Assets 5 7 3 3 4 0 Investments 0 4 3 8 1
Net Current Assets 6 IV 3 5 2 6
PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000) Turnover / Income 2 7 2 0 6 2 1 9 Total Expenditure 7 5 6 1
Profit Before Tax 7 4 5 0 1 6
Profit After Tax 9 4 7 0
Earnings per Share (in Rs.) 7 V . 4 8
Dividend % N I L
GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS) N A I D L V I S O R Y S E R V I C E S
Item Code No. (ITC Code) Product Description
I D F C I N V E ST M E N T A D V I S O R S L I M I T E D
45
IDFC project
equity company limited
B O A R D O F D I R E CTO R S
?
? ?
Dr. Rajiv B. Lall Chairman Mr. Vikram Limaye Mr. Mahendra N. Shah
A U D I TO R S
?
S. R. Batliboi & Co. Chartered Accountants
P R I N C I PA L B A N K E R S
?
HDFC Bank Limited
R E G I ST E R E D O F F I C E
Naman Chambers, C-32, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai 400 051. TEL +91 22 42222000 FAX +91 22 26540354
46
I D F C A N N U A L R E P O R T 09 –10
D I R E CT O R S ’ R E P O R T
TO THE MEMBERS
Your directors have pleasure in presenting the Fourth Annual Report together with the audited accounts for the year ended March 31, 2010. also indicated their willingness to be re-appointed. You are requested to consider their re-appointment.
PERSONNEL AND OTHER MATTERS
The Company has 11 employees in receipt of remuneration of more than Rs.24 lakh per annum. In accordance with the provisions of Section 217 (2A) of the Companies Act, 1956 and the rules framed thereunder, the names and other particulars of employees are set out in the Annexure to the Directors’ Report. Since the Company does not own any manufacturing facility, the disclosure of information on other matters required to be disclosed in terms of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1998, are not applicable and hence not given.
OPERATIONAL REVIEW
Your Company is the Investment Manager to India Infrastructure Fund (“Fund”), which was set up as a part of ‘India Infrastructure Financing Initiative’, a collaborative effort between Government of India and leading Indian and global financial institutions for providing capital to infrastructure projects in India. The Fund has achieved the Final Close on June 8, 2009 with total commitments of INR 38.37 billion. The Fund’s investors include leading Indian and global institutional investors. The Fund focuses on investing equity for the long-term in a diversified portfolio of infrastructure assets in India.
FINANCIAL RESULTS
RUPEES (IN MILLION)
FOREIGN EXCHANGE EARNINGS AND EXPENDITURE
The particulars regarding foreign exchange expenditure are furnished in note no 13 to Schedule 10 of Notes to Accounts. There was no foreign currency income earned during the year.
FOR THE YEAR ENDED MARCH 31, 2010 Total Income Less: Total Expenses Profit/(Loss) before Tax Less: Provision for Tax Profit/(Loss) after Tax Add: Profit/(Loss) brought forward Profit/(Loss) carried forward 643.46 355.51 287.95 57.86 230.09 (106.66) 123.43
FOR THE YEAR ENDED MARCH 31, 2009 443.08 546.40 (103.32) 2.26 (105.58) (1.08) (106.66)
DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors confirm that: the applicable accounting standards have been followed in preparation of annual accounts and there are no material departures;
¬
DIVIDEND
The Directors do not recommend any dividend for the year ended March 31, 2010.
PUBLIC DEPOSITS
During the year under review, your Company has not accepted public deposits under Section 58-A of the Companies Act, 1956.
they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2010 and the Profit of the Company for the year ended on that date; ¬ they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and detecting fraud and other irregularities; and ¬ they have prepared the annual accounts on a going concern basis.
¬
DIRECTORS
In terms of the provisions of the Articles of Association of the Company and Companies Act, 1956, Mr. Mahendra N. Shah would retire at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.
ACKNOWLEDGEMENTS
The Directors thank the investors of India Infrastructure Fund, Reserve Bank of India and the Securities and Exchange Board of India for their continued support to the Company. The Directors also express their gratitude for the unstinted support and guidance received from Infrastructure Development Finance Company Limited and other group companies.
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
RAJIV B. LALL
AUDITORS
M/s. S.R. Batliboi & Co., Chartered Accountants will retire as the statutory auditors of the Company at the ensuing Annual General Meeting. The Board at its meeting held on April 19, 2010 has proposed their re-appointment as Auditors to audit the accounts of the Company for the financial year ending March 31, 2011. M/s. S. R. Batliboi & Co., the retiring Auditors, have confirmed that their re-appointment, if made, would be in conformity with the provisions of Sections 224 and 226 of the Companies Act, 1956 as
Chairman Mumbai April 19, 2010
I D F C P R O J E C T E Q U I TY C O M P A N Y L I M I T E D
47
AU D I TO RS ’ R E PO RT
To The Members of IDFC Project Equity Company Limited
1. We have audited the attached Balance Sheet of IDFC Project Equity Company Limited (‘the Company’) as at March 31, 2010 and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditor’s Report) Order, 2003 (as amended) (‘Order’) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. 4. Further to our comments in the Annexure referred to above, we report that: (i) 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; (iv) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956. (v) On the basis of the written representations received from the directors, as on March 31, 2010, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2010 from being appointed as a director in terms of Clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956; (vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India; (a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2010; (b) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and (c) in the case of Cash Flow Statement, of the cash flows for the year ended on that date.
FOR S. R. BATLIBOI & CO. Chartered Accountants Firm registration number: 301003E
per SHRAWAN JALAN
(ii) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books; (iii) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;
Partner Membership No.: 102102 Mumbai April 19, 2010
48
I D F C A N N U A L R E P O R T 09 –10
ANNEXURE
Annexure referred to in paragraph 3 of our report of even date
Re: IDFC Project Equity Company Limited (‘the Company’) (i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. (b) Fixed assets have been physically verified by the management during the year and no material discrepancies were identified on such verification. (c) There was no substantial disposal of fixed assets during the year. (c)
TO THE AUDITORS’ REPORT
According to the information and explanations given to us, there are no dues of income-tax, sales-tax, service tax and cess which have not been deposited on account of any dispute.
(x) The Company has been registered for a period of less than five years and hence we are not required to comment on whether or not the accumulated losses at the end of the financial year is fifty per cent or more of its net worth and whether it has incurred cash losses in such financial year and in the immediately preceding financial year. (xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution. The Company has no outstanding dues in respect of banks or debenture holders. (xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. (xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of Clause 4(xiii) of the Order are not applicable to the Company. (xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of Clause 4(xiv) of the Order are not applicable to the Company. (xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions. (xvi) The Company did not have any term loans outstanding during the year. (xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment. (xviii)The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Companies Act, 1956. (xix) The Company did not have any outstanding debentures during the year. (xx) The Company has not raised money in the year by public issue. (xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.
FOR S. R. BATLIBOI & CO. Chartered Accountants Firm registration number: 301003E
per SHRAWAN JALAN
(ii) The Company provides investment management services and does not maintain inventories. Therefore, the provisions of clause 4(ii) of the Order are not applicable to the Company. (iii) (a) As informed, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. (b) As informed, the Company has not taken any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. (iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of fixed assets and for the sale of services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas. (v) According to the information and explanations provided by the management, we are of the opinion that there were no particulars of contracts or arrangements referred to in Section 301 of the Act that need to be entered into the register maintained under Section 301. (vi) The Company has not accepted any deposits from the public. (vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business. (viii) To the best of our knowledge and as explained, the Central Government has not prescribed maintenance of cost records under Clause (d) of sub-Section (1) of Section 209 of the Companies Act, 1956 for the products of the Company. (ix) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, income-tax, service tax, cess and other material statutory dues applicable to it. The provisions relating to employees’ state insurance, investors’ education and protection fund, sales-tax, wealth-tax, customs duty and excise duty are not applicable to the Company. Further, since the Central Government has till date not prescribed the amount of cess payable under Section 441 A of the Companies Act, 1956, we are not in a position to comment upon the regularity or otherwise of the company in depositing the same. (b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, income-tax, service tax, cess and other undisputed material statutory dues applicable to the Company, were outstanding, at the year end, for a period of more than six months from the date they became payable.
Partner Membership No.: 102102 Mumbai April 19, 2010
I D F C P R O J E C T E Q U I TY C O M P A N Y L I M I T E D 49
BALANCE SHEET
RUPEES SCHEDULE
AS AT MARCH 31, 2010
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
SOURCES OF FUNDS
Shareholders’ Funds Share Capital Reserves and Surplus TOTAL 1 2 500,000 123,425,847 123,925,847 3 3,677,171 1,177,816 2,499,355 3,318,835 34,726 4 5 6 343,029,674 112,246,852 455,276,526 Net Current Assets / (Liabilities) Profit and Loss Account TOTAL Notes to the Accounts The Schedules referred to above form an integral part of the Balance Sheet 10 118,107,657 – 123,925,847 326,492,338 21,801,447 348,293,785 (106,833,090) 106,659,173 500,000 391,593,298 181,756,159 573,384,183 Less: Current Liabilities and Provisions Current Liabilities Provisions 1,029,979 356,062 673,917 – 50,301 113,914,406 127,495,988 241,460,695 500,000 – 500,000
APPLICATION OF FUNDS
Fixed Assets Gross Block Less: Accumulated Depreciation/Amortisation Net Block Deferred Tax Asset (Refer Schedule 10 Note 11) Current Assets, Loans and Advances Interest Accrued on term deposits with Banks Cash and Bank Balances Loans and Advances
THIS IS THE BALANCE SHEET REFERRED TO IN OUR REPORT OF EVEN DATE. FOR S. R. BATLIBOI & CO. Chartered Accountants
per SHRAWAN JALAN
FOR AND ON BEHALF OF BOARD OF DIRECTORS OF IDFC PROJECT EQUITY COMPANY LIMITED
VIKRAM LIMAYE
MAHENDRA N. SHAH
Partner Membership No. 102102
Director
Director
SANJAY AJGAONKAR
Mumbai | April 19, 2010
50 I D F C A N N U A L R E P O R T 09 –10
Company Secretary
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
SCHEDULE
APRIL 1, 2009 TO MARCH 31, 2010 605,593,024
APRIL 1, 2008 TO MARCH 31, 2009 436,629,371
INCOME
Investment Management Fees (Service Tax Rs. 64,469,267; Previous Year: 53,952,286) (Tax deducted at Source Rs. 76,670,295; Previous Year: 68,426,737) (Refer Schedule 10 - Note 2(H)) Interest on Fixed Deposits (Tax deducted at Source Rs. 28,926; Previous Year: 83,406) Dividend on Mutual Fund Units Profit on Sale of Mutual Fund Units Foreign Currency Gain (net) (Refer Schedule 10 - Note 2(I)) Miscellaneous Income 9,140,599 – 28,532,594 70,968 643,462,028 5,873,003 121,752 – – 443,079,311 993,351 85,643,191 909,030 458,501,098 356,062 546,402,732 (103,323,421) – 5,099 2,250,000 (105,578,520) (1,080,653) (106,659,173) (2,111.57) 124,843 455,185
EXPENDITURE
Bank Charges Personnel Expenses Establishment Expenses Administrative Expenses Depreciation/ Amortisation TOTAL PROFIT/ (LOSS) BEFORE TAXATION Provision for Taxation (Refer Schedule 10 Notes 2(K) and 11) - Current Tax - Deferred Tax - Fringe Benefit Tax PROFIT/ (LOSS) AFTER TAXATION Profit and Loss Account Balance Brought Forward Profit and Loss Account Balance Carried to Balance Sheet Earnings Per Share (Refer Schedule 10 Notes 2(N) and 10) Basic and Diluted (Face Value Rs.10) Notes to the Accounts The Schedules referred to above form an integral part of the Profit and Loss Account 10 4,601.70 61,181,266 (3,318,835) – 230,085,020 (106,659,173) 123,425,847 7 8 9 3 1,686 187,629,119 4,990,743 162,071,275 821,754 355,514,577 287,947,451
THIS IS THE BALANCE SHEET REFERRED TO IN OUR REPORT OF EVEN DATE. FOR S. R. BATLIBOI & CO. Chartered Accountants
per SHRAWAN JALAN
FOR AND ON BEHALF OF BOARD OF DIRECTORS OF IDFC PROJECT EQUITY COMPANY LIMITED
VIKRAM LIMAYE
MAHENDRA N. SHAH
Partner Membership No. 102102
Director
Director
SANJAY AJGAONKAR
Mumbai | April 19, 2010
Company Secretary
I D F C P R O J E C T E Q U I TY C O M P A N Y L I M I T E D 51
C A S H F L OW ST AT E M E N T
FOR THE PERIOD APRIL 1, 2009 TO MARCH 31, 2010
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010
APRIL 1, 2008 TO MARCH 31, 2009 (103,323,421) 356,062 (1,319,564) (5,873,003) (121,752) (455,185) (110,736,863) (50,301) (39,355,532) 329,043,839 178,901,143 (70,797,686) 108,103,457 (1,029,979) 5,873,003 455,185 (499,900,000) 500,021,752 5,419,961 113,523,418 390,988 113,914,406 MARCH 31, 2009
RUPEES
CASH FLOW FROM OPERATING ACTIVITIES
Net Profit / (Loss) Before Taxation Adjustments for: Depreciation / Amortisation Foreign Currency Gains / Losses on revaluation Dividend on Mutual Fund Units Profit on Sale of Mutual Fund Units Interest on Fixed Deposits Operating Profit / (Loss) Before Working Capital Changes (Increase) / Decrease in Interest Accrued Increase in Loans and Advances Increase in Current Liabilities and Provisions Cash Generated from Operations Direct Taxes Paid (including Fringe Benefit Tax) NET CASH FROM OPERATING ACTIVITIES A 821,754 (27,128,008) (9,140,599) – (124,843) 252,375,755 15,575 (32,942,216) 134,110,749 353,559,863 (82,499,221) 271,060,642 (2,647,192) 9,140,599 124,843 (701,300,000) 701,300,000 B A+B 6,618,250 277,678,892 113,914,406 391,593,298 MARCH 31, 2010
RUPEES
287,947,451
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Fixed Assets Dividend on Mutual Fund Units Interest on Fixed Deposits Purchase of Current Investments Proceeds from Sale of Current Investments NET CASH FROM INVESTING ACTIVITIES NET INCREASE IN CASH AND CASH EQUIVALENTS Cash and Cash Equivalents at the beginning of the Year Cash and Cash Equivalents at the end of the Year NOTE:
Cash and Cash Equivalents include: Cash in Hand Balance with a Scheduled Bank in Current Account Balance with a Scheduled Bank in Deposit Accounts 9,366 1,583,932 390,000,000 391,593,298 10,262 1,904,144 112,000,000 113,914,406
THIS IS THE CASH FLOW STATEMENT REFERRED TO IN OUR REPORT OF EVEN DATE. FOR S. R. BATLIBOI & CO. Chartered Accountants
per SHRAWAN JALAN
FOR AND ON BEHALF OF BOARD OF DIRECTORS OF IDFC PROJECT EQUITY COMPANY LIMITED
VIKRAM LIMAYE
MAHENDRA N. SHAH
Partner Membership No. 102102
Director
Director
SANJAY AJGAONKAR
Mumbai | April 19, 2010
52 I D F C A N N U A L R E P O R T 09 –10
Company Secretary
SCHEDULES
SCHEDULE 1 Share Capital
AUTHORISED: 10,000,000 (Previous year 10,000,000) Equity Shares of Rs.10 each ISSUED, SUBSCRIBED AND PAID-UP: 50,000 (Previous Year 50,000) Equity Shares of Rs.10 each fully paid up [The above Equity Shares are held by Infrastructure Development Finance Company Limited (the “Holding Company”) and its nominees]
ANNEXED TO AND FORMING PART OF THE ACCOUNTS
RUPEES
RUPEES
AS AT MARCH 31, 2010 100,000,000 500,000
AS AT MARCH 31, 2009 100,000,000 500,000
500,000
500,000
RUPEES
SCHEDULE 2 Reserves and Surplus
Profit and Loss Account
RUPEES
AS AT MARCH 31, 2010 123,425,847 123,425,847
AS AT MARCH 31, 2009 – –
SCHEDULE 3 Fixed Assets
DESCRIPTION OF ASSET April 1, 2009 GROSS BLOCK ACCUMLATED DEPRECIATION/ AMORTISATION April 1, 2009 NET BLOCK
RUPEES
March 31,
March 31,
March 31,
March 31,
Additions
Additions
Deletions
Deletions
2010
2010
2010
TANGIBLE Computer Hardware Furniture & Fixtures Office Equipments Vehicles INTANGIBLE Computer Software Total Previous Year 29,642 1,029,979 – 53,411 2,647,192 1,029,979 – – – 83,053 3,677,171 1,029,979 8,228 356,062 – 19,927 821,754 356,062 – – – 28,155 1,177,816 356,062 54,898 2,499,355 673,917 21,414 673,917 – 598,882 74,187 327,268 – 509,853 137,162 406,195 1,540,571 – – – – 1,108,735 211,349 733,463 1,540,571 227,278 15,232 105,324 – 244,496 27,540 210,708 319,083 – – – – 471,774 42,772 316,032 319,083 636,961 168,577 417,431 1,221,488 371,604 58,955 221,944 –
SCHEDULE 4 Cash and Bank Balances
Cash in hand Balance with a Scheduled Bank In Current Account In Term Deposit Accounts
RUPEES
RUPEES
AS AT MARCH 31, 2010 9,366 1,583,932 390,000,000 391,593,298
AS AT MARCH 31, 2009 10,262 1,904,144 112,000,000 113,914,406
SCHEDULE 5 Loans and Advances
Advance Payment of Tax and Tax Deducted at Source (net of provisions) Service Tax Input Credit (net) Security Deposits Advances recoverable in cash or in kind or for value to be received Prepaid Expenses Others
RUPEES
RUPEES
AS AT MARCH 31, 2010 89,865,641 973,504 77,511,881 10,767,479 2,637,654 181,756,159
AS AT MARCH 31, 2009 68,547,686 9,666,302 27,500,000 15,562,222 6,219,778 127,495,988
53
I D F C P R O J E C T E Q U I TY C O M P A N Y L I M I T E D
2009
As at
As at
As at
As at
As at
As at
SCHEDULE 6 Current Liabilities
Sundry Creditors for Expenses to Micro, Small and Medium Enterprises (Refer Schedule 10 - Note 17) to Others
RUPEES
RUPEES
AS AT MARCH 31, 2010 – 233,200,245 108,794,774 1,034,655 343,029,674 Provisions - Employee Benefits (Refer Schedule 10 - Note 6) 112,246,852 455,276,526
AS AT MARCH 31, 2009 – 225,250,701 100,784,574 457,063 326,492,338 21,801,447 348,293,785
Investment Management Fees Received in Advance Statutory Dues
SCHEDULE 7 Personnel Expenses (Refer Schedule 10 - Note 4)
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Salaries and Bonus Contribution to Provident Fund and Other Funds Staff Training and Welfare 175,955,517 6,281,579 5,392,023 187,629,119
APRIL 1, 2008 TO MARCH 31, 2009 78,625,267 6,108,990 908,934 85,643,191
SCHEDULE 8 Establishment Expenses
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Rent Rates and Taxes Electricity Repairs and Maintenance Buildings Equipments Others 50,288 5,250 199,480 22,342 4,990,743 1,267,893 1,918,487 1,527,003
APRIL 1, 2008 TO MARCH 31, 2009 546,500 62,862 – 288,707 – – 10,961 909,030
Insurance
SCHEDULE 9 Administrative Expenses
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Travelling and Conveyance Printing and Stationery Postage, Telephone, Fax Conference and Sponsorships Professional Fees Placement Fees (Refer Schedule 10 - Note 5) Service Fees Foreign Currency Loss (Refer Schedule 10 - Note 2(I)) Auditors Remuneration Statutory Audit Fees Tax Audit Fees Out of Pocket Expenses 400,000 100,000 9,537 5,162,249 162,071,275 13,366,893 168,791 1,158,423 6,258,012 4,162,785 48,570,000 82,714,585 –
APRIL 1, 2008 TO MARCH 31, 2009 6,984,159 9,787 1,533,044 5,690,344 8,848,576 358,876,350 66,014,110 5,533,580 400,000 100,000 6,055 4,505,093 458,501,098
Miscellaneous Expenses
54
I D F C A N N U A L R E P O R T 09 –10
SCHEDULE – 10 Notes to the Accounts
1 Nature of Operations
IDFC Project Equity Company Limited (“the Company”) was incorporated on February 6, 2007. The Company has entered into an Investment Management Agreement with IDFC Trustee Company Limited on March 11, 2008 to act as the Investment Manager of the India Infrastructure Fund (“Fund”) – a domestic venture capital fund registered under the Securities and Exchange Board of India (Venture Capital Funds) Regulations, 1996. In accordance with the agreement, the Company is entitled to receive an investment management fee for managing the Fund beginning from the Initial Closing of the Fund.
2 Statement of Significant Accounting Policies
(A) BASIS OF PREPARATION
The financial statements have been prepared to comply in all material respects with the notified accounting standards by Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956 (‘the Act’). The financial statements have been prepared under the historical cost convention on an accrual basis. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.
(B) USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting year end. Although these estimates are based upon management’s best knowledge of current events and actions, actual results could differ from these estimates.
(C) CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash in hand and at bank and short-term investments with an original maturity of three months or less.
(D) FIXED ASSETS
Fixed assets are stated at cost of acquisition less accumulated depreciation. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use.
(E) INTANGIBLE ASSETS
Intangible assets comprising of software are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated amortisation. Any expense on such software for support and maintenance payable annually is charged to the Profit and Loss Account. Website development cost is charged to the Profit and Loss Account in the year in which such cost is incurred.
(F) DEPRECIATION AND AMORTISATION
Tangible Assets – Depreciation on fixed assets is provided on written down value method, at the rates prescribed by Schedule XIV of the Companies Act, 1956. Mobile handsets are depreciated over a period of two years on straight line method. Depreciation on additions during the year is provided on pro-rata basis. Assets costing less than Rs. 5,000 are depreciated fully in the year of capitalization. Intangible Assets – Computer software is amortised over a period of three years on straight line method.
(G) IMPAIRMENT
(i) The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset’s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital. (ii) After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
(H) REVENUE RECOGNITION
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Investment Management Fees for managing the Fund is accrued from the date of initial closing as stipulated in the Investment Management Agreement dated March 11, 2008 entered into by the Company with IDFC Trustee Company Limited. Interest is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable. Dividend is accounted when the right to receive payment is established by the balance sheet date.
(I) FOREIGN CURRENCY TRANSACTIONS
(i) Initial Recognition Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.
I D F C P R O J E C T E Q U I TY C O M P A N Y L I M I T E D
55
(ii) Conversion Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined. (iii) Exchange Differences Exchange differences arising on the settlement of monetary items or on reporting monetary items of company at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as expenses in the year in which they arise.
(J) PROVISIONS
A provision is recognised when an enterprise has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
(K) INCOME TAX
Tax expense comprises of current, deferred and fringe benefit tax. Current income tax and fringe benefit tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act of 1961. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the taxes on income levied by same governing taxation laws. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits. At each balance sheet date, the Company re-assesses unrecognised deferred tax assets. It recognises unrecognised deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realised. The carrying amount of deferred tax assets are reviewed at each balance sheet date. The Company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.
(L) OPERATING LEASES
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased term, are classified as operating leases. Operating lease payments are recognized as an expense in the Profit and Loss account on a straight-line basis over the lease term.
(M) INVESTMENTS
Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognise a decline other than temporary in the value of the investments.
(N) EARNINGS PER SHARE
Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, the net profit or loss for the year 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.
(O) EMPLOYEE BENEFITS
i.
Defined Contribution Plans The Company’s contribution paid/payable during the year towards Provident Fund and Superannuation Fund is charged in the Profit and Loss Account every year.
ii.
Defined Benefit Obligation Gratuity liability is a defined benefit obligation and is provided for on the basis of actuarial valuation on projected unit credit method made at the end of each financial year. Actuarial gains and losses are recognized in the Profit and Loss Account.
56
I D F C A N N U A L R E P O R T 09 –10
iii. Other long-term employee benefits Long-term compensated absences are provided for on the basis of actuarial valuation on projected unit credit method made at the end of each financial year. Actuarial gains and losses are recognized in the Profit and Loss Account. iv. Short-term employee benefits Short-term compensated absences are paid to the employees at the end of every year along with the monthly salary.
3 Investment Management Fees
On June 9, 2008, the Fund achieved its Initial Closure and as per the Investment Management Agreement (“the Agreement”) dated March 11, 2008, the Company has started accruing and receiving investment management fees from that date. The Fund has achieved Final Closure on June 8, 2009 and as per the Agreement, the Investment Management Fees are charged on aggregate commitments received as at the Final Closure during the commitment period of the Fund.
4 Infrastructure Development Finance Company Limited, the Holding Company has transferred the employees to the payroll of the Company effective April 1, 2009 who were deputed to the Company in the previous year. 5 Placement Fees
Placement Fees represents fees in respect of Capital Commitments arranged by Citigroup Global Markets Limited, UK in the Fund pursuant to the Placement Agreement dated February 20, 2008 entered into with the Company. During the year, an amount of Rs. 48.6 million (USD 1.0 million) has been accrued based on the additional Capital Commitments received during the year ended March 31, 2010. This is in addition to placement fees accrued during the previous year of Rs. 358.9 million (USD 7.3 million). Of the above, the Company has paid Rs. 23.5 million (USD 0.5 million) during the current year.
6 Employee Benefits
In accordance with Accounting Standard 15 (Revised) on ‘Employee Benefits’ as notified by the Companies (Accounting Standards) Rules, 2006, the following disclosures have been made: i. The Company has recognised the following amounts in the Profit and Loss Account towards contribution to defined contribution plans which are included under Contribution to Provident and Other Funds:
APRIL 1, 2009 TO MARCH 31, 2010
RUPEES
APRIL 1, 2008 TO MARCH 31, 2009
RUPEES
Provident Fund Superannuation Fund
2,800,569 3,481,010 6,281,579
2,715,143 3,393,847 6,108,990
ii.
The details of post – retirement benefit plans for gratuity are given below which is certified by the actuary and relied upon by the auditors:
APRIL 1, 2009 TO MARCH 31, 2010
NON-FUNDED (RUPEES)
CHANGE IN THE DEFINED BENEFIT OBLIGATIONS: Liability at the beginning of the year Unfunded Obligation on transfer of employees from holding company Current Service Cost Interest Cost Benefits Paid Actuarial Loss / (Gain) Liability at the end of the year FAIR VALUE OF PLAN ASSETS: Fair Value of Plan Assets at the beginning of the year Expected Return on Plan Assets Contributions Benefits paid Actuarial Loss on Plan Assets Fair Value of Plan Assets at the end of the year Total Actuarial Loss to be recognised – – – – – – – – 5,426,826 867,115 275,706 (635,396) 447,077 6,381,328
I D F C P R O J E C T E Q U I TY C O M P A N Y L I M I T E D
57
APRIL 1, 2009 TO MARCH 31, 2010
NON-FUNDED (RUPEES)
ACTUAL RETURN ON PLAN ASSETS: Expected Return on Plan Assets Actuarial Loss on Plan Assets Actual Return on Plan Assets AMOUNT RECOGNISED IN THE BALANCE SHEET: Liability at the end of the year Fair Value of Plan Assets at the end of the year Amount recognised in the Balance Sheet under “Provision for Employee Benefits” EXPENSE RECOGNISED IN THE PROFIT AND LOSS ACCOUNT: Unfunded Obligation on transfer of employees from holding company Current Service Cost Interest Cost Expected Return on Plan Assets Net Actuarial Loss to be recognised Recovery of the Past service cost from the holding company Expense recognised in the Profit and Loss Account under staff expenses RECONCILIATION OF THE LIABILITY RECOGNISED IN THE BALANCE SHEET: Opening Net Liability Expense recognised Contribution by the Group Amount recognised in the Balance Sheet under “Provision for Employee Benefits” Estimated Contribution EXPERIENCE ADJUSTMENTS: (*) Defined Benefit Obligation Plan Assets Deficit Experience Adjustments on Plan Liabilities Experience Adjustments on Plan Assets 6,381,328 – (6,381,328) (177,117) –
%
– – – 6,381,328 – 6,381,328 5,426,826 867,115 275,706 – 447,077 (1,885,505) 5,131,219 – 5,131,219 – 6,381,328 –
INVESTMENT PATTERN OF PLAN ASSETS: Insurer Managed Fund The Company’s Gratuity liability is unfunded. PRINCIPAL ASSUMPTIONS: Discount Rate (p.a.) Expected Rate of Return on Assets (p.a.) Salary Escalation (p.a.) 8.10% – 8.00% – –
(*) The Company was incorporated on February 6, 2007 and did not have any employees on its payroll until April 1, 2009. Consequently, no disclosure has been made for previous 4 years in terms of Accounting Standard 15 on ‘Employee Benefits’. The estimate of future salary increase, considered in the actuarial valuation takes account of inflation, seniority, promotion and other relevant factors.
58
I D F C A N N U A L R E P O R T 09 –10
7 Purchase and Redemption of Current Investments
The Company has purchased and redeemed the following investments during the year.
APRIL 1, 2009 TO MARCH 31, 2010 PURCHASE UNITS IDFC MUTUAL FUND IDFC Cash Fund Super Institutional Plan C – Daily Dividend Option IDFC Money Manager Fund Investment Plan Institutional Plan B – Daily Dividend Option IDFC Money Manager Fund Investment Plan Super Institutional Plan C – Daily Dividend Option IDFC Money Manager Fund Treasury Plan Institutional Plan B – Daily Dividend Option IDFC Money Manager Fund Treasury Plan Super Institutional Plan C – Daily Dividend Option IDFC Fixed Maturity Plan - Quarterly Series 32 – Dividend IDFC Fixed Maturity Plan – Monthly Series 3 – Dividend IDFC Fixed Maturity Plan – Monthly Series 5 – Dividend IDFC Fixed Maturity Plan - Quarterly Series 43 – Dividend Total – – – – 111,352,343.836 – – – – 111,352,343.836 1,150,000.000 1,007,240.000 1,014,905.096 675,285.600 109,279,707.011 1,150,000.000 1,007,240.000 1,014,905.096 675,285.600 109,279,707.011 70,658,140.120 70,658,140.120 35,442,919.295 35,442,919.295 – – 1,149,807.991 1,149,807.991 10,209,910.011 10,209,910.011 – – 30,484,293.705 – 30,484,293.705 – 48,908,355.454 19,931,193.575 48,908,355.454 19,931,193.575 REDEMPTION UNITS APRIL 1, 2008 TO MARCH 31, 2009 PURCHASE UNITS REDEMPTION UNITS
8 Segment Information
The Company is an asset management company engaged in managing a domestic venture capital fund registered with the Securities and Exchange Board of India. During the year, the Company was engaged in only one business segment and no geographical segments. As such, there are no separate reportable segments as per Accounting Standard 17 on Segment Reporting as provided under the Companies (Accounting Standards) Rules, 2006.
9 Related Party Disclosures under Accounting Standard 18
(a) Relationships:
HOLDING COMPANY: FELLOW SUBSIDIARIES:
Infrastructure Development Finance Company Limited IDFC Private Equity Company Limited IDFC Capital Singapore Pte. Limited M.K. Sinha (President and CEO)
KEY MANAGERIAL PERSONNEL:
(b) The transactions / balances outstanding with related parties in the ordinary course of business during the year are as follows:
NAME OF RELATED PARTY AND NATURE OF RELATIONSHIP (A) HOLDING COMPANY Infrastructure Development Finance Company Limited Guarantee commission** Reimbursement of Expenses ** Recovery of Expenses ** Rent paid ** Repayment of Security Deposit Advances received and repaid Purchase of Fixed Assets Equity share capital outstanding Amount payable (B) FELLOW SUBSIDIARY IDFC Private Equity Company Limited IDFC Capital Singapore Pte Limited (C) KEY MANAGERIAL PERSONNEL M.K. Sinha Remuneration paid # 43,451,565 – Reimbursement of Expenses ** Reimbursement of Expenses ** 155,426 369,239 – 74,530 1,770,836 10,004,222 2,079,712 407,399 50,000,000 – 489,261 500,000 – – 89,248,141 – – – 11,150,000 822,045 500,000 236,245 PARTICULARS APRIL 1, 2009 TO MARCH 31, 2010
RUPEES
APRIL 1, 2008 TO MARCH 31, 2009
RUPEES
** - Includes Service tax # - Excludes gratuity and insurance premium
I D F C P R O J E C T E Q U I TY C O M P A N Y L I M I T E D 59
10 Earnings Per Share
Basic profit / (loss) per share is calculated by dividing the net profit / (loss) for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.
PARTICULARS Profit / (Loss) After Tax (Rs.) Weighted average number of equity shares outstanding (Nos.) Basic and Diluted Earnings / (Loss) Per Share (Rs.) Face Value Per Share (Rs.) APRIL 1, 2009 TO MARCH 31, 2010 230,085,020 50,000 4,601.70 10 APRIL 1, 2008 TO MARCH 31, 2009 (105,578,520) 50,000 (2,111.57) 10
11 Deferred Tax
In compliance with the Accounting Standard 22 on “Accounting for Taxes on Income” as notified by the Companies (Accounting Standards) Rules, 2006, the Company has credited an amount of Rs. 3,318,835 to the Profit and Loss Account towards Deferred Tax Asset (Previous Year: expense of Rs. 5,099 towards Deferred Tax Liability). The major components of the deferred tax assets and liabilities arising on account of timing differences are:
AS AT MARCH 31, 2010
RUPEES
AS AT MARCH 31, 2009
RUPEES
Preliminary Expenses Provision for Employee Benefits Depreciation Gross Deferred Tax Asset Depreciation Gross Deferred Tax Liability Net Deferred Tax Asset
1,661 3,304,096 13,078 3,318,835 – – 3,318,835
3,399 20,292 – 23,691 (23,691) (23,691) –
12 Leases
Residential premise for staff and office premises are obtained on operating lease. There are no non-cancellable operating lease agreements entered into by the Company.
APRIL 1, 2009 TO MARCH 31, 2010
RUPEES
APRIL 1, 2008 TO MARCH 31, 2009
RUPEES
Lease payments recognized in Profit and Loss Account
1,267,893
5,46,500
13 Expenditure in Foreign Currency (on accrual basis)
APRIL 1, 2009 TO MARCH 31, 2010
RUPEES
APRIL 1, 2008 TO MARCH 31, 2009
RUPEES
Travelling Placement Fees Service Fees Sponsorships and Conference Expenses Staff Training and Welfare Others Total
1,653,767 48,570,000 28,506,537 4,030,368 3,104,060 274,862 86,139,594
596,636 358,876,350 22,736,811 – – 978,401 383,188,198
14 There are no contingent liabilities as at March 31, 2010 (Previous Year: Nil). 15 There are no contracts remaining to be executed on capital account and not provided for as at March 31, 2010 (Previous Year: Nil). 16 Unhedged foreign currency exposure as at March 31, 2010: Rs. 220,647,229 i.e. USD 4,909,818.19 @ Closing Rate of 1 USD = Rs. 44.94 (Previous Year: 224,105,891 i.e. USD 4,398,545.46 @ Closing Rate of 1 USD = Rs. 50.95).
60
I D F C A N N U A L R E P O R T 09 –10
17 The Company has initiated the process of identification of suppliers registered under “The Micro, Small and Medium, Enterprises Development (‘MSMED’) Act, 2006” by obtaining confirmations from suppliers. Based on the intimation received by the Company, three suppliers have confirmed to be registered under MSMED Act, 2006. The Company has no amounts due to any Micro, Small and Medium Enterprises as defined under Section 7(1) (a)/7 (1) (b) / 7 (1) of MSMED as on March 31, 2010. 18 Previous year’s figures have been regrouped wherever necessary in order to conform to current year’s classification.
FOR S. R. BATLIBOI & CO.
CHART E R E D ACCOU N TA N TS per SHRAWAN JALAN
FOR AND ON BEHALF OF BOARD OF DIRECTORS OF IDFC PROJECT EQUITY COMPANY LIMITED
VIKRAM LIMAYE MAHENDRA N. SHAH
Partner Membership No. 102102
Director
Director
SANJAY AJGAONKAR
Mumbai | April 19, 2010
Company Secretary
I D F C P R O J E C T E Q U I TY C O M P A N Y L I M I T E D 61
B A L A N C E S H E E T A B ST R A CT
AND COMPANY’S GENERAL BUSINESS PROFILE
I.
REGISTRATION DETAILS Registration No. State Code Balance Sheet Date U 1 3 5 1 1 0 3 2 0 1 0 1 1 0 3 M H 2 0 0 7 P L C 1 6 7 6 1 1
II.
CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000) Public Issue N I L Right Issue N I L
Bonus Issue N III. I L POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000) Total Liabilities 5 SOURCES OF FUNDS Paid-up Capital 5 0 0 7 9 2 0 2 5 7 9
Stock Options N I L
Total Assets 2 0 2
Secured Loans N I L
Reserves and Surplus 1 APPLICATION OF FUNDS Net Fixed Assets 2 4 9 9 2 3 4 2 6
UnSecured Loans N I L
Investments N I L
Net Currect Assets 1 1 8 1 0 8
Miscellaneous Expenditure N I L
Deferred Tax Asset 3 IV. 3 1 9 Total Expenditure 3 5 5 5 1 5
PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000) Turnover/Income 6 4 3 4 6 2
Profit Before Tax 2 8 7 9 4 7 2 3
Profit After Tax 0 0 8 5
Earnings per Share (in Rs.) 4 V. 6 0 1 . 7 0
Dividend % N I L
GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS) Item Code No. (ITC Code) Product Description N A I S L S E T M A N A G E M E N T
62
I D F C A N N U A L R E P O R T 09 –10
IDFC finance
limited
?
B O A R D O F D I R E CTO R S
? ?
Mr. A. K. T. Chari Chairman Mr. Sadashiv Rao Mr. Mahendra N. Shah
A U D I TO R S
?
Deloitte Haskins & Sells Chartered Accountants
P R I N C I PA L B A N K E R S
?
HDFC Bank Limited
R E G I ST E R E D O F F I C E
The Capital Court, 2nd Floor, Olof Palme Marg, Munirka, New Delhi 110 067. TEL +91 11 46006100 FAX +91 11 26713359
IDFC FINANCE LIMITED
63
D I R E CT O R S ’ R E P O R T
TO THE MEMBERS
Your Directors have pleasure in presenting the Tenth Annual Report together with the audited accounts for the year ended March 31, 2010. their willingness to be appointed. You are requested to consider their reappointment.
FOREIGN EXCHANGE EARNINGS AND EXPENDITURE
There was no income or expenditure in foreign currency during the period under review.
FINANCIAL HIGHLIGHTS
Total Income of the Company during the year was Rs. 7,585,014/-. The Income includes Profit on Sale of Current Investments of Rs. 1,223,148/- and Dividend on Current Investment of Rs.6,331,722/-. The Company’s operations during the year have resulted in net gain of Rs. 7,112,908/- as against Rs. 15,379,893/- during the previous year.
PERSONNEL AND OTHER MATTERS
Since your Company does not have any employees, the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are not applicable and hence not given. Since the Company does not own any manufacturing facility, the disclosure of information on other matters required to be disclosed in terms of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1998, are not applicable and hence not given.
DIVIDEND
The Directors do not recommend any dividend for the year ended March 31, 2010.
PUBLIC DEPOSITS
During the period under review, your Company has not accepted public deposits under the provisions of Section 58-A of the Companies Act, 1956.
DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors confirm that: the applicable accounting standards have been followed in preparation of annual accounts and there are no material departures;
¬
DIRECTORS
In terms of the provisions of the Articles of Association of the Company, Mr. Sadashiv Rao would retire at the ensuing Annual General Meeting and being eligible, offer himself for re-appointment.
AUDIT COMMITTEE
The Audit Committee consists of three Directors Mr. A. K. T. Chari, Mr. Sadashiv Rao and Mr. Mahendra N. Shah. There were four meetings of the Committee held during the year. The functions of the Committee include reviewing the quarterly and annual financial statements, internal control systems and significant accounting policies of the Company and discussing the audit findings and recommendations of the internal and statutory auditors of the Company.
they have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2010 and the profit of the Company for the year ended on that date; ¬ they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and detecting fraud and other irregularities; and ¬ they have prepared the annual accounts on a going concern basis.
¬
ACKNOWLEDGEMENTS
The Directors also express their gratitude for the unstinted support and guidance received from Infrastructure Development Finance Company Limited and other group companies.
AUDITORS
M/s. Deloitte Haskins & Sells, Ahmedabad will retire as the statutory auditors of the Company at the ensuing Annual General Meeting. The Board of Directors, at its meeting held on April 22, 2010, has proposed the reappointment of M/s. Deloitte Haskins & Sells, Ahmedabad as statutory auditors to audit the financials of the Company for the year ending March 31, 2011. M/s. Deloitte Haskins & Sells, Ahmedabad have confirmed that their reappointment, if made, would be in conformity with the provisions of Sections 224 and 226 of the Companies Act, 1956 as also indicated
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
A. K. T. CHARI
Chairman Mumbai April 22 , 2010
64
I D F C A N N U A L R E P O R T 09 –10
AU D I TO RS ’ R E PO RT
TO THE MEMBERS OF IDFC FINANCE LIMITED
1. We have audited the attached Balance Sheet of IDFC FINANCE LIMITED (“the Company”) as at March 31, 2010, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditor’s Report) Order, 2003 (CARO) issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. 4. Further to our comments in the Annexure referred to in paragraph 3 above, we report as follows: (a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; (b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books; (c) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account;
FOR DELOITTE HASKINS & SELLS Chartered Accountants (Registration No. 117366W)
Z. F. BILLIMORIA
(d) in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956; (e) in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2010;
(ii) in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date and (iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date. 5. On the basis of the written representations received from the Directors as on March 31, 2010 taken on record by the Board of Directors, none of the Directors is disqualified as on March 31, 2010 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956.
Partner Membership No. 42791 Mumbai April 22, 2010
IDFC FINANCE LIMITED
65
ANNEXURE
(Referred to in paragraph 3 of our report of even date) (i) Having regard to the nature of the Company’s business/ activities/result/transactions etc., clauses (i), (ii), (vi), (viii), (x), (xi), (xii), (xiii), (xv), (xvi), (xvii), (xviii), (xix) and (xx) of CARO are not applicable.
TO THE AUDITORS’ REPORT
(b) There were no undisputed amounts payable in respect of Income-tax and other material statutory dues in arrears as at March 31, 2010 for a period of more than six months from the date they became payable. (vii) Based on our examination of the records and evaluation of the related internal controls, the Company has maintained proper records of the transactions and contracts in respect of its dealing in shares securities, debentures and other investments and timely entries have been made therein. The aforesaid securities have been held by the Company in its own name. (viii) To the best of our knowledge and according to the information and explanations given to us, no fraud by and on the Company has been noticed or reported during the year.
(ii) The Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956. (iii) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to the sale of services. During the course of our audit, we have not observed any major weakness in such internal control system. (iv) To the best of our knowledge and belief and according to information and explanation given to us, there were no contracts or arrangements required to be entered in the register maintained in pursuance of Section 301 of the Companies Act, 1956. (v) The Company does not have an internal audit system. (vi) According to the information and explanations given to us in respect of statutory dues: (a) The Company has been regular in depositing undisputed dues, including Income-tax and other material statutory dues applicable to it with the appropriate authorities.
FOR DELOITTE HASKINS & SELLS Chartered Accountants (Registration No. 117366W)
Z. F. BILLIMORIA
Partner Membership No. 42791 Mumbai April 22, 2010
66
I D F C A N N U A L R E P O R T 09 –10
BALANCE SHEET
RUPEES SCHEDULE RUPEES
AS AT MARCH 31, 2010
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
SOURCES OF FUNDS:
Shareholders’ Funds: Share Capital Reserves and Surplus 1 2 210,002,000 65,012,138 275,014,138 210,002,000 57,899,230 267,901,230 267,256,198 5,818 771,574 777,392 132,360 453,070 275,014,138 Notes to the Accounts Schedules 1 to 8 form an integral part of the Accounts 8 645,032 267,901,230
APPLICATION OF FUNDS :
Investments Curent Assets, Loans and Advances: Cash and Bank Balances Loans and Advances Less: Current Liabilities and Provisions: Liabilities Net Current Assets 5 216,787 3 4 175,832 494,025 669,857 274,561,068
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants
Z. F. B I L L I M O R I A A. K. T. CHARI SADASHIV S. RAO
FOR AND ON BEHALF OF THE BOARD
Partner Mumbai | April 22, 2010
Chairman
Director
IDFC FINANCE LIMITED
67
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
SCHEDULE
APRIL 1, 2009 TO MARCH 31, 2010 6 7,585,014 7,585,014
APRIL 1, 2008 TO MARCH 31, 2009 17,693,059 17,693,059 292,166 292,166 17,400,893 2,021,000 – 15,379,893 34,015,470 49,395,363 3,075,979 46,319,384 49,395,363 0.73
INCOME
Operating and Other Income
EXPENSES
Other Expenses PROFIT BEFORE TAXATION Less: Provision for Taxation Current Tax Excess provision for earlier years written back PROFIT AFTER TAXATION Add: Balance as per last Balance Sheet AVAILABLE FOR APPROPRIATION Appropriations: Special Reserve u/s 45-IC of RBI Act, 1934 Balance Carried Forward Basic and Diluted Earnings Per Share (Face Value Rs. 10) (See Schedule 8 Note 5) Notes to the Accounts Schedules 1 to 8 form an integral part of the Accounts 8 1,422,581 52,009,711 53,432,292 0.34 285,000 (143,868) 7,112,908 46,319,384 53,432,292 7 330,974 330,974 7,254,040
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants
Z. F. B I L L I M O R I A A. K. T. CHARI SADASHIV S. RAO
FOR AND ON BEHALF OF THE BOARD
Partner Mumbai | April 22, 2010
68 I D F C A N N U A L R E P O R T 09 –10
Chairman
Director
C A S H F L OW ST AT E M E N T
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010
APRIL 1, 2008 TO MARCH 31, 2009 17,400,893 (5,945,270) 11,455,623 (2,094,394) (3,139,277) 6,221,952 (1,862,890,114) 1,856,517,870 (6,372,244) – (150,292) 156,110 5,818 (150,292)
A.
CASH FLOW FROM OPERATING ACTIVITIES
Profit Before Taxation Adjustments for : Profit on Sale of Investments Operating Profit before Working Capital Changes Changes in : Current Liabilities Direct Taxes paid (Net of refund) NET CASH FROM OPERATING ACTIVITIES 84,427 136,417 6,251,736 (486,392,284) 480,310,563 (6,081,721) – 170,015 5,818 175,832 170,014 (1,223,148) 6,030,892 7,254,040
B.
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Investments Sale Proceeds of Investments NET CASH USED IN INVESTING ACTIVITIES
C.
CASH FLOW FROM FINANCING ACTIVITIES
NET CASH USED IN FINANCING ACTIVITIES Net increase/(decrease) in cash and cash equivalents (A+B+C) Cash and cash equivalents as at the beginning of the year (as per Schedule 4) Cash and cash equivalents as at the end of the year (as per Schedule 4)
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants
Z. F. B I L L I M O R I A A. K. T. CHARI SADASHIV S. RAO
FOR AND ON BEHALF OF THE BOARD
Partner Mumbai | April 22, 2010
Chairman
Director
IDFC FINANCE LIMITED
69
SCHEDULES
SCHEDULE 1 Shareholders’ Funds SHARE CAPITAL
Authorised : 40,000,000 Equity Shares of Rs. 10 each Issued : 27,000,400 Equity Shares of Rs. 10 each Subscribed and Paid-up : 21,000,200 Equity Shares of Rs. 10 each (All the above shares are held by Infrastructure Development Finance Company Limited, the holding company and its nominees)
ANNEXED TO AND FORMING PART OF THE ACCOUNTS
RUPEES
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
400,000,000 270,004,000 210,002,000
400,000,000 270,004,000 210,002,000
SCHEDULE 2 Reserves and Surplus
SPECIAL RESERVE U/S 45-IC OF RBI ACT, 1934 Opening Balance Add: Transfer from Profit and Loss Account PROFIT AND LOSS ACCOUNT
RUPEES
RUPEES
RUPEES
AS AT MARCH 31, 2010 11,579,846 1,422,581 13,002,427 52,009,711 65,012,138
AS AT MARCH 31, 2009 8,503,867 3,075,979 11,579,846 46,319,384 57,899,230
SCHEDULE 3 Investments
I. LONG TERM (NON-TRADE) NO. OF SHARES EQUITY SHARES (FULLY PAID) (UNQUOTED) SUBSIDIARY COMPANY IDFC Projects Limited (upto February 03, 2010) II. CURRENT (TRADE) MUTUAL FUNDS (UNQUOTED) ICICI Prudential Institutional Liquid Plan Super Institutional - Growth IDFC Money Manager Fund - Treasury Plan Super Institutional Plan C - Growth IDFC Fixed Maturity Plan Thirteen Month Series 5 - Growth GRAND TOTAL (I+II) 12,000,000.000 10 5,805,846.782 10 6,271.074 100 NO. OF UNITS FACE VALUE (RUPEES) 9,049,900 10 FACE VALUE (RUPEES)
RUPEES
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
90,499,000
90,499,000
812,744 63,249,324 120,000,000 184,062,068 274,561,068
812,744 175,944,454 – 176,757,198 267,256,198
70
I D F C A N N U A L R E P O R T 09 –10
SCHEDULE 4 Current Assets, Loans and Advances
A. CURRENT ASSETS Cash and Bank Balances with Scheduled Bank in Current Account B. LOANS AND ADVANCES Unsecured, considered good Advance Payment of Income Tax (Net of Provisions)
RUPEES
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
175,832 175,832
5,818 5,818
494,025 494,025 669,857
771,574 771,574 777,392
SCHEDULE 5 Current Liabilities and Provisions
A. LIABILITIES Sundry Creditors (Other than Micro, Small and Medium Enterprises) Other Liabilities
RUPEES
RUPEES
AS AT MARCH 31, 2010 196,933 19,854 216,787
AS AT MARCH 31, 2009 117,364 14,996 132,360
SCHEDULE 6 Operating and other Income
RUPEES
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 OPERATING INCOME Profit on Sale of Current Investments Dividend on Current Investments OTHER INCOME Interest on Income-Tax Refund 30,144 7,585,014 1,223,148 6,331,722 7,554,870
APRIL 1, 2008 TO MARCH 31, 2009 5,945,270 11,747,789 17,693,059 – 17,693,059
SCHEDULE 7 Other Expenses
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Legal and Professional Fees Auditors’ Remuneration (See Schedule 8 Note 2) Rates and Taxes Interest on delayed payment of Tax deducted at source Miscellaneous Expenses 20,133 309,296 1,400 145 – 330,974
APRIL 1, 2008 TO MARCH 31, 2009 30,394 251,462 – – 10,310 292,166
IDFC FINANCE LIMITED
71
SCHEDULE 8 Notes Forming Part of the Accounts
1 Significant Accounting Policies
A. Basis of Accounting
The Company adopts the accrual concept in the preparation of accounts. The preparation of financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.
B. Revenue Recognition
Interest Income is accounted for on accrual basis. Dividend income is recognised when the right to receive is established.
C. Investments
The Company is regulated as a Non-Banking Financial Company (NBFC) by the Reserve Bank of India (RBI). Accordingly, Investments are classified under two categories i.e. Current and Long Term and are valued in accordance with the RBI guidelines and Accounting Standard 13 on ‘Accounting for Investments’ as notified by the Companies (Accounting Standards) Rules, 2006.
¬ ¬
‘Long Term Investments’ are carried at acquisition cost. A provision is made for diminution other than temporary on an individual basis. ‘Current Investments’ are carried at the lower of cost or fair value on an individual basis.
D. Income Tax
The accounting treatment for income-tax in respect of the Company’s income is based on the Accounting Standard 22 on ‘Accounting for Taxes on Income’ as notified by the Companies (Accounting Standards) Rules, 2006. The provision made for income-tax in the accounts comprises both, the current tax and the deferred tax. The deferred tax assets and liabilities for the year arising on account of timing differences are recognised in the Profit and Loss Account and the cumulative effect thereof is reflected in the Balance Sheet. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the Company has unabsorbed depreciation or carry forward tax losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that the same can be realised against future taxable profits.
2 Auditors’ Remuneration :
PARTICULARS Audit Fees Tax Audit Fees Other Matters Out of pocket expenses Service Tax Total CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
150,000 30,000 100,000 456 28,840 309,296
100,000 20,000 106,000 – 25,462 251,462
3 The Company is engaged in investing activities in India and there are no separate reportable segments as per Accounting Standard 17 on ‘Segment Reporting’ as notified by the Companies (Accounting Standards) Rules, 2006. 4 As per the Accounting Standard 18 on ‘Related Party Disclosures’ as notified by the Companies (Accounting Standards) Rules, 2006, the related parties of the Company are as follows:
(a) Relationships:
I. II. HOLDING COMPANY : Infrastructure Development Finance Company Limited SUBSIDIARY: IDFC Projects Limited (upto February 03, 2010)
72
I D F C A N N U A L R E P O R T 09 –10
(b) The nature and volume of transactions carried out with the above related parties in the ordinary course of business are as follows:
NAME OF THE RELATED PARTY IDFC Projects Limited PARTICULARS Subscription towards Equity Share Capital CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
Nil
90,000,000
5 In accordance with the Accounting Standard 20 on ‘Earnings Per Share’ as notified by the Companies (Accounting Standards) Rules, 2006; the Earnings Per Share is as under:
PARTICULARS Profit After Tax (Rs.) Weighted average number of equity shares (Nos.) Basic & Diluted Earnings Per Share (Rs.) Nominal Value Per Share (Rs.) CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
7,112,908 21,000,200 0.34 10
15,379,893 21,000,200 0.73 10
6 The Company has no amounts due to any micro, small and medium enterprises as defined under Micro Small and Medium Enterprises Development Act, 2006 as on March 31, 2010. 7 The following additional information (other than what is already disclosed elsewhere) is disclosed in terms of RBI circular (Ref. No. DNBS (PD) CC No. 145 /03.02.001 /2009-10 dated July 1, 2009):
Investor group wise classification of all investments (Current and Long Term) in shares and securities (both Quoted and Unquoted):
CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
Category 1. Related Parties (a) Subsidiaries 2. Other then Related Parties
Market Value/ Breakup Value / Fair Value / NAV – 274,832,942
Book Value Net of Provision – 274,561,068
Market Value/ Breakup Value / Fair Value / NAV 90,499,000 177,169,577
Book Value Net of Provision 90,499,000 176,757,198
8 The figures for the previous year have been regrouped / rearranged wherever necessary.
FOR AND ON BEHALF OF THE BOARD
A. K. T. CHARI
SADASHIV S. RAO
Chairman Mumbai | April 22, 2010
Director
IDFC FINANCE LIMITED
73
B A L A N C E S H E E T A B ST R A CT
AND COMPANY’S GENERAL BUSINESS PROFILE
I.
REGISTRATION DETAILS Registration No. State Code Balance Sheet Date U 5 3 4 5 1 0 3 2 0 1 0 5 2 0 1 D L 2 0 0 0 P L C 1 0 5 2 9 2
II.
CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000) Public Issue N I L Right Issue N I L
Bonus Issue N III. I L POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000) Total Liabilities 2 SOURCES OF FUNDS Paid-up Capital 2 1 0 0 0 2 7 5 2 3 1 2 7
Private Placement N I L
Total Assets 5 2 3 1
Reserves and Surplus 6 5 0 1 2
Secured Loans N APPLICATION OF FUNDS Net Fixed Assets N I L 2 7 I L
Unsecured Loans N I L
Investments 4 5 6 1
Net Current Assets 4 IV. 5 3
Deferred Tax Asset N I L
PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000) Turnover / Income 7 5 8 5 Total Expenditure 3 3 1
Profit Before Tax 7 2 5 4
Profit After Tax 7 1 1 3
Earnings per Share (in Rs.) 0 V. . 3 4
Dividend % N I L
GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS) Item Code No. (ITC Code) Product Description N U F I R I L B N A A N N C I I N N F G R A S T R U C T U R E
74
I D F C A N N U A L R E P O R T 09 –10
limited*
? ? ? ? ? ? ?
IDFC securities
B O A R D O F D I R E CTO R S
Dr. Rajiv B. Lall Mr. Vikram Limaye Mr. T. S. Bhattacharya Mr. Yuvraj Narayan Mr. L. K. Narayan Mr. Tapasije Mishra Mr. Mahehdra N. Shah
A U D I TO R S
?
Deloitte Haskins & Sells Chartered Accountants
P R I N C I PA L B A N K E R S
?
HDFC Bank Limited
R E G I ST E R E D O F F I C E
Naman Chambers, C-32, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai 400 051. TEL +91 22 66222600 FAX +91 22 66222501
* Formerly known as IDFC - SSKI Securities Limited
I D F C S E C U R I T I E S L I M I T E D ( F O R M E R LY , I D F C - S S K I S E C U R I T I E S L I M I T E D ) 75
D I R E CT O R S ’ R E P O R T
TO THE MEMBERS
Your directors have pleasure in presenting the Seventeenth Annual Report together with the audited accounts for the year ended March 31, 2010. infrastructure, consumers and financials sectors as also mid-caps. While the Company was recognized for the differentiated research, it has also scaled up materially on its client relationships during the year.
FINANCIAL RESULTS
RUPEES
SUBSIDIARY COMPANIES
YEAR ENDED MARCH 31, 2010 YEAR ENDED MARCH 31, 2009 713,685,450 442,741,472 270,943,978 7,761,033 13,726,570 249,456,375
IDFC Securities Ltd. has two direct wholly owned subsidiary companies - IDFC Capital Ltd. (earlier known as IDFC – SSKI Ltd.) and IDFC – SSKI Stock Broking Ltd. In addition IDFC Capital Ltd. has a wholly owned subsidiary – IDFC Capital (Singapore) Pte Ltd. During the year, IDFC Capital Ltd. has further floated two wholly owned subsidiary companies namely, IDFC General Partners Ltd. and IDFC Fund of Funds Ltd. As required under the provisions of section 212 of the Companies Act, 1956, a statement of holding company’s interest in the subsidiary companies is attached to this report.
Gross Revenue Operating Expenses (including Employee Costs) Profit before Depreciation, Interest and Tax Depreciation/Amortisation Finance Charges Net Profit before Tax Provision for Taxation Current Tax Deferred Tax Fringe Benefit Tax Short provision for Income Tax Net Profit after tax
1,047,298,141 672,218,942 375,079,199 5,750,406 10,440,940 358,887,853
DIVIDEND
Your Directors do not recommend any dividend for the financial year ended March 31, 2010.
115,200,000 1,000,000 6,026,067 236,661,786
79,300,000 300,000 2,640,000 2,578,179 164,638,196
SHAREHOLDERS UPDATE
The Company had shifted its Registered Office from 803/804, Tulsiani Chambers, Nariman Point, Mumbai 400 021 to Naman Chambers, C-32, G- Block, Bandra- Kurla Complex, Bandra (East), Mumbai 400 051 with effect from December 25, 2009. During the financial year, the Company had changed its name from IDFC – SSKI Securities Limited to IDFC Securities Limited by passing special resolution at the Extraordinary General Meeting held on February 16, 2010 and the change of name was effective after obtaining fresh certificate of incorporation consequent to the name change from Registrar of Companies with effect from March 12, 2010. Infrastructure Development Finance Company Limited (IDFC) holds 100% of paid up capital of the Company. The name change was done to reflect the parentage of IDFC. The word "Securities" indicates important business of the Company.
BUSINESS REVIEW AND FUTURE OUTLOOK
After a tumultuous Financial Year 2009, the Indian economy has staged a smart V-shaped recovery in the Financial Year 2010, led by buoyant domestic demand as well as fiscal and monetary stimulus. The decline in interest rates drove the revival in domestic demand as indicated by higher sales of passenger cars, consumer durables, housing loan disbursals, etc. Industrial production growth, as measured by the Index of Industrial Production (IIP), reached a 15-year high in December 2009. Consequently, GDP growth was set to cross the 7% mark for FY10, notwithstanding the impact of a deficient monsoon. Buoyed by the improved macroeconomic environment, capital markets have been up by more than 100% over the year. However, amidst the euphoria, broking business encountered serious headwinds on many fronts as: (a) investors remain cautious after the debacle of the previous year and churn has been lower, due to which volume growth has not been commensurate with growth in the capital market; (b) competition is intensifying and an increasingly fragmented market has hit yields (commission rates), because of which revenue pool has not grown materially; and (c) derivatives (F&O) volumes have been subdued as the proprietary book and P Note market remains unaddressable. Despite the odds, performance of the Company was quite impressive. Our revenues have grown 47% and PAT 44% for FY10. The year also brought some ‘laurels’ for the Company – as the Company was awarded the ‘Best Local Brokerage’ for the last 20 years in Asiamoney’s ‘Poll of Polls’. Also, three of analysts of the Company featured in the league of top 20, ranked for their research on
76 I D F C A N N U A L R E P O R T 09 –10
DIRECTORS
Mr. T. S. Bhattacharya was appointed as an Additional Director (Independent) with effect from June 17, 2009 whose appointment was approved at the Annual General Meeting held on July 13, 2009. Appointment of Mr. L K Narayan as Director was also approved at the said Annual General Meeting. The Board, at its meeting held on April 21, 2010, proposed appointment of Mr. Anil Singhvi as an Independent Director subject to approval of exchanges. Dr. Rajiv Lall and Mr. Vikram Limaye are reting by rotation and being eligible, offers themselves for re-appointment at the ensuing Annual General Meeting.
AUDIT COMMITTEE
The Audit Committee was re-constituted during the year and the same consists of Mr. Vikram Limaye as Chairman, Mr. L K Narayan, Mr. Yuvraj Narayan and Mr. T. S. Bhattacharya. The Audit Committee met four times during the year under the review.
AUDITORS
M/s Deloitte Haskins & Sells, Chartered Accountants, Mumbai will retire and have expressed their willingness to continue as Auditors, if re-appointed, at the ensuing Annual General Meeting. Since more than twenty five percent of the subscribed share capital is held by Infrastructure Development Finance Company Limited, a Public Financial Institution, in terms of Section 224A of Companies Act, 1956, a Special Resolution would be required at the Annual General Meeting for their re-appointment
and prudent, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2010 and the profit of the Company for the year ended on that date; ¬ they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and detecting fraud and other irregularities; and ¬ they have prepared annual accounts on a going concern basis.
ACKNOWLEDGEMENTS
The Board wishes to thank the clients, custodians, Securities and Exchange Board of India, Stock Exchanges, Banks and other statutory and regulatory authorities for their support to your Company. The Board also places on record its appreciation for the sincere efforts of the staff. The Board would also like to express its gratitude for the unstinted support and guidance received from IDFC, the parent organisation, and also other group companies.
FOREIGN EXCHANGE
The particulars regarding foreign exchange earnings and expenditure are furnished at Item No. 7 in the Notes to the Accounts.
PERSONNEL AND OTHER MATTERS
As required by the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of employees are set out in Annexure to the Directors’ Report. Since the Company does not own any manufacturing facility, the disclosure of information on other matters required to be disclosed in terms of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the report of Board of Directors) Rules, 1988, are not applicable and hence not given.
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors confirm that: the applicable accounting standards have been followed in the preparation of the annual accounts and that there are no material departures; ¬ they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable
¬ RAJIV B. LALL TAPASIJE MISHRA
Director
Director
Mumbai April 21, 2010
I D F C S E C U R I T I E S L I M I T E D ( F O R M E R LY , I D F C - S S K I S E C U R I T I E S L I M I T E D )
77
AU D I TO RS ’ R E PO RT
TO THE MEMBERS OF IDFC SECURITIES LIMITED
1. We have audited the attached Balance Sheet of IDFC SECURITIES LIMITED (formerly, IDFC-SSKI SECURITIES LIMITED) (“the Company”) as at March 31, 2010, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditor’s Report) Order, 2003 (CARO) issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. 4. Further to our comments in the Annexure referred to in paragraph 3 above, we report as follows: (a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; (b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books; (c) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account;
FOR DELOITTE HASKINS & SELLS Chartered Accountants (Registration No. 117366W)
NALIN M. SHAH
(d) in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956; (e) in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2010;
(ii) in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date and (iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date. 5. On the basis of the written representations received from the Directors as on 31st March, 2010 taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March, 2010 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956.
Partner Membership No. 15860 Mumbai April 21, 2010
78
I D F C A N N U A L R E P O R T 09 –10
ANNEXURE
(Referred to in paragraph 3 of our report of even date) (i) Having regard to the nature of the Company’s business/activities/ result and transactions, etc. and clauses (ii), (vi), (viii), (x), (xii), (xiii), (xiv), (xv), (xvi), (xvii), (xviii), (xix) and (xx) of CARO are not applicable. (ii) In respect of its fixed assets: (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of the fixed assets. (b) The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and 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.
TO THE AUDITOR’S REPORT
(vii) In our opinion, the internal audit functions carried out during the year by a firm of Chartered Accountants appointed by the Management have been commensurate with the size of the Company and the nature of its business. (viii) According to the information and explanations given to us in respect of statutory dues: (a) The Company has generally been regular in depositing undisputed dues, including Provident Fund, Income-tax, Service Tax, Cess and other material statutory dues applicable to it with the appropriate authorities. (b) There were no undisputed amounts payable in respect of Incometax, Service tax and other material statutory dues in arrears as at 31st March, 2010 for a period of more than six months from the date they became payable. (c) Details of dues of Income-tax which have not been deposited as on 31st March, 2010 on account of disputes are given below:
NATURE FORUM WHERE OF DISPUTE IS DUES PENDING Income Tax Appellate Tribunal Income Tax Appellate Tribunal Income Tax Income Act, 1961 Tax Income Tax Appellate Tribunal High Court Commissioner of Income Tax (Appeals) A.Y. 2001-02 A.Y. 2007-08 6,316,859 6,451,227 A.Y. 1999-00 3,050,631 PERIOD TO WHICH THE AMOUNT RELATES A.Y. 1997-98 A.Y. 1998-99 42,334,898 AMOUNT INVOLVED (RUPEES) 42,48,070
STATUTE
(iii) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956. (iv) In respect of loans, secured or unsecured, taken by the Company from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956, according to the information and explanations given to us: (a) The Company has taken loans aggregating Rs. 5,819,000,000 from one party during the year. At the year-end, there was no amount outstanding of such loans taken and the maximum amount involved at any time during the year was Rs. 1,600,000,000. (b) The rate of interest and other terms and conditions of such loans are, in our opinion, prima facie not prejudicial to the interests of the Company. (c) The payments of principal amounts and interest in respect of such loans are regular/as per stipulations.
(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 and financial institutions. (x) To the best of our knowledge and according to the information and explanations given to us, no fraud by or on the Company has been noticed or reported during the year.
FOR DELOITTE HASKINS & SELLS Chartered Accountants (Registration No. 117366W)
NALIN M. SHAH
(v) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of fixed assets and the sale of services. During the course of our audit, we have not observed any major weakness in such internal control system. (vi) To the best of our knowledge and belief and according to the information and explanations given to us, there were no contracts or arrangements that needed to be entered in the Register maintained under Section 301 of the Companies Act, 1956.
Partner Membership No. 15860 Mumbai April 21, 2010
I D F C S E C U R I T I E S L I M I T E D ( F O R M E R LY , I D F C - S S K I S E C U R I T I E S L I M I T E D )
79
BALANCE SHEET
RUPEES SCHEDULE RUPEES
AS AT MARCH 31, 2010
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
SOURCES OF FUNDS
Shareholders’ Funds Share Capital Reserves and Surplus 1 2 141,372,000 1,165,743,145 1,307,115,145 141,372,000 929,081,359 1,070,453,359
APPLICATION OF FUNDS
Fixed Assets Gross Block Less : Depreciation and Amortisation Add : Capital Work - in - Progress Investments Deferred Tax Asset (See Schedule 15, Note 11) Current Assets, Loans and Advances Sundry Debtors Cash and Bank Balances Loans and Advances Less : Current Liabilities and Provisions Current Liabilities Provisions Net Current Assets Notes to the Accounts Schedules 1 to 15 form an integral part of the accounts 15 8 9 392,991,423 5,257,273 398,248,696 186,553,272 1,307,115,145 191,994,071 3,916,773 195,910,844 453,363,176 1,070,453,359 5 6 7 46,148,251 396,127,030 142,526,687 584,801,968 18,112,216 482,252,348 148,909,456 649,274,020 4 3 32,290,308 22,097,690 10,192,618 520,000 10,712,618 1,102,749,255 7,100,000 37,768,937 23,165,855 14,603,082 520,000 15,123,082 593,867,101 8,100,000
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants
NALIN M . S H A H RAJIV B. LALL TAPASIJE MISHRA
FOR AND ON BEHALF OF THE BOARD
Partner
Director
AMOL RANADE
Director
Mumbai | April 21, 2010
80 I D F C A N N U A L R E P O R T 09 –10
Company Secretary
PROFIT AND LOSS ACCOUNT
RUPPES
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
SCHEDULE
APRIL 1, 2009 TO MARCH 31, 2010 701,962,708 279,168,262 10 66,167,171 1,047,298,141
APRIL 1, 2008 TO MARCH 31, 2009 547,037,552 96,474,863 70,173,035 713,685,450 13,726,570 311,731,577 34,943,751 95,002,938 1,063,206 7,761,033
INCOME
Brokerage Fee Income (Advisory)(See Schedule 15, Note 5) Other Income
EXPENDITURE
Interest & Other Charges Staff Expenses Establishment Expenses Other Expenses Provision for Doubtful Deposits Depreciation & Amortisation PROFIT BEFORE TAXATION Less : Provision for Taxation Current Tax (See Schedule 15, Note 13) Add: Deferred Tax (See Schedule 15, Note 11) Add: Fringe Benefit Tax Add: Short provision for Income Tax PROFIT AFTER TAXATION Add : Balance as per last Balance Sheet AVAILABLE FOR APPROPRIATION Earning per share (Face Value Rs. 10) (See Schedule 15, Note 10) Basic and Diluted Notes to the Accounts Schedules 1 to 15 form an integral part of the Accounts 15 115,200,000 1,000,000 6,026,067 122,226,067 236,661,786 745,789,782 982,451,568 16.74 79,300,000 300,000 2,640,000 2,578,179 84,818,179 164,638,196 581,151,586 745,789,782 11.65 11 12 13 14 10,440,940 537,798,479 25,920,368 106,700,095 1,800,000 5,750,406 688,410,288 358,887,853
464,229,075 249,456,375
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants
NALIN M . S H A H RAJIV B. LALL TAPASIJE MISHRA
FOR AND ON BEHALF OF THE BOARD
Partner
Director
AMOL RANADE
Director
Mumbai | April 21, 2010
Company Secretary
I D F C S E C U R I T I E S L I M I T E D ( F O R M E R LY , I D F C - S S K I S E C U R I T I E S L I M I T E D ) 81
C A S H F L OW ST AT E M E N T
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 CASH FLOW FROM OPERATING ACTIVITIES: Profit before Tax Adjustments for Depreciation and Amortisation Interest Income Provision for Gratuity Dividend Income Loss on Sale /Discarding of Fixed Assets B OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES Changes in Sundry Debtors Loans and Advances Fixed Deposit with Scheduled Banks under Lien Current Liabilties D Cash generated from Operations Taxes Paid NET CASH FROM OPERATING ACTIVITIES CASH FLOW FROM INVESTING ACTIVITIES Purchase of Fixed assets Purchase of Investments Proceeeds from Sale of Investments Proceeds from sale of Fixed Assets Interest received Dividend received NET CASH USED IN INVESTING ACTIVITIES CASH FLOW FROM FINANCING ACTIVITIES Proceeds from unsecured loans Repayments of unsecured loans NET CASH USED IN FINANCING ACTIVITIES : NET INCREASE/(DECREASE) IN CASH EQUIVALENTS INCREASE /(DECREASE)IN CASH EQUIVALENTS Cash and Cash Equivalents as at the beginning of the year (see Note below) Cash and Cash Equivalents as at the end of the year (see Note below) Note : Cash and Cash Equivalents as per Schedule 6 Less: Fixed Deposits Under Lien Cash and Cash Equivalents as above 396,127,030 264,902,716 131,224,314 217,702,348 131,224,314 (86,478,034) H I=F+G+H (86,478,034) G (2,811,623) (964,434,605) 455,552,451 35,849 39,875,584 26,184,716 (445,597,628) F E=C+D (28,036,035) 22,129,601 (352,716) 200,997,352 194,738,202 496,092,493 (136,972,899) 359,119,594 C=A+B 5,750,406 (39,875,584) 1,340,500 (26,184,716) 1,435,832 (57,533,562) 301,354,291 A 358,887,853
APRIL 1, 2008 TO MARCH 31, 2009 249,456,375 7,761,033 (51,446,226) (6,986) (17,521,090) 81,505 (61,131,764) 188,324,611 59,734,365 (23,913,262) 317,296,630 (180,749,988) 172,367,745 360,692,356 (83,421,201) 277,271,155 (6,698,372) (455,552,451) 281,208,340 133,385 51,446,226 17,521,090 (111,941,782) 1,940,000,000 (1,940,000,000) 165,329,373 52,372,975 217,702,348 165,329,373 482,252,348 264,550,000 217,702,348
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants
NALIN M . S H A H RAJIV B. LALL TAPASIJE MISHRA
FOR AND ON BEHALF OF THE BOARD
Partner
Director
AMOL RANADE
Director
Mumbai | April 21, 2010
82 I D F C A N N U A L R E P O R T 09 –10
Company Secretary
SCHEDULES
SCHEDULE 1 Share Capital
AUTHORISED: 20,000,000 equity shares of Rs 10 each ISSUED, SUBSCRIBED AND PAID-UP: 14,137,200 equity shares of Rs 10 each fully paid (All the above Equity Shares are held by Infrastructure Development Finance Company Limited, the holding company and its nominees)(Previous year 11,309,443 Equity Shares)
ANNEXED TO AND FORMING PART OF THE ACCOUNTS
RUPEES
RUPEES
AS AT MARCH 31, 2010 200,000,000 141,372,000 141,372,000
AS AT MARCH 31, 2009 200,000,000 141,372,000 141,372,000
SCHEDULE 2 Reserves and Surplus
Securities Premium Account General Reserve Profit and Loss Account
RUPEES
RUPEES
AS AT MARCH 31, 2010 142,578,000 40,713,577 982,451,568 1,165,743,145
AS AT MARCH 31, 2009 142,578,000 40,713,577 745,789,782 929,081,359
SCHEDULE 3 Fixed Assets
DESCRIPTION As at April 1, 2009 GROSS BLOCK As at March 31, 2010 Additions Deletions DEPRECIATION AND AMORTISATION As at March 31, 2010 Charge for the year As at April 1, 2009 Deletions As at March 31, 2010
RUPEES
NET BLOCK As at March 31, 2009 950,170 2,845,780 6,128,198 1,072,813 3,606,121
83
TANGIBLE Furniture and Fittings Office Equipments Computer Hardware INTANGIBLE Tenancy Rights Computer Software Total Previous Year 1,083,200 7,115,903 37,768,937 31,545,267 521,841 6,698,372 52,000 1,083,200 7,585,744 10,387 3,509,782 23,165,855 15,664,634 108,320 2,099,232 5,750,406 7,761,033 44,600 6,818,571 259,812 118,707 5,564,414 22,097,690 23,165,855 964,493 2,021,330 14,603,082 6,334,294 5,972,876 17,262,664 - 5,949,294 1,602,115 1,586,463 687,667 385,000 5,988,528 5,384,124 3,127,096 11,134,466 268,353 704,444 2,570,057 5,474,888 708,054 591,029 177,589 3,123,486 13,113,494 207,411 2,865,042 4,134,342
702,495 17,247,836
2,811,623 8,290,252 32,290,308 474,702 37,768,937
10,192,618 14,603,082
I D F C S E C U R I T I E S L I M I T E D ( F O R M E R LY , I D F C - S S K I S E C U R I T I E S L I M I T E D )
SCHEDULE 4 Investments (Unquoted)
I. LONG TERM Equity Shares (Fully paid) NUMBER OF SHARES Subsidiaries (Trade) IDFC Capital Limited (Formerly IDFC -SSKI Limited) IDFC -SSKI Stock Broking Limited Others Bombay Stock Exchange Limited TOTAL LONG TERM INVESTMENTS II CURRENT (NON-TRADE) Mutual Funds Units NUMBER OF UNITS IDFC Money Manager Fund Treasury Plan C Daily Dividend [Net Asset Value Rs.964,434,605; (Previous year Rs.455,552,451)] TOTAL INVESTMENTS 96,428,996.109 FACE VALUE
RUPEES
RUPEES
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
FACE VALUE
RUPEES
6,035,220 1,500,000 130,000
10 10 1
123,304,650 15,000,000 10,000 138,314,650
123,304,650 15,000,000 10,000 138,314,650
10
964,434,605
455,552,451
1,102,749,255
593,867,101
SCHEDULE 5 Sundry Debtors (Unsecured)
CONSIDERED GOOD Over six months Others (See Schedule 15, Note 4) CONSIDERED DOUBTFUL Over six months Less : Provision for Doubtful Debts
RUPEES
RUPEES
RUPEES
AS AT MARCH 31, 2010 40,626 46,107,625 46,148,251 3,299,896 49,448,147 3,299,896 46,148,251
AS AT MARCH 31, 2009 18,112,216 18,112,216 3,299,896 21,412,112 3,299,896 18,112,216
SCHEDULE 6 Cash and Bank Balances
- Cash Balance with Scheduled Banks - in Current Accounts - in Deposit Accounts - in Deposit Accounts (Under Lien)
RUPEES
RUPEES
RUPEES
AS AT MARCH 31, 2010 19,662 29,762,504 101,442,148 264,902,716 396,107,368 396,127,030
AS AT MARCH 31, 2009 16,208 10,988,130 206,698,010 264,550,000 482,236,140 482,252,348
84
I D F C A N N U A L R E P O R T 09 –10
SCHEDULE 7 Loans and Advances (Unsecured)
CONSIDERED GOOD Interest accrued on Deposits Advances recoverable in cash or in kind or for value to be received Deposits with Stock Exchanges Other Deposits Advance payment of Income Tax (Net of provision) CONSIDERED DOUBTFUL Other Deposits Less : Provision for Doubtful Deposits
RUPEES
RUPEES
RUPEES
AS AT MARCH 31, 2010 21,253,637 9,914,079 30,652,200 5,904,920 74,801,851 142,526,687 1,800,000 144,326,687 1,800,000 142,526,687
AS AT MARCH 31, 2009 20,699,588 7,007,729 40,252,200 21,894,920 59,055,019 148,909,456 – 148,909,456 – 148,909,456
SCHEDULE 8 Current Liabilities
Sundry Creditors - Micro and Small Enterprises (See schedule 15, Note 15) Sundry Creditors - Others Other Liabilities
RUPEES
RUPEES
AS AT MARCH 31, 2010 – 362,588,700 30,402,723 392,991,423
AS AT MARCH 31, 2009 8,704 159,215,163 32,770,204 191,994,071
SCHEDULE 9 Provisions
Provision for Employees Benifit (See schedule 15, Note 6)
RUPEES
RUPEES
AS AT MARCH 31, 2010 5,257,273 5,257,273
AS AT MARCH 31, 2009 3,916,773 3,916,773
RUPEES
SCHEDULE 10 Other Income
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Interest on Bank Deposits Tax Deducted at source Rs 5,466,336; (Previous year Rs 10,458,963) Interest on Income Tax Refund Dividend On Current Investments (Non-Trade) Dividend On Long Term Investments (Non-Trade) Gain on Foreign Exchange Fluctuation (Net) Miscellaneous Income 25,664,716 520,000 106,871 66,167,171 39,875,584
APRIL 1, 2008 TO MARCH 31, 2009 49,348,250 2,097,976 17,221,090 300,000 967,774 237,945 70,173,035
RUPEES
SCHEDULE 11 Interest and Other Charges
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Other Interest Other Charges 3,813,215 6,627,725 10,440,940
APRIL 1, 2008 TO MARCH 31, 2009 3,716,864 10,009,706 13,726,570
RUPEES
SCHEDULE 12 Staff Expenses
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Salaries, Wages and Bonus Contribution to Provident and Other Funds (See schedule 15, Note 6) [Including provision for gratuity Rs.19,30,073; (Previous Year Rs.18,26,829)] Staff Welfare Expenses 6,457,231 537,798,479 517,782,313 13,558,935
APRIL 1, 2008 TO MARCH 31, 2009 296,047,102 11,886,506 3,797,969 311,731,577
I D F C S E C U R I T I E S L I M I T E D ( F O R M E R LY , I D F C - S S K I S E C U R I T I E S L I M I T E D )
85
SCHEDULE 13 Establishment Expenses
RUPEES
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Rent Rates & Taxes Electricity Repairs and Maintenance Building Equipment Others Insurance Charges 213,070 1,977,503 976,295 3,166,868 799,344 25,920,368 17,347,863 657,117 3,949,176
APRIL 1, 2008 TO MARCH 31, 2009 25,582,838 4,470,526 140,518 2,606,531 740,201 3,487,250 1,403,137 34,943,751
SCHEDULE 14 Other Expenses
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Travelling and Conveyance Printing and Stationery Postage, Telephone and Fax Advertising and Publicity Membership and Subscription Professional Fees Loss on Foreign Exchange Fluctuation (Net) Loss on Sale / Discarding of Fixed Assets (Net) Other Operating Expenses Loss on Sale of Misdeal Stock (Net) Miscellaneous Expenses Directors’ Commission Directors’ Sitting Fees Auditors’ Remuneration (See schedule 15, Note 8) 29,080,907 2,669,697 11,811,090 13,791,431 31,150,766 9,828,562 341,457 1,435,832 800,834 2,000,564 1,015,051 – 140,000 2,633,904 106,700,095
APRIL 1, 2008 TO MARCH 31, 2009 21,839,360 2,108,874 9,753,455 17,060,868 27,489,189 2,209,492 – 81,505 3,209,137 5,458,325 1,925,733 1,084,000 20,000 2,763,000 95,002,938
86
I D F C A N N U A L R E P O R T 09 –10
SCHEDULE 15: Notes Forming Part of the Accounts
BACKGROUND
IDFC Securities Limited (formerly IDFC - SSKI Securities Limited) is a wholly owned subsidiary of Infrastructure Development Finance Company Limited (“IDFC”).
1 Significant Accounting Policies
A. Accounting convention
These accounts have been prepared in accordance with historical cost convention, applicable Accounting Standards notified by the Companies (Accounting Standards) Rules, 2006 and relevant provisions of the Companies Act, 1956.
B. Use of Estimates
The Company adopts the accrual concept in the preparation of the accounts. The preparation of financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates. Assets and liabilities are recorded at historical cost to the Company. These costs are not adjusted to reflect the changing value in the purchasing power of money.
C. Revenue recognition
(a) Income from brokerage activities is recognised on trade date basis and is net of statutory payments. (b) Interest income is recognised on an accrual basis. (c) Fees are recognised when reasonable right of recovery is established, the revenue can be reliably measured and there is no uncertainty regarding recoverability. (d) Dividend is recognised when the right to receive is established.
D. Fixed assets and Intangible Assets
Fixed assets are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated depreciation. Intangible Assets comprising of system software are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated amortisation. Any technology support cost or annual maintenance cost for such software is charged annually to the Profit and Loss Account. Consideration paid for transfer of tenancy rights is capitalised as an Intangible Asset.
E. Depreciation
¬
Tangible Assets
Depreciation on Fixed Assets, excluding certain electronic items, is provided on the written down value method, at the rates prescribed by Schedule XIV of the Companies Act, 1956. Certain electronic items are depreciated over a period of two years on straight line method based on the Management’s estimate of the useful life of assets. Depreciation on additions during the year is provided on a pro-rata basis. Assets costing less than Rs 5,000 each are written off in the year of capitalisation.
¬
Intangible Assets
Computer software is amortised over a period of 3 years and Tenancy rights are amortised over a period of 10 years by using straight-line method. The Company has regular programme of evaluating useful life of its assets.
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 the carrying value other than temporary in nature is provided for. Current investments are valued at cost or market/fair value, whichever is lower. In case of investments in units of mutual funds, the net asset value of units has been considered as the market value.
G. Misdeal stock
Misdeal stock comprises of stock that has devolved on the Company due to erroneous execution of trades on behalf of the institutional clients in the normal course of business. These securities are valued at lower of cost or market value/realisable value on an individual basis. Any valuation loss based on the above is debited to the Profit and Loss Account.
H. Employee benefits
DEFINED CONTRIBUTION PLANS
The Company’s contribution to Provident Fund is deposited with Regional Provident Fund Commissioner and is charged to the Profit and Loss Account every year.
¬
The Company participates in the Holding Company’s Superannuation policy, for future payments of Superannuation and the Company’s contribution paid / payable during the year is charged to the Profit & Loss Account every year.
¬ I D F C S E C U R I T I E S L I M I T E D ( F O R M E R LY , I D F C - S S K I S E C U R I T I E S L I M I T E D ) 87
DEFINED BENEFIT PLAN
The net present value of the Company’s obligation towards Gratuity to employees is funded and actuarially determined as at the Balance Sheet date based on the Projected Unit Credit Method. Actuarial gains and losses are recognised in the Profit & Loss Account.
¬
OTHER BENEFITS
¬
The employees are required to avail of the leave entitlement during the financial year and are not entitled to any encashment.
I. Income - Tax
The accounting treatment for income-tax in respect of the Company’s income is based on the Accounting Standard 22 on ‘Accounting for Taxes on Income’ as notified by the Companies (Accounting Standards) Rules, 2006. The provision made for income-tax in the accounts comprises both, the current tax and the deferred tax. The deferred tax assets and liabilities for the year, arising on account of timing differences, are recognised in the Profit & Loss Account and the cumulative effect thereof is reflected in the Balance Sheet. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax asset is recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the Company has unabsorbed depreciation or carried forward losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that the same can be realised against future taxable profits.
J. Contingencies
The Company creates a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
K. Foreign Currency Transactions
Foreign currency transactions are accounted at the exchange rates prevailing on the date of the transaction. Foreign currency monetary items outstanding as at the Balance Sheet date are reported using the closing rate. Gains and losses resulting from the settlement of such transactions and translation of monetary assets and liabilities denominated in foreign currencies are recognised in the Profit and Loss Account.
2 Contingent liabilities not provided for in respect of :
PARTICULARS (a) Claims not acknowledged as debts in respect of : Income-tax demands disputed by the Company (net of amounts provided). The matters in dispute are under appeal. The demands have been paid / adjusted and will be received as refund if the matters are decided in favour of the Company (b) Counter guarantees given by Company to various banks 492,300,000 492,300,000 62,401,685 31,351,510 CURRENT YEAR
(RUPEES)
PREVIOUS YEAR
(RUPEES)
3 IDFC Capital Limited (formerly, IDFC – SSKI Limited) has given Guarantee in form of its Fixed Deposit lien with HDFC Bank towards
Overdraft facility for Rs. 291,533,838 (previous year Rs. 300,000,000).
4 Sundry Debtors include Rs. 28,101,773 (Previous Year Rs. NIL) receivable from a Subsidiary Company. 5 The Company has an arrangement with its Wholly Owned Subsidiary, IDFC Capital Limited (formerly IDFC-SSKI Limited) to provide research, financial advisory and other distribution services on some of the assignments/mandates. In consideration of these services, the Company receives a share from the Subsidiary Company in the ratio mutually agreed upon. An amount of Rs.254,042,007 (Previous year Rs 62,297,486) has been shared during the year in respect of the above services and the same has been included under Fee Income (Advisory). 6 Employee Benefits
(i) In accordance with Accounting Standard –AS15 on “Employee Benefits”, notified by the Companies (Accounting Standards) Rules 2006, the following disclosures have been made: The Company has recognised the following amounts in the Profit and Loss Account towards contribution to defined contribution plans which are included under Contribution to Provident and Other Funds:
CURRENT YEAR Rupees Provident Fund Superannuation Fund 10,868,862 760,000 PREVIOUS YEAR Rupees 10,059,677 -
88
I D F C A N N U A L R E P O R T 09 –10
(ii) The details of the Company’s post-retirement benefit plans for gratuity for its employees are given below which is certified by the actuary and relied upon by the auditors:
RUPEES
PARTICULARS CHANGE IN THE BENEFIT OBLIGATIONS: Liability at the beginning of the year Current Service cost Interest Cost Actuarial Gain Liability at the end of the year FAIR VALUE OF PLAN ASSETS: Fair Value of Plan Assets at the beginning of the year Expected Return on Plan Assets Contributions Actuarial loss on Plan Assets Fair Value of Plan Assets at the end of the year Total Actuarial Gain to be recognized ACTUAL RETURN ON PLAN ASSETS: Expected Return on Plan Assets Actuarial loss on Plan Assets Actual Return on Plan Assets AMOUNT RECOGNISED IN THE BALANCE SHEET: Liability at the end of the year Fair Value of Plan Assets at the end of the year Amount recognised in the Balance Sheet under “Provision for Employee Benefits” EXPENSES RECOGNISED IN THE PROFIT & LOSS ACCOUNT UNDER STAFF EXPENSES Current Service cost Interest Cost Expected Return on Plan Assets Net Actuarial Loss to be recognised Expense recognised in the Profit & Loss Account under staff expenses RECONCILIATION OF THE LIABILITY RECOGNISED IN THE BALANCE SHEET Opening Net Liability Expense recognised Contribution by the Company Amount recognised in the Balance Sheet under “Provision for Employee Benefits” Expected Employer’s Contribution next year PARTICULARS EXPERIENCE ADJUSTMENTS Defined Benefit Obligation Plan Assets Deficit / (Surplus) Experience Adjustment on Plan Liabilities Experience Adjustment on Plan Assets PARTICULARS Investment Pattern Insurer Managed Fund Principal Assumptions Discount rate Return on Plan Assets Salary Escalation Rate 8.10 8 8 10,993,766 5,736,494 5,257,273 5,986,757 202,914 AS AT 31.03.10 % 100 AS AT 31.03.10
AS AT 31.03.10 8,745,683 5,304,017 1,123,976 4,179,910 10,993,766 4,828,911 520,924 589,573 202,914 5,736,494 3,976,996 520,924 202,914 318,010 10,993,766 5,736,494 5,257,273 5,304,017 1,123,976 520,924 3,976,996 1,930,073 3,916,773 1,930,073 589,573 5,257,273 8,000,000 AS AT 31.03.09 8,745,683 4,828,911 3,916,772 383,113 12,514 AS AT 31.03.09 % 100 8 8 6
AS AT 31.03.09 6,572,745 2,350,206 736,143 913,411 8,745,683 2,648,986 358,624 1,833,815 12,514 4,828,911 900,897 358,624 12,514 346,110 8,745,683 4,828,911 3,916,773 2,350,206 736,143 358,624 900,897 1,826,829 3,923,759 1,826,829 1,833,815 3,916,773 3,366,000 AS AT 31.03.08 6,572,745 2,648,986 (3,923,759) – –
As the Gratuity fund is managed by Life Insurance Company details of investments are not available with the Company. The estimates of future salary increase, considered in the actuarial valuation takes account of inflation, seniority, promotion and other relevant factors.
I D F C S E C U R I T I E S L I M I T E D ( F O R M E R LY , I D F C - S S K I S E C U R I T I E S L I M I T E D )
89
7 Expenditure in foreign currencies :
RUPEES
PARTICULARS Professional Fees Others Total EARNINGS IN FOREIGN CURRENCIES :
CURRENT YEAR 189,461 8,214,002 8,403,463
PREVIOUS YEAR – 9,180,850 9,180,850
RUPEES
PARTICULARS Advisory Fees Others Total
CURRENT YEAR 25,126,255 106,871 25,233,126
PREVIOUS YEAR 34,177,378 28,924 34,206,302
8 Auditors’ Remuneration:
RUPEES
PARTICULARS Audit Fees Tax Audit Fees Taxation Services Other Services Out of Pocket Expenses Service tax Total Less: Service tax set off claimed
CURRENT YEAR 1,200,000 400,000 200,000 825,000 8,904 271,292 2,905,196 271,292 2,633,904
PREVIOUS YEAR 1,200,000 800,000 200,000 563,000 304,427 3,067,427 304,427 2,763,000
9 Managerial Remuneration:
RUPEES
PARTICULARS Commission to Non-Executive Director Total
CURRENT YEAR -
PREVIOUS YEAR 1,084,000 1,084,000
Computation of Net Profit in accordance with Section 349 of the Companies Act, 1956 in respect of Commission payable to Non- Executive Director.
PARTICULARS Profit Before Tax Add: Directors’ Fees and Commission Provision for Doubtful Debts Net Profit as per Section 349 of the Companies Act, 1956 Maximum permissible commission to all Non-Executive Directors @ 1% Restricted to 1,104,000 1,063,206 2,167,206 251,623,581 2,516,236 1,084,000 CURRENT YEAR RUPEES
PREVIOUS YEAR 249,456,375
10 In accordance with the Accounting Standard 20 on ‘Earnings Per Share’ as notified by the Companies (Accounting Standards) Rules, 2006, the Earnings Per Share has been computed as under:
RUPEES
PARTICULARS Net Profit attributable to equity shareholders (A) Number of equity shares issued (B) Basic and Diluted Earnings per share (EPS) [A/B]
CURRENT YEAR 236,661,786 14,137,200 16.74
PREVIOUS YEAR 164,638,196 14,137,200 11.65
90
I D F C A N N U A L R E P O R T 09 –10
11 Deferred Tax:
As per Accounting Standard 22 relating to ‘Accounting for Taxes on Income’ as notified by the Companies (Accounting Standards) Rules, 2006, the Company has taken debit of Rs. 1,000,000 (Previous Year Debit Rs. 300,000) in the Profit & Loss Account towards deferred tax liability (net) on account of timing differences. The major components of deferred tax assets arising on account of timing differences are:
RUPEES
PARTICULARS DEFERRED TAX ASSET Depreciation Provisions TOTAL DEFERRED TAX ASSET
CURRENT YEAR 3,624,132 3,475,868 7,100,000 7,100,000
PREVIOUS YEAR 5,647,054 2,452,946 8,100,000 8,100,000
12 Segment Reporting:
The Company’s business is to provide broking services to its clients in the capital market in India. All other activities of the Company revolve around the main business. As such, there are no reportable segments as per the Accounting Standard on ‘Segment Reporting’ (AS-17), as notified by the Companies (Accounting Standards) Rules, 2006.
13 Provision for income tax for the year includes interest of Rs.120,076 (previous year Rs.125,905) under section 234C of Income Tax Act,1961. 14 Related party disclosures:
As per the Accounting Standard 18 on ‘Related Party Disclosures’ as notified by the Companies (Accounting Standards) Rules, 2006, the related parties of the Company are as follows:
I. HOLDING COMPANY:
Infrastructure Development Finance Company Limited
II. SUBSIDIARY COMPANIES:
IDFC Capital Limited (formerly, IDFC – SSKI Limited) IDFC – SSKI Stock Broking Limited
III. THERE ARE NO TRANSACTIONS WITH FELLOW SUBSIDIARIES:
The nature and volume of transactions carried out with the above related parties in the ordinary course of business:
RUPEES
NAME OF RELATED PARTY AND NATURE OF RELATIONSHIP (A) HOLDING COMPANY Infrastructure Development Finance Company Limited
PARTICULARS
CURRENT YEAR
PREVIOUS YEAR
Inter Corporate Deposits placed and redeemed Interest paid on Inter Corporate Deposits Brokerage Received
5,819,000,000 2,224,889 5,672,744 254,042,007 28,101,773
1,940,000,000 1,804,932 2,076,845 62,297,486 -
(B) SUBSIDIARY COMPANY IDFC Capital Limited (formerly, IDFC-SSKI Limited) Debtors outstanding balance Fees income
15 There is no interest paid/payable during the year by the Company to suppliers covered under the Micro, Small and Medium Enterprises Development Act, 2006. The above information takes into account only those suppliers who have responded to the enquires made by the Company for this purpose. 16 Prior year comparatives:
The prior year comparatives have been regrouped, recasted and reclassified wherever necessary to confirm with current year’s presentation.
FOR AND ON BEHALF OF THE BOARD
RAJIV B. LALL
TAPASIJE MISHRA
Director
AMOL RANADE
Director
Mumbai | April 21, 2010
Company Secretary
I D F C S E C U R I T I E S L I M I T E D ( F O R M E R LY , I D F C - S S K I S E C U R I T I E S L I M I T E D ) 91
B A L A N C E S H E E T A B ST R A CT
AND COMPANY’S GENERAL BUSINESS PROFILE
I.
REGISTRATION DETAILS Registration No. State Code Balance Sheet Date U 1 3 9 1 1 0 3 2 0 1 0 9 9 9 9 M H 1 9 9 3 P L C 0 7 1 8 6 5
II.
CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000) Public Issue N I L Right Issue N I L
Bonus Issue N III. I L
Private Placement N I L
POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000) Total Liabilities 1 SOURCES OF FUNDS Paid-up Capital 1 4 1 3 7 2 1 1 Reserves and Surplus 6 5 7 4 3 7 0 5 3 6 4 1 7 0 5 Total Assets 3 6 4
Secured Loans N APPLICATION OF FUNDS Net Fixed Assets 1 0 7 1 3 1 1 0 I L
Unsecured Loans N I L
Investments 2 7 4 9
Net Current Assets 1 8 6 5 5 3
Miscelleneous Expenditure N I L
Deferred Tax Asset (Net) 7 IV. 1 0 0
PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000) Turnover / Income 1 0 4 7 2 9 8 6 8 Total Expenditure 8 4 1 0
Profit Before Tax 3 5 8 8 8 8 2 3
Profit After Tax 6 6 6 2
Earnings per Share (in Rs.) 1 V. 6 . 7 4
Dividend % N I L
GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS) Item Code No. (ITC Code) Product Description N I I N L S T I T U T I O N A L B R O K I N G
92
I D F C A N N U A L R E P O R T 09 –10
ST AT E M E N T P U R S U A N T T O S E CT I O N 2 1 2
NAME OF SUBSIDIARY COMPANY IDFC CAPITAL LIMITED IDFC - SSKI STOCK BROKING LIMITED IDFC CAPITAL (SINGAPORE) PTE. LTD.
OF THE COMPANIES ACT, 1956
IDFC FUND OF FUNDS LIMITED
IDFC GENERAL PARTNERS LIMITED
1 2
Financial year of the Subsidiary Companies ended on Equity Shares of Rs.10 each a) Number of Shares b) Extent of Holding
31st March 2010 31st March 2010 31st March 2010 31st March 2010 31st March 2010 6,035,220 100% 1,500,000 100% 6,655,000 100% 6,505,504.18 100% 10,000 100%
3
Net aggregate amount of Profit/ (Losses) of the Subsidiary, so far as they concern members of IDFC Securities Limited i. For the Financial Year of the Subsidiary Nil 281,187,231 Nil 776,662 Nil (110,802,874) Nil (1,153,369) Nil Nil a) Dealt with in the accounts of the Holding Company. b) Not dealt with in the accounts of the Holding Company. ii. For the previous financial years of the Subsidiary since it became the Holding Company’s Subsidiary. a) Dealt with in the accounts of the Holding Company. b) Not dealt with in the accounts of the Holding Company. Nil 145,444,160 Nil 729,645 Nil (110,016,386) Nil Nil Nil Nil
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
RAJIV B. LALL
TAPASIJE MISHRA
Director Mumbai April 21, 2010
Director
I D F C S E C U R I T I E S L I M I T E D ( F O R M E R LY , I D F C - S S K I S E C U R I T I E S L I M I T E D )
93
limited*
? ? ? ? ? ?
IDFC capital
B O A R D O F D I R E CTO R S
Dr. Rajiv B. Lall Mr. Vikram Limaye Mr. L. K. Narayan Mr. Naishadh Paleja Mr. Pathik Gandotra Mr. Mahehdra N. Shah
A U D I TO R S
?
Deloitte Haskins & Sells Chartered Accountants
P R I N C I PA L B A N K E R S
?
HDFC Bank Limited
R E G I ST E R E D O F F I C E
Naman Chambers, C-32, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai 400 051. TEL +91 22 66222600 FAX +91 22 66222501
* Formerly known as IDFC - SSKI Limited
94 I D F C A N N U A L R E P O R T 09 –10
D I R E CT O R S ’ R E P O R T
TO THE MEMBERS
Your directors have pleasure in presenting the Fifteenth Annual Report together with the audited accounts for the year ended March 31, 2010. During the year, IDFC Capital Limited has further floated two wholly owned subsidiary companies namely, IDFC General Partners Limited and IDFC Fund of Funds Limited. As required under the provisions of section 212 of the Companies Act, 1956, a statement of holding company’s interest in the subsidiary companies is attached to this report.
FINANCIAL RESULTS
RUPEES
YEAR ENDED MARCH 31, 2010 Gross Revenue Operating Expenses (including Employee Costs) Profit before Depreciation, Interest and Tax Depreciation/Amortisation Net Profit before Tax Provision for Taxation Current Tax Deferred Tax Fringe Benefit Tax Short provision for Income Tax Profit/ (Loss) after tax 144,700,000 14,750,000 – (616,563) 281,187,231 1,962,346 440,020,668 441,983,014 847,838,496 405,855,482
YEAR ENDED MARCH 31, 2009 464,060,849 258,857,291 205,203,558 3,606,992 201,596,566 70,000,000 (15,100,000) 920,000 332,406 145,444,160
SHAREHOLDERS UPDATE
The Company had shifted its Registered Office from 803/804, Tulsiani Chambers, Nariman Point, Mumbai 400 021 to Naman Chambers, C-32, G- Block, Bandra- Kurla Complex, Bandra (East), Mumbai 400 051 with effect from December 25, 2009. During the financial year, the Company had changed its name from IDFC – SSKI Limited to IDFC Capital Limited by passing special resolution at the Extraordinary General Meeting held on February 16, 2010 and the change of name was effective after obtaining fresh certificate of incorporation consequent to the name change from Registrar of Companies with effect from March 12, 2010. The Company is wholly-owned subsidiary of Infrastructure Development Finance Company Limited (IDFC), the name change was done to reflect parentage of IDFC. The word "Capital" is being used in the name to indicate the important business activity of the Company.
FY2010: OVERVIEW
FY 2010 fee based revenues increased 65% year on year (aggregating to Rs. 85 crore) on the back of a strong rebound across equity capital markets. The pace of corporate fund raising across debt and equity was hectic as the liquidity environment improved. The firm increased its market shares in each of its products. We dominated bulge bracket investment banks and finished the year as the 2nd largest Investment Bank by number of deals (16) and the 3rd largest Investment Bank by equity capital raised (Rs. 15,067 crore) (Prime Database) for the private sector. In Debt syndication we raised over Rs 8,600 crore in 7 transactions and were the 4th largest Lead Arranger of Debt in India for 2009 (Bloomberg).
DIVIDEND
The Directors do not recommend any dividend for the year ended March 31, 2010.
DIRECTORS
Appointment of Mr. L K Narayan as a Director was approved at the Annual General Meeting held on July 13, 2009. Dr. Rajiv Lall and Mr. Vikram Limaye are retiring by rotation and being eligible, offer themselves for re-appointment at the ensuing Annual General Meeting.
AUDIT COMMITTEE
The Audit Committee was re-constituted during the year and the same consists of Mr. Vikram Limaye, Chairman, Mr. L K Narayan and Mr. Mahendra Shah. The Audit Committee met four times during the year under review.
OUTLOOK
The competitive intensity in our industry continues to rise as a number of well capitalized investment banks enter the domestic market. Fees and margins will be under pressure. Manpower costs have been rising and competition for talent is intense. The environment for fund raising is expected to be volatile in FY2011 and determined by macro trends across global equities. Focus in the current year will be to expand the product portfolio and leverage the broader IDFC platform to improve our product offering towards our clients. Knowledge leadership and improved client servicing will be critical for ensuring retaining of our market share in FY2011.
AUDITORS
M/s. Deloitte Haskins & Sells, Chartered Accountants, Mumbai will retire as Auditors of the Company at the ensuing Annual General meeting. Your Directors propose their re-appointment as Auditors of the Company for the financial year ending March 31, 2011. As required under the provisions of Section 224(1B) of the Companies Act, 1956 the Company has obtained a written certificate from the Auditors proposed to be re-appointed to the effect that their reappointment if made will be in conformity with the limits specified in the said section. The shareholders are requested to re-appoint the auditors and authorise the Board to fix their remuneration for the year 2010-11.
SUBSIDIARY COMPANIES
IDFC Capital Limited has wholly owned subsidiary company - IDFC Capital (Singapore) Pte. Ltd.
I D F C C A P I T A L L I M I T E D ( F O R M E R LY , I D F C - S S K I L I M I T E D )
95
FOREIGN EXCHANGE
The particulars regarding foreign exchange earnings and expenditure are furnished at Item No.6 in the Notes to the Accounts.
PERSONNEL AND OTHER MATTERS
As required by the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, names and other particulars of employees are set out in the annexure to the Directors’ Report. Since the Company does not own any manufacturing facility, the disclosure of information on other matters required to be disclosed in terms of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the report of Board of Directors) Rules, 1988, are not applicable and hence not given.
they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and detecting fraud and other irregularities; and
¬ ¬
they have prepared annual accounts on a going concern basis.
ACKNOWLEDGEMENTS
The Directors wishes to thank the clients, Banks, Securities Exchange Board of India and other regulatory and statutory authorities for their continued support to your Company. The Directors also express their gratitude for the unstinted support and guidance received from IDFC, the parent organisation, and also other group companies. The Directors also places on record its appreciation for the sincere efforts of the staff.
DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors confirm that: the applicable accounting standards have been followed in the preparation of the annual accounts and that there are no material departures;
¬
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2010 and the profit of the Company for the year ended on that date;
¬
VIKRAM LIMAYE
NAISHADH PALEJA
Director Mumbai April 21, 2010
Director
96
I D F C A N N U A L R E P O R T 09 –10
AU D I TO RS ’ R E PO RT
TO THE MEMBERS OF IDFC CAPITAL LIMITED
1. We have audited the attached Balance Sheet of IDFC CAPITAL LIMITED (formerly, IDFC – SSKI Limited) (“the Company”) as at March 31, 2010, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditor’s Report) Order, 2003 (CARO) issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. 4. Further to our comments in the Annexure referred to in paragraph 3 above, we report as follows: (a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; (b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books; (c) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account;
FOR DELOITTE HASKINS & SELLS Chartered Accountants (Registration No. 117366W)
NALIN M. SHAH
(d) in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956; (e) in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2010;
(ii) in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date and (iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date. 5. On the basis of the written representations received from the Directors as on 31st March, 2010 taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March, 2010 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956.
Partner Membership No. 15860 Mumbai April 21, 2010
I D F C C A P I T A L L I M I T E D ( F O R M E R LY , I D F C - S S K I L I M I T E D )
97
ANNEXURE
(Referred to in paragraph 3 of our report of even date) (i) Having regard to the nature of the Company’s business/activities/ result and transactions, etc., clauses (ii), (vi), (viii), (x), (xi), (xii), (xiii), (xiv), (xv), (xvi), (xvii), (xviii), (xix) and (xx) of CARO are not applicable. (ii) In respect of its fixed assets: (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of the fixed assets. (b) The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and 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.
TO THE AUDITOR’S REPORT
(vii) According to the information and explanations given to us in respect of statutory dues: (a) The Company has generally been regular in depositing undisputed dues, including Provident Fund, Income-tax, Service Tax, Cess and other material statutory dues applicable to it with the appropriate authorities. (b) There were no undisputed amounts payable in respect of Incometax, Service tax and other material statutory dues in arrears as at 31st March, 2010 for a period of more than six months from the date they became payable. (c) Details of dues of Income-tax which have not been deposited as on 31st March, 2010 on account of disputes are given below:
NATURE OF DUES FORUM WHERE DISPUTE IS PENDING Income Tax Appellate Tribunal PERIOD TO WHICH THE AMOUNT RELATES A.Y. 2002-03 AMOUNT INVOLVED (RUPEES) 188,316
STATUTE
Income Tax Act, 1961
Income Tax
(iii) The Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956. (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 purchases of fixed assets and the sale of services. During the course of our audit, we have not observed any major weakness in such internal control system. (v) To the best of our knowledge and belief and according to the information and explanations given to us, there were no contracts or arrangements that needed to be entered in the Register maintained under Section 301 of the Companies Act, 1956. (vi) In our opinion, the internal audit functions carried out during the year by a firm of Chartered Accountants appointed by the Management have been commensurate with the size of the Company and the nature of its business.
(viii) To the best of our knowledge and according to the information and explanations given to us, no fraud by or on the Company has been noticed or reported during the year.
FOR DELOITTE HASKINS & SELLS Chartered Accountants (Registration No. 117366W)
NALIN M. SHAH
Partner Membership No. 15860 Mumbai April 21, 2010
98
I D F C A N N U A L R E P O R T 09 –10
BALANCE SHEET
RUPEES SCHEDULE RUPEES
AS AT MARCH 31, 2010
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
SOURCES OF FUNDS
Shareholders’ Funds Capital Reserves and Surplus 1 2 60,352,200 777,321,619 837,673,819 60,352,200 496,134,388 556,486,588
APPLICATION OF FUNDS
Fixed Assets Gross Block Less : Depreciation and Amortisation Investments Deferred Tax Asset (See Schedule 14 Note 9) Current Assets, Loans and Advances Sundry Debtors Cash and Bank Balances Loans and Advances Less : Current Liabilities and Provisions Current Liabilities Provisions Net Current Assets Notes to the Accounts Schedules 1 to 14 form an integral part of the Accounts 14 8 9 289,277,128 7,754,015 297,031,143 242,653,351 837,673,819 139,043,228 1,822,886 140,866,114 248,860,194 556,486,588 5 6 7 202,913,006 325,959,039 10,812,449 539,684,494 41,188,184 307,803,319 40,734,805 389,726,308 4 3 9,473,959 6,000,733 3,473,226 587,797,242 3,750,000 13,796,060 9,211,334 4,584,726 284,541,668 18,500,000
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTEE HASKINS & SELLS Chartered Accountants FOR AND ON BEHALF OF THE BOARD
NALIN M . S H A H
VIKRAM LIMAYE
NAISHADH PALEJA
Partner
Director
NARENDRA GANGAN
Director
Mumbai | April 21, 2010
Company Secretary
I D F C C A P I T A L L I M I T E D ( F O R M E R LY , I D F C - S S K I L I M I T E D ) 99
PROFIT AND LOSS ACCOUNT
RUPEES
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
SCHEDULE
APRIL 1, 2009 TO MARCH 31, 2010 813,957,873 10 33,880,623 847,838,496
APRIL 1, 2008 TO MARCH 31, 2009 427,008,350 37,052,499 464,060,849 190,177,424 19,705,208 31,627,673 17,346,986 3,606,992
INCOME
Investment Banking Fees (See Schedule 14 Note 4) Other Income
EXPENDITURE
Staff Expenses Establishment Expenses Other Expenses Provision for Doubtful Debts Depreciation and Amortisation PROFIT BEFORE TAXATION Less : Provision for Taxation Current Tax Add/(Less): Deferred Tax (See Schedule 14 Note 9) Add: Fringe Benefit Tax Add/(Less): Short / (Excess) provision for Income Tax PROFIT AFTER TAXATION Add : Balance as per last Balance Sheet AVAILABLE FOR APPROPRIATION APPROPRIATIONS: Earnings per share (Face Value Rs. 10) (See Schedule 14 Note 8) Basic and Diluted Notes to the Accounts Schedules 1 to 14 form an integral part of the Accounts 14 46.59 24.10 144,700,000 14,750,000 – (616,563) 158,833,437 281,187,231 395,034,388 676,221,619 – 676,221,619 70,000,000 (15,100,000) 920,000 332,406 56,152,406 145,444,160 249,590,228 395,034,388 – 395,034,388 11 12 13 351,201,800 16,242,202 38,064,111 347,369 1,962,346 407,817,828 440,020,668
262,464,283 201,596,566
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTEE HASKINS & SELLS Chartered Accountants FOR AND ON BEHALF OF THE BOARD
NALIN M . S H A H
VIKRAM LIMAYE
NAISHADH PALEJA
Partner
Director
NARENDRA GANGAN
Director
Mumbai | April 21, 2010
100 I D F C A N N U A L R E P O R T 09 –10
Company Secretary
C A S H F L OW ST AT E M E N T
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
CURRENT YEAR
PREVIOUS YEAR 201,596,566 3,606,992 (28,318,774) 428,921 (8,347,143) 5,369 (32,624,635) 168,971,931 63,051,943 (8,346,004) 791,237 (90,571,384) (35,074,208) 133,897,723 (96,908,748) 36,988,975 (895,360) 44,818 (263,956,608) 152,787,061 28,318,774 8,347,143 (75,354,172) (38,365,197) 46,168,516 7,803,319 (38,365,197) 307,803,319 300,000,000 7,803,319
CASH FLOW FROM OPERATING ACTIVITIES:
PROFIT BEFORE TAX Adjustments for Depreciation and Amortisation Interest Income Provision for Gratuity Dividend Income Loss on Sale /Discarding of Fixed Assets B OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES Change in : Sundry Debtors Loans and Advances Fixed Deposit with Scheduled Banks under Lien Current Liabilties D Cash generated from Operations Taxes Paid NET CASH FROM OPERATING ACTIVITIES F E=C+D (161,724,822) 7,522,352 8,466,162 150,233,900 4,497,592 415,122,760 (117,077,718) 298,045,042 (2,048,207) (406,772,336) 103,516,760 28,397,383 5,483,240 G I=F+G (271,423,160) 26,621,882 7,803,319 34,425,201 26,621,882 Note : Cash and Cash Equivalents as per Schedule 6 Less: Fixed Deposits Under Lien Cash and Cash Equivalents as above 325,959,039 291,533,838 34,425,201 C=A+B 1,962,346 (28,397,383) 1,325,414 (5,483,240) 1,197,363 (29,395,500) 410,625,168 A 440,020,668
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Fixed assets Proceeds from Sale of Fixed Assets Purchase of Investments - subsidiary companies Proceeeds from Sale of Investments - others Interest received Dividend received NET CASH USED IN INVESTING ACTIVITIES NET (DECREASE) / INCREASE IN CASH EQUIVALENTS INCREASE /(DECREASE) IN CASH AND EQUIVALENTS Cash and Cash Equivalents as at the beginning of the year (see Note below) Cash and Cash Equivalents as at the end of the year (see Note below)
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTEE HASKINS & SELLS Chartered Accountants FOR AND ON BEHALF OF THE BOARD
NALIN M . S H A H
VIKRAM LIMAYE
NAISHADH PALEJA
Partner
Director
NARENDRA GANGAN
Director
Mumbai | April 21, 2010
Company Secretary
I D F C C A P I T A L L I M I T E D ( F O R M E R LY , I D F C - S S K I L I M I T E D ) 101
SCHEDULES
ANNEXED TO AND FORMING PART OF THE ACCOUNTS
SCHEDULE 1 Capital
AUTHORISED: 7,000,000 equity shares of Rs.10 each ISSUED, SUBSCRIBED AND PAID-UP: 6,035,220 equity shares of Rs.10 each, fully paid-up [All of the above Equity Shares are held by the holding company and its nominees IDFC Securities Limited (Formerly, IDFC - SSKI Securities Ltd.) The Utimate Holding Company is Infrastructure Development Finance Company Limited]
RUPEES
RUPEES
AS AT MARCH 31, 2010 70,000,000 70,000,000 60,352,200
AS AT MARCH 31, 2009 70,000,000 70,000,000 60,352,200
60,352,200
60,352,200
SCHEDULE 2 Reserves and Surplus
Securities Premium Account Profit and Loss Account
RUPEES
RUPEES
AS AT MARCH 31, 2010 101,100,000 676,221,619 777,321,619
AS AT MARCH 31, 2009 101,100,000 395,034,388 496,134,388
SCHEDULE 3 Fixed Assets
DESCRIPTION April 1, 2009 GROSS BLOCK DEPRECIATION AND AMORTISATION April 1, 2009 Charge for
RUPEES
NET BLOCK
March 31,
March 31,
March 31,
March 31,
Additions
Deletions
Deletions
the year
2010
2010
2010
TANGIBLE Furniture & Fixtures Office Equipments Computer Hardware INTANGIBLE Computer Software Total Previous Year 94,276 13,796,060 12,976,960 617,655 2,048,207 895,360 – 6,370,308 711,931 9,473,959 28,412 9,211,334 5,630,415 195,817 1,962,346 3,606,992 – 5,172,947 26,073 224,229 6,000,733 9,211,334 487,702 3,473,226 4,584,726 65,864 4,584,726 5,321,621 3,975,435 4,404,728 – 214,730 1,215,822 5,321,621 961,337 87,350 – 3,228,828 5,533,200 4,156,245 2,304,766 2,721,911 406,012 458,994 901,523 4,562,257 531,416 79,274 – 2,232,344 3,544,160 – 996,484 1,989,040 1,165,376 1,670,669 1,682,817
76,260 13,796,060
102
I D F C A N N U A L R E P O R T 09 –10
2009
As at
As at
As at
As at
As at
As at
SCHEDULE 4 Investments (Unquoted)
I. LONG TERM EQUITY SHARES (FULLY PAID) NUMBER OF SHARES SUBSIDIARIES (TRADE) IDFC Capital (Singapore) Pte Ltd. (3,045,000 Shares purchased during the year) IDFC Fund of Funds Limited IDFC General Partners Limited OTHERS Epsilon Advisors Private Limited SSIPL Retail Private Limited 1,250,000 121,840 INR 10 INR 10 6,505,504.18 10,000 USD 1 USD 1.65 6,655,000 SD1 FACE VALUE
RUPEES
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
216,718,695 303,648,301 769,725 15,135,000 20,585,060 556,856,781
114,364,385 – – 15,135,000 20,585,060 150,084,445
II.
CURRENT (NON-TRADE) MUTUAL FUNDS UNITS NUMBER OF UNITS IDFC Money Manager Fund Treasury Plan C Daily Dividend [Net Asset Value Rs.46,075,461; (Previous Year Rs.149,592,223)] TOTAL INVESTMENTS Less : Provision for Diminution in value of Investments 602,932,242 (15,135,000) 587,797,242 299,676,668 (15,135,000) 284,541,668
RUPEES
FACE VALUE
RUPEES
4,606,855.15
10
46,075,461
149,592,223
SCHEDULE 5 Sundry Debtors (Unsecured)
CONSIDERED GOOD Over six months Others CONSIDERED DOUBTFUL Over six months Less : Provision for Doubtful Debts
RUPEES
RUPEES
AS AT MARCH 31, 2010 67,277 202,845,729 202,913,006 4,789,045 207,702,051 4,789,045 202,913,006
AS AT MARCH 31, 2009 8,276,301 32,911,883 41,188,184 17,346,986 58,535,170 17,346,986 41,188,184
SCHEDULE 6 Cash and Bank Balances
Cash BALANCE WITH SCHEDULED BANKS - in Current Accounts - in Deposit Accounts (See Schedule 14 Note 3)
RUPEES
RUPEES
RUPEES
AS AT MARCH 31, 2010 46,365 34,378,836 291,533,838 325,912,674 325,959,039
AS AT MARCH 31, 2009 13,932 7,789,387 300,000,000 307,789,387 307,803,319
SCHEDULE 7 Loans and Advances (Unsecured considered good)
Interest accrued on Deposits Advance payment of Income Tax (Net of provision) Advances recoverable in cash or in kind or for value to be received Other Deposits
RUPEES
RUPEES
AS AT MARCH 31, 2010 7,178,496 – 3,382,953 251,000 10,812,449
AS AT MARCH 31, 2009 12,461,354 22,400,004 1,873,447 4,000,000 40,734,805
103
I D F C C A P I T A L L I M I T E D ( F O R M E R LY , I D F C - S S K I L I M I T E D )
SCHEDULE 8 Current Liabilities
Sundry Creditors - Other than Micro and Small Enterprises (See Schedule 14 Note 12) Other Liabilities
RUPEES
RUPEES
AS AT MARCH 31, 2010 252,713,173 36,563,955 289,277,128
AS AT MARCH 31, 2009 128,212,431 10,830,797 139,043,228
RUPEES
SCHEDULE 9 Provisions
Provision for Income Tax (Net of Advance Tax) Provision for Employee Benefits (See Schedule 14 Note 5)
RUPEES
AS AT MARCH 31, 2010 4,605,715 3,148,300 7,754,015
AS AT MARCH 31, 2009 – 1,822,886 1,822,886
RUPEES
SCHEDULE 10 Other Income
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Dividend On Current Investments (Non-Trade) Gain On Foreign Exchange Fluctuation (Net) Miscellaneous Income Interest on Bank Deposits [Tax Deducted at source Rs. 32,02,620 (Previous Year Rs. 6,418,070)] 33,880,623 5,483,240 – – 28,397,383
APRIL 1, 2008 TO MARCH 31, 2009 8,347,143 11,768 374,814 28,318,774 37,052,499
RUPEES
SCHEDULE 11 Staff Expenses
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Salaries, Wages and Bonus Contribution to Provident and Other Funds (See Schedule 14 Note 5) [Including Provision for Gratuity Rs.2,180,724; (Previous Year Rs.1,333,821)] Staff Welfare Expenses 1,331,603 351,201,800 340,422,024 9,448,173
APRIL 1, 2008 TO MARCH 31, 2009 181,911,635 7,126,489 1,139,300 190,177,424
RUPEES
SCHEDULE 12 Establishment Expenses
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Rent Rates & Taxes Electricity Repairs and Maintenance Building Equipments Others Insurance Charges 3,365 799,384 249,412 1,052,161 78,670 16,242,202 13,648,800 353,870 1,108,701
APRIL 1, 2008 TO MARCH 31, 2009 17,978,400 2,432 1,024,767 39,888 623,179 25,698 10,844 19,705,208
RUPEES
SCHEDULE 13 Other Expenses
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Travelling and Conveyance Postage, Telephone and Telex Advertising and Publicity Professional Fees Loss on Foreign Exchange Fluctuation(Net) Loss on Sale/Discarding of Fixed Assets (Net) Bank Charges Miscellaneous Expenses Auditors’ Remuneration (See Schedule 14 Note 7) Bad Debts 17,410,259 2,105,443 853,818 7,746,798 7,098 1,197,363 84,458 5,032,063 2,375,000 1,251,811 38,064,111
104 I D F C A N N U A L R E P O R T 09 –10
APRIL 1, 2008 TO MARCH 31, 2009 13,892,695 1,638,880 339,339 9,824,954 5,369 2,444 2,927,435 2,746,269 250,288 31,627,673
SCHEDULE 14: Notes Forming Part of the accounts
Background
IDFC Capital Limited (formerly, IDFC – SSKI Limited) is a wholly-owned subsidiary of IDFC Securities Limited (formerly, IDFC - SSKI Securities Limited). Infrastructure Development Finance Company Limited (“IDFC”) is the ultimate holding Company. The Company is a Category I Merchant Banker registered with the Securities and Exchange Board of India (SEBI).
1 Significant Accounting Policies
A. Accounting convention
These accounts have been prepared in accordance with historical cost convention, applicable Accounting Standards notified by the Companies (Accounting Standards) Rules, 2006 and relevant provisions of the Companies Act, 1956.
B. Use of Estimates
The Company adopts the accrual concept in the preparation of the accounts. The preparation of financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.
C. Inflation
Assets and liabilities are recorded at historical cost to the Company. These costs are not adjusted to reflect the changing value in the purchasing power of money.
D. Revenue recognition
(a) Income from fee-based activities is recognised on the basis of terms of contracts with the clients and when reasonable right of recovery is established and is accounted net of service tax. (b) Interest income is recognised on an accrual basis. (c) Dividend is recognised when the right to receive is established.
E. Fixed assets and Intangible assets
Fixed assets are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated depreciation. Intangible Assets comprising of system software are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated amortisation. Any technology support cost or annual maintenance cost for such software is charged annually to the Profit and Loss Account.
F. Depreciation
¬
Tangible Assets
Depreciation on Fixed Assets, excluding certain electronic items, is provided on the written down value method, at the rates prescribed by Schedule XIV of the Companies Act, 1956. Certain electronic items are depreciated over a period of two years on straight line method based on the Management’s estimate of the useful life of assets. Depreciation on additions during the year is provided on a pro-rata basis. Assets costing less than Rs. 5,000 each are written off in the year of capitalisation.
¬
Intangible Assets
Computer software is amortised over a period of 3 years by using straight-line method. The Company has regular programme of evaluating useful life of its assets.
G. 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 the carrying value other than temporary in nature is provided for. Current investments are valued at cost or market/fair value, whichever is lower. In case of investments in units of mutual funds, the net asset value of units has been considered as the market value.
H. Employee benefits –
DEFINED CONTRIBUTION PLANS
The Company’s contribution to Provident Fund is deposited with Regional Provident Fund Commissioner and is charged to the Profit and Loss Account every year.
¬
I D F C C A P I T A L L I M I T E D ( F O R M E R LY , I D F C - S S K I L I M I T E D )
105
The Company participates in the Ultimate Holding Company’s Superannuation policy, for future payments of Superannuation and the Company’s contribution paid/payable during the year is charged to the Profit and Loss Account every year.
¬
DEFINED BENEFIT PLAN
The net present value of the Company’s obligation towards Gratuity to employees is funded and actuarially determined as at the Balance Sheet date based on the Projected Unit Credit Method. Actuarial gains and losses are recognised in the Profit and Loss Account.
¬
OTHER BENEFITS
¬
The employees are required to avail of the leave entitlement during the financial year and are not entitled to any encashment.
I. Income - Tax
The accounting treatment for income-tax in respect of the Company’s income is based on the Accounting Standard 22 on ‘Accounting for Taxes on Income’ as notified by the Companies (Accounting Standards) Rules, 2006. The provision made for income-tax in the accounts comprises both, the current tax and the deferred tax. The deferred tax assets and liabilities for the year, arising on account of timing differences, are recognised in the Profit and Loss Account and the cumulative effect thereof is reflected in the Balance Sheet. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax asset is recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the Company has unabsorbed depreciation or carried forward losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that the same can be realised against future taxable profits.
J. Contingencies
The Company creates a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
K. Foreign Currency Transactions
Foreign currency transactions are accounted at the exchange rates prevailing on the date of the transaction. Foreign currency monetary items outstanding as at the Balance Sheet date are reported using the closing rate. Gains and losses resulting from the settlement of such transactions and translation of monetary assets and liabilities denominated in foreign currencies are recognised in the Profit and Loss Account.
2 Contingent liabilities not provided for in respect of :
PARTICULARS (a) Claims not acknowledged as debts in respect of : Income-tax demands disputed by the Company (net of amounts provided). The matters in dispute are under appeal. The demands have been paid/adjusted and will be received as refund if the matters are decided in favour of the Company. 188,316 9,167,008 CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
3 Balances in Banks in Fixed Deposits include Rs. 291,533,838 (Previous Year Rs. 300,000,000) which are pledged with HDFC Bank Ltd. for securing short term overdraft facilities to be availed by the Holding Company, IDFC Securities Limited (formerly, IDFC – SSKI Securities Limited) for settlement of institutional trades and margin. 4 (a) The Company has an arrangement with the holding company, IDFC Securities Limited (formerly, IDFC – SSKI Securities Limited) to avail of research, financial advisory and other distribution services on some of the assignment/mandates. In consideration of these services, the Company shares the success fees received from the clients in the ratio mutually agreed upon. An amount of Rs.254,042,007 (Previous year Rs. 62,297,486) has been shared during the year in respect of the above services with the Holding Company.
(b) The Company also has an arrangement with the Ultimate Holding Company, Infrastructure Development Finance Company Limited (IDFC Limited), for its Debt Syndication business on some of the assignments/mandates. In consideration of these services, the Company receives a share from IDFC Limited in the ratio mutually agreed upon. An amount of Rs.112,439,500 (Previous Year Rs. 91,938,719) has been shared during the year in respect of the above services.
5 Employee Benefits –
In accordance with the Accounting Standard –AS15 on “Employee Benefits”, notified by the Companies (Accounting Standards) Rules, 2006, the following disclosures have been made: (i) The Company has recognised the following amounts in the Profit and Loss Account towards contribution to defined contribution plans which are included under Contribution to Provident and Other Funds:
106
I D F C A N N U A L R E P O R T 09 –10
CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
Provident Fund Superannuation Fund
6,704,949 562,500
5,792,668 -
(ii) The details of the Company’s post-retirement benefit plans for gratuity for its employees are given below, which is certified by the actuary and relied upon by the auditors:
RUPEES
PARTICULARS CHANGE IN THE BENEFIT OBLIGATIONS: Liability at the beginning of the year Current Service cost Interest Cost Actuarial Gain Liability at the end of the year FAIR VALUE OF PLAN ASSETS: Fair Value of Plan Assets at the beginning of the year Expected Return on Plan Assets Contributions Actuarial Loss on Plan Assets Fair Value of Plan Assets at the end of the year Total Actuarial Gain to be recognised ACTUAL RETURN ON PLAN ASSETS: Expected Return on Plan Assets Actuarial Loss on Plan Assets Actual Return on Plan Assets AMOUNT RECOGNISED IN THE BALANCE SHEET: Liability at the end of the year Fair Value of Plan Assets at the end of the year Amount recognised in the Balance Sheet under “Provision for Employee Benefits” EXPENSES RECOGNISED IN THE PROFIT AND LOSS ACCOUNT UNDER STAFF EXPENSES Current Service cost Interest Cost Expected Return on Plan Assets Net Actuarial Gain to be recognised Expense recognised in the Profit and Loss Account under staff expenses RECONCILIATION OF THE LIABILITY RECOGNISED IN THE BALANCE SHEET Opening Net Liability Expense recognised Contributions Amount recognised in the Balance Sheet under “Provision for Employee Benefits” Expected Employer’s Contribution next year EXPERIENCE ADJUSTMENTS Defined Benefit Obligation Plan Assets Deficit Experience Adjustment on Plan Liabilities Experience Adjustment on Plan Assets INVESTMENT PATTERN Insurer Managed Fund PRINCIPAL ASSUMPTIONS Discount rate Return on Plan Assets Salary Escalation Rate
AS AT MARCH 31, 2010 3,773,094 3,460,520 578,689 1,709,402 6,102,901 1,950,208 237,575 855,310 88,492 2,954,601 1,620,910 237,575 88,492 149,083 6,102,901 2,954,601 3,148,300 3,460,520 578,689 237,575 1,620,910 2,180,724 1,822,886 2,180,724 855,310 3,148,300 5,000,000 6,102,901 2,954,601 3,148,300 (2,751,189) (88,492) % 100 8.10 8 8
AS AT MARCH 31, 2009 2,303,090 1,251,371 293,243 74,610 3,773,094 909,125 145,122 904,900 8,939 1,950,208 65,671 145,122 8,939 136,183 3,773,094 1,950,208 1,822,886 1,251,371 293,243 145,122 65,671 1,333,821 1,393,965 1,333,821 904,900 1,822,886 2,039,000 3,773,094 1,950,208 1,822,886 (162,937) (8,939) % 100 8 8 6
As the Gratuity fund is managed by life insurance company details of investments are not available with the Company. The estimates of future salary increase, considered in the actuarial valuation takes account of inflation, seniority, promotion and other relevant factors.
I D F C C A P I T A L L I M I T E D ( F O R M E R LY , I D F C - S S K I L I M I T E D ) 107
6 Expenditure in foreign currencies:
RUPEES
PARTICULARS Travelling Expenses Total
CURRENT YEAR 782,990 782,990
PREVIOUS YEAR 93,246 93,246
Earnings in foreign currencies:
RUPEES
PARTICULARS Investment Banking Fees Total
CURRENT YEAR -
PREVIOUS YEAR 5,000,000 5,000,000
7 Auditors’ Remuneration:
RUPEES
PARTICULARS Audit Fees Tax Audit Fees Taxation Services Other Services Out of Pocket Expenses Service tax Total Less: Service tax set off claimed
CURRENT YEAR 1,200,000 400,000 200,000 575,000 244,625 2,619,625 244,625 2,375,000
PREVIOUS YEAR 1,200,000 800,000 200,000 545,000 1,269 302,359 3,048,628 302,359 2,746,269
8 In accordance with the Accounting Standard 20 on ‘Earnings Per Share’ as notified by the Companies (Accounting Standards) Rules, 2006, the Earnings Per Share has been computed as under:
RUPEES
PARTICULARS Net Profit attributable to equity shareholders (A) Number of equity shares issued (B) Basic and Diluted Earnings per share (EPS) [A/B]
CURRENT YEAR 281,187,231 6,035,220 46.59
PREVIOUS YEAR 145,444,160 6,035,220 24.10
9 Deferred Tax:
As per Accounting Standard 22 relating to ‘Accounting for Taxes on Income’ as notified by the Companies (Accounting Standards) Rules, 2006, the Company has taken debit of Rs. 14,750,000 (Previous Year Credit of Rs. 15,100,000) in the Profit & Loss Account towards deferred tax liability (net) on account of timing differences. The major components of deferred tax assets arising on account of timing differences are:
RUPEES
PARTICULARS DEFERRED TAX ASSET Depreciation Provisions Total DEFERRED TAX ASSET
CURRENT YEAR 1,071,083 2,678,917 3,750,000 3,750,000
PREVIOUS YEAR 751,834 17,748,166 18,500,000 18,500,000
10 Segmental Reporting:
The Company is mainly engaged in Merchant Banking business in India, which is considered as the only reportable segment as per Accounting Standard –AS 17 “Segment Reporting” as notified by the Companies (Accounting Standards) Rules, 2006.
11 Related party disclosures:
As per the Accounting Standard 18 on ‘Related Party Disclosures’ as notified by the Companies (Accounting Standards) Rules, 2006, the related parties of the Company are as follows:
I. ULTIMATE HOLDING COMPANY:
Infrastructure Development Finance Company Limited
II. HOLDING COMPANY:
IDFC Securities Limited (formerly, IDFC – SSKI Securities Limited)
108 I D F C A N N U A L R E P O R T 09 –10
III. SUBSIDIARY COMPANIES:
IDFC Capital Singapore Pte. Limited IDFC General Partners Limited (with effect from 30th November, 2009) IDFC Fund of Funds Limited (with effect from 28th October, 2009)
IV. THERE ARE NO TRANSACTIONS WITH FELLOW SUBSIDIARIES.
The nature and volume of transactions carried out with the above related parties in the ordinary course of business:
RUPEES
NAME OF RELATED PARTY AND NATURE OF RELATIONSHIP (A) HOLDING COMPANY
PARTICULARS
CURRENT YEAR
PREVIOUS YEAR
IDFC Securities Limited (formerly, IDFC – SSKI Securities Limited) Fees Paid Creditors and Others Payable (B) ULTIMATE HOLDING COMPANY Infrastructure Development Finance Company Limited Sharing of Fees Other Fees Debtors and Others Receivable
254,042,007 25,291,596 112,439,500 -
62,297,486 91,938,719 138,000 14,881,797
12 There is no interest paid/payable during the year by the Company to suppliers covered under the Micro, Small and Medium Enterprises Development Act, 2006. The above information takes into account only those suppliers who have responded to the enquires made by the Company for this purpose. 13 Prior year comparatives:
The prior year comparatives have been regrouped, recasted and reclassified wherever necessary to confirm with current year’s presentation.
FOR AND ON BEHALF OF THE BOARD
VIKRAM LIMAYE
NAISHADH PALEJA
Director
NARENDRA GANGAN
Director
Mumbai | April 21, 2010
Company Secretary
I D F C C A P I T A L L I M I T E D ( F O R M E R LY , I D F C - S S K I L I M I T E D ) 109
B A L A N C E S H E E T A B ST R A CT
AND COMPANY’S GENERAL BUSINESS PROFILE
I.
REGISTRATION DETAILS Registration No. State Code Balance Sheet Date U 1 3 6 1 1 0 3 2 0 1 0 7 1 9 0 M H 1 9 9 5 P L C 0 9 2 2 2 1
II.
CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000) Public Issue N I L Right Issue N I L
Bonus Issue N III. I L
Private Placement N I L
POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000) Total Liabilities 1 SOURCES OF FUNDS Paid-up Capital 6 0 3 5 2 7 Reserves and Surplus 7 7 3 2 2 1 3 4 7 0 5 1 1 3 4 Total Assets 7 0 5
Secured Loans N APPLICATION OF FUNDS Net Fixed Assets 3 4 7 3 5 8 I L
Unsecured Loans N I L
Investments 7 7 9 7
Net Current Assets 2 4 2 6 5 4
Miscelleneous Expenditure N I L
Deferred Tax Asset (Net) 3 IV. 7 5 0 Total Expenditure 4 0 7 8 1 8
PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000) Turnover / Income 8 4 7 8 3 8
Profit Before Tax 4 4 0 0 2 1 2 8
Profit After Tax 1 1 8 7
Earnings per Share (in Rs.) 4 V. 6 . 5 9
Dividend % N I L
GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS) Item Code No. (ITC Code) Product Description N M I E L R C H A N T B A N K I N G
110
I D F C A N N U A L R E P O R T 09 –10
ST AT E M E N T P U R S U A N T T O S E CT I O N 2 1 2
OF THE COMPANIES ACT, 1956
NAME OF SUBSIDIARY COMPANY 1 2 Financial year of the Subsidiary Companies ended on Equity Shares of Rs.10 each a) Number of Shares b) Extent of Holding 3 Net aggregate amount of Profit/ (Losses) of the Subsidiary, so far as they concern members of IDFC Securities Limited i. For the Financial Year of the Subsidiary a) Dealt with in the accounts of the Holding Company. b) Not dealt with in the accounts of the Holding Company. ii. For the previous financial years of the Subsidiary since it became the Holding Company’s Subsidiary. a) Dealt with in the accounts of the Holding Company. b) Not dealt with in the accounts of the Holding Company.
IDFC CAPITAL (SINGAPORE) PTE. LTD. 31st March 2010 6,655,000 100%
IDFC FUND OF FUNDS LIMITED 31st March 2010 6,505,504.18 100%
IDFC GENERAL PARTNERS LIMITED 31st March 2010 10,000 100%
Nil (110,802,874)
Nil (1,153,369)
Nil Nil
Nil (110,016,386)
Nil Nil
Nil Nil
FOR AND ON BEHALF OF THE BOARD
VIKRAM LIMAYE
NAISHADH PALEJA
Director Mumbai | April 21, 2010
Director
I D F C C A P I T A L L I M I T E D ( F O R M E R LY , I D F C - S S K I L I M I T E D )
111
IDFC - SSKI stock
broking limited
B O A R D O F D I R E CTO R S
? ? ? ?
Mr. Tapasije Mishra Mr. Naishadh Paleja Mr. Pathik Gandotra Mr. Mahehdra N. Shah
A U D I TO R S
?
Deloitte Haskins & Sells Chartered Accountants
P R I N C I PA L B A N K E R S
?
HDFC Bank Limited
R E G I ST E R E D O F F I C E
Naman Chambers, C-32, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai 400 051. TEL +91 22 66222600 FAX +91 22 66222501
112
I D F C A N N U A L R E P O R T 09 –10
D I R E CT O R S ’ R E P O R T
TO THE MEMBERS
Your directors have pleasure in presenting the Eighteenth Annual Report together with the audited accounts for the year ended March 31, 2010. Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are not applicable and hence not given. Since the Company also does not own any manufacturing facility, the disclosure of information on other matters required to be disclosed in terms of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are not applicable and hence not given.
FINANCIAL RESULTS
RUPEES
YEAR ENDED MARCH 31, 2010 Gross Revenue Operating Expenses Net Profit before Tax Provision for Taxation Current Tax Net Profit/(Loss) after tax 350,000 776,662 1,432,017 305,355 1,126,662
YEAR ENDED MARCH 31, 2009 1,438,413 328,768 1,109,645 380,000 729,645
DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors confirm that: the applicable accounting standards have been followed in preparation of annual accounts and there are no material departures;
¬
OPERATIONS
The Company earned gross revenue of Rs.14.32 Lac. The Company has earned a Net profit before tax of Rs 11.27 Lac for the financial year ended March 31, 2010.
they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2010 and the profit of the Company for the year ended on that date;
¬
DIVIDEND
The Directors do not recommend any dividend for the year ended March 31, 2010.
they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and detecting fraud and other irregularities; and
¬ ¬
they have prepared the annual accounts on a going concern basis.
DIRECTORS
Mr. Tapasije Mishra and Mr Mahendra N. Shah are retiring by rotation and being eligible, offer themselves for re-appointment at the ensuing Annual General Meeting. The Board recommends their re-appointment as Directors of the Company.
COMPLIANCE CERTIFICATE
Pursuant to the provisions of Section 383A(1) of the Companies Act, 1956 a certificate from M/s S. S. Rauthan & Associates, Company Secretaries, certifying that the Company has complied with all applicable provisions of the Companies Act, 1956, is attached herewith.
AUDITORS
M/s. Deloitte Haskins & Sells, Chartered Accountants, Mumbai will retire as Auditors of the Company at the ensuing Annual General meeting. Your Directors propose their re-appointment as Auditors of the Company for the financial year ending March 31, 2011. As required under the provisions of Section 224(1B) of the Companies Act, 1956 the Company has obtained a written certificate from the Auditors proposed to be re-appointed to the effect that their re-appointment if made will be in conformity with the limits specified in the said section. The shareholders are requested to re-appoint the auditors and authorise the Board to fix their remuneration for the year 2010-11.
SHAREHOLDERS UPDATE
The Company had shifted its Registered Office from 803/804, Tulsiani Chambers, Nariman Point, Mumbai 400 021 to Naman Chambers, C-32, G- Block, Bandra- Kurla Complex, Bandra (East), Mumbai 400 051 with effect from December 25, 2009.
ACKNOWLEDGEMENTS
The Directors thank the Company’s Bankers and local Authorities for their continued support to the Company. The Directors also express their gratitude for the unstinted support and guidance received from Infrastructure Development Finance Company Limited and other group companies.
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
TAPASIJE MISHRA MAHENDRA N. SHAH
FOREIGN EXCHANGE
There was no income or expenditure in foreign currency during the year under review.
Director Mumbai April 21, 2010
Director
PERSONNEL AND OTHER MATTERS
Since your Company does not have any employee, the provisions of Section 217(2A) of the Companies Act, 1956 read with the
I D F C - S S K I ST O C K B R O K I N G L I M I T E D
113
C O M P L I A N C E C E R T I F I C AT E
To The Members of IDFC - SSKI STOCK BROKING LIMITED MUMBAI.
CIN. U65990MH1992PLC069824 AUTHORISED CAPITAL Rs.2,00,00,000/PAID UP CAPITAL Rs.1,50,00,000/-
12. The Company has not issued any duplicate certificates during the financial year. 13. During the financial year; a. b. c. d. There was no allotment/ transfer/ transmission of securities. The Company has not deposited any amount in a separate bank account as no dividend was declared. The Company has not posted warrants to any member of the Company as no dividend was declared. There was no amounts in unpaid dividend account, application money due for refund, matured deposits, matured debentures and the interest accrued which have remained unclaimed or unpaid for a period of seven years be transferred to Investor Education and Protection Fund. The Company has duly complied with the requirements of Section 217 of the Act.
We have examined the registers, records, books and papers of IDFC – SSKI STOCK BROKING LIMITED (the Company) as required to be maintained under the Companies Act, 1956, (the Act) and the rules made thereunder and also the provisions contained in the Memorandum of Association and Articles of Association of the Company for the financial year ended 31st March, 2010 (financial year). In our opinion, and to the best of our information and according to the examinations carried out by us and explanations furnished to us by the Company, its officers and agents, we certify that in respect of the aforesaid financial year: 1. The Company has kept and maintained all registers as stated in Annexure `A’ to this certificate, as per the provisions of the Act and the rules made there under and all entries therein have been duly recorded. 2. The Company has duly filed the forms and returns as stated in Annexure `B’ to this certificate, with the Registrar of Companies, Regional Director, Central Government, Company Law Board or other authorities within the time prescribed under the Act and the rules made there under. 3. The Company, being a Public Limited Company has the minimum prescribed paid-up capital. 4. The Board of Directors duly met four times respectively on 27th April 2009, 14th July 2009, 14th October 2009 and 21st January 2010 in respect of which meetings proper notices were given and the proceedings were properly recorded and signed including the circular resolutions passed in the Minutes Book maintained for the purpose. 5. The Company was not required to close its Register of Members and/or Transfer Register during the financial year. 6. The Annual General Meeting for the financial year ended on 31st March 2009 was held on 13th July, 2009 after giving due notice to the members of the Company and the resolutions passed thereat were duly recorded in Minutes Book maintained for the purpose. 7. Extra Ordinary General Meeting was held on August 12, 2009 for Alteration of Articles. 8. The Company has not advanced any loan to its Directors or persons or firms or companies referred to under Section 295 of the Act. 9. The Company has not entered into any contracts falling within the purview of Section 297 of the Act. 10. During the financial year under review the Company was not required to make any entries in the register maintained under Section 301 of the Act. 11. As there were no instances falling within the purview of Section 314 of the Act, the Company has not obtained any approvals from the Board of Directors, members or Central Government, as the case may be.
114 I D F C A N N U A L R E P O R T 09 –10
e.
14. The Board of Directors of the Company is duly constituted. There was no appointment of additional directors, alternate directors and directors to fill casual vacancy during the financial year. 15. The Company has not appointed any Managing Director/ Whole Time Director/ Manager during the financial year. 16. The Company has not appointed any sole selling agents during the financial year. 17. The Company was not required to obtain any approvals of the Central Government, Company Law Board, Regional Director, Registrar of Companies and/or such authorities prescribed under the various provisions of the Act. 18. The Directors have disclosed their interest in other firms/ companies to the Board of Directors pursuant to the provisions of the Act and the rules made thereunder. 19. The Company has not issued any shares, debentures or other securities during the financial year. 20. The Company has not bought back any shares during the financial year. 21. There was no redemption of preference shares or debentures during the financial year. 22. There were no transactions necessitating the Company to keep in abeyance the rights to dividend, rights shares and bonus shares pending registration of transfer of shares. 23. The Company has not invited/ accepted any deposits including any unsecured loans falling within the purview of Section 58A during the financial year. 24. The Company has not made any borrowings during the financial year. 25. The Company has not made loans and investments, or given guarantees or provided securities to other bodies corporate during the year. 26. The Company has not altered the provisions of the Memorandum of Association with respect to situation of the Company’s registered office from one state to another during the year under scrutiny.
27. The Company has not altered the provisions of the Memorandum of Association with respect to the objects of the Company during the year under review. 28. The Company has not altered the provisions of the Memorandum of Association with respect to name of the Company during the year under scrutiny. 29. The Company has not altered the provisions of the Memorandum of Association with respect to share capital of the company during the year under scrutiny. 30. The Company has altered its Articles of Association during the financial year 2009-10. 31. There was no prosecutions initiated against or show cause notices received by the Company, during the financial year, for offences under the Act. 32. The Company has not received any money as security from its employees during the financial year.
33. The Company has not deducted any contribution towards Provident Fund during the financial year in terms of Section 418 of the Companies Act, 1956.
FOR S. S. RAUTHAN & ASSOCIATES Company Secretaries
SURJAN SINGH RAUTHAN
(Proprietor) C.P. No.3233
Mumbai April 21, 2010
Annexure – A
Registers as maintained by the Company 1. Register of members under Section 150 and Index of Members under Section 151. 2. Register of Transfers. 3. Register of particulars of contracts in which directors are interested under Section 301. 4. Register of directors, managing director, manager and secretary under Section 303. 5. Register of director’s shareholding under Section 307
4. Form No.23 filed for Alteration of Articles during the financial year. 5. Form No. 32 filed for Cessation of Mr. Mahendra N Shah as an additional Director of the Company u/s 260 of the Companies Act, 1956 at the Annual General Meeting held on 10/07/2008 and Form No. 32 filed for Appointment of Mr. Mahendra N Shah as a Director of the Company u/s 257 of the Companies Act, 1956 w.e.f. 10/07/2008 6. Form No. 23AA filed for maintaining the Books of Account of Company at a place other than Registered Office of the Company. 7. Form No. 18 file for shifting of Registered Office from 803/804 Tulsiani Chambers, Nariman point, Mumbai -400 021 to Naman Chambers, C-32, G–Block, Bandra- Kurla Complex, Bandra (East) – 400 051 w.e.f. 25/12/2009.
Annexure – B
Forms and Returns as filed by the Company with Registrar of Companies, Regional Director, Central Government or other authorities during the financial year ended 31st March 2010. 1. Form No. 20B alongwith Annual Return filed for the year ended 31/03/2009. 2. Form No. 23AC & 23ACA alongwith Balance Sheet and Profit & Loss Account filed for year ended 31/03/2009. 3. Form No. 66 alongwith Compliance Certificate for the year ended 31/03/2009 filed u/s. 383A (1).
FOR S. S. RAUTHAN & ASSOCIATES Company Secretaries
SURJAN SINGH RAUTHAN
(Proprietor) C.P. No.3233 Mumbai April 21, 2010
I D F C - S S K I ST O C K B R O K I N G L I M I T E D
115
AU D I TO RS ’ R E PO RT
To The Members of IDFC - SSKI Stock Broking Limited
1. We have audited the attached Balance Sheet of IDFC - SSKI STOCK BROKING LIMITED (“the Company”) as at March 31, 2010, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditor’s Report) Order, 2003 (CARO) issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. 4. Further to our comments in the Annexure referred to in paragraph 3 above, we report as follows: (a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; (b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books; (c) the Balance Sheet, the Profit and Loss Account 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 Profit and Loss Account and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956; (e) in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (i) (ii) (iii) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2010; in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date and in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.
5. On the basis of the written representations received from the Directors as on 31st March, 2010 taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March, 2010 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956.
FOR DELOITTE HASKINS & SELLS Chartered Accountants (Registration No. 117366W)
NALIN M. SHAH
Partner Membership No. 15860 Mumbai April 21, 2010
116
I D F C A N N U A L R E P O R T 09 –10
ANNEXURE
(Referred to in paragraph 3 of our report of even date) (i) Having regard to the nature of the Company’s business/activities/ result and transactions, etc., clauses (i), (ii), (iv), (vi), (v), (viii), (x), (xi), (xii), (xiii), (xv), (xvi), (xvii), (xviii), (xix) and (xx) of CARO are not applicable. (ii) The Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956. (iii) The Company does not have an internal audit system. (iv) According to the information and explanations given to us in respect of statutory dues: (a) The Company has generally been regular in depositing undisputed dues, including Income-tax and other material statutory dues applicable to it with the appropriate authorities. (b) There were no undisputed amounts payable in respect of Incometax and other material statutory dues in arrears as at 31st March, 2010 for a period of more than six months from the date they became payable. (c) There were no disputed Income Tax, Service Tax and any other material statutory dues which were not deposited as on 31st March, 2010.
FOR DELOITTE HASKINS & SELLS Chartered Accountants (Registration No. 117366W)
NALIN M. SHAH
TO THE AUDITOR’S REPORT
(v) Based on our examination of the records and evaluation of the related internal controls, the Company has maintained proper records of the transactions and contracts in respect of its dealing in mutual funds and timely entries have been made therein. The aforesaid securities have been held by the Company in its own name. (vi) To the best of our knowledge and according to the information and explanations given to us, no fraud by or on the Company has been noticed or reported during the year.
Partner Membership No. 15860 Mumbai April 21, 2010
I D F C - S S K I ST O C K B R O K I N G L I M I T E D
117
BALANCE SHEET
RUPEES SCHEDULE RUPEES
AS AT MARCH 31, 2010
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
SOURCES OF FUNDS
Shareholders’ Funds Capital Reserves and Surplus 1 2 15,000,000 1,780,201 16,780,201 16,780,201 15,000,000 1,003,539 16,003,539 16,003,539 906,453 14,731,496 589,675 10,342,953 Less : Current Liabilities and Provisions Current Liabilities Provision for Income Tax (Net of Advance Tax) Net Current Assets Notes to the Accounts Schedules 1 to 10 form an integral part of the Accounts 10 6 126,845 256,207 383,052 9,959,901 16,780,201 116,665 107,420 224,085 15,097,086 16,003,539 15,321,171
APPLICATION OF FUNDS
Investments Current Assets, Loans and Advances Cash and Bank Balances Loans and Advances 4 5 10,076,369 266,584 3 6,820,300
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants
NALIN M . S H A H MAHENDRA N. SHAH TAPASIJE MISHRA
FOR AND ON BEHALF OF THE BOARD
Partner Mumbai | April 21, 2010
118 I D F C A N N U A L R E P O R T 09 –10
Director
Director
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
SCHEDULE
APRIL 01, 2009 TO MARCH 31, 2010 7 8 1,432,017 – 1,432,017
APRIL 01, 2008 TO MARCH 31, 2009 1,411,270 27,143 1,438,413 328,768 328,768 1,109,645 380,000 729,645 273,894 1,003,539 0.49
INCOME
Operating Income Other Income
EXPENDITURE
Establishment & Other Expenses PROFIT BEFORE TAXATION Less : Provision for Taxation Current Tax PROFIT AFTER TAXATION Add : Balance as per last Balance Sheet Balance Carried forward Earnings per share (Face Value Rs. 10) ( See Schedule 10 Note II.1 ) Basic and Diluted Notes to the Accounts Schedules 1 to 10 form an integral part of the Accounts 10 350,000 776,662 1,003,539 1,780,201 0.52 9 305,355 305,355 1,126,662
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants
NALIN M . S H A H MAHENDRA N. SHAH TAPASIJE MISHRA
FOR AND ON BEHALF OF THE BOARD
Partner Mumbai | April 21, 2010
Director
Director
I D F C - S S K I ST O C K B R O K I N G L I M I T E D
119
C A S H F L OW ST AT E M E N T
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
FOR THE YEAR ENDED MARCH 31, 2010
FOR THE YEAR ENDED MARCH 31, 2009 1,109,645 1,109,645 (428,898) (28,168) (457,066) 652,579 (315,089) 337,490 (906,453) (906,453) (568,963) 15,300,459 14,731,496 (568,963)
A.
CASH FLOW FROM OPERATING ACTIVITIES
Profit before Taxation OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES Changes in : Current Assets, Loans & Advances Current Liabilities 323,091 10,180 333,271 1,459,933 Direct Taxes paid NET CASH FROM OPERATING ACTIVITIES (201,213) 1,258,720 (5,913,846) (5,913,846) (4,655,127) 14,731,496 10,076,369 (4,655,127) 1,126,662 1,126,662
B.
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Investments NET CASH USED IN INVESTING ACTIVITIES Net Decrease in Cash and Cash Equivalents (A+B) Cash and Cash Equivalents as at the beginning of the year as per Schedule 4 Cash and Cash Equivalents as at the end of the year as per Schedule 4
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants
NALIN M . S H A H MAHENDRA N. SHAH TAPASIJE MISHRA
FOR AND ON BEHALF OF THE BOARD
Partner Mumbai | April 21, 2010
120 I D F C A N N U A L R E P O R T 09 –10
Director
Director
SCHEDULES
SCHEDULE 1 Capital
AUTHORISED: 2,000,000 equity shares of Rs. 10 each ISSUED, SUBSCRIBED AND PAID-UP: 1,500,000 equity shares of Rs. 10 each fully paid All the above shares are held by IDFC Securities Limited (Formerly known as IDFC - SSKI Securities Limited). The ultimate holding company is Infrastructure Development Finance Company Limited.
ANNEXED TO AND FORMING PART OF THE ACCOUNTS
RUPEES
RUPEES
AS AT MARCH 31, 2010 20,000,000 20,000,000 15,000,000
AS AT MARCH 31, 2009 20,000,000 20,000,000 15,000,000
15,000,000
15,000,000
SCHEDULE 2 Reserves and Surplus
Profit and Loss Account
RUPEES
RUPEES
AS AT MARCH 31, 2010 1,780,201 1,780,201
AS AT MARCH 31, 2009 1,003,539 1,003,539
SCHEDULE 3 Investments (Non-Trade Unquoted)
RUPEES
RUPEES
AS AT MARCH 31, 2010 I. CURRENT NUMBER OF UNITS IDFC Money Manager Fund Treasury Plan A Daily Dividend [Net Asset Value Rs.6,820,300 (Previous Year Rs.906,453)] 6,820,300 677295.67 FACE VALUE
RUPEES
AS AT MARCH 31, 2009
MUTUAL FUNDS
10
6,820,300
906,453 906,453
SCHEDULE 4 Cash and Bank Balances
- Cash BALANCE WITH SCHEDULED BANKS - in Current Account - in Deposit Account
RUPEES
RUPEES
RUPEES
AS AT MARCH 31, 2010 6,275 170,094 9,900,000 10,070,094 10,076,369
AS AT MARCH 31, 2009 7,335 24,161 14,700,000 14,724,161 14,731,496
SCHEDULE 5 Loans and Advances (Unsecured)
Interest accrued on Deposits
RUPEES
RUPEES
AS AT MARCH 31, 2010 266,584 266,584
AS AT MARCH 31, 2009 589,675 589,675
I D F C - S S K I ST O C K B R O K I N G L I M I T E D
121
SCHEDULE 6 Current Liabilities
Sundry Creditors – Other than Micro and Small Enterprises (See Schedule 10 Note II.5) Other Liabilities
RUPEES
RUPEES
AS AT MARCH 31, 2010 110,300 16,545 126,845
AS AT MARCH 31, 2009 97,803 18,862 116,665
SCHEDULE 7 Operating Income
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Interest on Deposits (Tax Deducted at Source Rs.143,883 Previous Year Rs.290,214/-) Dividend On Current Investment ( Non-Trade ) Profit on Sale of Investments 113,253 594 1,432,017 1,318,170
APRIL 1, 2008 TO MARCH 31, 2009 1,404,817 6,453 1,411,270
SCHEDULE 8 Other Income
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Miscellaneous Income Interest on Income Tax Refund -
APRIL 1, 2008 TO MARCH 31, 2009 25,277 1,866 27,143
SCHEDULE 9 Establishment & Other Expenses
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Rates and Taxes Professional Fees Filling Fees Miscellaneous Expenses Auditors’ Remuneration ( See Schedule 10 Note II.2 ) 2,000 18,545 9,000 60 275,750 305,355
APRIL 1, 2008 TO MARCH 31, 2009 140 43,355 – 6,433 278,840 328,768
122
I D F C A N N U A L R E P O R T 09 –10
SCHEDULE: 10 Notes to the Accounts
Background
The Company is a wholly-owned subsidiary of IDFC Securities Limited (Formerly known as IDFC-SSKI Securities Limited). Infrastructure Development Finance Company Limited (“IDFC”) is the ultimate holding company.
I Significant Accounting Policies
I.1 Accounting convention
The accompanying financial statements are prepared under the historical cost convention on an accrual basis of accounting and comply with the accounting standards as notified by the Companies (Accounting Standards) Rules, 2006 and in accordance with the generally accepted accounting principles (‘GAAP’) and the provisions of the Companies Act, 1956 as adopted consistently by the Company.
I.2 Use of Estimates
The Company adopts the accrual concept in the preparation of the accounts. The preparation of financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.
I.3 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 the carrying value other than temporary in nature is provided for. Current investments are valued at cost or market/fair value, whichever is lower. In case of investments in units of mutual funds, the net asset value of units has been considered as the market value.
I.4 Revenue recognition
I.4.1 Interest income is recognised on an accrual basis. I.4.2 Dividend is recognised when the right to receive is established.
I.5 Taxation
The accounting treatment for income-tax in respect of the Company’s income is based on the Accounting Standard 22 on ‘Accounting for Taxes on Income’ as notified by the Companies (Accounting Standards) Rules, 2006. The provision made for income-tax in the accounts comprises both, the current tax and the deferred tax. The deferred tax assets and liabilities for the year, arising on account of timing differences, are recognised in the Profit and Loss Account and the cumulative effect thereof is reflected in the Balance Sheet. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.
II Notes to Accounts
II.1 Basic & Diluted Earnings Per Share:
RUPEES
PARTICULARS Net Profit attributable to equity shareholders (A) Number of equity shares issued (B) Basic and Diluted Earnings per share (EPS) [A/B]
CURRENT YEAR 776,662 1,500,000 0.52
PREVIOUS YEAR 729,645 1,500,000 0.49
II.2 Auditors’ remuneration:
RUPEES
PARTICULARS Audit Fees Other Services Service Tax Total
CURRENT YEAR 100,000 150,000 25,750 275,750
PREVIOUS YEAR 100,000 150,000 28,840 278,840
I D F C - S S K I ST O C K B R O K I N G L I M I T E D
123
II.3 Related party disclosures
Related party disclosures, as required by Accounting Standard –AS18 “Related Parties Disclosures” as notified by the Companies (Accounting Standards) Rules, 2006.
I. HOLDING COMPANY:
IDFC Securities Limited (Formerly Known as IDFC-SSKI Securities Limited)
II. ULTIMATE HOLDING COMPANY:
Infrastructure Development Finance Company Limited
II.4 Since the Company is engaged only in investing activities, there are no separate reportable segments as per Accounting Standard 17 on
‘Segment Reporting’ as notified by the Companies (Accounting Standards) Rules, 2006.
II.5 There is no interest paid/payable during the year by the Company to suppliers covered under the Micro, Small and Medium Enterprises
Development Act, 2006. The above information takes into account only those suppliers who have responded to the enquires made by the Company for this purpose.
II.6 Prior year comparatives
The prior year comparatives have been regrouped, recasted and reclassified wherever necessary to ensure conformity with current year’s presentation.
FOR AND ON BEHALF OF THE BOARD
MAHENDRA N. SHAH
TAPASIJE MISHRA
Director Mumbai | April 21, 2010
124 I D F C A N N U A L R E P O R T 09 –10
Director
B A L A N C E S H E E T A B ST R A CT
AND COMPANY’S GENERAL BUSINESS PROFILE
I.
REGISTRATION DETAILS Registration No. State Code Balance Sheet Date U 5 3 6 5 1 0 3 2 0 1 0 5 9 9 0 M H 1 9 9 2 P L C 0 6 9 8 2 4
II.
CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000) Public Issue N I L Right Issue N I L
Bonus Issue N III. I L
Private Placement N I L
POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000) Total Liabilities 1 SOURCES OF FUNDS Paid-up Capital 1 5 0 0 0 Reserves and Surplus 1 7 8 0 7 1 6 3 1 7 Total Assets 1 6 3
Secured Loans N APPLICATION OF FUNDS Net Fixed Assets N I L I L
Unsecured Loans N I L
Investments 6 8 2 0
Net Current Assets 9 9 6 0
Miscelleneous Expenditure N I L
Deferred Tax Asset N IV. I L Total Expenditure 3 0 5
PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000) Turnover / Income 1 4 3 2
Profit Before Tax 1 1 2 7
Profit After Tax 7 7 7
Earnings per Share (in Rs.) 0 V. . 5 2
Dividend % N I L
GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS) Item Code No. (ITC Code) Product Description N T I R L A D I N G I N S E C U R I T I E S
I D F C - S S K I ST O C K B R O K I N G L I M I T E D
125
IDFC capital
company limited
B O A R D O F D I R E CTO R S
?
? ?
Mr. A. K. T. Chari Chairman Mr. Sadashiv Rao Mr. Mahendra N. Shah
A U D I TO R S
?
Deloitte Haskins & Sells Chartered Accountants
P R I N C I PA L B A N K E R S
?
HDFC Bank Limited
R E G I ST E R E D O F F I C E
Naman Chambers, C-32, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai 400051. TEL +91 22 42222000 FAX +91 22 26540354
126
I D F C A N N U A L R E P O R T 09 –10
D I R E CT O R S ’ R E P O R T
TO THE MEMBERS
Your directors have pleasure in presenting the Third Annual Report together with the audited accounts for the year ended March 31, 2010.
FOREIGN EXCHANGE EARNINGS AND EXPENDITURE
There was no income or expenditure in foreign currency during the period under review.
PERSONNEL AND OTHER MATTERS
Since your Company does not have any employees, the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are not applicable and hence not given. Since the Company does not own any manufacturing facility, the disclosure of information on other matters required to be disclosed in terms of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1998, are not applicable and hence not given.
PRINCIPAL ACTIVITIES
Your Company’s principal activity is to act as a capital and investment company.
FINANCIAL RESULTS
Your Company is yet to commence full fledged operations. During the year under review, the Company has incurred a loss of Rs.144,275/-.
DIVIDEND
The Directors do not recommend any dividend for the year ended March 31, 2010.
PUBLIC DEPOSITS
During the period under review, your Company has not accepted public deposits under the provisions of Section 58-A of the Companies Act, 1956.
DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors confirm that: the applicable accounting standards have been followed in preparation of annual accounts and there are no material departures;
¬
DIRECTORS
During the year, Dr. Rajiv B. Lall resigned from the Directorship of the Company with effect from October 12, 2009. The Board wishes to place on record its sincere appreciation for his valuable and guidance contribution to the Company. In accordance with the provisions of the Articles of Association of the Company and Companies Act, 1956, Mr. Sadashiv Rao would retire at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.
they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2010 and the loss of the Company for the year ended on that date;
¬
they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and detecting fraud and other irregularities; and
¬ ¬
they have prepared the annual accounts on a going concern basis.
AUDITORS
M/s. Deloitte Haskins & Sells, Ahmedabad will retire as the statutory auditors of the Company at the ensuing Annual General Meeting. The Board of Directors, at its meeting held on April 22, 2010, has proposed the re-appointment of M/s. Deloitte Haskins & Sells, Ahmedabad as statutory auditors to audit the financials of the Company for the year ending March 31, 2011. M/s. Deloitte Haskins & Sells, Ahmedabad have confirmed that their re-appointment, if made, would be in conformity with the provisions of Sections 224 and 226 of the Companies Act, 1956 as also indicated their willingness to be appointed. You are requested to consider their re-appointment.
ACKNOWLEDGEMENTS
The Directors also express their gratitude for the unstinted support and guidance received from Infrastructure Development Finance Company Limited and other group companies.
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
A. K. T. CHARI
Chairman Mumbai April 22, 2010
I D FC CA P I TA L CO M PA N Y L I M I T E D
127
AU D I TO RS ’ R E PO RT
To The Members of IDFC Capital Company Limited
1. We have audited the attached Balance Sheet of IDFC CAPITAL COMPANY LIMITED (“the Company”) as at March 31, 2010, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditor’s Report) Order, 2003 (CARO) issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. 4. Without qualifying our opinion, we invite attention to the Note No. 6 of Schedule 4 regarding the preparation of accounts on a going concern basis. 5. Further to our comments in the Annexure referred to in paragraph 3 above, we report as follows: (a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; (b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books; (c) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account;
FOR DELOITTE HASKINS & SELLS Chartered Accountants (Registration No.117365W)
(d) in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956; (e) in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2010;
(ii) in the case of the Profit and Loss Account, of the loss of the Company for the year ended on that date and (iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date. 6. On the basis of the written representations received from the Directors as on 31st March, 2010 taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March, 2010 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956.
Z. F. BILLIMORIA
Partner (Membership No. 42791)
Mumbai April 22, 2010
128
I D F C A N N U A L R E P O R T 09 –10
ANNEXURE
(Referred to in paragraph 3 of our report of even date) (i) Having regard to the nature of the Company’s business/ activities/result/transactions etc., clauses (i), (ii), (iii), (vi), (vii), (viii), (x), (xi), (xii), (xiii),(xiv), (xv), (xvi), (xvii), (xviii), (xix) and (xx) of CARO are not applicable. (ii) The Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956. (iii) To the best of our knowledge and belief and according to information and explanation given to us, there were no contracts or arrangements required to be entered in the register maintained in pursuance of section 301 of the Companies Act, 1956. (iv) According to the information and explanations given to us in respect of statutory dues: (a) The Company has been regular in depositing undisputed dues, including Income-tax and other material statutory dues applicable to it with the appropriate authorities.
TO THE AUDITOR’S REPORT
(b) There were no undisputed amounts payable in respect of Incometax and other material statutory dues in arrears as at 31st March, 2010 for a period of more than six months from the date they became payable. (v) To the best of our knowledge and according to the information and explanations given to us, no fraud by and on the Company has been noticed or reported during the year.
FOR DELOITTE HASKINS & SELLS Chartered Accountants (Registration No.117365W)
Z. F. BILLIMORIA
Partner (Membership No. 42791) Mumbai April 22, 2010
I D FC CA P I TA L CO M PA N Y L I M I T E D
129
BALANCE SHEET
RUPEES SCHEDULE RUPEES
AS AT MARCH 31, 2010
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
SOURCES OF FUNDS
Shareholders’ Funds Share Capital 1 500,000 500,000 500,000 500,000
APPLICATION OF FUNDS
Current Assets, Loans and Advances Bank Balance Less:Current Liabilities Net Current Liabilities Profit and Loss Account Notes to the Accounts. Schedules 1 to 4 form an integral part of the Accounts 4 2 3 184,241 891,060 (706,819) 1,206,819 500,000 328,516 891,060 (562,544) 1,062,544 500,000
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants
Z. F. B I L L I M O R I A SADASHIV S. RAO MAHENDRA N. SHAH
FOR AND ON BEHALF OF THE BOARD
Partner Mumbai | April 22, 2010
130 I D F C A N N U A L R E P O R T 09 –10
Director
Director
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
SCHEDULE
APRIL 1, 2009 TO MARCH 31, 2010 5,000 1,400 50,000 75,000 – 12,875 144,275 1,062,544 1,206,819 (2.89) 4
APRIL 1, 2008 TO MARCH 31, 2009 19,798 50,000 75,000 10,000 15,656 170,454 892,090 1,062,544 (3.41)
EXPENDITURE
Professional Fees Rates and Taxes Auditors’ Remuneration Audit Fees Other Matters Company Law Matters Service Tax Loss for the year Balance Loss Brought Forward Balance Loss Carried to Balance Sheet Basic and Diluted Earnings Per Share (Face value Rs.10) (See Schedule 4 Note 4) Notes to the Accounts Schedules 1 to 4 form an integral part of the Accounts
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants
Z. F. B I L L I M O R I A SADASHIV S. RAO MAHENDRA N. SHAH
FOR AND ON BEHALF OF THE BOARD
Partner Mumbai | April 22, 2010
Director
Director
I D FC CA P I TA L CO M PA N Y L I M I T E D
131
C A S H F L OW ST AT E M E N T
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010
APRIL 1, 2008 TO MARCH 31, 2009 (170,454)
A.
CASH FLOW FROM OPERATING ACTIVITIES
Loss before tax Adjustments for : Changes in : Current Liabilities NET CASH USED IN OPERATING ACTIVITIES (A) (B) (C) – (144,275) – – (144,275) 328,516 184,241 (144,275) (1,030) (171,484) – – (171,484) 500,000 328,516 (171,484) (144,275)
B. C.
CASH FLOW FROM INVESTING ACTIVITIES
NET CASH FROM INVESTING ACTIVITIES
CASH FLOW FROM FINANCING ACTIVITIES
NET CASH FROM FINANCING ACTIVITIES Net decrease in cash and cash equivalents (A+B+C) Cash and cash equivalents as at the beginning of the year (as per Schedule 2) Cash and cash equivalents as at the end of the year (as per Schedule 2)
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants
Z. F. B I L L I M O R I A SADASHIV S. RAO MAHENDRA N. SHAH
FOR AND ON BEHALF OF THE BOARD
Partner Mumbai | April 22, 2010
132 I D F C A N N U A L R E P O R T 09 –10
Director
Director
SCHEDULES
ANNEXED TO AND FORMING PART OF THE ACCOUNTS
SCHEDULE 1 Share Capital
AUTHORISED: 10,000,000 Equity shares of Rs.10 each ISSUED, SUBSCRIBED & PAID UP 50,000 Equity shares of Rs.10 each, fully paid-up (All the above shares are held by Infrastructure Development Finance Company Limited, the holding company and its nominees)
RUPEES
RUPEES
AS AT MARCH 31, 2010 100,000,000 500,000
AS AT MARCH 31, 2009 100,000,000 500,000
500,000
500,000
SCHEDULE 2 Bank Balance
Balance with Scheduled Bank in Current Account
RUPEES
RUPEES
AS AT MARCH 31, 2010 184,241 184,241
AS AT MARCH 31, 2009 328,516 328,516
SCHEDULE 3 Current Liabilities
Sundry Creditors - Other than Micro and Small Enterprises (See Schedule 4 Note 5) Other Liabilities
RUPEES
RUPEES
AS AT MARCH 31, 2010 885,545 5,515 891,060
AS AT MARCH 31, 2009 884,812 6,248 891,060
I D FC CA P I TA L CO M PA N Y L I M I T E D
133
SCHEDULE 4 Notes Forming Part of the Accounts
1 Significant Accounting Policies
A. Basis of Preparation
The Company adopts the accrual concept in the preparation of accounts. The preparation of financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.
B. Income Tax
The accounting treatment for income-tax in respect of the Company’s income is based on the Accounting Standard 22 on ‘Accounting for Taxes on Income’ as notified by the Companies (Accounting Standards) Rules, 2006. The provision made for income-tax in the accounts comprises both, the current tax and the deferred tax. The deferred tax assets and liabilities for the year, arising on account of timing differences, are recognised in the Profit and Loss Account and the cumulative effect thereof is reflected in the Balance Sheet. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the Company has unabsorbed depreciation or carry forward tax losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that the same can be realised against future taxable profits.
2 The Company is yet to commence its commercial operations. Accordingly, there are no separate reportable segments as per Accounting Standard 17 on ‘Segment Reporting’ as notified by the Companies (Accounting Standards) Rules, 2006. 3 As per the Accounting Standard 18 on ‘Related Party Disclosures’ as notified by the Companies (Accounting Standards) Rules, 2006, the related parties of the Company are as follows:
(a) Relationship: Holding Company: Infrastructure Development Finance Company Limited (b) The nature and volume of transactions carried out with the above related party in the ordinary course of business are as follows:
NAME OF THE RELATED PARTY Infrastructure Development Finance Company Limited PARTICULARS Amount Payable CURRENT YEAR
(RUPEES)
PREVIOUS YEAR
(RUPEES)
835,910
835,910
4 In accordance with the Accounting Standard 20 on ‘Earnings Per Share’ as notified by the Companies (Accounting Standards) Rules, 2006; the Earnings Per Share is as under:
PARTICULARS Loss After Tax (Rs.) Weighted average number of equity shares (Nos.) Basic and Diluted Earnings Per Share (Rs.) Nominal Value Per Share (Rs.) CURRENT YEAR (144,275) 50,000 (2.89) 10.00 PREVIOUS YEAR (170,454) 50,000 (3.41) 10.00
5 The Company has no amounts due to any micro, small and medium enterprises as defined under Micro Small and Medium Enterprises Development Act, 2006 as on March 31, 2010. 6 The accounts of the Company have been prepared on a going concern basis. The Company continues to be a going concern in view of the commitment and financial support from its holding company, Infrastructure Development Finance Company Limited, regarding the amounts due to it and other liabilities as and when they fall due for payment 7 The figures for the previous year have been regrouped / rearranged wherever necessary.
FOR AND ON BEHALF OF THE BOARD
SADASHIV S. RAO
MAHENDRA N. SHAH
Director Mumbai | April 22, 2010
134 I D F C A N N U A L R E P O R T 09 –10
Director
B A L A N C E S H E E T A B ST R A CT
AND COMPANY’S GENERAL BUSINESS PROFILE
I.
REGISTRATION DETAILS Registration No. State Code Balance Sheet Date U 1 3 6 1 1 0 3 2 0 1 0 5 9 9 3 M H 2 0 0 7 P L C 1 7 5 3 3 5
II.
CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000) Public Issue N I L Right Issue N I L
Bonus Issue N III. I L
Private Placement N I L
POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000) Total Liabilities 1 SOURCES OF FUNDS Paid-up Capital 5 0 0 Reserves and Surplus N I L 8 4 Total Assets 1 8 4
Secured Loans N APPLICATION OF FUNDS Net Fixed Assets N I L I L
Unsecured Loans N I L
Investments N I L
Net Current Assets (7 0 7)
Deferred Tax Asset N I L
Profit and Loss Account 1 IV. 2 0 7
PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000) Turnover / Income N I L Total Expenditure 1 4 4
Profit Before Tax (1 4 4)
Profit After Tax (1 4 4)
Earnings per Share (in Rs.) (2 V. . 8 9)
Dividend % N I L
GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS) Item Code No. (ITC Code) Product Description N I I N L V E S T M E N T C O M P A N Y
I D FC CA P I TA L CO M PA N Y L I M I T E D
135
IDFC ppp
trusteeship company limited
B O A R D O F D I R E CTO R S
?
? ?
Mr. Anil Baijal Chairman Mr. Cherian Thomas Mr. Mahendra N. Shah
A U D I TO R S
?
Deloitte Haskins & Sells Chartered Accountants
P R I N C I PA L B A N K E R S
?
HDFC Bank Limited
R E G I ST E R E D O F F I C E
Naman Chambers, C-32, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai 400051. TEL +91 22 42222000 FAX +91 22 26540354
136
I D F C A N N U A L R E P O R T 09 –10
D I R E CT O R S ’ R E P O R T
TO THE MEMBERS
Your directors have pleasure in presenting the Third Annual Report together with the audited accounts for the year ended March 31, 2010. Sections 224 and 226 of the Companies Act, 1956 as also indicated their willingness to be appointed. You are requested to consider their reappointment.
FOREIGN EXCHANGE EARNINGS AND EXPENDITURE
There was no income or expenditure in foreign currency during the period under review.
PRINCIPAL ACTIVITIES
Your Company’s principal activity is to act as trustee in general and particular for investment fund, debt fund, mutual fund, venture capital fund or any other pool or portfolio of securities and to set up, constitute, promote, settle and executive trusts and/or companies or other entities and to act as, or, exercise powers of trustees, executers, administrators, receivers, managers, treasurers, attorneys, nominees and agent to the debenture holders. During the year, your Company has been appointed as a Trustee to PPP Capacity Building Trust. This trust would be set up under IDFC Foundation, a division proposed to be set up by Infrastructure Development Finance Company Limited, which shall undertake initiatives on the matters of research/advisory on policy, PPP advisory & capacity building and CSR.
PERSONNEL AND OTHER MATTERS
Since your Company does not have any employees, the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) rules, 1988, are not applicable and hence not given. Since the Company does not own any manufacturing facility, the disclosure of information on other matters required to be disclosed in terms of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1998, are not applicable and hence not given.
DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors confirm that: the applicable accounting standards have been followed in preparation of annual accounts and there are no material departures;
¬
FINANCIAL RESULTS
Your Company is yet to commence full fledged operations. During the year under review, the Company has incurred a loss of Rs.135,234/-.
DIVIDEND
Your Directors do not recommend any dividend for the period ended March 31, 2010.
PUBLIC DEPOSITS
During the period under review, your Company has not accepted public deposits under Section 58-A of the Companies Act, 1956.
they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2010 and the loss of the Company for the year ended on that date;
¬
DIRECTORS
In terms of the provisions of the Articles of Association of the Company, Mr. Cherian Thomas would retire at the ensuing Annual General Meeting and being eligible, offers himself for reappointment.
they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and detecting fraud and other irregularities; and
¬ ¬
they have prepared the annual accounts on a going concern basis.
ACKNOWLEDGEMENTS
The Directors also express their gratitude for the unstinted support and guidance received from Infrastructure Development Finance Company Limited and other group companies.
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
ANIL BAIJAL
AUDITORS
M/s. Deloitte Haskins & Sells, Ahmedabad will retire as the statutory auditors of the Company at the ensuing Annual General Meeting. The Board of Directors, at its meeting held on April 22, 2010, has proposed the reappointment of M/s. Deloitte Haskins & Sells, Ahmedabad as statutory auditors for the financial year ending March 31, 2011. M/s. Deloitte Haskins & Sells, Ahmedabad have confirmed that their reappointment, if made, would be in conformity with the provisions of
Chairman Mumbai April 22, 2010
I D F C P P P T R U ST E E S H I P C O M P A N Y L I M I T E D
137
AU D I TO RS ’ R E PO RT
To The Members of IDFC PPP TRUSTEESHIP COMPANY LIMITED
1. We have audited the attached Balance Sheet of IDFC PPP TRUSTEESHIP COMPANY LIMITED (“the Company”) as at March 31, 2010, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditor’s Report) Order, 2003 (CARO) issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. 4. Further to our comments in the Annexure referred to in paragraph 3 above, we report as follows: (a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; (b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books; (c) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account;
FOR DELOITTE HASKINS & SELLS Chartered Accountants (Registration No.117365W)
Z. F. BILLIMORIA
(d) in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956; (e) in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (i) (ii) (iii) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2010; in the case of the Profit and Loss Account, of the loss of the Company for the year ended on that date and in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.
5. On the basis of the written representations received from the Directors as on 31st March, 2010 taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March, 2010 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956.
Partner (Membership No. 42791) Mumbai April 22, 2010
138
I D F C A N N U A L R E P O R T 09 –10
ANNEXURE
TO THE AUDITOR’S REPORT
(Referred to in paragraph 3 of our report of even date) (i) Having regard to the nature of the Company’s business/ activities/result/transactions etc., clauses (i), (ii), (vi), (vii), (viii), (x), (xi), (xii), (xiii), (xiv), (xv), (xvi), (xvii), (xviii), (xix) and (xx) of CARO are not applicable. (ii) The Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956. (iii) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to the sale of services. During the course of our audit, we have not observed any major weakness in such internal control system. (iv) To The best of our knowledge and belief and according to information and explanation given to us, there were no contracts or arrangements required to be entered in the register maintained in pursuance of section 301 of the Companies Act, 1956. (v) According to the information and explanations given to us in respect of statutory dues:
(a) The Company has been regular in depositing undisputed dues, including Income-tax and other material statutory dues applicable to it with the appropriate authorities. (b) There were no undisputed amounts payable in respect of Income-tax and other material statutory dues in arrears as at 31st March, 2010 for a period of more than six months from the date they became payable. (vi) To the best of our knowledge and according to the information and explanations given to us, no fraud by and on the Company has been noticed or reported during the year.
FOR DELOITTE HASKINS & SELLS Chartered Accountants (Registration No.117365W)
Z. F. BILLIMORIA
Partner (Membership No. 42791) Mumbai April 22, 2010
I D F C P P P T R U ST E E S H I P C O M P A N Y L I M I T E D
139
BALANCE SHEET
RUPEES SCHEDULE RUPEES
AS AT MARCH 31, 2010
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
SOURCES OF FUNDS
Shareholders’ Funds Share Capital 1 500,000 500,000 500,000 500,000
APPLICATION OF FUNDS
Current Assets, Loans and Advances Bank Balance Less:Current Liabilities Net Current Assets Profit and Loss Account Notes to the Accounts. Schedules 1 to 4 form an integral part of the Accounts 4 2 3 136,844 55,150 81,694 418,306 500,000 272,078 55,150 216,928 283,072 500,000
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants
Z. F. B I L L I M O R I A CHERIAN THOMAS MAHENDRA N. SHAH
FOR AND ON BEHALF OF THE BOARD
Partner
Director
Director
Mumbai | April 22, 2010
140 I D F C A N N U A L R E P O R T 09 –10
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
SCHEDULE
APRIL 1, 2009 TO MARCH 31, 2010 9,041 9,041 5,000 1,400 50,000 75,000 12,875 144,275 135,234 283,072 418,306 (2.70) 4
APRIL 1, 2008 TO MARCH 31, 2009 18,582 50,000 75,000 10,000 15,656 169,238 169,238 113,834 283,072 (3.38)
INCOME
Trusteeship Fees Total
EXPENDITURE
Professional Fees Rates and Taxes Auditors’ Remuneration Audit Fees Other Matters Company Law Matters Service Tax Loss for the year Balance Loss Brought Forward Balance Loss Carried to Balance Sheet Basic and Diluted Earnings Per Share (Face value Rs.10) (See Schedule 4 Note 4) Notes to the Accounts. Schedules 1 to 4 form an integral part of the Accounts
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants
Z. F. B I L L I M O R I A CHERIAN THOMAS MAHENDRA N. SHAH
FOR AND ON BEHALF OF THE BOARD
Partner
Director
Director
Mumbai | April 22, 2010
I D F C P P P T R U ST E E S H I P C O M P A N Y L I M I T E D 141
C A S H F L OW ST AT E M E N T
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010
APRIL 1, 2008 TO MARCH 31, 2009 (169,238)
A.
CASH FLOW FROM OPERATING ACTIVITIES
Loss before tax Adjustments for : Changes in : Current Liabilities NET CASH USED IN OPERATING ACTIVITIES (A) (B) (C) (135,234) (135,234) 272,078 136,844 (135,234) (58,684) (227,922) (227,922) 500,000 272,078 (227,922) (135,234)
B. C.
CASH FLOW FROM INVESTING ACTIVITIES
NET CASH FROM INVESTING ACTIVITIES
CASH FLOW FROM FINANCING ACTIVITIES
NET CASH FROM FINANCING ACTIVITIES Net decrease in cash and cash equivalents (A+B+C) Cash and cash equivalents as at the beginning of the year (as per Schedule 2) Cash and cash equivalents as at the end of the year (as per Schedule 2)
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants
Z. F. B I L L I M O R I A CHERIAN THOMAS MAHENDRA N. SHAH
FOR AND ON BEHALF OF THE BOARD
Partner
Director
Director
Mumbai | April 22, 2010
142 I D F C A N N U A L R E P O R T 09 –10
SCHEDULES
ANNEXED TO AND FORMING PART OF THE ACCOUNTS
SCHEDULE 1 Share Capital
AUTHORISED: 100,000 Equity shares of Rs.10 each ISSUED, SUBSCRIBED & PAID UP 50,000 Equity shares of Rs.10 each, fully paid-up (All the above shares are held by Infrastructure Development Finance Company Limited, the holding company and its nominees)
RUPEES
RUPEES
AS AT MARCH 31, 2010 1,000,000 500,000
AS AT MARCH 31, 2009 1,000,000 500,000
500,000
500,000
SCHEDULE 2 Bank Balance
Balance with Scheduled Bank in Current Account
RUPEES
RUPEES
AS AT MARCH 31, 2010 136,844 136,844
AS AT MARCH 31, 2009 272,078 272,078
SCHEDULE 3 Current Liabilities
Sundry Creditors - Other than Micro and Small Enterprises (See Schedule 4 Note 5) Other Liabilities
RUPEES
RUPEES
AS AT MARCH 31, 2010 49,635 5,515 55,150
AS AT MARCH 31, 2009 48,902 6,248 55,150
I D F C P P P T R U ST E E S H I P C O M P A N Y L I M I T E D
143
SCHEDULE 4 Notes Forming Part of the Accounts
1 SIGNIFICANT ACCOUNTING POLICIES
A. Basis of Preparation
The Company adopts the accrual concept in the preparation of accounts. The preparation of financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.
B. Revenue Recognition
Trusteeship fees are accounted for on accrual basis.
C. Income Tax
The accounting treatment for income-tax in respect of the Company’s income is based on the Accounting Standard 22 on ‘Accounting for Taxes on Income’ as notified by the Companies (Accounting Standards) Rules, 2006. The provision made for income-tax in the accounts comprises both, the current tax and the deferred tax. The deferred tax assets and liabilities for the year, arising on account of timing differences, are recognised in the Profit and Loss Account and the cumulative effect thereof is reflected in the Balance Sheet. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the Company has unabsorbed depreciation or carry forward tax losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that the same can be realised against future taxable profits.
2 The Company is engaged in the business of providing trusteeship services in India. As such there is no separate reportable segment as per Accounting Standard 17 on ‘Segment Reporting’ as notified by the Companies (Accounting Standards) Rules, 2006. 3 As per the Accounting Standard 18 on ‘Related Party Disclosures’ as notified by the Companies (Accounting Standards) Rules, 2006, the related parties of the Company are as follows:
(a) Relationship: Holding Company: Infrastructure Development Finance Company Limited Enterprise Controlled by the Holding Company: India PPP Capacity Building Trust (b) The nature and volume of transactions carried out with the above related party in the ordinary course of business are as follows:
NAME OF THE RELATED PARTY India PPP Capacity Building Trust PARTICULARS Trusteeship Fees CURRENT YEAR
(RUPEES)
PREVIOUS YEAR
(RUPEES)
9,041
Nil
4 In accordance with the Accounting Standard 20 on ‘Earnings Per Share’ as notified by the Companies (Accounting Standards) Rules, 2006; the Earnings Per Share is as under:
PARTICULARS Loss After Tax (Rs.) Weighted average number of equity shares (Nos.) Basic and Diluted Earnings Per Share (Rs.) Nominal Value Per Share (Rs.) CURRENT YEAR (135,234) 50,000 (2.70) 10.00 PREVIOUS YEAR (169,238) 50,000 (3.38) 10.00
5 The Company has no amounts due to any micro, small and medium enterprises as defined under Micro Small and Medium Enterprises
Development Act, 2006 as on March 31, 2010.
6 The figures for the previous year have been regrouped / rearranged wherever necessary.
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants
Z. F. B I L L I M O R I A CHERIAN THOMAS MAHENDRA N. SHAH
FOR AND ON BEHALF OF THE BOARD
Partner
Director
Director
Mumbai | April 22, 2010
144 I D F C A N N U A L R E P O R T 09 –10
B A L A N C E S H E E T A B ST R A CT
AND COMPANY’S GENERAL BUSINESS PROFILE
I.
REGISTRATION DETAILS Registration No. State Code Balance Sheet Date U 1 3 6 1 1 0 3 2 0 1 0 7 1 9 0 M H 2 0 0 7 P L C 1 7 4 8 6 7
II.
CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000) Public Issue N I L Right Issue N I L
Bonus Issue N III. I L
Private Placement N I L
POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000) Total Liabilities 1 SOURCES OF FUNDS Paid-up Capital 5 0 0 Reserves and Surplus N I L 3 7 Total Assets 1 3 7
Secured Loans N APPLICATION OF FUNDS Net Fixed Assets N I L I L
Unsecured Loans N I L
Investments N I L
Net Current Assets 8 2
Deferred Tax Asset N I L
Profit and Loss Account 4 IV. 1 8
PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000) Turnover / Income 9 Profit Before Tax (1 3 5) Total Expenditure 1 4 4
Profit After Tax (1 3 5)
Earnings per Share (in Rs.) (2 V. . 7 0)
Dividend % N I L
GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS) Item Code No. (ITC Code) Product Description N T I R L U S T E E S E R V I C E S
I D F C P P P T R U ST E E S H I P C O M P A N Y L I M I T E D
145
IDFC projects
limited
?
B O A R D O F D I R E CTO R S
? ? ? ?
Dr. Rajiv B. Lall Chairman Mr. Vikram Limaye Mr. A. K. T. Chari Mr. Sadashiv Rao Mr. Mahendra N. Shah
A U D I TO R S
?
Deloitte Haskins & Sells Chartered Accountants
P R I N C I PA L B A N K E R S
?
HDFC Bank Limited
R E G I ST E R E D O F F I C E
Naman Chambers, C-32, G-Block, Bandra-Kurla Complex, Bandra(East), Mumbai 400051. TEL +91 22 42222000 FAX +91 22 26540354
146
I D F C A N N U A L R E P O R T 09 –10
D I R E CT O R S ’ R E P O R T
TO THE MEMBERS
Your Directors have pleasure in presenting the Third Annual Report together with the audited accounts for the year ended March 31, 2010.
AUDIT COMMITTEE
The Audit Committee consists of three Directors Mr. Vikram Limaye, Mr. Sadashiv Rao and Mr. Mahendra N Shah. The functions of the Committee include reviewing the half yearly and annual financial statements, internal control systems and significant accounting policies of the Company and discussing the audit findings and recommendations of the internal and statutory auditors of the Company.
PRINCIPAL ACTIVITIES
Your Company’s principal activity is to design, develop, engineer, finance, construct, operate and maintain infrastructure projects.
OPERATIONAL REVIEW
Your Company has continued to focus on projects in power sector and road sector. A team of professionals has also been put in place to pursue projects in these sectors. Your Company acquired 51% stake in Dheeru Powergen Private Limited (DPPL). DPPL is in the process of setting up a 1050 MW coalfired thermal power plant at District Korba, State of Chhattisgarh, India (the “Project”). The Project has made substantial progress during the year. It has received coal linkage for the entire capacity. The environment clearance from Ministry of Environment and Forests has been obtained. The water requirement for the Project has been tied up. Land for the Project is in advanced stages of acquisition. The Project has received open access and the Bulk Power Transmission Agreement has been signed with Power Grid Corporation of India Limited. The International Competitive Bidding process for BTG has begun and bids are expected in April 2010. Your Company submitted pre-qualification application for 17 National Highway Authority of India (NHAI) road projects. It has been shortlisted to the RFP stage in 7 projects and expects to be short listed for the remaining projects. Your Company has forged partnerships with PLUS Expressways Malaysia, Punj Lloyd Limited and Simplex Infrastructures Limited. Your Company also submitted the financial bid for one project but did not win the same. Your Company submitted the Concept Paper on the Peninsular Region Industrial Development (PRIDe) Corridor (the erstwhile Chennai-Bengaluru-Mumbai Industrial Corridor) to the Department of Industrial Policy & Promotion.
AUDITORS
M/s. Deloitte Haskins & Sells, will retire as the statutory auditors of the Company at the ensuing Annual General Meeting. The Board of Directors, at its meeting held on April 19, 2010 for the financial year ending March 31, 2010 has proposed the re-appointment of M/s. Deloitte Haskins & Sells, as statutory auditors to audit the financials of the Company for the year ending March 31, 2011. M/s. Deloitte Haskins & Sells, have confirmed that their re-appointment, if made, would be in conformity with the provisions of Sections 224 and 226 of the Companies Act, 1956 as also indicated their willingness to be appointed. You are requested to consider their appointment.
FOREIGN EXCHANGE EARNINGS AND EXPENDITURE
There was no income or expenditure in foreign currency during the period under review.
PERSONNEL AND OTHER MATTERS
As required by the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, names and other particulars of the employees are set out in the annexure to the Directors’ Report. Since the Company does not own any manufacturing facility, the disclosure of information on other matters required to be disclosed in terms of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1998, are not applicable and hence not given.
FINANCIAL RESULTS
During the period under review, the Company has incurred a loss of Rs. 8.38 Crore.
DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors confirm that: the applicable accounting standards have been followed in preparation of annual accounts and there are no material departures;
¬
DIVIDEND
The Directors do not recommend any dividend for the year ended March 31, 2010.
PUBLIC DEPOSITS
During the year under review, your Company has not accepted public deposits under the provisions of section 58-A of the Companies Act, 1956.
they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2010 and the loss of the Company for the year ended on that date;
¬
DIRECTORS
In accordance with the provisions of the Articles of Association and Companies Act, 1956, Dr. Rajiv B. Lall and Mr. Vikram Limaye would retire at the ensuing Annual General Meeting and being eligible, offers themselves for re-appointment.
they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and detecting fraud and other irregularities; and
¬ ¬
they have prepared the annual accounts on a going concern basis.
I D F C P R O J E CT S L I M I T E D 147
SUBSIDIARY COMPANY
Dheeru Powergen Private Limited is the Subsidiary Company of IDFC Projects Limited which is a stand-alone infrastructure developer. Statement pursuant to Section 212 of the Companies Act, 1956, relating to of Dheeru Powergen Private Limited, is attached hereto.
ACKNOWLEDGEMENTS
The Board also express their gratitude for the unstinted support and guidance received from Infrastructure Development Finance Company Limited and other group companies, NHAI and Gujarat Government. The Board would also like to express their sincere thanks and appreciation to all employees for their commendable teamwork, exemplary professionalism and enthusiastic contribution during the year.
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
RAJIV B . L A L L
Chairman
Mumbai April 19, 2010
148
I D F C A N N U A L R E P O R T 09 –10
AU D I TO RS ’ R E PO RT
TO THE MEMBERS OF IDFC PROJECTS LIMITED
1. We have audited the attached Balance Sheet of IDFC PROJECTS LIMITED (“the Company”) as at March 31, 2010, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditor’s Report) Order, 2003 (CARO) issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. 4. Further to our comments in the Annexure referred to in paragraph 3 above, we report as follows: (a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; (b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books; (c) the Balance Sheet, the Profit and Loss Account 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 Profit and Loss Account and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956; (e) in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2010;
(ii) in the case of the Profit and Loss Account, of the loss of the Company for the year ended on that date and (iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date. 5. On the basis of the written representations received from the Directors as on 31st March, 2010 taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March, 2010 from being appointed as a director in terms of Section 274(1) (g) of the Companies Act, 1956.
FOR DELOITTE HASKINS & SELLS Chartered Accountants (Registration No. 117366W)
NALIN M. SHAH
Partner Membership No. 15860 Mumbai April 19, 2010
I D F C P R O J E CT S L I M I T E D
149
ANNEXURE
(Referred to in paragraph 3 of our report of even date) (i) Having regard to the nature of the Company’s business/ activities/result/transactions etc., clauses (i)(c), (ii), (viii), (x), (xi), (xii), (xiii), (xiv), (xvi), (xvii), (xix) and (xx) of CARO are not applicable. (ii) In respect of its fixed assets: (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of the fixed assets. (b) The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanation given to us, no material discrepancies were noticed on such verification. (iii) In respect of loans, secured or unsecured, granted by the Company to companies, firms or other parties covered in the Register under Section 301 of the Companies Act, 1956, according to the information and explanations given to us: (a) The Company has granted loan aggregating Rs. 30,000,000 to 1 party during the year. At the year-end, there was no outstanding balance of this loan and the maximum amount involved during the year was Rs. 30,000,000 (1 party). (b) The rate of interest and other terms and conditions of such loans are, in our opinion, prima facie not prejudicial to the interests of the Company. (c) The receipts of principal amounts and interest have been regular/as per stipulation.
TO THE AUDITOR’S REPORT
(viii) In our opinion, the internal audit functions carried out during the year by a firm appointed by the Management have been commensurate with the size of the Company and the nature of its business. (ix) According to the information and explanations given to us in respect of statutory dues: (a) The Company has been regular in depositing undisputed dues, including Provident Fund, Income Tax, Service Tax, Cess and other material statutory dues applicable to it with the appropriate authorities. (b) There were no undisputed amounts payable on account of the above dues outstanding as at 31st March, 2010 for a period of more than six months from the date they became payable. (c) There were no disputed Income Tax, Service Tax and any other material statutory dues which were not deposited as on 31st March, 2010.
(x) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by others from banks and financial institutions are not prima facie prejudicial to the interests of the Company. (xi) According to the information and explanations given to us, the Company has made preferential allotment of shares to a party covered in the Register maintained under Section 301 of the Companies Act, 1956 at a price which is prima facie not prejudicial to the interests of the Company. (xii) To the best of our knowledge and according to the information and explanations given to us, no fraud by or on the Company has been noticed or reported during the year.
(iv) The Company has not taken any loans, secured or unsecured, from companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956. (v) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of fixed assets and the sale of services. During the course of our audit, we have not observed any major weakness in such internal control system. (vi) To the best of our knowledge and belief and according to the information and explanations given to us, there were no contracts or arrangements that needed to be entered in the Register maintained under Section 301 of the Companies Act, 1956. (vii) According to the information and explanations given to us, the Company has not accepted any deposit from the public during the year.
FOR DELOITTE HASKINS & SELLS Chartered Accountants (Registration No. 117366W)
NALIN M. SHAH
Partner Membership No. 15860
Mumbai April 19, 2010
150
I D F C A N N U A L R E P O R T 09 –10
BALANCE SHEET
RUPEES SCHEDULE RUPEES
AS AT MARCH 31, 2010
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
SOURCES OF FUNDS
Shareholders’ Funds Share Capital 1 340,500,000 340,500,000 90,500,000 90,500,000
APPLICATION OF FUNDS
Fixed Assets Gross Block Less: Accumulated Depreciation Net Block Investments Current Assets, Loans and Advances Sundry Debtors Cash and Bank Balance Loans and Advances Less: Current Liabilities and Provisions Current Liabilities Provisions Net Current Liabilities Profit and Loss Account Notes forming part of the Accounts Schedules 1 to 12 form an integral part of the Accounts 12 4 5 6 7 156,522,334 2,482,309 159,004,643 (119,412,647) 179,098,247 340,500,000 10,954,186 1,948,053 12,902,239 (5,226,543) 95,300,178 90,500,000 9,501,803 3,036,092 27,054,101 39,591,996 1,762,533 1,020,650 4,892,513 7,675,696 3 2 1,266,448 451,248 815,200 279,999,200 555,215 128,850 426,365 -
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants
NALIN M . S H A H RAJIV B. LALL VIKRAM LIMAYE
FOR AND ON BEHALF OF THE BOARD
Partner
Chairman
V. NARAYANAN
Director
Mumbai | April 19, 2010
Company Secretary & Manager
I D F C P R O J E CT S L I M I T E D 151
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
SCHEDULE
APRIL 1, 2009 TO MARCH 31, 2010 8 10,465,733 10,465,733
APRIL 1, 2008 TO MARCH 31, 2009 3,952,039 3,952,039 52,844,508 3,421,857 28,471,758 6,392,114 128,850 91,259,087 87,307,048 800,000 88,107,048 7,193,130 95,300,178 (20.35)
INCOME
Operating Income
EXPENDITURE
Staff Expenses Establishment Expenses Other Expenses Provision for Doubtful Advances Depreciation & Amortisation LOSS BEFORE TAX Provision for Tax Fringe Benefit Tax 83,798,069 95,300,178 179,098,247 (6.63) 12 LOSS AFTER TAX Balance Brought Forward LOSS CARRIED TO BALANCE SHEET Basic and Diluted Earnings Per Share (Face value Rs.10) (See Schedule 12 Note 8) Notes forming part of the Accounts Schedules 1 to 12 form an integral part of the Accounts 9 10 11 73,886,403 1,358,286 18,696,715 322,398 94,263,802 83,798,069
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants
NALIN M . S H A H RAJIV B. LALL VIKRAM LIMAYE
FOR AND ON BEHALF OF THE BOARD
Partner
Chairman
V. NARAYANAN
Director
Mumbai | April 19, 2010
152 I D F C A N N U A L R E P O R T 09 –10
Company Secretary & Manager
C A S H F L OW ST AT E M E N T
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
FOR THE YEAR ENDED MARCH 31, 2010
FOR THE YEAR ENDED MARCH 31, 2009 (87,307,048) 128,850 1,948,053 6,392,114 (892,039) 4,641 (79,725,429) (12,985,795) 3,761,056 (88,950,168) (861,365) (89,811,533) (555,215) 892,039 (61,892,039) 61,887,398 332,183 90,000,000 90,000,000 520,650 500,000 1,020,650 520,650
A.
CASH FLOW FROM OPERATING ACTIVITIES
Loss before taxation Adjustments for : Depreciation Provision for Employee Benefits Provision for Doubtful Advances Dividend Received Loss on Sale of Investments Operating loss before Working Capital Changes Changes in : Current Assets , Loans and Advances Current Liabilities Cash generated from Operations Direct Taxes Paid NET CASH FROM / (USED IN) OPERATING ACTIVITIES (A) (29,530,992) 145,568,148 33,095,742 (369,866) 32,725,875 (711,233) – (279,999,200) – (B) (280,710,433) 250,000,000 (C) 250,000,000 2,015,442 1,020,650 3,036,092 2,015,442 322,398 534,256 – – – (82,941,415) (83,798,069)
B.
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Fixed Assets Dividend Received Purchase of Investments Sale Proceeds of Investments NET CASH FROM / (USED IN) INVESTING ACTIVITIES
C.
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from Issue of Share Capital NET CASH FROM FINANCING ACTIVITIES Net increase in cash and cash equivalents (A+B+C) Cash and cash equivalents as at the beginning of the year (as per Schedule 5) Cash and cash equivalents as at the end of the year (as per Schedule 5)
IN TERMS OF OUR REPORT ATTACHED FOR DELOITTE HASKINS & SELLS Chartered Accountants
NALIN M . S H A H RAJIV B. LALL VIKRAM LIMAYE
FOR AND ON BEHALF OF THE BOARD
Partner
Chairman
V. NARAYANAN
Director
Mumbai | April 19, 2010
Company Secretary & Manager
I D F C P R O J E CT S L I M I T E D 153
SCHEDULES
ANNEXED TO AND FORMING PART OF THE ACCOUNTS
SCHEDULE 1 Share Capital
AUTHORISED: 100,000,000 Equity Shares of Rs.10/- each ISSUED, SUBSCRIBED AND PAID UP 34,050,000 (Previous Year 90,500,00) Equity Shares of Rs.10/- each, fully paid-up [Of the above, 25,000,100 (Previous Year 100) Equity Shares are held by Infrastructure Development Finance Company Limited (IDFC), the holding company with effect from February 04, 2010 and 9,049,900 (Previous Year 9,049,900) Equity Shares are held by IDFC Finance Limited, a wholly owned Subsidiary of IDFC which was the holding company up to February 03, 2010]
RUPEES
RUPEES
AS AT MARCH 31, 2010 1,000,000,000 340,500,000
AS AT MARCH 31, 2009 1,000,000,000 90,500,000
340,500,000
90,500,000
SCHEDULE 2 Fixed Assets
DESCRIPTION April 1, 2009 GROSS BLOCK March 31, 2010 DEPRECIATION AND AMORTISATION March 31, 2010 Charge for the April 1, 2009 March 31, 2010
RUPEES
NET BLOCK March 31, 2009 – 426,365 – – – – –
Additions
Deletions
Deletions
As at
As at
As at
As at
As at
TANGIBLE Furniture and Fittings Office Equipment Computers INTANGIBLE Computer Software Total Previous Year – 555,215 – 459,953 711,233 555,215 – – – 459,953 1,266,448 555,215 – 128,850 – 94,140 322,398 128,850 – – – 94,140 451,248 128,850 365,813 815,200 426,365 46,798 444,709 63,708 6,375 157,657 87,248 – – – 53,173 602,366 150,956 8,238 103,533 17,079 13,354 170,780 44,124 – – – 21,592 274,313 61,203 31,581 328,053 89,753 38,560 341,176 46,629
SCHEDULE 3 Investments
LONG TERM (TRADE) A EQUITY SHARES (FULLY PAID) UNQUOTED SUBSIDARIES Dheeru Powergen Private Limited B REDEEMABLE PREFERENCE SHARES (FULLY PAID-UNQUOTED) SUBSIDARIES Dheeru Powergen Private Limited C BONDS (FULLY PAID-UNQUOTED) SUBSIDARIES 0.00% Dheeru Powergen Private Limited (Convertible) 1,815,053 100 78,516 100 5,100 10 NUMBER OF SHARES FACE VALUE
RUPEES
RUPEES
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
90,642,300
7,851,600
181,505,300 279,999,200
154
I D F C A N N U A L R E P O R T 09 –10
As at
year
SCHEDULE 4 Sundry Debtors
(See Schedule 12 Note 2) (Unsecured, considered good) Over six months Others
RUPEES
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
3,475,321 6,026,482 9,501,803
– 1,762,533 1,762,533
SCHEDULE 5 Cash and Bank Balance
Cash Balance with Scheduled Bank in Current Accounts
RUPEES
RUPEES
AS AT MARCH 31, 2010 15,126 3,020,966 3,036,092
AS AT MARCH 31, 2009 – 1,020,650 1,020,650
SCHEDULE 6 Loans and Advances (Unsecured)
CONSIDERED GOOD Advances Recoverable in Cash or in Kind or for Value to be Received Advance Payment of Tax Advance Payment of Fringe Benefit Tax (Net of Provisions) Advance against Investments CONSIDERED DOUBTFUL Advance Recoverable in Cash or in Kind or for Value to be Received Less: Provision for Doubtful Advances
RUPEES
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
26,622,070 376,231 55,000 800
4,831,148 6,365 55,000 –
6,392,114 33,446,215 6,392,114 27,054,101
6,392,114 11,284,627 6,392,114 4,892,513
SCHEDULE 7 Current Liabilities and Provisions
CURRENT LIABILITIES Sundry Creditors - Other than Micro and Small Enterprises (See Schedule 12 Note 12) Other Liabilities PROVISIONS Provision for Employee Benefits (See Schedule 12 Note 9(II))
RUPEES
RUPEES
AS AT MARCH 31, 2010 154,910,553 1,611,781 156,522,334 2,482,309 2,482,309
AS AT MARCH 31, 2009 9,185,304 1,768,882 10,954,186 1,948,053 1,948,053
I D F C P R O J E CT S L I M I T E D
155
SCHEDULE 8 Operating Income
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Fees Dividend on Current Investments (non-trade) Interest on loan (Tax Deducted at Source Rs. 134,569; Previous Year Nil) 9,120,051 – 1,345,682 10,465,733
APRIL 1, 2008 TO MARCH 31, 2009 3,060,000 892,039 – 3,952,039
SCHEDULE 9 Staff Expenses
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Salaries Contribution to Provident and Other Funds (See Schedule 12 Note 9(I)) Staff Training and Welfare Expenses 69,780,474 2,363,978 1,741,951 73,886,403
APRIL 1, 2008 TO MARCH 31, 2009 47,643,346 4,349,413 851,749 52,844,508
SCHEDULE 10 Establishment Expenses
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Rent Rates & Taxes Electricity Expenses Repairs and Maintenance - Others 878,507 3,800 85,530 390,449 1,358,286
APRIL 1, 2008 TO MARCH 31, 2009 2,729,751 85,558 494,504 112,044 3,421,857
SCHEDULE 11 Other Expenses
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Travelling and Conveyance Postage, Telephone and Fax Printing and Stationery Professional Fees Tender Charges Membership and Subscriptions Loss on Sale of Current Investments Office Maintenance Advertisement & Publicity Books & Periodicals Business Development Expenses Miscellaneous Expenses Guarantee Commission Loss on Foreign Exchange Fluctuation Auditors’ Remuneration (See Schedule 12 Note 4) 4,717,944 699,393 192,256 5,399,349 1,252,300 295,506 – 134,326 8,000 9,070 223,913 595,609 4,013,227 39,312 1,116,510 18,696,715
APRIL 1, 2008 TO MARCH 31, 2009 10,211,340 948,452 361,843 13,921,937 815,000 178,468 4,641 667,752 131,318 114,977 316,624 299,966 – – 499,440 28,471,758
156
I D F C A N N U A L R E P O R T 09 –10
SCHEDULE 12 Notes Forming Part of the Accounts
1 Significant Accounting Policies
A. Account Convention
These accounts have been prepared in accordance with historical cost convention, applicable Accounting Standards notified by the Companies (Accounting Standards) Rules, 2006, relevant provisions of the Companies Act, 1956.
B. System of Accounting
The Company adopts the accrual concept in the preparation of accounts. The preparation of financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.
C. Inflation
Assets and liabilities are recorded at historical cost to the Company. These costs are not adjusted to reflect the changing value in the purchasing power of money.
D. Fixed Assets
Fixed assets are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated depreciation.
E. Intangible Assets
Intangible Assets Comprising of system software are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated amortisation. Any technology support cost or annual maintenance cost for such software is charged annually to the Profit and Loss Account.
F. Depreciation & Amortisation
¬
Tangible Assets Depreciation on Fixed Assets, excluding certain electronic items, is provided on the written down value method, at the rates prescribed by Schedule XIV of the Companies Act, 1956. Certain electronic items are depreciated over a period of two years on straight line method based on the Management’s estimate of the useful life of assets. Depreciation on additions during the year is provided on a pro-rata basis. Assets costing less than Rs. 5,000 each are written off in the year of capitalisation.
¬
Intangible Assets Intangible Assets consisting of computers software are being amortised over a period of three years on straight line method.
G. Operating Leases
Leases of assets under which all the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the Profit and Loss Account, on a straight line basis, over the lease term.
H. 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 the carrying value other than temporary in nature is provided for. Current investments are valued at cost or market/fair value, whichever is lower. In case of investments in units of mutual funds, the net asset value of units has been considered as the market value.
I. Revenue Recognition
a) Fees are recognised when reasonable right of recovery is established, the revenue can be reliably measured and there is no uncertainty regarding recoverability. b) Dividend is recognised when the right to receive is established. c) Interest Income is recognised on accrual basis.
J. Foreign Currency Transactions
Foreign currency transactions are accounted at the exchange rates prevailing on the date of the transaction.
K. Provisions and Contingencies
The Company creates a provision when there is a present obligation as a result of past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
I D F C P R O J E CT S L I M I T E D 157
L. Income-Tax
The accounting treatment for income-tax in respect of the Company’s income is based on the Accounting Standard 22 on ‘Accounting for Taxes on Income’ as notified by the Companies (Accounting Standards) Rules, 2006. The provision made for income-tax in the accounts comprises both, the current tax and the deferred tax. The deferred tax assets and liabilities for the year, arising on account of timing differences, are recognised in the Profit and Loss Account and the cumulative effect thereof is reflected in the Balance Sheet. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the Company has unabsorbed depreciation or carry forward tax losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that the same can be realised against future taxable profits.
M. Employee Benefits:
DEFINED CONTRIBUTION PLAN
The Company’s contribution to Provident Fund is deposited with the prescribed authorities and is charged to the Profit and Loss Account. The Company participates in the holding company’s superannuation policy and the Company’s contribution paid / payable during the year is charged to the Profit and Loss Account.
¬ ¬
DEFINED BENEFIT PLAN
The net present value of the Company’s obligation towards Gratuity to employees is unfunded and actuarially determined as at the Balance Sheet date based on the projected unit credit method. Actuarial gains and losses are recognised in the Profit and Loss Account.
¬
OTHER LONG TERM EMPLOYEE BENEFIT
Liability for compensated absences in respect of sick leave which is of a long term nature is actuarially determined as at the Balance Sheet date based on the projected unit credit method.
¬
2 Sundry Debtors include Rs. 9,119,778; (Previous Year Rs. Nil) and Loans and Advances include Rs.14,812,404; (Previous Year Rs.Nil) due from a private company in which Directors are interested as directors. 3 Contingent Liabilities not provided for in respect of :
PARTICULARS (a) Capital Commitments (Net of advance) (b) Guarantees Issued As a part of project assistance, the Company has provided the following guarantees: Financial Guarantees 432,525,600 – CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
1,224,000,000
–
4 Auditors’ Remuneration
CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
Audit Fees Tax Audit Fees Other Matters Company Law Matters Out of pocket expenses Service Tax Less: Service tax set off claimed
400,000 250,000 465,000 – 1,510 58,355 1,174,865 58,355 1,116,510
300,000 – 140,000 10,000 – 49,440 499,440 – 499,440
5 The primary mandate of the Company is to conceive, develop, execute and manage infrastructure projects in India. All other activities revolve around the main business. The Company does not have any geographical segments. As such, there are no separate reportable segments as per Accounting Standard 17 on ‘Segment Reporting’ as notified by the Companies (Accounting Standards) Rules, 2006.
158
I D F C A N N U A L R E P O R T 09 –10
6 As per the Accounting Standard 18 on ‘Related Party Disclosures’ as notified by the Companies (Accounting Standards) Rules, 2006, the related parties of the Company are as follows:
(a) Relationships:
I. HOLDING COMPANY:
Infrastructure Development Finance Company Limited (With effect from February 4, 2010) IDFC Finance Limited (up to February 3, 2010)
II. FELLOW SUBSIDIARY (WITH WHOM THERE ARE TRANSACTIONS):
IDFC Finance Limited (With effect from February 4, 2010)
III. SUBSIDIARY COMPANY :
Dheeru Powergen Private limited (with effect from February 5, 2010)
IV. KEY MANAGEMENT PERSONNEL:
Mr. V. Narayanan – Manager (b) The nature and volume of transactions carried out with the above related parties in the ordinary course of business are as follows:
NAME OF THE RELATED PARTY Infrastructure Development Finance Company Limited PARTICULARS Advances taken and repaid Subscription towards Equity Share Capital Sundry Creditors – Balance Outstanding Bank Guarantee Commission charges IDFC Finance Limited Dheeru Powergen Private Limited Subscription towards Equity Share Capital Loan Given and Repaid Subscription towards Equity Share Capital Subscription towards Preference Share Capital Bonds application money Subscription towards Bonds Sundry Debtors – Balance Outstanding Bank Guarantee commission charged Upfront Fees charged Interest charged Advances Recoverable - Balance outstanding Mr. V. Narayanan Remuneration CURRENT YEAR
(RUPEES)
PREVIOUS YEAR
(RUPEES)
– 250,000,000 116,538,500 4,103,677 – 30,000,000 90,642,300 7,851,600 800 181,505,300 9,119,778 6,730,368 2,029,480 1,345,682 14,812,404 –
20,000,000 – 1,503,615 – 90,000,000 – – – – – – – – – – –
7 Personnel expenses amounting to Rs. Nil (Previous Year Rs.24,587,615) include reimbursement of cost of employees of Infrastructure Development Finance Company Limited, the holding Company, on deputation to the Company. 8 Earnings Per Share:
In accordance with the Accounting Standard 20 on “Earnings Per Share” as notified under the Companies (Accounting Standards) Rules, 2006 the Earning Per Share has been computed as under:
PARTICULARS (a) Loss after taxation (Rs.) (b) Weighted average number of equity shares (c) Earnings Per Share (Rs.) (a)/(b) (Basic and Diluted) CURRENT YEAR (83,798,069) 12,639,041 (6.63) PREVIOUS YEAR (88,107,048) 4,329,452 (20.35)
9 In accordance with Accounting Standard 15 on “Employee Benefits” as notified by the Companies (Accounting Standards) Rules, 2006 the following disclosures have been made:
I. The Company has recognised the following amounts in the Profit and Loss Account towards contribution to defined contribution plans which are included under Contribution to Provident and Other Funds:
CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
Provident Fund Superannuation Fund
1,408,644 955,334
1,665,793 1,314,094
159
I D F C P R O J E CT S L I M I T E D
II. The details of the Company’s unfunded employee benefit plans for gratuity for its employees are given below which is as certified by the actuary and relied upon by the auditors:
CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
CHANGE IN THE DEFINED BENEFIT OBLIGATIONS: Liability at the beginning of the year Current Service Cost Interest Cost Benefits Paid Actuarial Gain Liability at the end of the year AMOUNT RECOGNISED IN THE BALANCE SHEET: Liability at the end of the year Amount recognised in the Balance Sheet under “Provision for Employee Benefits” EXPENSE RECOGNISED IN THE PROFIT AND LOSS ACCOUNT: Current Service Cost Interest Cost Net Actuarial Gain to be recognised Expense recognised in the Profit and Loss Account under staff expenses RECONCILIATION OF THE LIABILITY RECOGNISED IN THE BALANCE SHEET: Opening Net Liability Expense recognised Contribution by the Company Amount recognised in the Balance Sheet under “Provision for Employee Benefits” EXPECTED EMPLOYER’S CONTRIBUTION NEXT YEAR EXPERIENCE ADJUSTMENTS: Defined Benefit Obligation PRINCIPAL ASSUMPTIONS: Discount Rate Salary Escalation Rate (p.a.) 1,795,308 % 8.10 8.00 1,369,526 % 8.00 7.00 1,369,526 664,506 (238,724) 1,795,308 700,126 – 1,369,526 – 1,369,526 754,850 990,846 158,636 (484,976) 664,506 1,369,526 – – 1,369,526 1,795,308 1,795,308 1,369,526 1,369,526 1,369,526 990,846 158,636 (238,724) (484,976) 1,795,308 – 1,369,526 – – – 1,369,526
The estimate of future salary increase, considered in the actuarial valuation takes account of inflation, seniority, promotion and other relevant factors.
10 In accordance with the Accounting Standard 19 on ‘Leases’ as notified by the Companies (Accounting Standards) Rules, 2006, the following disclosure in respect of Operating Leases is made:
The Company has taken vehicles for certain employees under Operating Leases, which expire between August 2009 to October 2012 (Previous Year August 2008 to October 2012). The committed lease rentals in the future are:
PARTICULARS Not later than one year Later than one year and not later than five years CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
875,004 1,227,894
516,352 2,102,898
11 Expenditure incurred in foreign currency:
PARTICULARS Foreign Travel CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
330,674
1,046,836
12 No interest has been paid / payable by the Company during the year to the “suppliers” covered under the Micro, Small and Medium Enterprises Development Act, 2006. The above information takes into account only those suppliers who have responded to inquires made by the Company for this purpose. 13 The figures for the previous year have been regrouped / rearranged wherever necessary.
FOR AND ON BEHALF OF THE BOARD
RAJIV B. LALL VIKRAM LIMAYE
Chairman
V. NARAYANAN
Director
Mumbai | April 19, 2010
160 I D F C A N N U A L R E P O R T 09 –10
Company Secretary & Manager
B A L A N C E S H E E T A B ST R A CT
AND COMPANY’S GENERAL BUSINESS PROFILE
I.
REGISTRATION DETAILS Registration No. State Code Balance Sheet Date U 1 3 4 1 1 0 3 2 0 1 0 5 2 0 3 M H 2 0 0 7 P L C 1 7 6 6 4 0
II.
CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000) Public Issue N I L Right Issue N I L
Bonus Issue N III. I L
Private Placement N I L
POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000) Total Liabilities 3 SOURCES OF FUNDS Paid-up Capital 3 4 0 5 0 0 Reserves and Surplus N I L 2 0 4 0 6 3 2 0 Total Assets 4 0 6
Secured Loans N APPLICATION OF FUNDS Net Fixed Assets 8 1 5 2 7 I L
Unsecured Loans N I L
Investments 9 9 9 9
Net Current Assets (1 1 9 4 1 2)
Deferred Tax Asset N I L
Profit and Loss Account 1 IV. 7 9 0 9 8
PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000) Turnover / Income 1 0 4 6 6 9 Total Expenditure 4 2 6 4
Profit Before Tax (8 3 7 9 8) (8
Profit After Tax 3 7 9 8)
Earnings per Share (in Rs.) (6 V. . 6 3)
Dividend % N I L
GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS) Item Code No. (ITC Code) Product Description N I A I N N L F D R A F S I T N R A U N C C T I U N R G E D E V E L O P M E N T
I D F C P R O J E CT S L I M I T E D
161
ST AT E M E N T P U R S U A N T T O S E CT I O N 2 1 2
OF THE COMPANIES ACT, 1956
NAME OF SUBSIDIARY COMPANY 1 2 Financial year of the Subsidiary Companies ended on Equity Shares of Rs.10 each a) Number of Shares b) Extent of Holding 3 The Net aggregate of profits of the Subsidiary Company so far as these concern members of IDFC Projects Limited i. For the Financial Year of the Subsidiary a) Dealt with in the accounts of the Holding Company b) Not dealt with in the accounts of the Holding Company ii. For the previous financial years of the Subsidiary since it became the Holding Company’s Subsidiary a) Dealt with in the accounts of the Holding Company b) Not dealt with in the accounts of the Holding Company
DHEERU POWERGEN PRIVATE LIMITED 31st March 2010 5100 51%
Nil Nil Nil Nil
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
RAJIV B. LALL
VIKRAM LIMAYE
Chairman Mumbai | April 19, 2010
162 I D F C A N N U A L R E P O R T 09 –10
Director
IDFC asset
management company limited
B O A R D O F D I R E CTO R S
?
? ?
Dr. Rajiv B. Lall Chairman Mr. Pradip Madhavji Mrs. Bakul Patel
A U D I TO R S
?
M. P. Chitale & Co Chartered Accountants
P R I N C I PA L B A N K E R S
?
HDFC Bank Limited Standard Chartered Bank
R E G I ST E R E D O F F I C E
One India Bulls Centre, 841 Jupiter Mills Compound, Senapati Bapat Marg, Elphinstone Road (West), Mumbai 400 013. TEL +91 22 66289999 FAX +91 22 24215051/52/53
I D FC ASSS E T M A N AG E M E N T CO M PA N Y L I M I T E D
163
D I R E CT O R S ’ R E P O R T
TO THE MEMBERS
We are pleased to present the Tenth Annual Report to the Members, along with the audited Profit and Loss Account for the period ended March 31, 2010 and the Balance Sheet as at March 31, 2010. ? Close ended schemes launched during the period under review: In addition to the above open ended schemes, Six Close-Ended income Schemes in the form of Fixed Maturity Plans (FMP’s) were launched. These comprised of IDFC Fixed Maturity Plan – Thirteen Months Series I, IDFC Fixed Maturity Plan –Fifteen Months Series 3, IDFC Fixed Maturity Plan – Seventeen Months Series 1, IDFC FMPHalf Yearly Series 9 and IDFC Fixed Maturity Plan – Fourteen Months Series 1. These Fixed Maturity Plans collected approximately Rs 1027.85 crores.
FINANCIAL RESULTS
RUPEES
PARTICULARS Gross Income Profit before Interest, Depreciation & Tax Depreciation Profit before Tax Provision for Tax Deferred Tax Liability Fringe Benefit Tax Profit after Tax Balance brought forward from previous year Amount available for Appropriation Balance carried to Balance Sheet
YEAR ENDED MARCH 31, 2010 1,069,714,808 60,238,451 27,826,751 32,411,700 9,000,000 (4,519,346) – 27,931,046 282,863,881 310,794,927 310,794,927
YEAR ENDED MARCH 31, 2009 683,074,465 111,125,086 11,711,459 99,413,627 38,500,000 (3,775,654) 4,600,000 60,089,281 222,774, 600 282,863,881 282,863,881
AWARDS & RECOGNITION
IDFC Premier Equity Fund – Plan A has been ranked as a Seven Star Fund by ICRA in the category of ‘Open Ended Equity Diversified Defensive’ schemes for its 3 years performance till December 31, 2009. The rank is an outcome of an objective and comparative analysis against various parameters, including: risk adjusted return, fund size, company concentration and liquidity. The ranking methodology did not take into account entry and exit loads imposed by the Fund. There were 81 schemes considered in ‘Open Ended Equity Diversified - Defensive’ category for the ranking exercise. The rank is neither a certificate of statutory compliance nor any guarantee on the future performance of IDFC Premier Equity Fund – Plan A. IDFC Government Securities Fund – ST – Plan A has been ranked as a Five Star Fund by ICRA in the category of ‘Open Ended Gilt’ schemes for its 1 year performance till December 31, 2009. The rank is an outcome of an objective and comparative analysis against various parameters, including: risk adjusted return, fund size and average maturity. The ranking methodology did not take into account entry and exit loads imposed by the Fund. There were 30 schemes considered in ‘Open Ended Gilt’ category for the ranking exercise. The rank is neither a certificate of statutory compliance nor any guarantee on the future performance of IDFC Government Securities Fund – ST – Plan A. IDFC Premier Equity Fund ranked as Best Fund over Past 3 Years period ending Dec. 31, 2009, India Equity by Lipper, a global ranking agency for mutual funds in Lipper Fund Awards, India, 2010. Business Standard, a leading newspaper in India voted IDFC Mutual Fund as the “Equity Fund Managers of the Year” for the year 2009. Business World, a leading business magazine in India voted Kenneth Andrade (Head – Investments) as the “Smartest Fund Manager of the Year” for the year 2009. IDFC Premier Equity Fund rated as the “Best Mid-cap and Small-cap Fund” over Past 3 Years period ending Dec. 31, 2009 by Business World, a leading business magazine in India IDFC AMC rated as the “Best Performing Fund House” by the Economic Times (ET) Quarterly Mutual Fund Tracker for Q1 and Q2 of FY 09-10. IDFC Imperial Equity Fund and IDFC Dynamic Bond Fund ranked in the “Platinum Category” which is the highest ranking given to schemes in Q1 and Q2 2009.
OPERATIONS OF IDFC MUTUAL FUND
The Company is the Investment Manager of the schemes of IDFC Mutual Fund (IDFC MF). The Assets under Management of IDFC Mutual Fund were Rs. 19,979 Crore (including AUM of Fund of Funds Schemes) as on March 31, 2010.
NEW SCHEMES LAUNCH
? Open ended schemes launched during the period under review: IDFC Asset Allocation Fund of Fund, an open ended Fund of Funds Scheme was launched on January 04, 2010. The investment objective of the scheme is to generate capital appreciation through investment in different mutual fund schemes primarily local funds based on a defined asset allocation model. It has 3 plans – Aggressive Plan, Conservative Plan and Moderate Plan. The Aggressive Plan collected a total of Rs. 613,484,254.26 during the New Fund Offer. The Conservative Plan collected a total of Rs 301,262,457.31during the New Fund Offer. The Moderate Plan collected a total of Rs. 404,381,577.08 during the New Fund Offer. IDFC Monthly Income Plan Fund of Fund, an open ended Fund of Fund scheme was launched on January 11, 2010. This scheme collected a total of Rs. 2,113,409,943.68 during the New Fund Offer. The primary objective of the Scheme is to generate regular returns through investment primarily in debt oriented Mutual Fund schemes (such as Income and Liquid funds). The secondary objective of the Scheme is to generate long-term capital appreciation by investing a portion of the Scheme’s assets in equity oriented MF schemes. Monthly Income is not assumed and the same is subject to availability of distributable surplus.
164
I D F C A N N U A L R E P O R T 09 –10
NEW BUSINESSES
? Portfolio Management Services: During the year under review, the Company acquired 100% of the equity share capital of IDFC Investment Advisors Limited (IDFC IA) from Infrastructure Development Finance Company Limited (IDFC). IDFC IA is a Portfolio Manager, registered with the Securities and Exchange Board of India (SEBI) to carry out Portfolio Management Services pursuant to SEBI (Portfolio Managers) Regulations, 1993. ? Pension Fund Management During the year under review, the Company acquired 50.00001% of the equity share capital of IDFC Pension Fund Management Company Limited (IDFC PFM). IDFC PFM is one of the six pension fund managers selected by the Pension Fund Regulatory and Development Authority (PFRDA) to manage the New Pension System (NPS) launched by the Government of India for all citizens of India other than government employees covered under NPS. IDFC PFM was incorporated on March 31, 2009 and the Pension Fund Regulatory & Development Authority issued the Certificate of Commencement of Business on May 01, 2009. Tier I and Tier II schemes are managed by IDFC PFM.
SHARE CAPITAL
No further equity or preference share capital was issued by the company during the year.
FIXED DEPOSITS
The Company has not accepted any Fixed Deposits from the public.
PARTICULARS OF EMPLOYEES
As required under the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of employees is annexed to this Report.
STATUTORY DISCLOSURE OF PARTICULARS
The requirements of disclosure, in terms of Section 217 (1)(e) of the Companies Act, 1956, read with Companies (Disclosure of particulars in the report of Board of Directors) Rules, pertaining to steps taken regarding conservation of energy & technology absorption, do not apply to the Company. There were no foreign exchange earnings by the Company during the period under review. The details of expenditure in foreign currency are given in note 8 of Schedule 16.
DIVIDEND
Due to inadequacy of profits, the Board of Directors do not recommend the declaration of dividend.
DIRECTORS RESPONSIBILITY STATEMENT
Based on the representation made by the management, the directors, pursuant to the provisions of Section 217 (2AA) the Directors wish to state: 1. that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; 2. that they have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit or loss of the company for that period; 3. that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and 4. that they have prepared the annual accounts on a going concern basis.
DIRECTORS
In accordance with the provisions of the Companies Act, 1956 and the Company’s Articles of Association, Mr. Pradip Madhavji retires by rotation and is eligible for re-appointment. Mr. R. H. Patil resigned from the directorship of the Company with effect from April 12, 2010. The Board wishes to place on record its sincere appreciation for his guidence and valuable contribution to the Company.
AUDITORS
M/s M. P. Chitale and Co., Chartered Accountants and Statutory Auditors of the Company would be retiring at the conclusion of the forthcoming Annual General Meeting and are eligible for reappointment. The auditors have confirmed their eligibility and willingness to accept the office if re-appointed. The Members are requested to consider their re-appointment, at a remuneration to be decided by the Board of Directors, for the financial year ending March 31, 2011 as set out in the Notice convening the Annual General Meeting.
ACKNOWLEDGEMENT
The Board places on record its gratitude to the Government of India, Securities & Exchange Board of India, Reserve Bank of India, Association of Mutual Funds of India, other regulatory authorities and institutions, investors in the Mutual Fund schemes and to the Members for their continued guidance and support and expresses its sincere appreciation to all the employees for their commendable teamwork and enthusiastic contribution during the year.
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
RAJIV B. LALL
AUDIT COMMITTEE
The Audit Committee consists of three members, Mr. Pradip Madhavji, Chairman, Dr. R.H. Patil and Mrs. Bakul Patel. The Committee met four times during the year under review. The functions of the Committee includes reviewing the financial statements, internal control systems and significant accounting policies of the Company and discussing the audit findings and recommendatintons of the internal and statutory auditors of the Company.
CONVERSION INTO PUBLIC COMPANY
The Company has been converted into a Public Company. The Registrar of Companies, Maharashtra has issued a Fresh Certificate of Incorporation consequent upon change of name on conversion to Public Limited Company dated June 5, 2009.
Chairman Mumbai April 20, 2010
I D FC ASSS E T M A N AG E M E N T CO M PA N Y L I M I T E D 165
AU D I TO RS ’ R E PO RT
To The Members of IDFC Asset Management Company Limited
We have audited the attached Balance Sheet of IDFC Asset Management Company Limited as at March 31, 2010 and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. (1) As required by the Companies Auditors Report Order (CARO) 2003, issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956, we enclose as Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order. (2) Further to our comments in the Annexure referred to in paragraph (1) above, we state that: (a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit; (b) In our opinion, proper books of account as required by law have been kept by the Company, so far as appears from our examination of those books; (c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with in this report are in agreement with the books of account; (d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in Section 211 (3C) of the Companies Act, 1956 to the extent applicable; (e) On the basis of written representation received by the Company from the directors, we report that none of the directors is disqualified as on March 31, 2010 from being appointed as a director in terms of clause (g) of sub section (1) of section 274 of the Companies Act, 1956; (f) In our opinion and to the best of our information and according to the explanations given to us, the accounts read with notes thereon give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (i) in so far as it relates to the Balance Sheet, of the state of affairs of the Company as at March 31, 2010,
(ii) in so far as it relates to the Profit and Loss Account, of the profit of the Company for the year ended on that date, and (iii) in so far as it relates to the Cash Flow Statement of the Company for the year ended on that date.
FOR M. P. CHITALE & CO. Chartered Accountants
VIDYA BARJE
Partner M. No. 104994 Firm Registration No. 101851W
Mumbai April 21, 2010
166
I D F C A N N U A L R E P O R T 09 –10
ANNEXURE
TO THE AUDITOR’S REPORT
Annexure referred to in paragraph 1 of the report of even date of the Auditors to the members of IDFC Asset Management Company Limited
(i) (a) The Company has maintained proper records, showing full particulars including quantitative details and situation of Fixed Assets. (b) The fixed assets were physically verified during the year by the Management in accordance with a program of verification, which in our opinion provides for the physical verification of all the fixed assets at reasonable intervals and discrepancies observed during the verification have been properly dealt with in the books of account. (c) The Company has not disposed of substantial part of fixed assets during the year.
dues outstanding as at March 31, 2010 for a period of more than six months from the date they became payable. (x) The Company does not have accumulated losses at the end of the financial year and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year. (xi) In our opinion and according to the information and explanations given to us, during the year, the Company has not taken any loan and no amounts were due towards principal or interest to financial institution, bank or debenture holders during the year. (xii) According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. (xiii) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other securities. (xiv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions. (xv) According to the information and explanations given to us, the Company has not taken any term loan. (xvi) According to the information and explanations given to us, during the year, the Company has not raised any funds. (xvii) The Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under section 301 of the Act. (xviii) According to the information and explanations given to us, the Company has not issued any debentures up to 31st March 2010. (xix) The Company has not raised money from public issue. (xx) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year. (xxi) Considering the nature of the business and the services rendered by the Company, clauses (ii) and (xiii) under Clause 4 of the CARO are not applicable.
FOR M. P. CHITALE & CO. Chartered Accountants
VIDYA BARJE
(ii) The Company has not granted any loans to Companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. (iii) The Company has not taken any loans from Companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. (iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business for purchase of fixed assets and for the services rendered. (v) In our opinion and according to the information and explanations given to us, there are no transactions that need to be entered into a register in pursuance of section 301 of the Companies Act, 1956. (vi) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public. (vii) Company has an internal audit system commensurate with its size and nature of business. (viii) Central Government has not prescribed maintenance of cost records under Section 209 (1) (d) of the Companies Act, 1956. (ix) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income-tax, Sales-tax, Wealth tax, Service Tax, Customs duty, Excise duty, cess and any other statutory dues as applicable with the appropriate authorities. According to the information and explanations given to us, 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, Customs duty, Excise duty, cess and any other statutory
Partner M. No. 104994 Firm Registration No. 101851W Mumbai April 21, 2010
I D FC ASSS E T M A N AG E M E N T CO M PA N Y L I M I T E D
167
BALANCE SHEET
RUPEES SCHEDULE RUPEES
AS AT MARCH 31, 2010
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
SOURCES OF FUNDS
Shareholders’ Funds Share Capital Reserves and Surplus Total 1 2 224,025,020 339,144,927 563,169,947 563,169,947 3 143,886,697 56,248,738 87,637,959 Add: Capital Work-in-Progress Investments Deferred Tax Asset Current Assets, Loans and Advances Interest accrued on Fixed Deposit Sundry Debtors Cash and Bank Balances Loans and Advances Less: Current Liabilities and Provisions Current Liabilities Provisions Net Current Assets Total Notes to the Accounts Schedules 1 to 16 form an integral part of the Accounts 16 8 9 488,047,611 3,718,700 491,766,311 (194,440,647) 563,169,947 109,150,063 3,482,044 112,632,107 150,544,567 535,238,901 5 6 7 77,376 17,599,296 26,536,713 253,112,279 297,325,664 1,050 11,495,650 6,595,056 245,084,918 263,176,674 4 3,511,753 91,149,712 659,483,882 6,977,000 85,746,190 40,533,211 45,212,979 3,288,684 48,501,663 333,735,017 2,457,654 224,025,020 311,213,881 535,238,901 535,238,901
APPLICATION OF FUNDS
Fixed Assets Gross Block Less: Depreciation & Amortisation
IN TERMS OF OUR REPORT OF EVEN DATE FOR M.P. CHITALE & CO. Chartered Accountants
VIDYA V . B A R J E BAKUL PATEL PRADIP MADHAVJI
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Partner
Director
UTTARA DEKA
Director
Mumbai | April 20, 2010
168 I D F C A N N U A L R E P O R T 09 –10
Company Secretary
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
SCHEDULE
APRIL 1, 2009 TO MARCH 31, 2010 10 11 12 13 14 15 1,058,850,803 1,174,816 427,457,377 123,942,231 456,901,933 – 27,826,751 1,037,303,108 21,547,695 9,000,000 4,519,346 – 4,480,654 17,067,041 10,864,005 282,863,881 310,794,927 – 310,794,927 10.70 16
JANUARY 1, 2008 TO MARCH 31, 2009 683,074,465 6,172,183 213,639,474 93,000,677 251,245,347 7,891,698 11,711,459 583,660,838 99,413,627 38,500,000 3,775,654 4,600,000 39,324,346 60,089,281 – 222,774,600 282,863,881 – 282,863,881 23.02
INCOME
Operating and Other Income
EXPENDITURE
Interest & Other Charges Staff Expenses Establishment Expenses Other Expenses Provisions and Contingencies Depreciation & Amortisation PROFIT BEFORE TAXATION Less : Provision for Taxation Current Tax Less: Deferred Tax Add: Fringe Benefit Tax PROFIT AFTER TAXATION Add : Prior Period Income Add : Balance as per last Balance Sheet AVAILABLE FOR APPROPRIATION Appropriations BALANCE CARRIED FORWARD Earnings per share (Face Value Rs. 10) (Basic) Notes to the Accounts Schedules 1 to 16 form an integral part of the Accounts
IN TERMS OF OUR REPORT OF EVEN DATE FOR M.P. CHITALE & CO. Chartered Accountants
VIDYA V . B A R J E BAKUL PATEL PRADIP MADHAVJI
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Partner
Director
UTTARA DEKA
Director
Mumbai | April 20, 2010
Company Secretary
I D FC ASSS E T M A N AG E M E N T CO M PA N Y L I M I T E D 169
C A S H F L OW ST AT E M E N T
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010
JANUARY 1, 2008 TO MARCH 31, 2009 99,413,627 11,710,317 3,482,044 7,891,698 3,145,507 125,643,193 (95,985,985) 36,609,224 (59,376,761)
A. CASH FLOW FROM OPERATING ACTIVITIES
Profit/(Loss) Before Taxation Adjustments for Add: Depreciation & Amortisation Add: Provision for Retirement Benefits Add: Provision for diminution in value of Investments Add: Lease Escalation Charge Add: Fixed Assets Writte Off Add: Prior Period Income Operating Profit before Working Capital Changes (Increase)/Decrease Current Assets, Loan & Advances Debtors 69,112,739 (6,103,646) 63,009,093 Increase/(Decrease) in Current Liabilities - Expenses/Tax Payable Direct taxes Paid NET CASH FROM/(USED IN) OPERATING ACTIVITIES (A) 369,864,030 432,873,123 (86,216,424) 413,857,218 (160,000,010) (76,058,393) (236,058,403) 177,798,815 347,171,770 524,970,585 (177,798,815) Note to Cash Flow Statement : CASH & CASH EQUIVALENTS Cash and Bank Balance as per Schedule 6 Less: Fixed Deposit under Lien Add: Investment at cost as per Schedule 4 END OF THE PERIOD 26,536,713 1,050,000 499,483,872 524,970,585 BEGINNING OF THE PERIOD 6,595,056 1,050,000 341,626,714 347,171,770 (72,016,817) (131,393,578) (81,725,097) (87,475,482) (1,050,000) (45,100,969) (46,150,969) (34,734,353) (34,734,353) (168,360,804) 515,532,574 347,171,770 168,360,804 27,826,751 236,656 (7,891,698) 9,033,517 5,583,593 10,864,005 67,200,519 21,547,695
B. CASH FLOW FROM INVESTING ACTIVITIES
Investment in Subsidiaries Fixed Deposit under lien Purchase of Fixed Asset including Capital Work-in-Progress (Net of deletions) NET CASH USED IN INVESTING ACTIVITIES (B)
C. CASH FLOW FROM FINANCING ACTIVITIES
Dividend Paid (including Dividend Tax) NET CASH USED IN FINANCING ACTIVITIES (C) NET INFLOW/(OUTFLOW) DURING THE PERIOD (A)+(B)+(C) Cash and cash equivalents as at the beginning of the period as per Note below Cash and cash equivalents as at the end of the period as per Note below
IN TERMS OF OUR REPORT OF EVEN DATE FOR M.P. CHITALE & CO. Chartered Accountants
VIDYA V . B A R J E BAKUL PATEL PRADIP MADHAVJI
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Partner
Director
UTTARA DEKA
Director
Mumbai | April 20, 2010
170 I D F C A N N U A L R E P O R T 09 –10
Company Secretary
SCHEDULES
ANNEXED TO AND FORMING PART OF THE ACCOUNTS
SCHEDULE 1 Share Capital
AUTHORISED: 4,000,000 Equity shares of Rs. 10/- each 21,000,000 15% Non participating, non convertible , cumulative redeemable Preference shares of Rs. 10/- each ISSUED, SUBSCRIBED AND PAID-UP: 2,610,002 Equity shares of Rs. 10/- each (Note: All the above equity shares are fully paid shares and are held by Infrastructure Development Finance Company Ltd., the holding company) 19,792,500 15% Non participating, non convertible, cumulative redeemable Preference shares of Rs. 10/- each Redeemable on 2nd January, 2020. (Note: All the above preference shares are fully paid shares and are held by Infrastructure Development Finance Company Ltd., the holding company)
RUPEES
RUPEES
AS AT MARCH 31, 2010 40,000,000 210,000,000 26,100,020
AS AT MARCH 31, 2009 40,000,000 210,000,000 26,100,020
197,925,000
197,925,000
224,025,020
224,025,020
SCHEDULE 2 Reserves and Surplus
General Reserve Profit and Loss Account
RUPEES
RUPEES
AS AT MARCH 31, 2010 28,350,000 310,794,927 339,144,927
AS AT MARCH 31, 2009 28,350,000 282,863,881 311,213,881
SCHEDULE 3 Fixed Assets
DESCRIPTION April 1, 2009 GROSS BLOCK March 31, DEPRECIATION & AMORTISATION April 1, 2009 March 31,
RUPEES
NET BLOCK March 31, March 31,
Additions
Additions
Deletions
Deletions
As at
2010
2010
2010
TANGIBLE Computer Hardware Furnitures and Fixtures Office Equipments INTANGIBLE Computer Software LEASEHOLD IMPROVEMENT Total Previous Period 11,762,779 15,054,517 85,746,190 43,933,905 11,100,095 38,075,362 75,835,324 41,837,275 5,449,452 22,862,874 47,680,427 7,736,922 1,722,875 40,533,211 28,822,894 4,188,627 10,998,988 27,826,752 11,711,459 – 2,142,101 12,111,225 1,142 11,925,549 10,579,762 56,248,738 40,533,211 10,937,325 37,100,665 87,637,959 45,212,979 4,025,857 13,331,642 45,212,979 36,033,926 2,772,799 20,122,169 6,761,943 11,273,723 8,624,201 7,407,147 672,201 4,166,017 35,388,722 13,374,321 24,580,353 24,696,190 1,098,744 5,278,480 6,540,190 2,694,689 3,404,258 6,854,028 531,664 2,583,432 24,382,352 3,261,769 6,099,306 11,006,370 10,112,552 18,481,047 11,337,736 1,674,055 14,843,689
17,694,817 143,886,697 24,990 85,746,190
I D FC ASSS E T M A N AG E M E N T CO M PA N Y L I M I T E D
171
2009
As at
As at
As at
As at
As at
SCHEDULE 4 Investments
I. LONG TERM A. Equity Shares (Fully paid, Unquoted) Subsidiaries IDFC Investment Advisors Limited IDFC Pension Fund Management Company Limited TOTAL LONG TERM INVESTMENTS (A) II. CURRENT A. Mutual Funds (Unquoted) IDFC-SSIF-ST - Plan C-Monthly Dividend IDFC Money Manager Fund- Treasury Plan C-Daily Dividend IDFC SSIF IP - Plan B Dividend IDFC Money Manager Fund- Treasury Plan BDaily Dividend TOTAL CURRENT INVESTMENTS (A) GRAND TOTAL (I + II) Less : Provision for Diminution in Value of Investments Aggregate amount of Unquoted Investments Cost Market Value 49,940,896 10 Number of Units Face Value Rupees 10,000,000 6,000,001 10 10 Number of Shares Face Value Rupees
RUPEES
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
100,000,000 60,000,010 160,000,010
-
499,483,872 499,483,872 659,483,882 659,483,882 659,483,882 659,483,882
53,542,195 113,084,519 100,000,000 75,000,000 341,626,714 341,626,714 7,891,697 333,735,017 341,626,714 333,735,017
SCHEDULE 5 Sundry Debtors (Unsecured, Considered Good)
Debtors
RUPEES
RUPEES
AS AT MARCH 31, 2010 17,599,296 17,599,296
AS AT MARCH 31, 2009 11,495,650 11,495,650
SCHEDULE 6 Cash and Bank Balances
Cash (including Cheques on hand) Balances with Scheduled Banks - in Current Accounts - in Deposit Accounts
RUPEES
RUPEES
AS AT MARCH 31, 2010 894,805 24,591,908 1,050,000 25,641,908 26,536,713
AS AT MARCH 31, 2009 120,669 5,424,387 1,050,000 6,474,387 6,595,056
SCHEDULE 7 Loans and Advances (Unsecured, Considered Good)
Advances recoverable in cash or in kind or for value to be received Advances to IDFC Group Companies (Refer Note 13) - Advances to Subsidiaries - Others Other Deposits Advance payment of Income Tax (Net of provision)
RUPEES
RUPEES
AS AT MARCH 31, 2010 15,419,835 974,799 87,337,735 149,379,910 253,112,279
AS AT MARCH 31, 2009 55,590,838 3,354,790 568,360 113,407,444 72,163,486 245,084,918
172
I D F C A N N U A L R E P O R T 09 –10
SCHEDULE 8 Current Liabilities
Sundry Creditors - Other than Micro, Small and Medium Enterprises Other Liabilities
RUPEES
RUPEES
AS AT MARCH 31, 2010 481,086,884 6,960,727 488,047,611
AS AT MARCH 31, 2009 107,818,062 1,332,001 109,150,063
SCHEDULE 9 Provisions
Provision for Retirement Benefits
RUPEES
RUPEES
AS AT MARCH 31, 2010 3,718,700 3,718,700
AS AT MARCH 31, 2009 3,482,044 3,482,044
RUPEES
SCHEDULE 10 Operating and Other Income
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Operating Income Management Fees Other Income Dividend on Investments Profit/(Loss) on sale of Investments Provision for Diminution in Value of Investment written back Interest on Income Tax Refund Miscellaneous Income 11,772,561 (5,524,366) 7,891,698 2,265,473 277,925 16,683,291 1,058,850,803 1,042,167,512 1,042,167,512
JANUARY 1, 2008 TO MARCH 31, 2009 637,045,996 637,045,996 32,759,053 9,086,534 4,182,882 46,028,469 683,074,465
SCHEDULE 11 Interest & Other Charges
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 On Security Deposit Other Charges 17,742 1,157,074 1,174,816
JANUARY 1, 2008 TO MARCH 31, 2009 4,510,375 1,661,808 6,172,183
SCHEDULE 12 Staff Expenses
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Salaries Contribution to Provident and Other Funds Staff Welfare Expenses 409,144,508 7,453,856 10,859,013 427,457,377
JANUARY 1, 2008 TO MARCH 31, 2009 203,664,247 5,243,889 4,731,338 213,639,474
I D FC ASSS E T M A N AG E M E N T CO M PA N Y L I M I T E D
173
SCHEDULE 13 Establishment Expenses
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Rent Rates & Taxes Electricity Repairs and Maintenance Buildings Equipments Others Insurance Charges 795,555 730,576 15,792,807 17,318,938 1,869,261 123,942,231 89,922,321 4,672,010 10,159,701
JANUARY 1, 2008 TO MARCH 31, 2009 66,237,187 3,461,473 1,735,367 20,364,192 25,561,032 1,202,458 93,000,677
RUPEES
SCHEDULE 14 Other Expenses
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Travelling and Conveyance Printing and Stationery Postage, Telephone and Fax Advertising and Publicity (Refer Note 5) Brokerage expenses Scheme Issue Expenses (Refer Note 4) Operational Costs (Refer Note 6) Professional Fees Directors’ Fees Internet Expenses Filing Fees Fixed Assets Write Off Miscellaneous Expenses Auditors’ Remuneration (Refer Note 3) 22,982,042 12,523,043 16,169,485 61,024,742 106,591,967 125,566,732 22,940,387 62,438,737 210,000 11,096,058 3,111,328 5,575,293 5,742,299 929,820 456,901,933
JANUARY 1, 2008 TO MARCH 31, 2009 12,823,539 11,011,590 18,090,039 30,005,041 46,454,033 45,743,329 8,025,046 59,842,620 320,000 10,407,555 7,670,445 852,110 251,245,347
RUPEES
SCHEDULE 15 Provisions and Contingencies
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Provision for Diminution in Value of Investments -
JANUARY 1, 2008 TO MARCH 31, 2009 7,891,698 7,891,698
174
I D F C A N N U A L R E P O R T 09 –10
SCHEDULE 16 Notes Forming part of the Accounts
1 Significant Accounting Policies
A. System of Accounting
The Company adopts the accrual concept in the preparation of the accounts. The preparation of financial statements as per this policy 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. Future results could differ from these estimates.
B. Inflation
Assets and liabilities are recorded at historical cost to the Company. These costs are not adjusted to reflect the changing value in the purchasing power of money.
C. Investments
Long Term Investments’ are carried at acquisition cost. A provision is made for diminution, other than temporary, on an individual basis. Current Investments’ are carried at the lower of cost or fair value on an individual basis.
D. Fixed Assets
Fixed assets are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated depreciation. Leasehold Improvements are shown at historical cost less accumulated amortisation.
E. Intangible Assets
Intangible Assets comprising of system software and licenses purchased, are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated depreciation. Any expenses on such software for support and maintenance payable annually are charged to revenue account.
F. Depreciation & Amortisation
¬
DEPRECIATION ON FIXED ASSETS
Depreciation is charged at the rates prescribed in Schedule XIV of the Companies Act, 1956 as per WDV Method. Any asset costing Rs.5,000/or less is written off in the year of its purchase. Depreciation on additions during the year is provided on a pro-rata basis.
¬
DEPRECIATION ON INTANGIBLE ASSETS AMORTISATION OF LEASEHOLD IMPROVEMENTS
Intangible assets consisting of computer software are depreciated at 33.33% per annum on SLM basis.
¬
Leasehold Improvements are amortised over the balance period of extended lease term or five years whichever is earlier.
G. Foreign Currency Transactions
The transactions in Foreign exchange are accounted at exchange rate prevailing on the date of transactions. Any exchange gains or losses arising from the settlement of such transactions are recognised in the Profit and Loss Account. Receivables/Payables in foreign currency at the year end are translated at the year end exchange rate.
H. Operating Leases
Leases of assets under which all the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases. Rental charges over the term of such leases, after taking in to account the escalation clause, are charged to the Profit and Loss Account on a straight line basis over the extended lease term.
I. Retirement Benefits
The net present value of the Company’s obligation towards Gratuity to employees is actuarially determined as at the Balance Sheet date and actuarial gains and losses are recognised in the Profit and Loss Account. ¬ The Company has taken a superannuation policy, for future payment of superannuation and the Company’s contribution paid/payable during the year is charged to Profit and Loss Account. ¬ The Company’s contribution to Provident Fund is deposited with Regional Provident Fund Commissioner and is charged to Profit and Loss Account every year.
¬
I D FC ASSS E T M A N AG E M E N T CO M PA N Y L I M I T E D
175
J. Income-Tax
The accounting treatment for income-tax in respect of the Company’s income is based on the Accounting Standard 22 on ‘Accounting for Taxes on Income’ issued by the Institute of Chartered Accountants of India. The provision made for income-tax in the accounts comprises both, the current tax and deferred tax. The deferred tax assets and liabilities for the year, arising on account of timing differences, are recognised in the Profit and Loss Account and the cumulative effect thereof is reflected in the Balance Sheet.
K. Revenue Recognition
Revenue is recognised when no significant uncertainty as regards to its measurement and collection exists.
L. Provisions
A provision is recognised when the Company has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
2 Managerial Remuneration:
APRIL 1, 2009 TO MARCH 31, 2010
RUPEES
JANUARY 1, 2008 TO OCTOBER 20, 2008
RUPEES
(i) (ii) (iii)
Salary Contribution to Provident and Other Funds Perquisites
1,633,600 81,600 56,568 1,771,768
25,418,307 387,809 523,339 26,329,455
3 Auditors’ Remuneration :
APRIL 1, 2009 TO MARCH 31, 2010
RUPEES
JANUARY 1, 2008 TO MARCH 31, 2009
RUPEES
Audit Fees Tax Audit Fees Other Services Out of Pocket Expenses
450,000 200,000 265,000 14,820 929,820
450,000 300,000 95,370 6,740 852,110
4 Scheme Issue Expenses are the expenses incurred by the Company towards launching schemes and plans of the Mutual Fund during the year. 5 Advertising and Publicity Expenses includes cost of advertising, publicity, marketing of various schemes of IDFC Mutual Fund. 6 Operational Costs include interest charged by bank to the Mutual Fund on account of temporary borrowings or overdrafts and payments made to investors of Mutual Fund on account of delay in payment of redemption proceeds which are borne by the Company. 7 Service Tax Credit of Rs. 2,219,857/- (Previous Year – Rs. 7,028,650/-), would be claimed against future Service Tax Liability. 8 Expenditure in foreign currencies:
APRIL 1, 2009 TO MARCH 31, 2010
RUPEES
JANUARY 1, 2008 TO MARCH 31, 2009
RUPEES
Advertising Media Filing Fees Foreign Travel Hotel Accommodation Staff Training Expenses Staff welfare Road shows & Events Telephone- Cellular
51,694 678,984 170,260 20,418 145,286 – – –
– – 113,724 255,848 – 43,761 91,745 10,377
9 Earnings in foreign currencies: NIL (Previous Year Nil) 10 The Company is planning to expand its operations for which it anticipates significant working capital requirements. With the aim to conserve cash resources, the Company has not proposed any dividend for the period April 1, 2009 to March 31, 2010 on 15% cumulative redeemable preference shares allotted during 1999-00 amounting to Rs. 29,688,750/-. The consent letter for waiver of dividend has been received from IDFC Limited, sole shareholder of the preference shares.
176 I D F C A N N U A L R E P O R T 09 –10
11 As per Accounting Standard 15 on ‘Employee Benefits’ as notified by the Companies (Accounting Standards) Rules, 2006, the following disclosures are made as required :
i. The Company has recognised the following amounts in the Profit and Loss Account towards defined contribution plans which are included in Personnel Costs for the period 1st April, 2009 to 31st March, 2010:
PARTICULARS Provident Fund Superannuation CURRENT PERIOD
RUPEES
PREVIOUS PERIOD
RUPEES
7,453,856 519,131
5,243,889 1,481,326
ii. The details of the Company’s post – retirement benefit plans for gratuity for its employees are given below which is certified by the actuary and relied upon by the auditors:
PARTICULARS CHANGE IN THE DEFINED BENEFIT OBLIGATIONS: Liability at the beginning of the year Current Service Cost Interest Cost Benefits Paid Actuarial Loss Liability as at the end of the year FAIR VALUE OF PLAN ASSETS : Fair Value of Plan Assets at the beginning of the year Expected Return on Plan Assets Contributions Benefits Paid Actuarial Loss on Plan Assets Fair Value of Plan Assets at the end of the year Total Actuarial Loss to be recognised ACTUAL RETURN ON PLAN ASSETS : Expected Return on Plan Assets Actuarial Loss on Plan Assets Actuarial Return on Plan Assets AMOUNT RECOGNISED IN THE BALANCE SHEET : Liability at the end of the year Fair Value of Plan Assets at the end of the year Amount recognised in the Balance Sheet under “Provision for Retirement Benefits” EXPENSE RECOGNISED IN THE PROFIT AND LOSS ACCOUNT : Current Service Cost Interest Cost Expected Return on Plan Assets Net Actuarial Loss to be recognised Expense recognised in the Profit and Loss Account under Personnel Costs RECONCILIATION OF THE LIABILITY RECOGNISED IN THE BALANCE SHEET : Opening Net Liability Expense recognised Contribution by the Company Amount recognised in the Balance Sheet under “Provision for Retirement Benefit” PRINCIPAL ASSUMPTIONS : Discount Rate Expected Rate of Return on Assets Salary Escalation Rate 2,000,718 1,717,982 3,718,700 CURRENT PERIOD % 8.10% 8.00% 2,000,718 2,000,718 PREVIOUS PERIOD % 6.65 % 7.00 % 2,143,480 275,309 (700,807) 1,717,982 2,000,718 2,000,718 3,718,700 3,718,700 2,000,718 2,000,718 2,000,718 2,143,480 275,309 (700,807) 3,718,700 2,000,718 2,000,718 CURRENT PERIOD
RUPEES
PREVIOUS PERIOD
RUPEES
I D FC ASSS E T M A N AG E M E N T CO M PA N Y L I M I T E D
177
12 The Company is an Asset Management Company to IDFC Mutual Fund business. During the year ended 31st March, 2010, the Company was engaged in only one business segment and as such there are no separate reportable segments, as required by Accounting Standard 17 on ‘Segment Reporting’ issued by the Institute of Chartered Accountants of India. 13 As per the Accounting Standard 18 on ‘Related Party Disclosures’ issued by the Institute of Chartered Accountants of India, the related parties of the Company are as follows:
I. HOLDING COMPANY:
Infrastructure Development Finance Company Limited
II. SUBSIDIARIES:
IDFC Investment Advisors Limited IDFC Pension Fund Management Company Limited
III. FELLOW SUBSIDIARIES:
IDFC AMC Trustee Company Limited IDFC Private Equity Company Limited
IV. KEY MANAGEMENT PERSONNEL:
Mr. Naval Bir Kumar – President & CEO Mrs. Jyothi Krishnan – Compliance Officer & Manager The nature and volume of transactions carried out with the above related parties in the ordinary course of business are as follows:
NAME OF RELATED PARTY AND NATURE OF RELATIONSHIP I. HOLDING COMPANY Infrastructure Development Finance Company Limited Advances taken and repaid (Net of advances given) Purchase of Shares of IDFC Investment Advisors Limited Purchase of Fixed Assets Transfer of Fixed Assets Deputation Charges paid Advances given Advances Recoverable – Balance outstanding II. SUBSIDIARIES IDFC Investment Advisors Limited Advances Given and recovered Purchase of Shares Advances Recoverable – Balance outstanding IDFC Pension Fund Management Company Limited Advances Given and recovered Purchase of Shares Advances Recoverable – Balance outstanding III. FELLOW SUBSIDIARIES IDFC AMC Trustee Company Limited IDFC Private Equity Company Limited IV KEY MANAGEMENT PERSONNEL: Mr. Naval Bir Kumar Remuneration paid Reimbursement of Business Expenses Rent paid Security Deposit paid Payment to relatives Mrs. Jyothi Krishnan Remuneration paid 11,354,555 761,843 250,000 720,444 1,771,768 29,576,536 670,912 375,000 30,000,000 3,262,881 Advances given and recovered Advances Recoverable – Balance outstanding Transfer of Fixed Asset 152,032 351,217 40,000 55,250 4,222,728 20,000,000 2,469,162 60,000,010 974,799 2,407,975 946,815 921,424 80,000,000 14,486,458 2,759,128 439,795 5,430,657 256,999 528,359 PARTICULARS CURRENT PERIOD PREVIOUS PERIOD
178
I D F C A N N U A L R E P O R T 09 –10
14 In accordance with the Accounting Standard 19 on ‘Leases’ issued by the Institute of Chartered Accountants of India, the following disclosure in respect of Operating Leases is made:
The Company has taken a copier machine under irrevocable rental agreement (expiring on 31st May, 2011) from En Em Business Solutions. The committed rentals in the future are :
¬
PARTICULARS Not later than one year Later than one year and not later than five years
¬
RUPEES 49,000/-
The Company has taken vehicles for three employees under Cancellable Operating Leases from LeasePlan India Limited, which expire between October 2012 to December 2013. Staff Expenses include rental expenses of Rs.1,368,949 (Previous Year Rs. 488,489) paid to LeasePlan India Limited. ¬ The Company has entered in to Lease agreements for Office Premises and Residential Premises as per detailed below :
SR. NO. LOCATION OFFICE PREMISES 1 2 3 4 5 6 7 Ahmedabad Amritsar Bangalore Baroda Bhopal Bhubaneshwar Chandigarh Pranav Multitech Pvt. Ltd. Ajit Singh S. M. Kamal Pasha West Coast Contractors Pvt Ltd D. G. Enterprise Manisha Surekha Rahul Mahajan - 25% Praveen Mahajan - 25% Sandeep Mahajan - 25% Sahil Mahajan - 12.5% Siddharth Mahajan - 12.5% 8 9 10 Chennai Cochin Coimbatore Maalavika Hotels Private Limited Fathima Zackeria R. Malaiyappan, R. Rajarathnam & R. Balashanmugam 11 12 13 Dehradun Goa Guwahati EBD Business Centre Suzette Indresh Advani Aakash Jhunjhunwala Bimla Devi Jhunjhunwala Srinarayan Jhunjhunwala 14 15 16 17 18 19 Hyderabad Indore Jaipur Jallandar Jamshedpur Kanpur Anand Yemul – 50% Sai Suman Yemul – 50% Priya Baj Surjit Kaur – 50% Gurpreet Singh – 50% Surjit Singh Arora Corporate Inn Deep Management & Eco Consultants P. Ltd. – 50% Rachit Prakash – 25% Tripti Srivastava – 25% 20 21 22 Kolkata Lucknow Ludhiana Oswal Holdings Sahej Promoters Pvt. Ltd. Manjit Kaur Deol - 29.25% Mohinder Singh Deol - 27.75% Surjit Kaur Sekhon - 17.50% Jatinder Pal Singh Sekhon - 11.50% Gauravjit Singh Deol - 5% Gurbir Singh Deol - 5% Gurdial Singh Sekhon - 4% Increase by 15% after every 3 Years. Total Lease 14 Years. Increase by 15% after 3 Years. Total Lease 6 Years. Increase by 20% after 3 Years. Total Lease 6 Years. Increase by 10% after 1 Year. Total Lease 3 Years. Increase by 15% after 3 Years. Total Lease 9 Years. Increase by 15% after every 3 Years. Total Lease 9 Years. Increase by 15% after 3 Years. Total Lease 9 Years. Increase by 15% after every 3 Years. Total Lease 9 Years. Increase by 5.5% after every 1 Year. Total Lease 7 Years. Increase by 10% after 11 Months. Total Lease 22 Months. No Escalation. Increase by 15% after 3 Years. Total Lease 6 Years. Increase by 15% after every 3 Years. Total Lease 9 Years. Lease terminated w.e.f April 5, 2010. Increase by 15% after 3 Years. Total Lease 6 Years. Increase by 22.5% after every 3 Years. Total Lease 9 Years. Increase by 15% after every 3 Years. Total Lease 9 Years. Increase by 8% after every 1 Year. Total Lease 3 Years. Increase by 10% after every 3 Years. Total Lease 9 Years. Increase by 15% after 3 Years. Total Lease 9 Years. No Escalation. Increase by 15% after 3 Years. Total Lease 6 Years. Increase by 7.5% after 1 Year. Total Lease 6 Years. NAME OF THE LESSOR ESCALATION CLAUSE
I D FC ASSS E T M A N AG E M E N T CO M PA N Y L I M I T E D
179
SR. NO. LOCATION OFFICE PREMISES 23 24 25 26 27 28 29 30 31 32 33 Mangalore Mumbai-Churchgate Nagpur Nasik New Delhi Patna Pune Raipur Rajkot Surat
NAME OF THE LESSOR Raj Business Centre Ashu Engineers & Plastics Pvt. Ltd. Fortune Business Centre Madan’s Services Deepa Kiran Kaur & Others Sushma Khemka Prashant Kumar Kapse Amritpal Kaur Anil Dhulia (HUF) - 50% Usha Dhulia - 50% Kirti Kumar K. Shroff – 50% Pratik Kirtikumar Shroff – 25% Samir K. Shroff – 25%
ESCALATION CLAUSE No Escalation. Increase by 15% after 3 Years. Total Lease 5 Years. Increase by 15% after 3 Years. Total Lease 5 Years. No Escalation. No Escalation. Increase by 15% after every 3 Years. Total Lease 9 Years. Increase by 15% after 3 Years. Total Lease 6 Years. Increase by 20% after 5 Years. Total Lease 10 Years. Increase by 5% after 1 Year. Total Lease 6 Years. Increase by 15% after 1 Year. Total Lease 6 Years. Increase by 15% after 3 Years. Total Lease 5 Years.
Mumbai-Eplhinstone IndiaBulls Properties Pvt. Ltd.
34 35 1 2 3 4 5 6
Varanasi Vishakhapatnam Delhi Mumbai Mumbai Mumbai Mumbai Mumbai
Satya Narain Agrawal Vastav Consultancy Services Rishi Gupta C.K. Mirchandani Nilima A. Kamani Ram Swaroop Sodhani Sumit Banerjee Sapna Rajgarhia & Satish Rajgarhia
No Escalation. No Escalation. No Escalation. No Escalation. No Escalation. No Escalation. No Escalation. No Escalation.
RESIDENTIAL PREMISES
15 In compliance with the Accounting Standard 22 relating to ‘Accounting for Taxes on Income’ issued by the Institute of Chartered Accountants of India, the Company has taken credit in the Profit and Loss Account towards deferred tax asset (net) on account of timing differences. The major components of deferred tax assets and liabilities arising on account of timing differences are:
APRIL 1, 2009 TO MARCH 31, 2010
RUPEES
JANUARY 1, 2008 TO MARCH 31, 2009
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010
RUPEES
JANUARY 1, 2008 TO MARCH 31, 2009
RUPEES
Assets (a) (b) (c) Depreciation Provisions Others Net Deferred Tax Asset/(Liability) 1,573,000 1,264,000 4,140,000 6,977,000 6,977,000 3,362,432 1,069,158 4,431,590 2,457,654
Liabilities 1,973,936 1,973,936
16 The earning per share in accordance with the Accounting Standard 20 on ‘Earning Per Share’ issued by the Institute of Chartered Accountants of India is as under:
PARTICULARS Profit/(Loss) after Tax and prior period items (Rs.) Less: Proposed dividend on Preference Shares(Rs.) Less: Tax on dividend on Preference Shares (Rs.) Profit attributable to Equity shareholders (Rs.) No. of Shares Earnings per share in (Rs.) APRIL 1, 2009 TO MARCH 31, 2010 27,931,045 27,931,045 2,610,002 10.70 JANUARY 1, 2008 TO MARCH 31, 2009 60,089,281 60,089,281 2,610,002 23.02
180
I D F C A N N U A L R E P O R T 09 –10
17 Details of Movement in Provisions, in terms of Accounting Standard 29 issued by the Institute of Chartered Accountants of India, is as under:
NATURE OF PROVISION OPENING BALANCE AS ON 01/04/2009
RUPEES
PROVISIONS MADE DURING THE YEAR
RUPEES
PROVISIONS REVERSED / ADJUSTED
RUPEES
CLOSING BALANCE AS ON 31/03/2010
RUPEES
Provision for Diminution in Value of Investments Provision for Income Tax Provision for Deferred Tax (Asset)/ Liability Provision for Fringe Benefit Tax
7,891,698 276,925,601 (2,457,654) 12,072,000
– 9,000,000 (7,201,734) –
7,891,698 – 2,682,388 –
– 285,925,601 (6,977,000) 12,072,000
18 Estimated amount of contracts remaining to be executed on capital account and not provided for Rs.2,763,000/(Previous Year 23,743,564/-) 19 Contingent liabilities not provided for in respect of :
APRIL 1, 2009 TO MARCH 31, 2010
RUPEES
JANUARY 1, 2008 TO MARCH 31, 2009
RUPEES
(a)
Claims not acknowledged as debts in respect of Income-tax demand, disputed by the Company in respect of A.Y. 2005-06. The matters in dispute are under appeal. Amount of Rs. 1,500,000 has been paid against the demand. 3,037,298 1,000,000 3,037,298 1,000,000
(b)
Bank guarantees issued on behalf of the Company
20 No interest has been paid/payable by the Company during the year to the “suppliers” covered under the Micro, Small and Medium Enterprises Development Act, 2006. The above information is based on the records available with the Company. 21 Previous year’s figures have been regrouped wherever necessary. Since the current period is for 12 months from April 1, 2009 to March 31, 2010, the figures for current period are not comparable with previous period viz., 15 months from January 1, 2008 to March 31, 2009.
IN TERMS OF OUR REPORT OF EVEN DATE FOR M.P. CHITALE & CO. Chartered Accountants
VIDYA V . B A R J E BAKUL PATEL PRADIP MADHAVJI
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Partner
Director
UTTARA DEKA
Director
Mumbai | April 20, 2010
Company Secretary
I D FC ASSS E T M A N AG E M E N T CO M PA N Y L I M I T E D 181
B A L A N C E S H E E T A B ST R A CT
AND COMPANY’S GENERAL BUSINESS PROFILE
I.
REGISTRATION DETAILS Registration No. State Code Balance Sheet Date U 1 3 6 1 1 0 3 2 0 1 0 5 9 9 3 M H 1 9 9 9 P T C 1 2 3 1 9 1
II.
CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000) Public Issue N I L Right Issue N I L
Bonus Issue N III. I L
Private Placement N I L
POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000) Total Liabilities 1 SOURCES OF FUNDS Paid-up Capital 2 2 4 0 2 5 3 Reserves and Surplus 3 9 1 4 5 0 5 4 9 3 6 1 0 5 4 Total Assets 9 3 6
Secured Loans N APPLICATION OF FUNDS Net Fixed Assets 9 1 1 5 0 6 5 I L
Unsecured Loans N I L
Investments 9 4 8 4
Net Current Assets (1 IV. 9 4 4 4 1)
Deferred Tax Asset 6 9 7 7
PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000) Turnover / Income 1 0 6 9 7 1 5 1 0 3 Total Expenditure 7 3 0 3
Profit Before Tax 3 2 4 1 2 2
Profit After Tax 7 9 3 1
Earnings per Share (in Rs.) 1 V. 0 . 7 0
Dividend % N I L
GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS) Item Code No. (ITC Code) Product Description N A I S L S E T M A N A G E M E N T
182
I D F C A N N U A L R E P O R T 09 –10
ST AT E M E N T P U R S U A N T T O S E CT I O N 2 1 2
OF THE COMPANIES ACT, 1956
NAME OF SUBSIDIARY COMPANIES
IDFC INVESTMENT ADVISORS LIMITED
RUPEES
IDFC PENSION FUND MANAGEMENT COMPANY LIMITED
RUPEES
The financial year of the Subsidiary Companies ended on Number of shares in the Subsidiary Companies held by IDFC Asset Management Company Limited at the above date. Holding Company’s interest in percentage The net aggregate of profits of the Subsidiary Companies so far as these concern the members of IDFC Asset Management Company Limited. (i) dealt with in the accounts of IDFC Asset Management Company Limited amounted to: (a) for subsidiaries’ financial year ended on March 31, 2010 (b) for previous financial years of the subsidiaries since these became subsidiaries of IDFC Asset Management Company Limited (ii) not dealt with in the accounts of IDFC Asset Management Company Limited amounted to: (a) for subsidiaries’ financial year ended on March 31, 2010 (b) for previous financial years of the subsidiaries since these became subsidiaries of IDFC Asset Management Company Limited.
March 31, 2010 10,000,000 shares of Rs. 10 each 100.00%
March 31, 2010 6,000,001 shares of Rs. 10 each 50.01%
-
-
69,469,803 -
(638,164) -
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
BAKUL PATEL
PRADIP MADHAVJI
Director Mumbai | April 20, 2010
Director
I D FC ASSS E T M A N AG E M E N T CO M PA N Y L I M I T E D
183
IDFC amc trustee
company limited
B O A R D O F D I R E CTO R S
?
? ? ?
Mr. Vikram Limaye Chairman Mr. Jamsheed Kanga Mr. D. M. Sukthankar Mr. U. Sundararajan
A U D I TO R S
?
M. P. Chitale & Co Chartered Accountants
P R I N C I PA L B A N K E R S
?
Standard Chartered Bank
R E G I ST E R E D O F F I C E
One India Bulls Centre, 841 Jupiter Mills Compound, Senapati Bapat Marg, Elphinstone Road (West), Mumbai 400 013. TEL +91 22 66289999 FAX +91 22 24215051/52/53
184
I D F C A N N U A L R E P O R T 09 –10
D I R E CT O R S ’ R E P O R T
TO THE MEMBERS
We are pleased to present the Tenth Annual Report to the Members, along with the Audited Profit and Loss Account for the year ended March 31, 2010 and the Balance Sheet as at March 31, 2010.
AWARDS & RECOGNITION
IDFC Premier Equity Fund – Plan A has been ranked as a Seven Star Fund by ICRA in the category of ‘Open Ended Equity Diversified - Defensive’ schemes for its 3 years performance till December 31, 2009. The rank is an outcome of an objective and comparative analysis against various parameters, including: risk adjusted return, fund size, company concentration and liquidity. The ranking methodology did not take into account entry and exit loads imposed by the Fund. There were 81 schemes considered in ‘Open Ended Equity Diversified - Defensive’ category for the ranking exercise. The rank is neither a certificate of statutory compliance nor any guarantee on the future performance of IDFC Premier Equity Fund – Plan A. IDFC Government Securities Fund – ST – Plan A has been ranked as a Five Star Fund by ICRA in the category of ‘Open Ended Gilt’ schemes for its 1 year performance till December 31, 2009. The rank is an outcome of an objective and comparative analysis against various parameters, including: risk adjusted return, fund size and average maturity. The ranking methodology did not take into account entry and exit loads imposed by the Fund. There were 30 schemes considered in ‘Open Ended Gilt’ category for the ranking exercise. The rank is neither a certificate of statutory compliance nor any guarantee on the future performance of IDFC Government Securities Fund – ST – Plan A. IDFC Premier Equity Fund ranked as Best Fund over Past 3 Years period ending Dec. 31, 2009, India Equity by Lipper, a global ranking agency for mutual funds in Lipper Fund Awards, India, 2010. Business Standard, a leading newspaper in India voted IDFC Mutual Fund as the “Equity Fund Managers of the Year” for the year 2009. Business World, a leading business magazine in India voted Kenneth Andrade (Head – Investments) as the “Smartest Fund Manager of the Year” for the year 2009. IDFC Premier Equity Fund rated as the “Best Mid-cap and Small-cap Fund” over Past 3 Years period ending Dec. 31, 2009 by Business World, a leading business magazine in India IDFC AMC rated as the “Best Performing Fund House” by the Economic Times (ET) Quarterly Mutual Fund Tracker for Q1 and Q2 of FY 09-10. IDFC Imperial Equity Fund and IDFC Dynamic Bond Fund ranked in the “Platinum Category” which is the highest ranking given to schemes in Q1 and Q2 2009.
FINANCIAL RESULTS
RUPEES
YEAR ENDED MARCH 31, 2010 Gross Income Profit before Tax Provision for Tax Profit after Tax 500,000 218,647 68,000 150,647
YEAR ENDED MARCH 31, 2009 625,000 324,232 115,000 209,232
OPERATIONS OF IDFC MUTUAL FUND
The Company is the Trustee to the schemes of IDFC Mutual Fund (IDFC MF). The Assets under Management of IDFC Mutual Fund were Rs. 19,979 Crores (including AUM of Fund of Funds Schemes) as on March 31, 2010:
NEW SCHEMES LAUNCH
? Open ended schemes launched during the period under review: IDFC Asset Allocation Fund of Fund, an open ended Fund of Funds Scheme was launched on January 04, 2010. The investment objective of the scheme is to generate capital appreciation through investment in different mutual fund schemes primarily local funds based on a defined asset allocation model. It has 3 plans – Aggressive Plan, Conservative Plan and Moderate Plan. The Aggressive Plan collected a total of Rs. 613,484,254.26 during the New Fund Offer. The Conservative Plan collected a total of Rs 301,262,457.31during the New Fund Offer. The Moderate Plan collected a total of Rs. 404,381,577.08 during the New Fund Offer. IDFC Monthly Income Plan Fund of Fund, an open ended Fund of Fund scheme was launched on January 11, 2010. This scheme collected a total of Rs. 2,113,409,943.68 during the New Fund Offer. The primary objective of the Scheme is to generate regular returns through investment primarily in debt oriented Mutual Fund schemes (such as Income and Liquid funds). The secondary objective of the Scheme is to generate long-term capital appreciation by investing a portion of the Scheme’s assets in equity oriented MF schemes. Monthly Income is not assumed and the same is subject to availability of distributable surplus. ? Close ended schemes launched during the period under review: In addition to the above open ended schemes, Six Close-Ended income Schemes in the form of Fixed Maturity Plans (FMP’s) were launched. These comprised of IDFC Fixed Maturity Plan – Thirteen Months Series I, IDFC Fixed Maturity Plan –Fifteen Months Series 3, IDFC Fixed Maturity Plan – Seventeen Months Series 1, IDFC FMP-Half Yearly Series 9 and IDFC Fixed Maturity Plan – Fourteen Months Series 1. These Fixed Maturity Plans collected approximately Rs 1027.85 crores.
DIVIDEND
The Board of Directors of the Company do not recommend the payment of dividend for the current year.
DIRECTORS
In accordance with the provisions of the Companies Act, 1956 and the Company’s Articles of Association, Mr. U Sundararajan retires by rotation and is eligible for re-appointment.
I D F C A M C T R U ST E E C O M P A N Y L I M I T E D
185
AUDITORS
M/s M. P. Chitale and Co., Chartered Accountants and Statutory Auditors of the Company would be retiring at the conclusion of the forthcoming Annual General Meeting and are eligible for reappointment. The auditors have confirmed their eligibility and willingness to accept the office if re-appointed. The Members are requested to consider their re-appointment, at a remuneration to be decided by the Board of Directors, for the financial year ending March 31, 2011 as set out in the Notice convening the Annual General Meeting.
There was no foreign exchange earning or outgo during the period under review. The Board of Directors of the Company met seven times during the year and four meetings of the Audit Committee were convened during the year.
DIRECTORS RESPONSIBILITY STATEMENT
Based on the representation made by the management, the Directors, pursuant to the provisions of Section 217 (2AA) wish to state: 1. that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; 2. that they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit or loss of the company for that period; 3. that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and 4. that they have prepared the annual accounts on a going concern basis.
AUDIT COMMITTEE
The Audit Committee consists of two members, Mr. Jamsheed Kanga, Chairman and Mr. Vikram Limaye. The Committee met four times during the year under review. The functions of the Committee includes reviewing the financial statements, internal control systems and significant accounting policies of the Company and discussing the audit findings and recommendatintons of the internal and statutory auditors of the Company.
CONVERSION INTO PUBLIC COMPANY
The Company has been converted into a Public Company. The Registrar of Companies, Maharashtra has issued a Fresh Certificate of Incorporation consequent upon change of name on conversion to Public Limited Company dated June 23, 2009.
CAPITAL
No further equity share capital was issued by the company during the year.
ACKNOWLEDGEMENT
The Board places on record its gratitude to the Government of India, Securities and Exchange Board of India, Reserve Bank of India, Association of Mutual Funds in India, other regulatory authorities and institutions, the investors of IDFC Mutual Fund and to the Members for their continued guidance and support during the year.
FIXED DEPOSITS
The company has not accepted any Fixed Deposits from the public.
PARTICULARS OF EMPLOYEES
Since your Company does not have any employee, the provisions of Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, are not applicable and hence not given.
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
STATUTORY DISCLOSURE OF PARTICULARS
The requirements of disclosure, in terms of Section 217 (1)(e) of the Companies Act, 1956 pertaining to steps taken regarding conservation of energy and technology absorption do not apply to the Company.
VIKRAM LIMAYE
Chairman Mumbai April 20, 2010
186
I D F C A N N U A L R E P O R T 09 –10
AU D I TO RS ’ R E PO RT
To The Members of IDFC AMC Trustee Company Limited
We have audited the attached Balance Sheet of IDFC AMC Trustee Company Limited as at March 31, 2010 and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. (1) As required by the Companies Auditors Report Order (CARO) 2003, issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956, we enclose as Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order. (2) We state that: (a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit; (b) In our opinion, proper books of account as required by law have been kept by the Company, so far as appears from our examination of those books; (c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with in this report are in agreement with the books of account; (d) In our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in Section 211 (3C) of the Companies Act, 1956 to the extent applicable. (e) On the basis of written representation received by the Company from the directors, we report that none of the directors is disqualified as on 31st March 2010 from being appointed as a director in terms of clause (g) of sub section (1) of section 274 of the Companies Act, 1956. (f) In our opinion and to the best of our information and according to the explanations given to us, the accounts read with notes thereon give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (i) in so far as it relates to the Balance Sheet, of the state of affairs of the Company as at March 31, 2010,
(ii) in so far as it relates to the Profit and Loss Account, of the profit of the Company for the year ended on that date and (iii) in so far as it relates to the Cash Flow Statement of the Company for the year ended on that date.
FOR M. P. CHITALE & CO. Chartered Accountants
VIDYA BARJE
Partner M. No. 104994 Firm Registration No. 101851W Mumbai April 21, 2010
I D F C A M C T R U ST E E C O M P A N Y L I M I T E D
187
ANNEXURE
Annexure referred to in paragraph 1 of the report of even date of the Auditors to the members of IDFC AMC Trustee Company Limited
(i) The Company has no fixed assets. (ii) The Company has not granted any loans to Companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. (iii) The Company has not taken any loans from Companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. (iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business for purchase of fixed assets and for the services rendered. (v) In our opinion and according to the information and explanations given to us, there are no transactions that need to be entered into a register in pursuance of section 301 of the Companies Act, 1956. (vi) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public. (vii) The Company’s paid-up capital and reserves does not exceed Rs. 50 lakhs and the turnover of the Company does not exceed five crores rupees for a period of immediately preceding three consecutive financial years and hence, the Company is not required to have a formal Internal Audit System. (viii) Central Government has not prescribed maintenance of cost records under Section 209 (1) (d) of the Companies Act, 1956. (ix) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income-tax, Sales-tax, Wealth tax, Service Tax, Customs duty, Excise duty, cess and any other statutory dues as applicable with the appropriate authorities. According to the information and explanations given to us, 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, Customs duty, Excise duty, cess and any other statutory dues outstanding as at March 31, 2010 for a period of more than six months from the date they became payable. (x) The Company does not have accumulated losses at the end of the financial year and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.
TO THE AUDITOR’S REPORT
(xi) In our opinion and according to the information and explanations given to us, during the period, the Company has not taken any loan and no amounts were due towards principal or interest to financial institution, bank or debenture holders during the period. (xii) According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. (xiii) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other securities. (xiv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions. (xv) According to the information and explanations given to us, the Company has not taken any term loan. (xvi) According to the information and explanations given to us, during the year, the Company has not raised any funds. (xvii) The Company has not made any preferential allotment of shares to parties and Companies covered in the Register maintained under section 301 of the Act. (xviii) According to the information and explanations given to us, the Company has not issued any debentures up to 31st March 2010. (xix) The Company has not raised money from public issue. (xx) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the period. (xxi) Considering the nature of the business and the services rendered by the Company, clauses (ii) and (xiii) under Clause 4 of the CARO are not applicable.
FOR M. P. CHITALE & CO. Chartered Accountants
VIDYA BARJE
Partner M. No. 104994 Firm Registration No. 101851W Mumbai April 21, 2010
188
I D F C A N N U A L R E P O R T 09 –10
BALANCE SHEET
RUPEES SCHEDULE RUPEES
AS AT MARCH 31, 2010
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
SOURCES OF FUNDS
Shareholders’ Funds Capital Reserves and Surplus Total 1 2 500,000 522,230 1,022,230 1,022,230 3 551,500 550,201 306,616 1,408,317 Less: Current Liabilities & Provisions Net Current Assets Total Notes to the Accounts Schedules 1 to 6 form an integral part of the Accounts 6 4 386,087 1,022,230 1,022,230 496,628 426,442 310,162 1,233,232 361,649 871,583 871,583 500,000 371,583 871,583 871,583
APPLICATION OF FUNDS
Current Assets, Loans and Advances Sundry Debtors Cash and Bank Balances Loans and Advances
IN TERMS OF OUR REPORT OF EVEN DATE FOR M.P. CHITALE & CO. Chartered Accountants FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
VIDYA V . B A R J E
U. SUNDARARAJAN
JAMSHEED KANGA
Partner Mumbai | April 20, 2010
Director
Director
I D F C A M C T R U ST E E C O M P A N Y L I M I T E D
189
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
SCHEDULE
APRIL 1, 2009 TO MARCH 31, 2010 500,000 5 281,353 218,647 68,000 150,647 371,583 522,230 3.01 6
JANUARY 1, 2008 TO MARCH 31, 2009 625,000 300,768 324,232 115,000 209,232 162,351 371,583 4.18
INCOME
Trusteeship Fees
EXPENDITURE
Operating Expenses PROFIT BEFORE TAX Less: Provision for tax PROFIT AFTER TAX Add: Balance as per last Balance Sheet BALANCE CARRIED FORWARD Earnings per Share (Face Value Rs. 10) (Basic) Notes to the Accounts Schedules 1 to 6 form an integral part of the Accounts
IN TERMS OF OUR REPORT OF EVEN DATE FOR M.P. CHITALE & CO. Chartered Accountants FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
VIDYA V . B A R J E
U. SUNDARARAJAN
JAMSHEED KANGA
Partner Mumbai | April 20, 2010
190 I D F C A N N U A L R E P O R T 09 –10
Director
Director
C A S H F L OW ST AT E M E N T
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
RUPEES
PARTICULARS
APRIL 1, 2009 TO MARCH 31, 2010 218,647 (23,171) (43,562) 151,914 (28,155) 123,759 123,759 426,442 550,201 (123,759)
JANUARY 1, 2008 TO MARCH 31, 2009 324,232 (173,752) (61,273) 89,207 (120,340) (31,133) 400,000 368,867 57,575 426,442 (368,867)
A. CASH FLOW FROM OPERATING ACTIVITIES
Profit Before Tax Changes in : Current Assets & Loans and Advances Current Liabilities Direct Taxes Paid NET CASH FLOW FROM/(USED IN) OPERATING ACTIVITIES (A)
B. CASH FLOW FROM FINANCING ACTIVITIES
NET CASH FROM FINANCING ACTIVITIES Increase in Share Capital (B) NET CHANGE IN CASH & CASH EQUIVALENTS (A)+(B) Cash & Cash Equivalents as at the beginning of the period (As per Schedule 3) Cash & Cash Equivalents as at the end of the period (As per Schedule 3)
IN TERMS OF OUR REPORT OF EVEN DATE FOR M.P. CHITALE & CO. Chartered Accountants FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
VIDYA V . B A R J E
U. SUNDARARAJAN
JAMSHEED KANGA
Partner Mumbai | April 20, 2010
Director
Director
I D F C A M C T R U ST E E C O M P A N Y L I M I T E D
191
SCHEDULES
ANNEXED TO AND FORMING PART OF THE ACCOUNTS
SCHEDULE 1 Share Capital
AUTHORISED 50,000 Equity shares of Rs. 10/- each ISSUED, SUBSCRIBED & PAID-UP 50,000 Equity shares of Rs. 10/- each (All the above shares are held by Infrastructure Development Finance Company Limited, the Holding Company and its nominees)
RUPEES
RUPEES
AS AT MARCH 31, 2010 500,000
AS AT MARCH 31, 2009 500,000
500,000 500,000
500,000 500,000
SCHEDULE 2 Reserves and Surplus
Profit and Loss Account
RUPEES
RUPEES
AS AT MARCH 31, 2010 522,230 522,230
AS AT MARCH 31, 2009 371,583 371,583
SCHEDULE 3 Current Assets, Loans and Advances
CURRENT ASSETS Sundry Debtors (Considered Good) Trusteeship Fees Receivable Over Six Months Others CASH AND BANK BALANCES Balances with Scheduled Banks - in Current Accounts LOANS AND ADVANCES Advance Income Tax and TDS Others
RUPEES
RUPEES
AS AT MARCH 31, 2010
AS AT MARCH 31, 2009
275,752 275,748 551,500 550,201 1,101,701 287,579 19,037 306,616
249,076 247,552 496,628 426,442 923,070 259,424 50,738 310,162
SCHEDULE 4 Current Liabilities and Provisions
Sundry Creditors Funds received from IDFC towards corpus Others Provision for taxation
RUPEES
RUPEES
AS AT MARCH 31, 2010 30,000 68,087 288,000 386,087
AS AT MARCH 31, 2009 30,000 111,649 220,000 361,649
192
I D F C A N N U A L R E P O R T 09 –10
SCHEDULE 5 Operating expenses
RUPEES
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Sitting Fees Bank Charges Miscellaneous Expenses Professional and Consultancy charges Stamp Duty and Registration Fees Printing and Stationery Audit Fees Advertising Car hire 180,000 6 – 48,499 2,300 – 29,224 – 21,324 281,353
JANUARY 1, 2008 TO MARCH 31, 2009 240,000 10 638 26,797 3,000 3,175 20,618 6,530 – 300,768
I D F C A M C T R U ST E E C O M P A N Y L I M I T E D
193
SCHEDULE: 6 Notes Forming Part of the Accounts
1 Significant Accounting Policies:
A. Method of Accounting
The accounts are prepared under the historical cost convention and on the going concern basis, with revenues recognised and expenses accounted on their accrual.
B. Revenue Recognition
Revenue is recognised when no significant uncertainty as to measurability and collectibility exists.
2 Earnings and expenditure in foreign currency: Nil 3 Contingent Liabilities not provided for:
Nil
4 As on the Balance sheet date there was no amount exceeding Rs.1 Lac, due to any small-scale Industrial undertaking, outstanding for more than 30 days. 5 The earning per share, in terms of Accounting Standard 20 issued by the Institute of Chartered Accountants of India, is as under:
PARTICULARS Profit after tax Profit attributable to Equity shareholders No. of Shares Earnings per share CURRENT PERIOD
RUPEES
PREVIOUS PERIOD
RUPEES
150,647 150,647 50,000 3.01
209,232 209,232 50,000 4.18
6 Deferred tax asset/liability does not arise since there is no difference in accounting profit and tax profit on account of timing differences. 7 The Company is engaged in the business of providing trusteeship services. As such there is no separate reportable primary business segment or geographical segment as required by Accounting Standard 17 on “Segment Reporting” issued by the Institute of Chartered Accountants of India. 8 As per the Accounting Standard 18 on “Related Party Disclosures” issued by the Institute of Chartered Accountants of India, the related parties of the Company are as follows:
I. HOLDING COMPANY:
Infrastructure Development Finance Company Limited
II. FELLOW SUBSIDIARY:
IDFC Asset Management Company Limited The nature and volume of transactions carried out with the above related parties in the ordinary course of business are as follows:
NAME OF RELATED PARTY & NATURE OF RELATIONSHIP Fellow Subsidiary IDFC Asset Management Company Limited Advances taken and Repaid Advances payable-Balance 152,032 351,217 40,000 PARTICULARS CURRENT PERIOD
RUPEES
PREVIOUS PERIOD
RUPEES
9 Details of Movement in Provisions, in terms of Accounting Standard 29 issued by the Institute of Chartered Accountants of India, is as under:
NATURE OF PROVISION OPENING BALANCE AS ON 01/04/2009 220,000 PROVISIONS MADE DURING THE YEAR 68,000 PROVISIONS REVERSED / ADJUSTED CLOSING BALANCE AS ON 31/03/2010 288,000
Provision for Income Tax
10 Previous period’s figures have been regrouped wherever necessary. Since the current period is for 12 months from April 01, 2009 to March 31, 2010, the figures for current period are not comparable with previous period viz., 15 months from January 01, 2008 to March 31, 2009.
FOR M.P. CHITALE & CO. Chartered Accountants
VIDYA V . B A R J E
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
U. SUNDARARAJAN
JAMSHEED KANGA
Partner Mumbai | April 20, 2010
194 I D F C A N N U A L R E P O R T 09 –10
Director
Director
B A L A N C E S H E E T A B ST R A CT
AND COMPANY’S GENERAL BUSINESS PROFILE
I.
REGISTRATION DETAILS Registration No. State Code Balance Sheet Date U 1 3 6 1 1 0 3 2 0 1 0 9 9 9 0 M H 1 9 9 9 P T C 1 2 3 1 9 0
II.
CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000) Public Issue N I L Right Issue N I L
Bonus Issue N III. I L
Private Placement N I L
POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000) Total Liabilities 1 SOURCES OF FUNDS Paid-up Capital 5 0 0 Reserves and Surplus 5 2 2 4 0 8 1 Total Assets 4 0 8
Secured Loans N APPLICATION OF FUNDS Net Fixed Assets N I L I L
Unsecured Loans N I L
Investments N I L
Net Current Assets 1 IV. 0 2 2
Deferred Tax Asset N I L
PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000) Turnover / Income 5 0 0 Total Expenditure 2 8 1
Profit Before Tax 2 1 9
Profit After Tax 1 5 1
Earnings per Share (in Rs.) 3 V. . 0 1
Dividend % N I L
GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS) Item Code No. (ITC Code) Product Description N T I R L U S T E E S H I P S E R V I C E S
I D F C A M C T R U ST E E C O M P A N Y L I M I T E D
195
IDFC pension fund
management company limited
B O A R D O F D I R E CTO R S
?
? ? ? ? ?
Mr. Vikram Limaye Chairman Mr. Naval Bir Kumar Mr. L. K. Narayan Mr. Bharat S. Raut Mr. Bharat Shah Dr. T. C. Nair
A U D I TO R S
?
Haribhakti & Co. Chartered Accountants
P R I N C I PA L B A N K E R S
?
HDFC Bank Limited
R E G I ST E R E D O F F I C E
One India Bulls Centre, 841 Jupiter Mills Compound, Senapati Bapat Marg, Elphinstone Road (West), Mumbai 400 013. TEL +91 22 66289999 FAX +91 22 24215052
D I R E CT O R S ’ R E P O R T
TO THE MEMBERS
We are pleased to present the First Annual Report to the Members, along with the Audited Profit and Loss Account for the period March 31, 2009 (date of incorporation) to March 31, 2010 and the Balance Sheet as at March 31, 2010.
DIVIDEND
Due to inadequacy of profits, the Board of Directors have not recommended any dividend for the year ended March 31, 2010.
DIRECTORS
In accordance with the provisions of the Companies Act, 1956 and the Company’s Articles of Association, the directors of the Company appointed by the Board of Directors during the year would hold office till the conclusion of the forthcoming Annual General Meeting. The members are requested to consider their appointment as directors of the Company.
PRINCIPAL ACTIVITIES
The Company is one of the six pension fund managers selected by the Pension Fund Regulatory and Development Authority (PFRDA) to manage the New Pension System (NPS) launched by the Government of India for all citizens of India other than government employees covered under NPS. The Company was incorporated on March 31, 2009 and the Registrar of Companies, Maharashtra issued the Certificate of Commencement of Business on April 20, 2009. The Pension Fund Regulatory & Development Authority issued the Certificate of Commencement of Business on May 01, 2009. The Company is now a subsidiary of IDFC Asset Management Company Limited (IDFC AMC). The Company is yet to commence full-fledged operations.
AUDITORS
M/s. Haribhakti & Co., Chartered Accountants will hold the office of the statutory auditors of the Company up to the ensuing Annual General Meeting. It is proposed to appoint M/s. M. P. Chitale as the statutory auditors in place of M/s. Haribhakti & Co to audit the accounts of the Company for the financial year ending March 31, 2011. M/s. M. P. Chitale & Co., have confirmed that their appointment, if made, would be in conformity with the provisions of Sections 224 and 226 of the Companies Act, 1956 and has also indicated their willingness to be appointed. You are requested to consider their appointment.
FINANCIAL RESULTS
RUPEES
YEAR ENDED MARCH 31, 2010 Gross Income Profit before Tax Provision for Tax Profit after Tax 3,937,255 (1,728,486) (452,413) (1,276,073)
AUDIT COMMITTEE
The Audit Committee consists of three members, Mr. Bharat S. Raut, Chairman, Dr. T. C. Nair and Mr. L. K. Narayan. The Committee met two times during the year under review. The functions of the Committee includes reviewing the financial statements, internal control systems and significant accounting policies of the Company and discussing the audit findings and recommendatintons of the internal and statutory auditors of the Company.
OPERATIONAL OVERVIEW
During the period under review, PFRDA launched Tier I & II NPS.
DATA AS ON MARCH 31, 2010 PORTFOLIOS AUM ADDED IN THE MONTH
RUPEES
CUMULATIVE MARKET VALUE
RUPEES
ALLOCATION
SHARE CAPITAL
46.90% 25.36% 23.93% 1.58% 0.83% 1.40% 100%
Scheme E Scheme G Scheme C Scheme E Tier II Scheme G Tier II Scheme C Tier II Total PERFORMANCE SCHEME Nifty Scheme E Scheme G Scheme C Scheme E Tier II Scheme G Tier II Scheme C Tier II
56,362.37 24,880.23 36,545.68 33,139.61 24,907.98 37,329.43 213,165.30
1,662,743.31 898,994.63 848,423.41 56,114.11 29,514.97 49,554.23 3,545,344.66
During the year, the Authorized Capital of the Company was increased from Rs. 10 crore to Rs 20 crore. The issued, subscribed and paid up equity share capital was increased from Rs. 10 crore to Rs. 12 crores by issuing further 20 lakhs equity shares to the existing shareholders, namely, Infrastructure Development Finance Company Limited (IDFC) and IDFC AMC (sponsors to the Company). IDFC and IDFC AMC contributed a sum of Rs. 1 crore each to the share capital of the Company making the paid up capital Rs. 12 crore.
1 MONTH (ABSOLUTE) 6.64% 8.10% 1.16% 1.23% 7.82% 0.38% 0.38%
* SINCE INCEPTION (ABSOLUTE) 43.65% 23.51% 2.48% 9.86% 0.23% 0.91% 0.91%
FIXED DEPOSITS
The company has not accepted any Fixed Deposits from the public.
PARTICULARS OF EMPLOYEES
Since your Company does not have any employee, the provisions of Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, are not applicable and hence not given.
Inception Date is May 1, 2009
I D FC P E N S I O N FU N D M A N AG E M E N T CO M PA N Y
LT D .
197
STATUTORY DISCLOSURE OF PARTICULARS
Since the Company does not own any manufacturing facility, the disclosure of information on other matters required to be disclosed in terms of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1998, are not applicable and hence not given. There was no income or expenditure in foreign currency during the period under review.
provisions of this Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; 4. that they have prepared the annual accounts on a going concern basis.
ACKNOWLEDGEMENT
The Board places on record its gratitude to the Government of India, the Pension Fund Regulatory & Development Authority, other regulatory authorities and institutions, investors in the Pension Fund schemes and to the Members for their continued guidance and support. The Company would also like to express its gratitude for the unstinted support and guidance received from Infrastructure Development Finance Company Limited and other group companies.
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
DIRECTORS RESPONSIBILITY STATEMENT
Based on the representation made by the management, the directors, pursuant to the provisions of Section 217 (2AA) the Directors wish to state. 1. that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; 2. that they have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the company for that period; 3. that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the
VIKRAM LIMAYE
Chairman Mumbai April 21, 2010
198
I D F C A N N U A L R E P O R T 09 –10
AU D I TO RS ’ R E PO RT
To The Members of IDFC Pension Fund Management Company Limited
We have audited the attached Balance Sheet of IDFC PENSION FUND MANAGEMENT COMPANY LIMITED as at March 31, 2010, the related Profit and Loss Account for the period ended on that date annexed thereto and the Cash Flow Statement for the period ended on that date, which we have signed under reference to this report. These Financial Statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these Financial Statements based on our audit. We conducted our audit in accordance with Auditing Standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the Financial Statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Financial Statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the Financial Statements. We believe that our audit provides a reasonable basis for our opinion. (I) As required by the Companies (Auditors’ Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, on the basis of such checks of the books and records as we considered appropriate and the information and explanations given to us during the course of the audit, we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order, to the extent they are applicable to the Company. (II) Further to our comments in the Annexure referred to in paragraph I above, we report as under: (a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit; (b) in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of such books; (c) the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;
(d) in our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of the Section 211 of the Companies Act, 1956 to the extent they are applicable to the Company; (e) On the basis of the written representations received from the directors of the Company as on March 31, 2010 and taken on record by the Board of Directors of the Company, we report that none of the directors is disqualified as on March 31, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956; (f) in our opinion and to the best of our information and according to the explanations given to us, the said Balance Sheet, the Profit and Loss Account and Cash Flow Statement read together with Notes thereon give the information required by the Companies Act, 1956 in the manner so required, and give a true and fair view in conformity with the accounting principles generally accepted in India: (i) in so far it relates to the Balance Sheet, of the state of affairs of the Company as at March 31, 2010,
(ii) in the case of the Profit and Loss Account, of the Loss of the Company for the period ended on that date and (iii) in the case of Cash Flow Statement, of the cash flows for the period ended on that date.
FOR HARIBHAKTI & CO. Chartered Accountants Firm Membership No. 103523W
RAKESH RATHI
Partner Membership No. 45228 Mumbai April 21, 2010
I D FC P E N S I O N FU N D M A N AG E M E N T CO M PA N Y
LT D .
199
ANNEXURE
ANNEXURE REFERRED TO IN PARAGRAPH I OF OUR REPORT OF EVEN DATE TO THE MEMBERS OF IDFC PENSION FUND MANAGEMENT COMPANY LIMITED ON THE ACCOUNTS FOR THE PERIOD ENDED MARCH 31, 2010.
1. The Company has maintained proper records showing full particulars and situation of fixed assets. 2. The Company has physically verified the fixed assets in accordance with a programme of verification, which in our opinion provides for physical verification of all fixed assets at reasonable intervals. We have been informed that the physical verification of fixed assets was carried out in the current period and discrepancies noticed on such verification have been dealt with in the books of account. 3. The Company has not disposed off a substantial part of the fixed assets during the period. 4. The Company has neither granted nor taken any loans, secured or unsecured from Companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956. 5. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and nature of its business with regards to purchase of fixed assets and sale of services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls. 6. Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the Company has not entered into any transactions that need to be entered in the register maintained under Section 301 of the Companies Act, 1956. 7. The Company has not accepted any deposits from the public. 8. In our opinion, the Company has an adequate internal audit system commensurate with the size of the Company and nature of its business. 9. We are informed that no cost records are required to be maintained by the Company under Section 209(1) (d) of the Companies Act, 1956. 10. According to the information and explanation given to us, the Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, income-tax, service tax and any other statutory dues applicable to it. 11. According to the information and explanations given to us, no undisputed amounts payable in respect of income tax and service tax were outstanding as at March 31, 2010 for a period of more than six months from the date they became payable.
TO THE AUDITORS’ REPORT
12. According to the information and explanations given to us, there are no dues of Income Tax, Service Tax and Cess which have not been deposited on account of any dispute. 13. The Company has accumulated losses as at March 31, 2010 and has incurred cash losses during the period covered by our audit. 14. The Company has not taken any loan from Financial Institution, Bank and the Company has not issued any Debentures. 15. The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. 16. The Company has not dealt or traded in shares, securities, debentures and other investments during the period. 17. The Company has not given any guarantee for loans taken by others from Bank or Financial Institutions. 18. The Company has not taken term loans during the period. 19. According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, funds raised on short-term basis have, prima facie, not been used during the period for long-term investment. 20. The Company has not made any preferential allotment of shares to the parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956 during the period. 21. The Company has not issued any Debentures during the period. 22. The Company has not raised any money by public issue during the period. 23. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on the Company or by the Company has been noticed or reported during the course of our audit. 24. The clause (ii), (iii) and (xiii) of para 4 are not reported upon as these are not applicable to the Company.
FOR HARIBHAKTI & CO. Chartered Accountants Firm Membership No. 103523W
RAKESH RATHI
Partner Membership No. 45228 Mumbai April 21, 2010
200
I D F C A N N U A L R E P O R T 09 –10
BALANCE SHEET
AS AT MARCH 31, 2010
RUPEES SCHEDULE
RUPEES
AS AT MARCH 31, 2010
SOURCES OF FUNDS
Shareholders’ Funds Share Capital 1 120,000,000 120,000,000
APPLICATION OF FUNDS
Fixed Assets Gross Block Less: Accumulated Depreciation & Amortisation Net Block Investments Deferred Tax Asset (Refer Note 4) Current Assets, Loans and Advances Cash and Bank Balances Loans and Advances Less: Current Liabilities and Provisions Current Liabilities Provisions Net Current Assets/(Liabilities) Debit Balance in Profit and Loss Account Notes to the Financial Statements 10 4 5 6 1,157,110 1,005,370 2,162,480 (893,568) 1,276,073 120,000,000 The Schedules referred to above and the Notes to Accounts form an integral part of the Balance Sheet 245,716 1,023,196 1,268,912 3 2 140,000 2,173 137,827 119,027,255 452,413
AS PER OUR REPORT OF EVEN DATE FOR HARIBHAKTI & CO. Chartered Accountants
RAKES H R AT H I
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF IDFC PENSION FUND MANAGEMENT COMPANY LTD.
BHARAT S. RAUT L. K. NARAYAN
Partner
Membe r s h i p N o . 4 5 2 2 8
Director
Director
Mumbai | April 21, 2010
I D FC P E N S I O N FU N D M A N AG E M E N T CO M PA N Y LT D . 201
PROFIT AND LOSS ACCOUNT
FOR THE PERIOD ENDED MARCH 31, 2010
RUPEES
SCHEDULE
MARCH 31, 2009 TO MARCH 31, 2010 – 7 3,937,255 3,937,255
INCOME
Management Fees (Refer Note 8) Other Income
EXPENDITURE
Personnel Expenses (Refer Note 7) Operating and Other Expenses Depreciation & Amortisation PROFIT/(LOSS) BEFORE TAX Provision for Tax - Current Tax - Deferred Tax PROFIT/(LOSS) AFTER TAX Net Loss Balance Carried to Balance Sheet Loss per share Basic and Diluted (Face value Rs.10) Notes to the Financial Statements The Schedules referred to above and the Notes to Accounts form an integral part of the Profit and Loss Account 10 (0.12) – (452,413) (1,276,073) (1,276,073) (1,276,073) 8 9 2,320,648 3,342,920 2,173 5,665,741 (1,728,486)
AS PER OUR REPORT OF EVEN DATE FOR HARIBHAKTI & CO. Chartered Accountants
RAKES H R AT H I
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF IDFC PENSION FUND MANAGEMENT COMPANY LTD.
BHARAT S. RAUT L. K. NARAYAN
Partner
Membe r s h i p N o . 4 5 2 2 8
Director
Director
Mumbai | April 21, 2010
202 I D F C A N N U A L R E P O R T 09 –10
C A S H F L OW ST AT E M E N T
FOR THE PERIOD ENDED MARCH 31, 2010
RUPEES
MARCH 31, 2009 TO MARCH 31, 2010
A.
CASH FLOW FROM OPERATING ACTIVITIES
Profit / (Loss) Before Tax and Prior Period Item Adjustments for: Depreciation & Amortisation Dividend Earned Operating loss before Working Capital Changes Movements in working capital : (Increase) / Decrease in Loans and Advances Increase / (Decrease) in Current Liabilities Increase / (Decrease) in Provisions Cash generated from Operations Income Taxes Paid (Including Fringe Benefit Tax) NET CASH USED IN OPERATING ACTIVITIES (A) (1,023,196) 1,157,110 1,005,370 (4,524,284) (4,524,284) (140,000) 3,937,255 (121,937,255) 2,910,000 (B) (115,230,000) 120,000,000 (C) (A)+(B)+(C) 120,000,000 245,716 245,716 2,173 (3,937,255) (5,663,568) (1,728,486)
B.
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Fixed Assets Dividend Earned Purchase of Investments Sale Proceeds of Investments NET CASH USED IN INVESTING ACTIVITIES
C.
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from Issue of Share Capital NET CASH FROM FINANCING ACTIVITIES Net change in Cash and Cash Equivalents Cash and Cash Equivalents as at the beginning of the year Cash and Cash Equivalents as at the end of the year
AS PER OUR REPORT OF EVEN DATE FOR HARIBHAKTI & CO. Chartered Accountants
RAKES H R AT H I
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF IDFC PENSION FUND MANAGEMENT COMPANY LTD.
BHARAT S. RAUT L. K. NARAYAN
Partner
Memb e r s h i p N o . 4 5 2 2 8
Director
Director
Mumbai | April 21, 2010
I D FC P E N S I O N FU N D M A N AG E M E N T CO M PA N Y LT D . 203
SCHEDULES
SCHEDULE 1 Share Capital
AUTHORISED: 20,000,000 Equity shares of Rs.10/- each ISSUED, SUBSCRIBED AND PAID UP 12,000,000 Equity shares of Rs.10/- each, fully paid up
ANNEXED TO AND FORMING PART OF THE ACCOUNTS
RUPEES
AS AT MARCH 31, 2010 200,000,000 120,000,000
(50.01 % shares are held by IDFC Asset Management Company Limited & 49.99 % shares are held by Infrastructure Development Finance Company Limited respectively )
SCHEDULE 2 Fixed Assets
DESCRIPTION March 31, GROSS BLOCK March 31, Additions Deletions DEPRECIATION & AMORTISATION the period AmortisaMarch 31, March 31, ciation & tion for DepreMarch 31,
RUPEES
NET BLOCK March 30,
2009
2010
2009
2010
2010
INTANGIBLES Computer Software Total 140,000 140,000 140,000 140,000 2,173 2,173 2,173 2,173 137,827 137,827 -
SCHEDULE 3 Investments- (Current)(At lower of cost or market value)
(Unquoted, Non-Trade) Mutual Fund Units 11,900,940.312 units of Face Value of Rs 10 (Cost Rs.10.0015) each in IDFC Money Manager Fund - Treasury Plan -Inst Plan C (Daily Dividend Reinvestment Plan) Market value Rs. 119,027,255/-
RUPEES
AS AT MARCH 31, 2010
119,027,255 119,027,255
SCHEDULE 4 Cash and Bank Balances
Balance with a Scheduled Bank - on Current Account
RUPEES
AS AT MARCH 31, 2010 245,716 245,716
SCHEDULE 5 Loans and Advances
(Unsecured, considered good) Advance Recoverable in Cash or in Kind or for value to be received Service Tax Input Credit
RUPEES
AS AT MARCH 31, 2010 690,926 332,270 1,023,196
204
I D F C A N N U A L R E P O R T 09 –10
2009
As at
As at
As at
As at
As at
As at
SCHEDULE 6 Current Liabilities and Provisions
CURRENT LIABILITIES Sundry Creditors for Expenses (Other than Micro, Medium and Small Enterprises) Payables to Inter company Statutory Dues PROVISIONS Provision for Bonus
RUPEES
AS AT MARCH 31, 2010 60,000 974,799 122,311 1,157,110 1,005,370 1,005,370 2,162,480
SCHEDULE 7 Other Income
RUPEES
MARCH 31, 2009 TO MARCH 31, 2010 Dividend from Units of Mutual Fund 3,937,255 3,937,255
SCHEDULE 8 Personnel Expenses
RUPEES
MARCH 31, 2009 TO MARCH 31, 2010 Salaries and Bonus Contribution to Provident Fund 2,266,263 54,385 2,320,648
SCHEDULE 9 Operating and Other Expenses
RUPEES
MARCH 31, 2009 TO MARCH 31, 2010 Professional Fees & Custodian Fees Directors’ Sitting Fees Computer Software Expenses Notary & Franking Expenses Stamp Duty Fees Registration Expenses Miscellaneous Expenses Auditors’ Remuneration Audit Fees Other Services 50,000 95,000 3,342,920 748,881 70,000 134,959 552,915 220,300 1,420,874 49,991
I D FC P E N S I O N FU N D M A N AG E M E N T CO M PA N Y
LT D .
205
SCHEDULE 10: Accounting Policies & Notes to the Financial Statements
1 Nature of Operations:
IDFC Pension Fund Management Company Limited (“the Company”) was incorporated on March 31, 2009 with IDFC Asset Management Company Limited Holding (50.01%) & Infrastructure Development Finance Company Limited Holding (49.99%). The Company is one of the Pension Fund Managers appointed by the Pension Fund Regulatory and Development Authority (PFRDA) to manage retirement funds under the New Pension Scheme (NPS) open to individuals in the private sector & manages the investment portfolio of IDFC Pension Fund.
2 Statement of Significant Accounting Policies:
A. Basis of Preparation
The financial statements have been prepared to comply in all material respects with the notified accounting standard by Companies Accounting Standards Rules, 2006 and the relevant provisions of the Companies Act, 1956 (‘the Act’). The financial statements have been prepared under the historical cost convention on an accrual basis except in case of assets for which provision for impairment is made and revaluation is carried out.
B. Use of Estimates
The preparation of financial statements, in conformity with generally accepted accounting principles, require management to make estimates and assumptions that are considered in the reported amounts of assets and liabilities (including contingent liabilities) at the date of the financial statements and the results of operations during the reporting period. Although these estimates are based upon management’s best knowledge of current events and actions, actual results could differ from these estimates.
C. Fixed Assets
Fixed assets are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated depreciation. ¬ Any additions, alterations, remodelling or renovations performed on a leased property in the form of false ceiling, partitions, flooring, structural or civil work, electrical work, acquiring furniture and fixtures attached to the walls along with professional fees paid for the same and any other expenditure of such kind that increases the property’s value or gives an enduring benefit are capitalised as Leasehold Improvements. ¬ Leasehold Improvements are shown at historical cost less accumulated amortisation. ¬ Intangible Assets comprising of system software and licenses purchased, are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated depreciation. Any expenses on such software for support and maintenance payable annually are charged to revenue account.
¬
D. Depreciation and Amortisation
DEPRECIATION ON FIXED ASSETS Depreciation is charged at the rates prescribed in Schedule XIV of the Companies Act, 1956 as per Written Down Value Method. Any asset costing Rs. 5,000/- or less is written off in the year of its purchase. Depreciation on additions during the year is provided on a pro-rata basis.
¬
DEPRECIATION ON INTANGIBLE ASSETS Depreciation on intangible assets is charged @ 33.33% per annum on straight line basis from the date of acquisition.
¬
AMORTISATION OF LEASEHOLD IMPROVEMENTS Leasehold Improvements are amortised over the balance period of extended lease term or five years whichever is earlier.
¬
E. Investments
Investments that are readily realizable and intended to be held for short-term are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost and market value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognise a decline other than temporary in the value of the investments.
F. Revenue Recognition
Revenue is recognized when no significant uncertainty as regards to its measurement and collection exists.
G. Foreign Currency Transactions
The transactions in Foreign exchange are accounted at exchange rate prevailing on the date of transactions. Any exchange gains or losses arising from the settlement of such transactions are recognized in the Profit and Loss Account. Receivable/ Payable in foreign currency at the year end are translated at the year end exchange rate.
H. Operating Leases
Leases of assets under which all the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases. Rental charges over the term of such leases, after taking in to account the escalation clause, are charged to the Profit and Loss Account on a straight line basis over the extended lease term.
206
I D F C A N N U A L R E P O R T 09 –10
I. Income-Tax
The provision made for income-tax in the accounts comprises both, the current tax and deferred tax and is based on the Accounting Standard 22 on ‘Accounting for Taxes on Income’ issued by the Institute of Chartered Accountants of India. The deferred tax assets and liabilities for the year, arising on account of timing differences, are recognized in the Profit and Loss Account and the cumulative effect thereof is reflected in the Balance Sheet.
J. Provisions, Contingent Assets and Contingent Liabilities
A provision is recognised when the Company has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent assets and contingent liabilities are not provided for in the accounts but contingent liabilities are disclosed by way of notes.
3 Cash and Cash Equivalents
Cash and cash equivalents in the Balance Sheet comprise cash at bank and in hand and short-term investments (FD) with an original maturity of three months or less.
4 Deferred Tax (Net)
In view of tax losses incurred by the Company, the deferred tax asset on preliminary expenditure and difference in depreciation in the block of Fixed Assets as per Tax and Financial books has been created. The deferred tax balances are set out below:
AS AT MARCH 31, 2010
RUPEES
DEFERRED TAX LIABILITY Differences in depreciation and other differences in block of fixed assets as per tax and financial books GROSS DEFERRED TAX LIABILITY Effect of preliminary expenditure debited to profit and loss account in the current year / period but allowed for tax purposes in following years GROSS DEFERRED TAX ASSET NET DEFERRED TAX ASSET 465,950 452,413 13,537 13,537 465,950
5 Segment Information
The Company is engaged in the business of acting as advisors and fund managers of IDFC Pension Fund.During the year the Company was engaged in only one business segment and no geographical segments. As such, there are no separate reportable segments as per Accounting Standards 17 on ‘Segment Reporting’ issued by Institute of Chartered Accountants of India.
6 Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or loss for the period/year attributable to equity shareholders by the weighted average number of equity shares outstanding during the period/year. The relevant details as are as follows:
PARTICULARS Net Loss (Rs.) Weighted average number of equity shares (Nos.) Basic Loss Per Share (Rs.) Face Value Per Share (Rs.) MARCH 31, 2009 TO MARCH 31, 2010 (1,276,073) 10,876,712 (0.12) 10.00
7 The Company does not have any employee on its payroll. Personnel expenses include salaries, allowances, bonus, reimbursements and
contribution to provident fund charged by IDFC Asset Management Company Limited, the Holding Company on account of employees on deputation to the Company.
8 Management Fees
During the year Management Fees has not been recognized since Management fees on Asset under Management is not significant.
I D FC P E N S I O N FU N D M A N AG E M E N T CO M PA N Y
LT D .
207
9 Investment
Company has purchased and sold / redeemed the following investments during the Period:
TYPE OF INVESTMENT Units of Mutual Fund PURCHASE (UNITS) 11,798,230.26 PURCHASE (VALUE) 118,000,000.00 SALE / REDEMPTION (UNITS) 290,956.35 SALE / REDEMPTION (VALUE) 2,910,000.00
10 Related Party Disclosures Under Accounting Standard 18:
(a) Relationships:
HOLDING COMPANY:
IDFC Asset Management Company Limited
ULTIMATE HOLDING COMPANY:
Infrastructure Development Finance Company Limited
FELLOW SUBSIDIARIES:
IDFC Investment Advisors Limited (b) The following transactions were carried out with the related parties in the ordinary course of business during the period:
RUPEES
NAME OF THE RELATED PARTY AND NATURE OF RELATIONSHIP IDFC Asset Management Company Limited (Holding Company)
PARTICULARS Reimbursement of expenses Subscription towards Equity Share Capital
MARCH 31, 2009 TO MARCH 31, 2010 3,438,476 60,000,010 59,999,990
Infrastructure Development Finance Company Limited
Subscription towards Equity Share Capital
(c) Following are the balances outstanding as at the year end:
RUPEES
NAME OF THE RELATED PARTY AND NATURE OF RELATIONSHIP Payable to IDFC Asset Management Company Limited (Holding Company)
AS AT MARCH 31, 2010 974,799
11 Sundry Creditors do not include any amount payable to Small Scale Industrial Undertakings and Micro, Small and Medium Enterprises. Under the Micro, Small and Medium Enterprises Development Act, 2006, (MSMEDA), which came into force from October 02, 2006, certain disclosures, are required to be made relating to Micro, Small and Medium Enterprises. On the basis of the information and records available with the management, the following disclosures are made for the amounts due to the Micro, Small and Medium enterprises, who are registered with the competent authorities.
PARTICULARS Principal amount remaining unpaid to any supplier as at the period end Interest due thereon Amount of Interest paid by the Company in terms of Section 16 of the MSMEDA, along with the amount of the payment made to the supplier beyond the appointed day during the accounting period Amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed day during the period) but without adding the interest specified under the MSMEDA Amount of interest accrued and remaining unpaid at the end of the accounting period Nil Nil AMOUNT Nil Nil Nil
12 There are no contingent liabilities as at March 31, 2010. 13 There are no contracts remaining to be executed on capital account and not provided for as at March 31, 2010. 14 This being first year audit, previous year’s figures have not been given.
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF IDFC PENSION FUND MANAGEMENT COMPANY LTD.
BHARAT S. RAUT L. K. NARAYAN
Director Mumbai | April 21, 2010
208 I D F C A N N U A L R E P O R T 09 –10
Director
B A L A N C E S H E E T A B ST R A CT
AND COMPANY’S GENERAL BUSINESS PROFILE
I.
REGISTRATION DETAILS Registration No. State Code Balance Sheet Date U 1 3 6 1 1 0 3 2 0 1 0 6 0 0 0 M H 2 0 0 9 P L C 1 9 1 3 5 0
II.
CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000) Public Issue N I L Right Issue N I L
Bonus Issue N III. I L 1
Private Placement 2 0 0 0 0
POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000) Total Liabilities 1 SOURCES OF FUNDS Paid-up Capital 1 2 0 0 0 0 Reserves and Surplus N I L 2 0 8 8 6 1 2 0 Total Assets 8 8 6
Secured Loans N APPLICATION OF FUNDS Net Fixed Assets 1 3 8 1 1 I L
Unsecured Loans N I L
Investments 9 0 2 7
Net Current Assets (8 9 4)
Deferred Tax Asset 4 5 2
Profit & Loss Account (1 IV. 2 7 7) Total Expenditure 5 6 6 5
PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000) Turnover / Income 3 9 3 7
Loss Before Tax 1 7 2 8
Loss After Tax 1 2 7 6
Loss per Share (in Rs.) (0 V. . 1 2)
Dividend % N I L
GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS) Item Code No. (ITC Code) Product Description N A I S L S E T M A N A G E M E N T
I D FC P E N S I O N FU N D M A N AG E M E N T CO M PA N Y
LT D .
209
IDFC capital
(singapore) pte. ltd
D I R E CTO R S
? ? ?
Dr. Rajiv B. Lall Ms. Veronica Louise John Ms. Ng Sok Keow Victoria Suzanne
A U D I TO R S
?
Deloitte & Touche LLP Chartered Accountants
R E G I ST E R E D O F F I C E
One Finlayson Green #16-02, Singapore 049246. TEL +65 6499 0718 FAX +65 65363359
210
I D F C A N N U A L R E P O R T 09 –10
R E P O R T O F T H E D I R E CT O R S
The directors present their report together with the audited financial statements of the company for the financial year ended March 31, 2010.
4. DIRECTORS’ RECEIPT AND ENTITLEMENT TO CONTRACTUAL BENEFITS
Since the beginning of the financial year, no director has received or become entitled to receive a benefit which is required to be disclosed under Section 201(8) of the Singapore Companies Act, by reason of a contract made by the company or a related corporation with the director or with a firm of which he is a member, or with a company in which he has a substantial financial interest except for salaries, bonuses and other benefits as disclosed in the financial statements.
1. DIRECTORS
The directors of the company in office at the date of this report are: Veronica Louise John Ng Sok Keow Victoria Suzanne Rajiv Behari Lall (Appointed on July 27, 2009)
5. SHARE OPTIONS
(a) Options to take up unissued shares During the financial year, no options to take up unissued shares of the company were granted. (b) Options exercised During the financial year, there were no shares of the company issued by virtue of the exercise of an option to take up unissued shares. (c) Unissued shares under option At the end of the financial year, there were no unissued shares of the company under options.
2. ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE BENEFITS BY MEANS OF THE ACQUISITION OF SHARES AND DEBENTURES
Neither at the end of the financial year nor at any time during the financial year did there subsist any arrangement whose object is to enable the directors of the company to acquire benefits by means of the acquisition of shares or debentures in the company or any other body corporate.
3. DIRECTORS’ INTERESTS IN SHARES AND DEBENTURES
The directors of the company holding office at the end of the financial year had no interests in the share capital and debentures of the company and related corporations as recorded in the register of directors’ shareholdings kept by the company under Section 164 of the Singapore Companies Act except as follows:
SHAREHOLDINGS REGISTERED IN NAME OF DIRECTOR SHAREHOLDINGS IN WHICH DIRECTORS ARE DEEMED TO HAVE AN INTEREST At beginning of year At end of year
6. AUDITORS
The auditors, Deloitte & Touche LLP, have expressed their willingness to accept re-appointment.
ON BEHALF OF THE DIRECTORS
Name of directors and companies in which interests are held Ultimate holding company Infrastructure Development Finance Company Limited (Ordinary shares) Rajiv Behari Lall
At beginning of year
At end of year
-------------------------Veronica Louise John
-------------------------------------Ng Sok Keow Victoria Suzanne
Singapore 686,656 2,129,984 April 13, 2010
I D F C C A P I T A L ( S I N G A P O R E ) P T E . LT D .
211
ST AT E M E N T O F D I R E CT O R S
In the opinion of the directors, the financial statements of the company are drawn up so as to give a true and fair view of the state of affairs of the company as at March 31, 2010 and of the results, changes in equity and cash flows of the company for the financial year then ended and at the date of this statement, there are reasonable grounds to believe that the company will be able to pay its debts as and when they fall due.
ON BEHALF OF THE DIRECTORS
-------------------------Veronica Louise John
-------------------------------------Ng Sok Keow Victoria Suzanne
Singapore April 13, 2010
212
I D F C A N N U A L R E P O R T 09 –10
I N D E P E N D E N T AU D I TO RS ’ R E PO RT
INDEPENDENT AUDITORS’ REPORT TO THE MEMBER OF IDFC CAPITAL (SINGAPORE) PTE. LTD.
We have audited the accompanying financial statements of IDFC Capital (Singapore) Pte. Ltd. (the “company”) which comprise the statement of financial position as at March 31, 2010 and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 6 to 24. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Singapore Companies Act, Cap. 50 (the “Act”) and Singapore Financial Reporting Standards. This responsibility includes: devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss account and balance sheet and to maintain accountability of assets; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, (a) the financial statements of the company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the company as at March 31, 2010 and of the results, changes in equity and cash flows of the company for the year ended on that date; and (b) the accounting and other records required by the Act to be kept by the company have been properly kept in accordance with the provisions of the Act.
Public Accountants and Certified Public Accountants Singapore April 13, 2010
I D F C C A P I T A L ( S I N G A P O R E ) P T E . LT D .
213
ST AT E M E N T O F F I N A N C I A L P O S I T I O N
US$ NOTE
MARCH 31, 2010
US$
2010
2009
ASSETS
CURRENT ASSETS Cash and cash equivalents Other receivables Total current assets NON-CURRENT ASSET Plant and equipment Total assets 9 144,397 655,976 224,977 679,727 7 8 373,406 138,173 511,579 373,938 80,812 454,750
LIABILITIES AND NET EQUITY
CURRENT LIABILITY Other payables CAPITAL AND RESERVES Share capital Accumulated losses Net equity Total liabilities and net equity 11 4,690,742 (4,502,897) 187,845 655,976 2,574,092 (2,159,301) 414,791 679,727 10 468,131 264,936
See accompanying notes to financial statements.
214
I D F C A N N U A L R E P O R T 09 –10
ST AT E M E N T O F C O M P R E H E N S I V E I N C O M E
YEAR ENDED MARCH 31, 2010
US$
US$
APRIL 1, 2009 TO MARCH 31, 2010
NOTE
JANUARY 2, 2008 (DATE OF INCORPORATION) TO MARCH 31, 2009
Revenue Other operating income Staff costs Professional fees Depreciation expense Other operating expenses LOSS BEFORE INCOME TAX Income tax LOSS FOR THE YEAR/PERIOD AND COMPREHENSIVE LOSS FOR THE YEAR/PERIOD
12 13 14
212,329 547,645 (1,533,856) (739,830) (79,337)
1,190 (606,992) (844,493) (83,138) (625,868) (2,159,301) – (2,159,301)
15 16
(750,547) (2,343,596) – (2,343,596)
See accompanying notes to financial statements.
I D F C C A P I T A L ( S I N G A P O R E ) P T E . LT D .
215
ST AT E M E N T O F C H A N G E S I N E Q U I TY
YEAR ENDED MARCH 31, 2010
SHARE CAPITAL US$ Balance at date of incorporation on January 2, 2008 Issuance of share capital Comprehensive loss for the period Balance at March 31, 2009 Issuance of share capital Comprehensive loss for the year Balance at March 31, 2010 1 2,574,091 – 2,574,092 2,116,650 4,690,742
ACCUMULATED LOSSES US$ (2,159,301) (2,159,301) (2,343,596) (4,502,897)
TOTAL US$
1 2,574,091 (2,159,301) 414,791 2,116,650 (2,343,596) 187,845
See accompanying notes to financial statements.
216
I D F C A N N U A L R E P O R T 09 –10
C A S H F L OW S ST AT E M E N T
YEAR ENDED MARCH 31, 2010
US$ APRIL 1, 2009 TO MARCH 31, 2010
US$ JANUARY 2, 2008 (DATE OF INCORPORATION) TO MARCH 31, 2009 (2,159,301) 83,138 (2,076,163) (80,812) 264,936 (1,892,039) (308,115) 2,574,092 373,938 373,938
OPERATING ACTIVITIES Loss before income tax Adjustment for: Loss on disposal of plant and equipment Depreciation expense Operating cash flows before movements in working capital Other receivables Other payables Net cash used in operating activities INVESTING ACTIVITY Purchase of plant and equipment, representing net cash used in investing activity FINANCING ACTIVITY Proceeds from issuance of shares, representing net cash from financing activity Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents as at the beginning of the year/period CASH AND CASH EQUIVALENTS AS AT THE END OF THE YEAR/PERIOD 2,116,650 (532) 373,938 373,406 (16,360) 125 79,337 (2,264,134) (39,883) 203,195 (2,100,822) (2,343,596)
See accompanying notes to financial statements.
I D F C C A P I T A L ( S I N G A P O R E ) P T E . LT D .
217
Notes to Financial Statements March 31, 2010 1 General
The company (Registration Number 200800200R) is incorporated in Singapore with its principal place of business at One Finlayson Green #16-02, Singapore 049246 and its registered office at 1 Temasek Avenue, #27 -01 Millenia Tower, Singapore 039192. The financial statements are expressed in United States dollars. The principal activity of the company is to establish funds, act as advisor and manager of funds, and to provide advice in relation to the setting up of funds. The financial statements of the company for the year ended March 31, 2010 were authorised for issue by the Board of Directors on April 13, 2010.
2 Summary of Significant Accounting Policies
BASIS OF ACCOUNTING - The financial statements are prepared in accordance with the historical cost convention, except as disclosed in
the accounting policies below, and are drawn up in accordance with the provisions of the Singapore Companies Act and Singapore Financial Reporting Standards (“FRS”).
ADOPTION OF NEW AND REVISED STANDARDS - In the current financial year, the company has adopted all the new and revised FRSs and
Interpretations of FRS (“INT FRS”) that are relevant to its operations and effective for annual periods beginning on or after April 1, 2009. The adoption of these new/revised FRSs and INT FRSs does not result in changes to the company’s accounting policies and has no material effect on the amounts reported for the current or prior years except as disclosed below:
FRS 1 - PRESENTATION OF FINANCIAL STATEMENTS (REVISED)
FRS 1 (2008) has introduced terminology changes (including revised titles for the financial statements) and changes in the format and content of the financial statements. In addition, the revised Standard requires the presentation of a third statement of financial position at the beginning of the earliest comparative period presented if the entity applies new accounting policies retrospectively or makes retrospective restatement or reclassifies items in the financial statements. At the date of authorisation of these financial statements, the following FRSs, INT FRSs and amendments to FRS that are relevant to the company were issued but not effective:
¬
Improvements to Financial Reporting Standards (issued in June 2009)
Consequential amendments were also made to various standards as a result of these new/revised standards. The management anticipates that the adoption of the above FRSs, INT FRSs and amendments to FRS that were issued but effective only in future periods will not have a material impact on the financial statements of the company in the period of their initial adoption.
FINANCIAL INSTRUMENT - Financial assets and financial liabilities are recognised on the company’s statement of financial position when the
company becomes a party to the contractual provisions of the instrument.
EFFECTIVE INTEREST RATE METHOD
The effective interest rate method is a method of calculating the amortised cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial instrument, or where appropriate, a shorter period. Income and expense is recognised on an effective interest rate basis for debt instruments.
FINANCIAL ASSETS
Loans and receivables Other receivables that have fixed or determinable payments that are not quoted in an active market are classified as “loans and receivables”. Loans and receivable are measured at amortised cost using the effective interest method less impairment. Interest is recognised by applying the effective interest rate method, except for short-term balances when the recognition of interest would be immaterial. Impairment of financial assets Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted. Objective evidence of impairment could include:
¬ ¬ ¬
significant financial difficulty of the issuer or counterparty; or default or delinquency in interest or principal payments; or it becoming probable that the borrower will enter bankruptcy or financial re-organisation.
218
I D F C A N N U A L R E P O R T 09 –10
For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables where the carrying amount is reduced through the use of an allowance account. When a trade receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised. Derecognition of financial assets The company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the company retains substantially all the risks and rewards of ownership of a transferred financial asset, the company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
FINANCIAL LIABILITIES AND EQUITY INSTRUMENTS
Classification as debt or equity Financial liabilities and equity instruments issued by the company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs. Financial liabilities Other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, using the effective interest rate method, with interest expense recognised on an effective yield basis. Derecognition of financial liabilities The company derecognises financial liabilities when, and only when, the company’s obligations are discharged, cancelled or they expire.
PLANT AND EQUIPMENT – Plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses.
Depreciation is charged so as to write off the cost of assets, using the written down value method, on the following bases: Leasehold improvements Computers Office equipment Furniture and fittings 33.33% or 36 months 40.00% 13.91% 18.10%
Fully depreciated assets still in use are retained in the financial statements. The estimated useful lives, residual values and depreciation method are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis. The gain or loss arising on disposal or retirement of an item of plant and equipment is determined as the difference between the sales proceeds and the carrying amounts of the asset and is recognised in profit or loss.
IMPAIRMENT OF NON-FINANCIAL ASSETS - At the end of each reporting period, the company reviews the carrying amounts of its non-financial
assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in the profit or loss.
I D F C C A P I T A L ( S I N G A P O R E ) P T E . LT D .
219
When an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
PROVISIONS - Provisions are recognised when the company has a present obligation (legal or constructive) as a result of a past event, it is prob-
able that the company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
LEASES - Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership
to the lessee. All other leases are classified as operating leases. Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred. In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
REVENUE RECOGNITION – revenue is measured at the fair value of the consideration, received or receivable. Revenue is recognised as follows:
Fee income Advisory fee income are recognised over the period the services are rendered based on the applicable rates and terms stated in the respective investment management agreements. Where the investment advisory fee is performance-based, the revenue is only recognised when the amount of revenue can be measured reliably and the criteria defined by the performance fee agreements have been met.
RETIREMENT BENEFIT COSTS - Payments to defined contribution retirement benefit plans are charged as an expense as they fall due. Pay-
ments made to state-managed retirement benefit schemes, such as the Singapore Central Provident Fund, are dealt with as payments to defined contribution plans where the company’s obligations under the plans are equivalent to those arising in a defined contribution retirement benefit plan.
INCOME TAX - Income tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are not taxable or tax deductible. The company’s liability for current tax is determined using tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. Deferred tax is recognised on the differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised based on the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and the company intends to settle its current tax assets and liabilities on a net basis. Current and deferred tax are recognised as an expense or income in profit or loss, except when they relate to items credited or debited outside profit or loss (either in other comprehensive income or directly in equity), in which case the tax is also recognised outside profit and loss (either in other comprehensive income or directly in equity, respectively).
FOREIGN CURRENCY TRANSACTIONS - The financial statements of the company are measured and presented in the currency of the primary
economic environment in which the entity operates (its functional currency). The financial statements of the company are presented in United States dollars, which is the functional currency of the company. Transactions in currencies other than the company’s functional currency are recorded at the rate of exchange prevailing on the date of the transaction. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the end of each reporting period. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the
220
I D F C A N N U A L R E P O R T 09 –10
rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences arising on the settlement of monetary items, and on retranslation of monetary items are included in profit or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised in other comprehensive income. For such non-monetary items, any exchange component of that gain or loss is also recognised in other comprehensive income.
CASH AND CASH EQUIVALENTS - Cash and bank balances comprise cash at bank and are subject to an insignificant risk of changes in value.
3 Critical Accounting Judgements and Key Sources of Estimation Uncertainty
In the application of the company’s accounting policies, which are described in Note 2, management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. (i) Critical judgements in applying the company’s accounting policies The management is of the opinion that there is no instance of application of judgements which are expected to have a significant effect on the amounts recognised in the financial statements. (ii) Key sources of estimation uncertainty The management is of the opinion that there are no key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
4 Financial Instruments, Financial Risks and Capital Risks Management
The following table sets out the financial instruments as at the end of the reporting period: a) Categories of financial instruments
2010
US$
2009
US$
FINANCIAL ASSETS Loans and receivables (including cash and bank balances) FINANCIAL LIABILITIES At amortised cost 468,131 264,936 489,022 450,491
b) Credit risk The company does not have any significant credit risk exposure as at the end of the reporting period. The company places its cash with creditworthy financial institutions. The maximum exposure to credit risk in the event that the counterparties fail to perform their obligations as at the end of the reporting period is the carrying amount of the financial assets as stated in the statement of financial position. c) Interest rate risk The company does not have any interest bearing assets and liabilities, hence it is not exposed to interest rate risk. d) Foreign currency risk The company’s foreign currency exposures arise mainly from the exchange rate movements of the Singapore dollar against the United States dollar. Those exposures are managed primarily by using natural hedges that arise from offsetting assets and liabilities that are denominated in foreign currencies.
I D F C C A P I T A L ( S I N G A P O R E ) P T E . LT D .
221
At the end of the reporting period, the carrying amounts of monetary assets and monetary liabilities denominated in currencies other than the company’s functional currency are as follows:
SINGAPORE
DOLLAR
STERLING
POUND
HONG KONG
DOLLAR
INDIAN
RUPEE
$ 2010 ASSETS Cash and cash equivalents Other receivables Total LIABILITY Other payables Net currency exposure 2009 ASSETS Cash and cash equivalents Other receivables Total LIABILITY Other payables Net currency exposure 120,214 307,540 351,201 76,553 427,754 227,988 (61,192) 51,475 115,321 166,796
$
$
$
10,839 (10,839)
-
-
46,358 (46,358)
5,419 (5,419)
398 (398)
Foreign currency sensitivity The following table details the sensitivity to a 10% increase and decrease in the relevant foreign currencies against the functional currency of the company. The sensitivity rate of 10% represents management’s assessment of the possible change in foreign exchange rates. If the relevant foreign currency weakens by 10% against the functional currency of the company, loss will increase (decrease) by:
SINGAPORE
DOLLAR
STERLING
POUND
HONG KONG
DOLLAR
INDIAN
RUPEE
IMPACT 2010 $ Loss (6,119) 2009 $ 30,754
IMPACT 2010 $ (1,084) 2009 $ (4,636)
IMPACT 2010 $ 2009 $ (542)
IMPACT 2010 $ 2009 $ (40)
In management’s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk as the year end exposure does not reflect the exposure during the year. e) Liquidity risk The company maintains sufficient cash and bank balances to fund its daily operating requirement. In addition, the company also relies on the holding company to fund any shortfall in liquidity requirement. f) Capital risk The company reviews its capital structure at least annually to ensure that the company will be able to continue as a going concern. The capital structure of the company comprises only issued capital. The company’s overall strategy remains unchanged from 2009. g) Fair values of financial assets and financial liabilities The carrying amounts of financial assets and financial liabilities approximate their respective fair values due to the relatively short-term maturity of these financial instruments. The company had no financial assets or liabilities carried at fair value in 2009 and 2010.
5 Holding Company and Related Company Transactions
The company is a wholly-owned subsidiary of IDFC Capital Limited formerly known as IDFC-SSKI Limited, incorporated in India. The company’s ultimate holding company is Infrastructure Development Finance Company Limited, incorporated in India. Related companies in these financial statements refer to members of the ultimate holding company’s group of companies. Some of the company’s transactions and arrangements are between members of the group and the effect of these on the basis determined between the parties is reflected in these financial statements. The intercompany balances are unsecured, interest-free and repayable on demand unless otherwise stated.
222
I D F C A N N U A L R E P O R T 09 –10
6 Other Related Party Transactions
Related parties are entities with common direct or indirect shareholders and/or directors. Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial and operating decisions. Some of the company’s transactions and arrangements are with related parties and the effect of these on the basis determined between the parties is reflected in these financial statements. The balances are unsecured, interest-free and repayable on demand unless otherwise stated. The remuneration of directors and other members of key management during the period was as follows:
APRIL 1, 2009 TO MARCH 31, 2010 JANUARY 2, 2008 (DATE OF INCORPORATION) TO MARCH 31, 2009
US$
US$
Short-term benefits Post-employment benefits
395,952 7,758
394,842 5,908
7 Cash and Cash Equivalents
2010
US$
2009
US$
Cash at bank
373,406
373,938
The carrying amounts of cash and cash equivalents approximate their fair values.
8 Other Receivables
2010
US$
2009
US$
Prepayment Deposits Others Total
22,557 81,931 33,685 138,173
4,259 76,516 37 80,812
9 Plant and Equipment
LEASEHOLD IMPROVEMENTS
US$
COMPUTERS
US$
OFFICE EQUIPMENT
US$
FURNITURE AND FITTINGS
US$
TOTAL US$
US$
COST: At January 2, 2008 (date of incorporation) Additions At March 31, 2009 Additions Adjustments Disposals At March 31, 2010 ACCUMULATED DEPRECIATION: At January 2, 2008 (date of incorporation) Depreciation At March 31, 2009 Depreciation Disposals At March 31, 2010 CARRYING AMOUNT: At March 31, 2010 At March 31, 2009 54,002 108,820 33,111 47,822 14,364 12,415 42,920 55,920 144,397 224,977 47,150 47,150 47,067 94,217 24,073 24,073 21,536 45,609 1,338 1,338 1,926 (29) 3,235 10,577 10,577 8,808 19,385 83,138 83,138 79,337 (29) 162,446 155,970 155,970 (7,751) 148,219 71,895 71,895 11,172 (4,347) 78,720 13,753 13,753 5,188 (1,188) (154) 17,599 66,497 66,497 (4,192) 62,305 308,115 308,115 16,360 (17,478) (154) 306,843
I D F C C A P I T A L ( S I N G A P O R E ) P T E . LT D .
223
10 Other Payables
2010 US$ Accruals Others Total 388,765 79,366 468,131 2009 US$ 149,266 115,670 264,936
Accrued expenses principally comprise amounts outstanding for ongoing costs.
11 Share Capital
2010 NUMBER OF ORDINARY SHARES ISSUED AND PAID UP: At the beginning of the year/ Issued at date of incorporation Issued for cash At the end of the year/period 3,610,000 3,045,000 6,655,000 1 3,609,999 3,610,000 2,574,092 2,116,650 4,690,742 1 2,574,091 2,574,092 2009 2010
US$
2009
US$
Fully paid ordinary shares, which have no par value, carry one vote per share and carry a right to dividends as and when declared by the company.
12 Revenue
2010
US$
2009
US$
Advisory fee income from a related company (Note 5)
212,329
-
13 Other Operating Income
2010
US$
2009
US$
Reimbursement of organisational expenses from a related company (Note 5) Others
541,269 6,376 547,645
1,190 1,190
14 Staff Costs
2010
US$
2009
US$
INCLUDED IN STAFF COSTS ARE: Costs of defined contribution plans 21,684 10,282
15 Other Operating Expenses
APRIL 1, 2009 TO MARCH 31, 2010 JANUARY 2, 2008 (DATE OF INCORPORATION) TO MARCH 31, 2009
US$
US$
Establishment expenses Travelling expenses Corporate communication expense Net foreign exchange (gain)/loss General administrative expenses Total
330,952 236,360 21,932 (6,791) 168,094 750,547
260,941 122,797 58,323 74,432 109,375 625,868
224
I D F C A N N U A L R E P O R T 09 –10
16 Income Tax
The company has been awarded a concessionary tax rate of 10% under the Financial Sector Incentive Scheme (“FSIS”) by the Monetary Authority of Singapore (“MAS”) which is effective from September 14, 2009 for a period of 5 years. This award is subject to an annual review by the MAS of compliance with stipulated terms and conditions including implementation of business plan and projections outlined in the company’s application to the MAS. The income tax benefit varied from the amount of income tax expense determined by applying the Singapore income tax rate of 17% (2009 : 17%) to profit before income tax as a result of the following differences:
APRIL 1, 2009 TO MARCH 31, 2010 JANUARY 2, 2008 (DATE OF INCORPORATION) TO MARCH 31, 2009
US$
US$
Loss before income tax Tax benefit at the statutory tax rate of 17% Effect of concessionary tax rates Effects of expenses that are not deductible in determining taxable profit Effects of unused tax losses not recognised as deferred tax assets
(2,343,596) (398,411) 104,461 5,762 288,188 -
(2,159,301) (367,081) 21,545 345,536 -
Subject to the agreement by the tax authorities, at the end of the reporting period, the company has unutilised tax losses of US$ 4,334,549 (2009 : US$ 2,032,564) available for offset against future profit. No deferred tax asset of US$ 633,724 (2008 : US$ 345,536) has been recognised in respect of the tax losses due to the unpredictability of future profit streams. The unrecognised tax losses may be carried forward indefinitely subject to the conditions imposed by law including the retention of majority shareholders as defined.
17 Operating Lease Commitments
APRIL 1, 2009 TO MARCH 31, 2010 JANUARY 2, 2008 (DATE OF INCORPORATION) TO MARCH 31, 2009
US$
US$
Minimum lease payments under operating leases
319,455
245,584
At the end of the reporting period, the company has outstanding commitments under non-cancellable operating leases, which fall due as follows:
2010
US$
2009
US$
Within one year In the second to fifth years inclusive
365,604 9,347
301,580 348,531
Operating lease payments represent rentals payable by the company for rental of office premises and equipment. Leases are negotiated for an average term of three years, with an option to renew for another 3 years subject to terms and conditions then prevailing.
18 Comparative Figures
The financial statements for 2009 cover the financial period from January 2, 2008 (date of incorporation) to March 31, 2009. The financial statements for 2010 cover the twelve months period ended March 31, 2010.
I D F C C A P I T A L ( S I N G A P O R E ) P T E . LT D .
225
IDFC fund of
funds limited
D I R E CTO R S
? ?
Mr. K. Brennan Mr. M. Davy
A U D I TO R S
?
Deloitte LLP Chartered Accountants
R E G I ST E R E D O F F I C E
Alexander House, 13-15 Victoria Road, St Peter Port, Guernsey, Channel Islands, GY1 1HU.
226
I D F C A N N U A L R E P O R T 09 –10
R E P O R T O F T H E D I R E CT O R S
The Directors present their Report and the Audited financial statements of IDFC Fund of Funds Limited (“the Company”) for the period from incorporation on June 26, 2009 to March 31, 2010. make judgements and estimates that are reasonable and prudent; and prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. The Directors confirm that they have complied with the above requirements in preparing the financial statements.
¬ ¬
HISTORY
The Company was incorporated in Guernsey on June 26, 2009 and commenced activity on October 28, 2009.
ACTIVITIES
The Company is a Limited Partner of Emerging Markets Private Equity Fund, L.P. (the “Partnership”), a Limited Partnership registered in Guernsey. The Company is to invest in the Partnership as Founder Partner with a commitment of USD50,000,000.
The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with The Companies (Guernsey) Law, 2008. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
RESULTS AND DIVIDENDS
The results for the period are set out in the Statement of Comprehensive Income on page 7. No dividend was declared during the period, in accordance with Clause 13 of the Articles of Association.
GOING CONCERN
The Company receives financial support from IDFC Capital Limited (previously known as IDFC SSKI Limited) as necessary to continue as a going concern. This support is in the form of capital invested in the Company to enable it to meet its commitments as stated in Note 12. On this basis, the Company is deemed to be a going concern.
DIRECTORS
The directors of the Company during the period were: K Brennan (appointed on 26.6.2009) M Davy (appointed on 30.11.2009) J Jones (resigned on 30.11.2009)
INDEPENDENT AUDITORS
Deloitte LLP has been invited to act as Independent Auditors to the Company and to hold office until The First Annual General Meeting. So far as the Directors are aware, there is no relevant audit information of which the Company’s auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the Company’s auditors are aware of that information. This confirmation is given and should be interpreted in accordance with the provisions of Section 249 of The Companies (Guernsey) Law, 2008.
SECRETARY
The Secretary of the Company who has served for the whole period is International Private Equity Services Limited.
DIRECTORS’ RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS
The Directors are responsible for preparing financial statements for each financial period which give a true and fair view, in accordance with The Companies (Guernsey) Law, 2008 and International Financial Reporting Standards (“IFRS”), of the state of affairs of the Company and of the Statement of Comprehensive Income of the Company for that period. In preparing those financial statements, the Directors are required to: select suitable accounting policies and then apply them consistently;
¬
BARRY MCCLAY AS ALTERNATE DIRECTOR TO KEVIN BRENNAN KAREN HAITH AS ALTERNATE DIRECTOR TO MICHEL DAVY
April 22, 2010
IDFC FUND OF FUNDS LIMITED
227
I N D E P E N D E N T AU D I TO RS ’ R E PO RT
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF IDFC FUND OF FUNDS LIMITED
We have audited the financial statements of IDFC Fund of Funds Limited for the period from incorporation on 26 June 2009 to 31 March 2010 which comprise the Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity and Statement of Cash Flows and the related notes 1 to 13. These financial statements have been prepared under the accounting policies set out therein. This report is made solely to the Company’s members, as a body, in accordance with Section 262 of The Companies (Guernsey) Law, 2008. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditors As described in the statement of directors’ responsibilities, the Company’s directors are responsible for the preparation of the financial statements in accordance with applicable Guernsey Law and International Financial Reporting Standards (“IFRS”). Our responsibility is to audit the financial statements in accordance with relevant Guernsey legal and regulatory requirements and International Standards on Auditing (UK and Ireland). We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with The Companies (Guernsey) Law, 2008. We also report to you if, in our opinion, the Company has not kept proper accounting records, or if we have not received all the information and explanations we require for our audit. We read the directors’ report for the above period and consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. Basis of audit opinion We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Company’s circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. Opinion In our opinion the financial statements give a true and fair view, in accordance with International Financial Reporting Standards, of the state of the Company’s affairs as at March 31, 2010 and of its profit for the period then ended and have been properly prepared in accordance with The Companies (Guernsey) Law, 2008.
DELOITTE LLP Chartered Accountants
St. Peter Port, Guernsey April 23, 2010
228
I D F C A N N U A L R E P O R T 09 –10
ST AT E M E N T O F C O M P R E H E N S I V E I N C O M E
FOR THE PERIOD FROM INCORPORATION ON JUNE 26, 2009 TO MARCH 31, 2010
USD
USD
NOTES
? 2
JUNE 26, 2009 TO MARCH 31, 2010 – –
INCOME
Bank Interest
EXPENDITURE
Provision for Impairment Administration fee Directors’ fees Audit fees Disbursements Sundry expenses Gain on foreign exchange Total Comprehensive loss for the period 2 5&6 3 1,865,448 15,620 1,637 7,548 322 405 (1,137) (1,889,843) (1,889,843)
See accompanying notes to financial statements.
IDFC FUND OF FUNDS LIMITED
229
ST AT E M E N T O F F I N A N C I A L P O S I T I O N
USD NOTES
AS AT MARCH 31, 2010
USD
? 3 7
2010
2010 4,203,702
NON CURRENT ASSETS Investment in Subsidiary CURRENT ASSETS Prepayments Cash and cash equivalents Total Current Assets Total Assets EQUITY AND LIABILITIES Share capital Reserves 10 CURRENT LIABILITIES Trade and other payables Total Equity and Liabilities 8 26,720 26,720 4,642,381 9 6,505,504 (1,889,843) 4,615,661 2,325 436,354 438,679 4,642,381
See accompanying notes to financial statements.
230
I D F C A N N U A L R E P O R T 09 –10
ST AT E M E N T O F C H A N G E S I N E Q U I TY
USD
FOR THE PERIOD FROM INCORPORATION ON JUNE 26, 2009 TO MARCH 31, 2010
USD
USD
SHARE CAPITAL At June 26, 2009 Issue of Shares Total Comprehensive loss for the period At March 31, 2010 – 6,505,504 – 6,505,504
DEFICIT – – (1,889,843) (1,889,843)
TOTAL – 6,505,504 (1,889,843) 4,615,661
See accompanying notes to financial statements.
IDFC FUND OF FUNDS LIMITED
231
ST AT E M E N T O F C A S H F L OW S
FOR THE PERIOD FROM INCORPORATION ON JUNE 26, 2009 TO MARCH 31, 2010
USD
USD
JUNE 26, 2009 TO MARCH 31, 2010
CASH FLOWS FROM OPERATING ACTIVITIES
Investments Operating expenses paid NET CASH (OUTFLOW) FROM OPERATING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Advance from the Partnership Proceeds from issue of shares Prepayments NET CASH INFLOW FROM FINANCING ACTIVITIES NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 17,130 6,505,504 (2,325) 6,520,309 436,354 – 436,354 (6,069,150) (14,805) (6,083,955)
See accompanying notes to financial statements.
232
I D F C A N N U A L R E P O R T 09 –10
N O T E S T O T H E F I N A N C I A L ST AT E M E N T S
1 Principal Activities
IDFC Fund of Funds Limited (the “Company”) is a company incorporated in Guernsey on June 26, 2009.
FOR THE PERIOD ENDED 31 MARCH 2010
The principal activity of the Company is to invest into Emerging Markets Private Equity Fund, L.P. (the “Partnership”), a Limited Partnership registered in Guernsey.
2 Principal Accounting Policies
The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the Company’s financial statements.
ADOPTION OF NEW AND REVISED STANDARDS
In the current year, the following new and revised Standards and Interpretations have been adopted and have affected the amounts reported in these financial statements
IAS 1 (revised 2007) Presentation of Financial Statements IAS 1(2007) has introduced a number of changes in the format and content of the financial statements. In addition, the revised Standard requires the presentation of a third balance sheet to show the financial effect of the non adoption of any standard.
At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective (and in some cases had not yet been adopted by the EU): Amendment to IFRS 1 (Jan 2010) IFRS 9 IAS 24 Limited Exemption from Comparative IFRS 7 Disclosures for First Time Adopters Financial Instruments Related Party Disclosures
The Directors do not expect that the adoption of these Standards and Interpretations in future periods will have a material impact on the financial statements of the Company.
BASIS OF ACCOUNTING
The financial statements have been prepared under the historical cost convention and in accordance with applicable International Financial Reporting standards.
GOING CONCERN
The Company receives financial support from IDFC Capital Limited (previously known as IDFC SSKI Limited) as necessary to continue as a going concern. This support is in the form of capital invested in the Company to enable it to meet its commitment as stated in Note 12. On this basis, the Company is deemed to be a going concern.
BANK INTEREST
Bank interest is accounted for on an accrual basis.
FOREIGN EXCHANGE
Monetary assets and liabilities in currencies other than USD are translated into USD at the rate of exchange ruling at the balance sheet date. Transactions in currencies other than USD are translated into USD at the rate of exchange ruling at the date of the transaction. Foreign exchange gains and losses resulting from settlement of such transactions and from the translation at year end exchange rates are recognised in the Statement of Comprehensive Income for the period.
3 Investment in Subsidiary
The Company investments relate to its interests which is an amount of USD 50,000,000 as commitment in the Partnership and comprise of (i) investments in portfolio companies through Emerging Markets Private Equity Fund, L.P. and (ii) other funding provided to the Partnership. The investments relates to the capital contributed to the Partnership as the sole capital partner as at 31/03/10. The Company has elected not to prepare consolidated financial statement because it is itself a wholly owned subsidiary of Infrastructure Development Finance Company Limited whose consolidated accounts are available for public use at KRM Tower, 8th Floor, No.1 Harrington Road, Chetpet, Chennai – 600 031. The investment held in the Partnership has been accounted for at cost less provision for impairment with the provision being the difference between the capital contributed less the Net Asset Value of the Partnership.
IDFC FUND OF FUNDS LIMITED
233
2010 INVESTMENTS Cost at 26 June 2009 Additions Provision for impairments Cost at 31 March 2010
USD
– 6,069,150 (1,865,448) 4,203,702
4 Taxation
The Company has been taxed in Guernsey at the standard rate of 0%.
5 Material Agreements
ADMINISTRATION SERVICES AGREEMENT
Under the Secretarial and Administration Agreement dated 28 October 2009, International Private Equity Services Limited, provides secretarial, directors and administrative services to the Company and is entitled to receive administration fees, directors’ fees and reimbursement of expenses as may be determined from time to time by the parties.
6 Information Regarding Directors and Employees
The average monthly number of employees (including directors)
2010
NUMBER
Directors
2 2
There were no other employees apart from the directors.
2010
USD
Director’s fee paid
1,299
7 Prepayments
2010
USD
Directors’ fees prepaid
2,325 2,325
8 Trade and Other Payables
2010
USD
Administration fee accrual Audit fees accrual Sundry creditors Advance from Emerging Markets Private Equity Fund, L.P.
1,634 7,548 408 17,130 26,720
9 Share Capital
2010
USD
Issued and fully paid Share Capital of $1 each
6,505,504 6,505,504
10 Statement of Movement in Equity Shareholders’ Fund
2010
USD
Opening equity shareholders’ funds Share Capital issued (Loss) for period Closing equity shareholders’ funds
– 6,505,504 (1,889,843) 4,615,661
234
I D F C A N N U A L R E P O R T 09 –10
11 Controlling Party
The ultimate controlling party of the Company is considered to be IDFC Capital Limited previously know as IDFC SSKI Limited who owns 100% of the Company.
12 Commitments
CONTRIBUTION FROM IDFC CAPITAL LIMITED
USD
Commitments Drawdowns as at March 31, 2010 Undrawn Commitment CONTRIBUTION IN EMERGING MARKETS PRIVATE EQUITY FUND L.P.
50,000,000 (6,505,504) 43,494,496
USD
Commitments Drawdowns as at March 31, 2010 Undrawn Commitment
50,000,000 (6,069,150) 43,930,850
13 Post Balance Sheet Events
On March 22, 2010, a drawdown notice amounting to USD436,353 with value date April 1, 2010 was received from the Partnership being for the financing of ongoing expenses, second quarter management fee and future investment. On April 12, 2010, a drawdown notice amounting to USD396,034 with value date April 22, 2010 was received from the Partnership being for the financing of follow-on investment in ASEAN China Investment Limited and audit fees.
IDFC FUND OF FUNDS LIMITED
235
IDFC general
partners limited
D I R E CTO R S
? ? ?
Mr. K. Brennan Mr. M. Davy Mr. K. Dorrian
A U D I TO R S
?
Deloitte LLP Chartered Accountants
R E G I ST E R E D O F F I C E
Alexander House, 13-15 Victoria Road, St Peter Port, Guernsey, Channel Islands, GY1 1HU.
236
I D F C A N N U A L R E P O R T 09 –10
R E P O R T O F T H E D I R E CT O R S
The Directors present their Report and the Audited financial statements of IDFC General Partners Limited (“the Company”) for the period from incorporation on June 26, 2009 to March 31, 2010. The Directors confirm that they have complied with the above requirements in preparing the financial statements. The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with The Companies (Guernsey) Law, 2008. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
HISTORY
The Company was incorporated in Guernsey on June 26, 2009 and commenced activity on October 28, 2009.
ACTIVITIES
The Company is the General Partner of a private equity fund, Emerging Markets Private Equity Fund, L.P. (the “Partnership”), a Limited Partnership registered in Guernsey.
GOING CONCERN
Pursuant to the Amended and Restated Limited Partnership Agreement dated October 28, 2009 of the Partnership, the expenses of the Company are borne by the Partnership in lieu of payment of fees. On this basis it is therefore deemed that the Company is a going concern.
RESULTS AND DIVIDENDS
No dividend was declared during the period, in accordance with Clause 13 of the Articles of Association.
DIRECTORS
The Directors of the Company during the period were as set out on page 2.
INDEPENDENT AUDITORS
Deloitte LLP has been invited to act as Independent Auditors to the Company and to hold office until the First Annual General Meeting. So far as the directors are aware, there is no relevant audit information of which the Company’s auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the Company’s auditors are aware of that information. This confirmation is given and should be interpreted in accordance with the provisions of Section 249 of The Companies (Guernsey) Law, 2008 and International Financial Reporting Standard.
SECRETARY
The Secretary of the Company who has served for the whole period is International Private Equity Services Limited.
DIRECTORS’ RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS
The directors are responsible for preparing financial statements for each financial period which give a true and fair view, in accordance with The Companies (Guernsey) Law, 2008 and International Financial Reporting Standard (“IFRS”), of the state of affairs of the Company for that period. In preparing those financial statements, the directors are required to: select suitable accounting policies and then apply them consistently; ¬ make judgements and estimates that are reasonable and prudent; and ¬ prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
¬
BARRY MCCLAY AS ALTERNATE DIRECTOR TO KEVIN BRENNAN KAREN HAITH AS ALTERNATE DIRECTOR TO MICHEL DAVY
April 22, 2010
I D FC G E N E R A L PA RT N E RS L I M I T E D
237
I N D E P E N D E N T AU D I TO RS ’ R E PO RT
misstatements or material inconsistencies with the financial statements. Basis of audit opinion We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Company’s circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. Opinion In our opinion, the financial statements give a true and fair view, in accordance with International Financial Reporting Standards, of the state of the Company’s affairs as at March 31, 2010 and of its result for the period from June 26, 2009 to March 31, 2010 and have been properly prepared in accordance with The Companies (Guernsey) Law, 2008.
DELOITTE LLP Chartered Accountants
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF IDFC GENERAL PARTNERS LIMITED
We have audited the financial statements of IDFC General Partners Limited for the period from incorporation on June 26, 2009 to March 31, 2010 which comprise the Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity, Statement of Cash Flows and the related notes 1 to 10. These financial statements have been prepared under the accounting policies set out therein. This report is made solely to the Company’s members, as a body, in accordance with Section 262 of The Companies (Guernsey) Law, 2008. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditors As described in the statement of directors’ responsibilities, the Company’s directors are responsible for the preparation of the financial statements in accordance with applicable Guernsey Law and International Financial Reporting Standards (“IFRS”). Our responsibility is to audit the financial statements in accordance with relevant Guernsey legal and regulatory requirements and International Standards on Auditing (UK and Ireland). We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with The Companies (Guernsey) Law, 2008. We also report to you if, in our opinion, the Company has not kept proper accounting records, or if we have not received all the information and explanations we require for our audit. We read the directors’ report for the above period and consider the implications for our report if we become aware of any apparent
St. Peter Port, Guernsey April 23, 2010
238
I D F C A N N U A L R E P O R T 09 –10
ST AT E M E N T O F C O M P R E H E N S I V E I N C O M E
FOR THE PERIOD FROM INCORPORATION ON JUNE 26, 2009 TO MARCH 31, 2010
USD
USD
NOTES
JUNE 26, 2009 TO MARCH 31, 2010 1 5 -
EXPENDITURE
Administration fee Directors’ fees Audit fees Bank charges Disbursements Sundry expenses Gain on foreign exchange Total Comprehensive loss for the period
See accompanying notes to financial statements.
I D FC G E N E R A L PA RT N E RS L I M I T E D
239
ST AT E M E N T O F F I N A N C I A L P O S I T I O N
USD NOTES
MARCH 31, 2010
USD
2010 2 5 16,489 11
2010
CURRENT ASSETS
Cash and cash equivalents Trade and other receivables Total Current Assets Total Assets Equity and Liabilities Share capital Total Equity and Liabilities 6 16,500 16,500 16,500
16,500 16,500
The Financial Statements on pages 7 to 14 were approved by the Board of Directors on April 22, 2010 and are signed on their behalf by:
BARRY MCCLAY AS ALTERNATE DIRECTOR TO KEVIN BRENNAN KAREN HAITH AS ALTERNATE DIRECTOR TO MICHEL DAVY
Directors of IDFC General Partners Limited
240
I D F C A N N U A L R E P O R T 09 –10
ST AT E M E N T O F C H A N G E S I N E Q U I TY
USD
FOR THE PERIOD FROM INCORPORATION ON JUNE 26, 2009 TO MARCH 31, 2010
USD
USD
SHARE CAPITAL At June 26, 2009 Issue of Shares Results of Statement of Financial Position At March 31, 2010 16,500 16,500
DEFICIT -
TOTAL 16,500 16,500
See accompanying notes to financial statements.
I D FC G E N E R A L PA RT N E RS L I M I T E D
241
ST AT E M E N T O F C A S H F L OW S
FOR THE PERIOD FROM INCORPORATION ON JUNE 26, 2009 TO MARCH 31, 2010
USD
USD
26 JUNE 2009 TO 31 MARCH 2010
CASH FLOWS FROM OPERATING ACTIVITIES
Trade & Other receivables NET CASH (OUTFLOW) FROM OPERATING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares NET CASH INFLOW FROM FINANCING ACTIVITIES NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 16,500 16,500 16,489 16,489 (11) (11)
See accompanying notes to financial statements.
242
I D F C A N N U A L R E P O R T 09 –10
N O T E S T O T H E F I N A N C I A L ST AT E M E N T S
1 Principal Activities
FOR THE PERIOD ENDED MARCH 31, 2010
IDFC General Partners Limited (the “Company”) is a company incorporated in Guernsey on June 26, 2009. The principal activity of the Company is to act as General Partner to Emerging Markets Private Equity Fund, L.P. (the “Partnership”), a Limited Partnership registered in Guernsey.
2 Principal Accounting Policies
The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the Company’s financial statements.
ADOPTION OF NEW AND REVISED STANDARDS
In the current year, the following new and revised Standards and Interpretations have been adopted and have affected the amounts reported in these financial statements.
IAS 1 (revised 2007) Presentation of Financial Statements IAS 1(2007) has introduced a number of changes in the format and content of the financial statements. In addition, the revised Standard requires the presentation of a third balance sheet to show the financial effect of the nonadoption of any standard.
At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective (and in some cases had not yet been adopted by the EU): Amendment to IFRS 1 (January 2010) Limited Exemption from Comparative IFRS 7 Disclosures for First Time Adopters IFRS 9 IAS 24 Financial Instruments Related Party Disclosures
The General Partner does not expect that the adoption of these Standards and Interpretations in future periods will have a material impact on the financial statements of the Partnership.
BASIS OF ACCOUNTING
The financial statements have been prepared under the historical cost convention and in accordance with applicable International Financial Reporting Standards.
GOING CONCERN
Pursuant to the Amended and Restated Limited Partnership Agreement dated October 28, 2009 of the Partnership, the expenses of the Company are borne by the Partnership in lieu of payment of fees. On this basis it is therefore deemed that the Company is a going concern.
BANK INTEREST
Bank interest is accounted for on an accruals basis.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less and bank overdrafts.
FOREIGN EXCHANGE
Monetary assets and liabilities in currencies other than USD are translated into USD at the rate of exchange ruling at the balance sheet date. Transactions in currencies other than USD are translated into USD at the rate of exchange ruling at the date of the transaction. Foreign exchange gains and losses resulting from settlement of such transactions and from the translation at year end exchange rates are recognised in the Statement of Comprehensive Income for the period.
3 Taxation
The Company has been taxed in Guernsey at the standard rate of 0%.
I D FC G E N E R A L PA RT N E RS L I M I T E D
243
4 Material Agreements
GENERAL PARTNER EXPENSES
The expenses of the Company are borne by Emerging Markets Private Equity Fund, L.P. (the “Partnership”) in lieu of payment of fees from that partnership as provided for in the Amended and Restated Limited Partnership Agreement dated October 28, 2009. In this respect an amount of USD90,902 has been recorded in the Partnership’s financial statements for the period from incorporation on June 26, 2009 to March 31, 2010.
FUNCTIONS OF THE COMPANY
Section 6 of the Limited Partnership Agreement of the Partnership defines the functions of the Company in its capacity as the General Partner as being:
¬ ¬ ¬ ¬ ¬
the admittance of Limited Partners; consent to the transfer of interest between existing partners; or the transfer of interest to additional partners; the maintenance of proper books and records in accordance with IFRS and Guernsey law; and any further incidental business as required by the furtherance of the aims of the Limited Partnership Agreement.
Pursuant to Section 6.5, the expenses of the Partnership shall include but without limitation the costs and expenses of the General Partner, Investment Manager, Investment Consultant and any of their Associates in connection with or related to the formation of the Partnership; and all operational, statutory and regulatory costs and expenses of the General Partner. To the extent that any of the fees, costs and expenses referred to above have been borne by the General Partner, such persons shall be entitled to be reimbursed out of the Partnership’s Assets.
ADMINISTRATION SERVICES AGREEMENT
Under the Secretarial and Administration Agreement dated October 28, 2009, International Private Equity Services Limited, provides secretarial, directors and administrative services to the Company and is entitled to receive administration fees, directors’ fees and reimbursement of expenses as may be determined from time to time by the parties.
5 Trade and Other Receivables
2010
USD
Due from the Partnership
11 11
6 Share Capital
2010
USD
AUTHORISED: 10,000 Ordinary Shares of $1.65 each 16,500 16,500 2010
USD
ISSUED AND CALLED: 10,000 Ordinary Shares of $1.65 each 16,500 16,500
244
I D F C A N N U A L R E P O R T 09 –10
7 Information Regarding Directors and Employees
The average monthly number of employees (including directors) was:
2010
NUMBER
Directors
3 3
There were no other employees apart from the directors.
2010
USD
Director’s fee paid by the Partnership
16,848
8 Statement of Movement in Equity Shareholders’ Funds
2010
USD
Opening equity shareholders’ funds Share Capital issued Closing equity shareholders’ funds
16,500 16,500
9 Controlling Party
The ultimate controlling party of the Company is considered to be IDFC Capital Limited previously known as IDFC SSKI Limited who owns 100% of the Company.
10 Post Balance Sheet Events
There were no material post balance sheet events.
I D FC G E N E R A L PA RT N E RS L I M I T E D
245
Dheeru powergen private limited
B O A R D O F D I R E CTO R S
?
? ? ? ? ?
Dr. Rajiv B. Lall Chairman Mr. Chandrasekar Suppiah Mr. Hamdan Mohamad Mr. A. K. T. Chari Mr. Pradeep Singh Mr. Athar Shahab
A U D I TO R S
?
K. S. Rao & Associates Chartered Accountants
P R I N C I PA L B A N K E R S
?
HDFC Bank Limited
R E G I ST E R E D O F F I C E
4th Floor, Central Plaza, #6-3-902/A Raj Bhavan Road, Somajiguda, Hyderabad- 500082, Andhra Pradesh.
246
I D F C A N N U A L R E P O R T 09 –10
D I R E CT O R S ’ R E P O R T
TO THE MEMBERS
Your directors have pleasure in presenting the Seventh Annual Report together with the audited accounts for the year ended March 31, 2010. effect from February 5, 2010 and they hold the office up to the date of ensuing Annual General Meeting.
AUDITORS
M/s. K. S. Rao & Associates, Chartered Accountants will retire as the statutory auditors of the Company at the ensuing Annual General Meeting. The Board at its meeting held on April 15, 2010 has proposed their re-appointment as Auditors to audit the accounts of the Company for the financial year ending March 31, 2011. M/s. K. S. Rao & Associates, the retiring Auditors, have confirmed that their re-appointment, if made, would be in conformity with the provisions of Sections 224 and 226 of the Companies Act, 1956 and has also indicated their willingness to be re-appointed.
OPERATIONAL REVIEW
The Company is in the process of setting up a 1050 MW coal-fired thermal power plant at District Korba, State of Chhattisgarh, India (the “Project”). The Project has made substantial progress during the year. It has received coal linkage for the entire capacity. The environment clearance from Ministry of Environment and Forests has been obtained. The water requirement for the Project has been tied up. Land for the Project is in advanced stages of acquisition. The Project has received open access and the Bulk Power Transmission Agreement has been signed with Power Grid Corporation of India Limited. During the year, IDFC Projects Limited has acquired 51% of the Company and consequently the Company has become a subsidiary of IDFC Projects Limited w.e.f. February 5, 2010.
FOREIGN EXCHANGE EARNINGS AND EXPENDITURE
The particulars regarding foreign exchange earning and expenditure are furnished at item no. 5(b) in the notes to accounts. Since, the Company has not started any manufacturing facilities, the other particulars in the Companies (Disclosure of Particulars as required under the Report of the Board of Directors) Rules, 1998 are not given in this report.
FINANCIAL RESULTS
RUPEES
PERSONNEL AND OTHER MATTERS
There were no employees who were in receipt of remuneration in excess of limits prescribed under the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, during the year under review. Since the Company has not started any manufacturing facility, the disclosure of information on other matters required to be disclosed in terms of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1998, are not given in this report.
FOR THE YEAR ENDED MARCH 31, 2010 Total Income Less: Total Expenses Profit / (Loss) before Tax Less: Provision for Tax Profit / (Loss) after Tax Add/Less: Profit/(Loss) Balance brought forward Profit/(Loss) carried forward (14,042,823) 9,511,633 21,939,810 (12,428,177) 2,505,975 (14.934,152) 891,329
FOR THE YEAR ENDED MARCH 31, 2009 1,339,861 49,950 1,289,9 11 398,582 891,329 Nil 891,329
DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors confirm that: the applicable accounting standards have been followed in preparation of annual accounts and there are no material departures;
¬
DIVIDEND
The Directors do not recommend any dividend for the year ended March 31, 2010.
PUBLIC DEPOSITS
During the year under review, your Company has not accepted public deposits under Section 58-A of the Companies Act, 1956.
DIRECTORS
During the year, Mr. Venkatachalam Gedupudi and Mr. K. Narayanswami resigned from the Directorship of the Company with effect from February 5, 2010. The Board wishes to place on record its sincere appreciation for their valuable guidance and contribution to the Company. The Board at its meeting held on February 5, 2010 appointed Dr. Rajiv B Lall, Mr. A. K. T. Chari, Mr. Pradeep Singh and Mr. Athar Shahab (nominees of IDFC Projects Limited, Holding Company) and Mr. Chandrasekhar Suppiah & Mr. Hamdan Mohamad (Nominees of Ranhill Dheeru Singapore Pte. Limited) as additional Directors with
they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2010 and the loss of the Company for the year ended on that date;
¬
they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and detecting fraud and other irregularities; and
¬ ¬
they have prepared the annual accounts on a going concern basis.
COMPLIANCE CERTIFICATE
Pursuant to the provisions of section 383A(1) the Companies Act, 1956, a certificate from a Practising Company Secretary, certifying that the Company has complied with all applicable provisions of the Companies Act, 1956 is attached herewith.
D H E E R U P O W E R G E N P R I VAT E L I M I T E D
247
ACKNOWLEDGEMENTS
The Board wishes to thank the Government of India, Government of Chattisgarh and other Agencies for their support. The Board would also like to express its gratitude for the unstinted support and guidance received from IDFC Group and Ranhil Group. The Board would also like to express their sincere thanks and appreciation to all the employees for their commendable teamwork, exemplary professionalism and enthusiastic contribution during the year.
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
RAJIV B . L A L L
Chairman Mumbai May 20, 2010
248
I D F C A N N U A L R E P O R T 09 –10
C O M P L I A N C E C E R T I F I C AT E
The Members, Dheeru Powergen Private Limited Andhra Pradesh
CIN. U40109AP2003PTC040899 NOMINAL CAPITAL Rs. 5,00,00,000/PAID UP CAPITAL Rs. 1,97,29,000/-
10. The Company has made necessary entries in the register maintained under section 301 of the Act during the period. 11. As there were no instances of falling within the purview of section 314 of the Act, the Company has not obtained any approvals from the Board of Directors, members or central Government. 12. The Company has not issued any duplicate share Certificates during the period. 13. (i) The Company has delivered the certificates of securities in respect of lodgment thereof for transfer and allotments during the financial year ended 31st March 2010.
I have examined the registers, records, books and papers of Dheeru Powergen Private Limited (the Company) as required to be maintained under the Companies Act, 1956 (the Act) and the rules made there under and also the provisions contained in the Memorandum and Articles of Association of the Company for the financial year ended 31st March 2010. In my opinion and to the best of my information and according to the examinations carried out by me and explanations furnished to me by the Company and its officers, I certify that in respect of the aforesaid period: 1. The Company has maintained all registers as stated in Annexure “A” to this certificate, as per the provisions of the Act and the rules made thereunder and all entries therein have been duly recorded. 2. The Company has duly filed the forms and returns as stated in Annexure “B” to this Certificate, with the Registrar of Companies. 3. The Company being a Private Limited Company has the minimum prescribed Capital and its maximum number of Members during the said period was 3 (Three) excluding its past and present employees and the Company during the year under scrutiny: (i) has not invited public to subscribe for its shares or debentures; and
(ii) The Company was not required to deposit any amount in a separate Bank Account as no dividend was declared during the period. (iii) The Company was not required to post warrants to any member of the Company as no dividend was declared during the period. (iv) The Company has duly complied with the requirements of section 217 of the Act. 14. The Board of Directors of the Company is duly constituted and that the appointments of Directors, additional directors, alternate directors and directors to fill casual vacancies if any, during the year ended 31st March 2010 have been duly made. 15. The Company has not appointed any Managing Director/whole time Director/ Manager during the year. 16. The Company has not appointed any sole selling agents during the year. 17. The Company was not required to obtain any approval of the Central Government, Company Law Board, Regional Director, Registrar or such other authorities as may be prescribed under the various provisions of the Act. 18. The Directors have disclosed their interest in other firms/ Companies to the Board of Directors pursuant to the provisions of the Act and the rules made thereunder. 19. The Company has issued 78516 Preference shares during the financial year ended 31.03.2010 and has complied with the provisions of the Act. 20. The Company has not bought back any shares during the year. 21. The Company has redeemed 78516 Preference shares during the year and has made the necessary compliance under the Act. 22. There were no transactions necessitating the Company to keep in abeyance the rights to dividend, rights shares and bonus shares pending registration of transfer of shares. 23. The Company has not invited/accepted any deposits including any unsecured loans falling within the purview of section 58A during the period. 24. The borrowings, if any, made by the Company during the financial year 31-03-2010 do not attract the provisions of section 293(1) (d) of the Act. However the Company being subsidiary of a Public
(ii) has not invited or accepted deposits from persons other than its members, Directors or their relatives. 4. The Board of Directors duly met Twelve times respectively on 0904-09, 20-04-09, 16-05-09, 17-05-09, 18-05-09, 30-07-09, 09-08-09, 08-10-09, 01-11-09, 19-01-10, 05-02-10 and 05-02-10 in respects of which proper notices were given and the proceedings were duly recorded and signed in the minutes book maintained for the purpose. 5. The Company was not required to close its Register of Members during the period. 6. The Annual General Meeting for the financial year ended 31-032009 was held on 2nd May 2009 after giving due notice to members of the Company and the resolutions passed thereat were duly recorded in the Minutes Book maintained for the purpose. 7. Two extra-ordinary general meetings were held during the financial year ended on 3-03-2010 on 17th May 2009 and 5th February 2010 after giving due notice to members of the Company and the resolutions passed thereat were duly recorded in the Minutes Book maintained for the purpose. 8. The Company being a private Company, section 295 of the Act is not applicable. 9. The Company has not entered into any contract/s with the Companies in which any of the directors were interested, during the period, hence the compliance under section 297 of the Act were not necessary during the said period.
D H E E R U P O W E R G E N P R I VAT E L I M I T E D
249
Limited Company has passed necessary special resolution under the provisions of section 293(1)(d) of the Act. 25. The Company has not made any loans or advances or given guarantees or provided securities to other body corporate in compliance of the provisions of the Act and was not required to make any entries in the register kept for the purpose. 26. The company has not altered the provisions of the Memorandum with respect to the situation of the registered office from one state to another during the period under scrutiny. 27. The company has not altered the provisions of the Memorandum with respect to the objects of the Company during the period under scrutiny. 28. The company has not altered the provisions of the Memorandum with respect to the name of the Company during the period under scrutiny. 29. The company has altered the provisions of the Memorandum with respect to the Share Capital of the Company during the period under scrutiny and has complied with the provisions of the Act. 30. The Company has altered its Articles of Association during the year ended 31st March 2010 and has made due compliances.
31. As undertaken by the management there was no prosecution initiated against or show cause notices received by the Company and no fines or penalties or any other punishment was imposed on the Company during the period, for offenses under the Act. 32. The Company has not received any money as security from its employees during the period. 33. The Company is not required to deposit any contribution to Provident Fund with the prescribed authorities pursuant to section 418 of the Act as it is not applicable to the company.
FOR SGS ASSOCIATES Company Secretaries
D. P. GUPTA
(Proprietor) C. P. No. 1509 New Delhi May 15, 2010
250
I D F C A N N U A L R E P O R T 09 –10
Annexure – A
Statutory Registers maintained by the Company 1. Register of Members 2. Register of Preference Shareholders 3. Register of Directors 4. Register of Director Shareholding
5. Register of transfer. 6. Register of contracts 7. Register of Allotment 8. Minutes of the Board Meetings 9. Minutes of Annual / Extraordinary General meetings 10. Minutes of the Committee of Directors meetings
Annexure B
Forms and Returns as filed by the Company with the Registrar of companies, Regional Director, Central Government or other authorities during the period ending 31st March 2010.
S.N. FORM NO./RETURN FILED FILED UNDER SECTION FOR DATE OF FILING WHETHER FILED WITHIN PRESCRIBED TIME No No No No No No Yes IF DELAY IN FILING WHETHER REQUISITE ADDITIONAL FEE PAID. Yes Yes Yes Yes Yes Yes N.A.
1 2 3 4. 5 6 7.
Form 32 Form 32 Form 5 Form 23 FORM 23 AC AND 23-ACA FORM 20-B Form 23
303 303 97 31 220 159 31
Resignation of Director Appointment of Director Increase in Authorised Capital Amendment in Articles of Association Balance Sheet as at 31-03-09 Annual Return Made Upto 02-05-09 • • • • • Alteration of Articles of Association Issue of Preference Shares Redemption of Preference Shares Issue of Debentures Borrowing in excess of paid up capital and free reserves
24.6.2009 23.6.2009 23.6.2009 23.6.2009 5.11.2009 5.11.2009 3.3.2010
8. 9. 10. 11.
Form 32 Form 5 Form 18 Form 23-AA
303 97 146 163
Appointment of Directors Redemption of Preference shares and re-classification of Preference shares Change of Registered Office of the Company within Local Limits of the City For keeping the Books of Accounts at a place other then the Registered Office of the Company.
3.3.2010 3.3.2010 19.2.2010 19.2.2010
Yes Yes Yes Yes
N.A. N.A. N.A. N.A.
12.
Form 2
75
Allotment of Preference shares
8.3.2010
Yes
N.A.
D H E E R U P O W E R G E N P R I VAT E L I M I T E D
251
AU D I TO RS ’ R E PO RT
To The Members of Dheeru Powergen Private Limited
We have audited the attached Balance Sheet of DHEERU POWERGEN PRIVATE LIMITED as at March 31, 2010, the annexed Profit and Loss Account for the year ended on that date. The financial Statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audit. 1. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statements. We believe that our audit provides a reasonable basis for our option. 2. As required by Companies (Auditor’s Report) Order, 2003 and the Companies (Auditors Report) (Amendment) Order, 2004 issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956, we enclose in the annexure a statement on the matters specified in Paragraphs 4 and 5 of the said order. 3. Further to our comments in the annexure referred to above, we report that: a) We have obtained all the information and explanations, which, to the best of our knowledge and belief, were necessary for the purpose of our audit: In our opinion proper books of accounts, as required by Law have been kept by the Company so far as it appears from our examination of the Books of the Company: The Balance Sheet and Profit and Loss Account and the Cash Flow Statement dealt with by this report is in agreement with the books of account of the Company:
d)
In our opinion, the Balance Sheet and Profit and Loss account and the cash flow statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956: Based on the representations made by the Directors as March 31, 2010 and taken on Record by the Board of Directors of the Company and the information and explanations given to us, none of the Directors is, as at March 31, 2010, prima facie disqualified from being appointed as a Director in terms of clause (g) of subsection (1) of Section 274 of the Companies Act, 1956: In our opinion and to the best of our information and according to the explanations given to us, the said financial statements, read with the Notes thereon, give the information required by the Companies, Act 1956, in the manner so required and present a true and fair view in conformity with the Accounting Principles generally accepted in India: i. ii. iii. In the case of Balance Sheet, the state of affairs of the company as on March 31, 2010. In the case of Profit and Loss Account the loss for the year ended as on March 31, 2010. In the case of Cash Flow Statement, of the cash flows of the Company for the year ended on that date.
e)
f)
FOR K S RAO & ASSOCIATES Chartered Accountants
K. SRINIVAS RAO
b)
Proprietor (Membership No. 213480) Delhi April 15, 2010
c)
252
I D F C A N N U A L R E P O R T 09 –10
ANNEXURE
(Referred to in Paragraph 2 of our Auditors’ Report of even date on the financial statements for the year ended March 31, 2010 of Dheeru Powergen Private Limited)
In terms of the information and explanations given to us and the books and records examined by us in the normal course of audit and to the best of our knowledge and belief, we state as under: i) (a) According to the information and explanations given to us the Company has maintained Proper records showing full particulars including quantitative details and situation of fixed assets. (b) According to the information and explanations given to us the Company has physically verified during the year its fixed assets. We have been informed that no material discrepancies were noticed on such physical verification. (c) According to the information and explanations given to us the Company has not disposed off substantial part of fixed assets during the year, which will affect its status as going concern.
TO THE AUDITOR’S REPORT
vi) In our opinion and according the information and explanations given to us, during the year under review the company has not accepted any deposits from the public within the purview of Section 58A of the Companies Act, 1956 and Rules made there under. vii) In our opinion the Company has an in built internal audit system. In our opinion the scope and coverage of the internal audit is commensurate with the size of the Company and nature of its business. viii) In our opinion and according to the information and explanations given to us the Central Government has not prescribed the maintenance of cost records by the company as specified in sub section (1) of section 209 of the companies Act, 1956. ix) a) According to the information and explanations given to us and according to the books and records examined by us except in some instance, the company has been generally regular in depositing with the appropriate authorities the undisputed statutory dues including provident fund, employee’s state Insurance, income tax, sales tax, excise duty, service tax, cess and other material statutory dues applicable to it. According to the information furnished to us and as per records of the Company examined by us there were no dues, as at the Balance Sheet date, of sales tax/income tax/ custom tax/excise duty/service tax/cess/that have not been deposited on account of any dispute.
ii)
(a) As per the books of account and information provided to us, there were no Inventories in the Company during the year, as such the physically verification by the Management during the year at reasonable intervals does not arise. (b) As there were no Inventories during the year, our opinion on the procedures of physical verification of inventory followed by the Management does not arise. (c) As there were no Inventories during the year, our opinion on maintenance of proper record of inventory, the discrepancies noticed on physical verification with books of account, etc. does not arise.
b)
x) In our opinion and according to the information and explanations given to us and according to the books of account examined by us the there are accumulated losses at the end of the financial year. xi) Based on our audit procedures and on the information and explanation given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to the financial institutions, banks. xii) According to the information and explanations given to us by the management and according to the records of the Company examined by us the company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. xiii) In our opinion and according to the information and explanations furnished to us the company is not a chit, nidhi or mutual benefit fund/society. xiv) According to the information and explanations furnished to us the Company is not dealing in shares, securities debentures and other investments. xv) In our opinion and 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. xvi) In our opinion and according to the information and explanations furnished to us the term loans have been applied for the purpose for which they were raised.
iii) According to the information and explanations given to us the Company has not granted/taken any loan, secured or unsecured to/from the parties covered in the register maintained under Section 301 of the Companies Act, 1956. iv) In our opinion there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and for the sale of goods and services. In our opinion according the information and explanations given to us there is no continuing failure to correct major weaknesses in internal control during the year. v) a) In our opinion and according to the information and explanations given to us the contracts or arrangements that need to be entered into a register in pursuance of Section 301 of the Companies Act, 1956 have been properly so entered. In our opinion and according to the information and explanations given to us, the transactions that need to be entered into a register in pursuance of Section 301 of the Companies Act, 1956 have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.
b)
D H E E R U P O W E R G E N P R I VAT E L I M I T E D
253
xvii) On the basis of an overall examination of the Balance sheet of the Company, we are of the opinion and according to the information and explanations given to us, there are no funds raised on short-term basis, which have been used for long term investments. xviii) According to the information and explanations furnished to us the Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956 during the year under review. xix) According to the information and explanations given to us the Company has issued the Zero Coupon Compulsory Convertible debentures during the year. xx) The Company has not raised any money by public issues during the year and hence commenting under this clause does not arise.
xxi) Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year.
FOR K S RAO & ASSOCIATES Chartered Accountants
K. SRINIVAS RAO
Proprietor (Membership No. 213480) Delhi April 15, 2010
254
I D F C A N N U A L R E P O R T 09 –10
BALANCE SHEET
RUPEES SCHEDULES RUPEES
AS AT MARCH 31, 2010
RUPEES
AS AT 31-03-2010
AS AT 31-3-2009
SOURCES OF FUNDS
Shareholders’ Funds Share Capital Share Application Money Reserves & Surplus Loan Funds Unsecured Total 2 245,277,400 265,006,400 3 51,344,354 98,978 51,245,376 4 5 6 7 8 26,880,453 2,505,975 29,386,428 Net Current Assets Profit and Loss account Miscellaneous Expenditure (to the extent not written off or adjusted) Preliminary Expenses Total Notes forming part of the Accounts Schedules 1 to 14 form an integral part of the Accounts 14 13 – 265,006,400 199,800 205,617,654 106,195,457 14,042,823 7,698,665 950,564 8,649,229 121,748,678 – – 128,723,728 6,858,157 135,581,885 Less: Current Liabilities and Provisions Liabilities Provisions 93,522,744 16,110,303 63,514 16,046,789 67,622,388 5,600,000 123,448,977 1,348,929 130,397,906 – 205,617,654 1 19,729,000 – – 19,729,000 19,729,000 184,997,325 891,329 205,617,654
APPLICATION OF FUNDS
Fixed Assets Gross Block Less: Accumulated Depreciation Net Block Preoperative Expenses pending for allocation Current Assets, Loans and Advances Sundry Debtors Cash and Bank balances Loans & Advances
IN TERMS OF OUR REPORT OF EVEN DATE K S RAO & ASSOCIATES Chartered Accountants
K. SRI N I VAS R AO PRADEEP SINGH ATHAR SHAHAB
FOR AND ON BEHALF OF THE BOARD
Proprietor Delhi | April 15, 2010
Director
Director
D H E E R U P O W E R G E N P R I VAT E L I M I T E D
255
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
RUPEES
SCHEDULE
APRIL 1, 2009 TO MARCH 31, 2010
APRIL 1, 2008 TO MARCH 31, 2009
INCOME
Operating and Other Income 9 9,511,633 9,511,633 1,339,861 1,339,861 – – – 49,950 – 49,950 1,289,911 398,582 – 891,329 – 891,329
EXPENDITURE
Staff Expenses Establishment Expenses Other Expenses Preliminary Expenses Depreciation PROFIT/(LOSS) BEFORE TAX Provision for Tax - For Income tax - For Deferred Tax PROFIT/(LOSS) AFTER TAX Balance brought forward PROFIT/(LOSS) CARRIED TO BALANCE SHEET Notes forming part of the Accounts Schedules 1 to 14 form an integral part of the Accounts In terms of our report of even date. 14 2,505,975 – (14,934,152) 891,329 (14,042,823) 10 11 12 13 3,202,571 756,418 17,745,557 199,800 35,464 21,939,810 (12,428,177)
IN TERMS OF OUR REPORT OF EVEN DATE K S RAO & ASSOCIATES Chartered Accountants
K. SRI N I VAS R AO PRADEEP SINGH ATHAR SHAHAB
FOR AND ON BEHALF OF THE BOARD
Proprietor Delhi | April 15, 2010
Director
Director
256
I D F C A N N U A L R E P O R T 09 –10
C A S H F L OW ST AT E M E N T
FOR THE YEAR ENDED MARCH 31, 2010
RUPEES
FOR THE YEAR ENDED MARCH 31, 2010
A.
CASH FLOW FROM OPERATING ACTIVITIES
Loss before taxation Adjustments for : Depreciation Preliminary expenses written off Operating loss before Working Capital Changes Changes in : Current Assets and Loans and Advances Current Liabilities Pre operative expenses Cash generated from Operations Direct Taxes Paid NET CASH USED IN OPERATING ACTIVITIES (A) 90,773 20,737,199 (25,900,356) (17,265,297) (2,505,975) (19,771,272) (35,234,051) (B) (35,234,051) (184,997,326) 245,277,400 (C) 60,280,074 5,274,751 123,448,977 128,723,728 5,274,751 35,464 199,800 (12,192,913) (12,428,177)
B.
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Fixed Assets NET CASH USED IN INVESTING ACTIVITIES
C.
CASH FLOW FROM FINANCING ACTIVITIES
Refund of share application money Proceeds from Borrowings NET CASH FROM FINANCING ACTIVITIES NET INCREASE IN CASH AND CASH EQUIVALENTS (A+B+C) Cash and cash equivalents as at the beginning of the year (as per Schedule 6) Cash and cash equivalents as at the end of the year (as per Schedule 6)
IN TERMS OF OUR REPORT OF EVEN DATE K S RAO & ASSOCIATES Chartered Accountants
K. SRI N I VAS R AO PRADEEP SINGH ATHAR SHAHAB
FOR AND ON BEHALF OF THE BOARD
Proprietor Delhi | April 15, 2010
Director
Director
D H E E R U P O W E R G E N P R I VAT E L I M I T E D
257
SCHEDULES
SCHEDULE 1 Share Capital
AUTHORISED 50,000 Equity Shares of Rs.10 each 495,000 Preference Shares of Rs. 100 each ISSUED, SUBSCRIBED AND PAID UP 10,000 (Previous Year 10,000) equity shares of Rs.10 each fully paid up 196,290 (Previous Year 196,290) preference Shares of Rs. 100 each fully paid up
ANNEXED TO AND FORMING PART OF THE ACCOUNTS
RUPEES
RUPEES
AS AT 31-03-2010 500,000 49,500,000 50,000,000 100,000 19,629,000 19,729,000
AS AT 31-3-2009 100,000 19,900,000 20,000,000 100,000 19,629,000 19,729,000
SCHEDULE 2 Loans Funds (Unsecured)
Debentures (Convertible) The Company has issued 2,452,774 Zero Coupon compulsory Convertible Debentures of Rs. 100 each these debentures will be converted to equity in 5 years from February 5, 2010 or the completion of Milestone IV whichever is earlier based on NAV methodology
RUPEES
RUPEES
AS AT 31-03-2010 245,277,400
AS AT 31-3-2009 –
245,277,400
–
SCHEDULE 3 Fixed Assets
DESCRIPTION As at April GROSS BLOCK As at April March 31, Additions Deletions DEPRECIATION March 31, March 31, Additions Deletions
RUPEES
NET BLOCK March 31,
1, 2009
1, 2009
2010
2010
2010
TANGIBLES Freehold Land Furniture and Fittings Office Equipment Computer Hardware Total
Previous Year
15,946,516 34,700,000 – 163,787 –
163,787
– – – – –
–
50,646,516 211,246 467,392 19,200 51,344,354
16,110,303
– – 63,514 – 63,514
40,731
– 5,996 28,353 1,115 35,464
22,783*
– – – – –
–
– 50,646,516 15,946,516 5,996 91,867 1,115
63,514
211,246 303,605 19,200
15,946,516
205,250 375,525 18,085
16,046,789
100,273 –
16,110,303 35,234,051
98,978 51,245,376 16,046,789
* Shown under Pre-operative expenses pending for allocation during previous year.
258
I D F C A N N U A L R E P O R T 09 –10
2009 –
As at
As at
As at
As at
SCHEDULE 4 Pre-operative expenses pending for allocation
Brought Forward from Previous Year Advertisement & Publicity Bank Guarantee Commission Expenses Water Commitment Charges Auditors Remuneration -Statutory Audit Bank Charges Postage, Telephone and Fax Professional Fees Depreciation Miscellaneous Expenses Printing & Stationery Insurance Project Development Expenses Salaries & Wages Gratuity, Leave encashment & Bonus Travelling & Conveyance Survey Expenses Rates & Taxes Rent & Utilities Staff Welfare Meeting Expenses Interest CSR Expenses Meting expenses FBT 2008-09 FBT 2007-08
RUPEES
RUPEES
AS AT 31-03-2010 67,622,388 777,840 10,157,446 – – – – 10,558,083 – 125,000 – – 969,614 – – 843,594 621,155 – – – – 1,442,424 100,000 404,788 (99,588) – 93,522,744
AS AT 31-3-2009 51,181,412 47,545 1,314,781 675,000 40,000 24,223 122,244 3,196,793 22,783 713,462 124,286 7,547 961,526 3,022,000 417,000 3,620,741 52,000 100,000 1,738,072 7,377 32,733 2,060 – – 134,982 63,821 67,622,388
SCHEDULE 5 Sundry Debtors (Unsecured)
Considered Good-Less than Six months
RUPEES
RUPEES
AS AT 31-03-2010 – –
AS AT 31-3-2009 5,600,000 5,600,000
SCHEDULE 6 Cash and Bank Balances
Cash Balances with a Scheduled Banks - In Current Accounts - In Deposit Account
RUPEES
RUPEES
AS AT 31-03-2010 47,948 6,508,729 122,167,051 128,723,728
AS AT 31-3-2009 – 3,448,977 120,000,000 123,448,977
SCHEDULE 7 Loans and Advances
Interest Accrued on Deposit Advances Against Land Advances Recoverable in cash or in kind or for value to be received Advance payment of Fringe Benefit Tax Advance payment of Taxes
RUPEES
RUPEES
AS AT 31-03-2010 – 4,247,805 94,309 10,068 2,505,975 6,858,157
AS AT 31-3-2009 1,188,054 – – 9,068 151,807 1,348,929
D H E E R U P O W E R G E N P R I VAT E L I M I T E D
259
SCHEDULE 8 Current Liabilities and Provisions
LIABILITIES Sundry Creditors (See schedule 14 Note 7) Other Liabilities Directors Reimbursement Ranhill India Private Limited PROVISIONS Provision for Fringe Benefit Tax AY 2008-2009 Provision for Income Tax Gratuity & Bonus payable
RUPEES
RUPEES
AS AT 31-03-2010 11,640,266 15,240,187 – – 26,880,453 – 2,505,975 – 2,505,975
AS AT 31-3-2009 95,880 4,244 6,659,777 938,764 7,698,665 134,982 398,582 417,000 950,564
RUPEES
SCHEDULE 9 Operating and Other Income
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Interest (Tax Deducted at Source INR 969,162 Previous Year INR 151,807) Tender Income Miscellaneous Income 400,000 30,001 9,511,633 9,081,632
APRIL 1, 2008 TO MARCH 31, 2009 1,339,861 – – 1,339,861
RUPEES
SCHEDULE 10 Personnel Expenses
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Salaries Staff Welfare Expenses 3,062,484 140,087 3,202,571
APRIL 1, 2008 TO MARCH 31, 2009 – – –
RUPEES
SCHEDULE 11 Establishment Expenses
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Rent Rates & Taxes Electricity Expenses 415,000 267,946 73,472 756,418
APRIL 1, 2008 TO MARCH 31, 2009 – – – –
RUPEES
SCHEDULE 12 Other Expenses
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Travelling and Conveyance Postage, Telephone and Fax Printing and Stationery Professional Fees Office Maintenance Expenses Advertisement & Publicity Expenses Business Development Expenses Miscellaneous Expenses Auditor’s Remuneration ( See Schedule 14 Note 3) Bank Charges Interest 5,871,947 119,827 113,041 9,557,122 109,524 125,856 76,239 1,374,117 85,000 23,136 289,748 17,745,557
APRIL 1, 2008 TO MARCH 31, 2009 – – – – – – – – – – – –
RUPEES
SCHEDULE 13 Preliminary Expenses (to the extent not written off or Adjusted)
RUPEES
APRIL 1, 2009 TO MARCH 31, 2010 Opening Balance Less: Written off during the year ( See Schedule 14 Note 8) Balance carried forward
260 I D F C A N N U A L R E P O R T 09 –10
APRIL 1, 2008 TO MARCH 31, 2009 249,750 49,950 199,800
199,800 199,800 –
SCHEDULE 14 Notes Forming Part of the Accounts
1 Significant Accounting Policies
A. Basis of Preparation
The Company adopts the accrual concept in the preparation of accounts. The preparation of financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.
B. Fixed Assets
Fixed assets are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated depreciation.
C. Depreciation
Depreciation on Fixed Assets, excluding certain electronic items, is provided on the written down value method, at the rates prescribed by Schedule XIV of the Companies Act, 1956. Certain electronic items are depreciated over a period of two years on straight line method based on the Management’s estimate of the useful life of assets. Depreciation on additions during the year is provided on a pro-rata basis. Assets costing less than Rs. 5,000 each are written off in the year of capitalisation.
D. Investments
There are no investments during the year.
E. Revenue Recognition
Interest income is recognized on accrual basis.
F. Provisions and Contingencies
The Company creates a provision when there is a present obligation as a result of past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
G. Foreign Currency Transactions
Foreign currency transactions are recorded at the exchange rate prevailing on the date of the transactions.
H. Income-Tax
The accounting treatment for income-tax in respect of the Company’s income is based on the Accounting Standard 22 on ‘Accounting for Taxes on Income’ as notified by the Companies (Accounting Standards) Rules, 2006. The provision made for income-tax in the accounts comprises both, the current tax and the deferred tax. The deferred tax assets and liabilities for the year, arising on account of timing differences, are recognised in the Profit and Loss Account and the cumulative effect thereof is reflected in the Balance Sheet. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the Company has unabsorbed depreciation or carry forward tax losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that the same can be realised against future taxable profits.
I. Employee Benefits
During the year company has paid Gratuity and Leave encashment to the eligible employees and thus no provision is made.
2 Contingent Liabilities not provided for in respect of
PARTICULARS (a) Capital Commitments (b) Guarantees Issued For Securing coal Linkages, the Company has provided the following guarantees. 1. Financial Guarantees 96,079,200 120,000,000 CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
38,230,242
–
D H E E R U P O W E R G E N P R I VAT E L I M I T E D
261
3 Auditors’ Remuneration
CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
Audit Fees Other Services Total
80,000 5,000 85,000
40,000 40,000
4 As per the Accounting Standard 18 on ‘Related Party Disclosures’ as notified by the Companies (Accounting Standards) Rules, 2006, the related parties of the Company are as follows:
(a) Relationships:
I. ULTIMATE HOLDING COMPANY:
Infrastructure Development Finance Company Limited
II. HOLDING COMPANY:
IDFC Projects Limited (with effect from February 5, 2010) Ranhill Dheeru Malaysia SDN BHD. (Till February 4, 2010)
III. KEY MANAGEMENT PERSONNEL:
Mr. S. Narayanaswamy, Director (Till February 4, 2010) (b) The nature and volume of transactions carried out with the above related parties in the ordinary course of business are as follows:
NAME OF THE RELATED PARTY PARTICULARS Loans taken and repaid Subscription towards Preference Share Capital Subscription towards Debentures Debentures application money IDFC Projects Limited Sundry Creditors-Balance Outstanding Advance Received - Balance Outstanding Bank Guarantee commission charges Upfront fees charges Interest charges Share Application money Ranhill Dheeru Malaysia SDN BHD Refund of Share Application Money Redemption of Preference Share Capital CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
30,000,000 7,851,600 181,505,300 800 9,119,778 14,812,404 6,730,368 2,029,480 1,345,682 5518,623 190,515,948 7,851,600
– – – – – – – – 152,540,595 – –
5 Disclosures pursuant to Part II to Schedule VI of the Companies Act, 1956:
(a) Managerial Remuneration under section 198 of the Companies Act, 1956:
PARTICULARS Salary and Other Allowances CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
1,140,000
1,080,000
As no commission is payable to Directors, the computation of Net Profits in accordance with Section 309 (5) read with Section 349 of the Companies Act, 1956 has not been furnished. (b) Expenditure incurred in foreign currency.
PARTICULARS Travelling Expenses Others Total CURRENT YEAR
RUPEES
PREVIOUS YEAR
RUPEES
868,469 78,486 946,955
307,938 27,968 335,906
262
I D F C A N N U A L R E P O R T 09 –10
6 As the company is yet to start its operations, the additional information pursuant paragraphs, 3, 4A, 4B and 4C of part II of Schedule VI to the Companies Act, 1956 has not been provided. 7 The Company has no amounts due to any micro, small and medium enterprises as defined under Micro Small and Medium Enterprises Development Act, 2006 as on March 31, 2010. 8 During the year entire preliminary expenses of Rs. 199,800 has been written off. 9 Previous year figures have been regrouped / reclassified wherever necessary.
K S RAO & ASSOCIATES Chartered Accountants
K. SRI N I VAS R AO
FOR AND ON BEHALF OF THE BOARD
PRADEEP SINGH
ATHAR SHAHAB
Proprietor Delhi | April 15, 2010
Director
Director
D H E E R U P O W E R G E N P R I VAT E L I M I T E D
263
B A L A N C E S H E E T A B ST R A CT
AND COMPANY’S GENERAL BUSINESS PROFILE
I.
REGISTRATION DETAILS Registration No. State Code Balance Sheet Date U 0 3 4 1 1 0 3 2 0 1 0 0 1 0 9 A P 2 0 0 3 P T C 0 4 0 8 9 9
II.
CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000) Public Issue N I L Right Issue N I L
Bonus Issue N III. I L
Private Placement N I L
POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000) Total Liabilities 2 SOURCES OF FUNDS Paid-up Capital 1 9 7 2 9 Reserves and Surplus N I L 8 0 3 5 0 2 8 0 Total Assets 3 5 0
Secured Loans N APPLICATION OF FUNDS Net Fixed Assets* 1 4 4 7 6 8 I L 2 4
Unsecured Loans 5 2 7 7
Investments N I L
Net Current Assets 1 0 6 1 9 5
Deferred Tax Asset N I L
Profit and Loss Account 1 IV. 4 0 4 3
PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000) Turnover / Income 9 5 1 2 2 Total Expenditure 1 9 4 0
Profit Before Tax (1 2 4 2 8) (1
Profit After Tax 4 9 3 4)
Earnings per Share (in Rs.) – V. GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS) Item Code No. (ITC Code) Product Description N P I O L W E R G E N E R A T I O N
Dividend % N I L
* Includes preoperative expenses pending for allocation.
264 I D F C A N N U A L R E P O R T 09 –10
Design Itu Chaudhuri Design | www.icdindia.com Printed at Repro India Ltd.
This Annual Report is printed on ECO-FRIENDLY Paper
doc_760797393.pdf