Trustee Company Ltd 2011ir.kotak.com/downloads/annual-reports-2010-11/pdf/KM-Trustee-Company-Ltd.pdfOne important change which could effect our industry is the parity in dividend distribution

ANNUAL REPORT2010-11Its grt 2b 25

KOTAK MAHINDRA TRUSTEE COMPANY LIMITED

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Directors’ Report

To the Members of


The Directors present their Sixteenth Annual Report together with the audited accounts of your Company for the year ended 31st March 2011.

FINANCIAL RESULTS

The financial results of the company for the year ended 31st March 2011 is as under:

(`̀̀̀̀ In Lakhs)

2010 - 2011 2009- 2010

Gross income 1083.51 1,142.90

Profit before Depreciation and Tax 990.14 1,052.25

Depreciation 0 0.00

Profit before Tax 990.14 1,052.25

Profit after Tax 668.10 694.98

Balance of Profit from previous years 2458.93 2,067.50

Amount available for appropriation 3127.03 2,762.47

Proposed dividend including dividend distribution tax 349.16 233.54

Transfer to General reserves 70.00 70.00

Surplus carried forward to the Balance Sheet 3127.03 2458.93

The trusteeship income during the period under consideration has decreased by 5% as compared to the previous year and consequently the

profit before tax has reduced by 6%. This is on account of a 13% reduction in Average Assets under management for the year as compared to

the previous year.

DIVIDEND

Your Directors also recommend a final dividend of ` 600/-per equity share.

CAPITAL

The Authorized Share Capital of the Company is ` 1 crore, comprising of 10,00,000 Equity Shares of ` 10 each. The issued and paid up capital of

the Company is ` 5,00,700 comprising of 50,070 Equity Shares of ` 10 each.

OPERATIONS

MARKET RELATED DEVELOPMENTS AFFECTING THE SCHEMES OF THE MUTUAL FUND

The financial year 2010-2011 which started well with the economy's strong growth momentum driven by strong consumption growth, saw a

plethora of domestic & global events acting as hindrance to growth. Inflation raised its ugly head since the beginning of the year itself at double

digits, and consequentially RBI raised policy rates regularly to tame it. However, inflation still remains a cause for concern. Governance issues at

the centre also had a sentimental impact on the markets. Global factors such as political unrest in the Middle East & the tsunami in Japan also

added to market worries. Nonetheless, Indian equities were able to attract net FII inflow for FY-11 to the tune of US $ 24.29 billion.

The union budget 2011-12 focused on condusive investment climate, inclusive growth, education, good governance standards & fiscal prudence.

One important change which could effect our industry is the parity in dividend distribution tax for all debt schemes for corporate investor's w.e.f

June 01, 2011, bringing it in line with bank fixed deposits. . Allowing FII's and foreign nationals to invest directly into Indian Mutual Funds giving

it an entire new customer base was a positive step.

The financial year 2011 began on a positive note for the fixed income segment with a liquidity overhang in the money markets. In April-May

2010, short term yields such as 3 month Bank CDs, fell to a low of around 4.5%. But, the telecom auction saw outflow of over ` 1 lakh crores

which led to liquidity tightness resulting in large scale redemption from money market schemes. This occurred when inflation too was on the

upswing. The yields at the shorter end went up by 400 to 500 bps during the financial year

BOARD OF DIRECTORS : MR. AMIT DESAI, MR. CHANDRASHEKHAR SATHE, MR. GIRISH SHAREDALAL, MR. BALAN WASUDEO,

MR. NOSHIR DASTUR

Financial Statements Reports

Directors’ Reports

Kotak Mahindra Trustee Company Limited Annual Report 2010-112

The debt market represented by the 10 year benchmark bond yield remained volatile throughout the year. Starting the year at 7.83%, the 10

year benchmark bond closed at 7.99% on 31st March 2011 before making an interim high of 8.25%.Similarly , the BSE Sensex also saw a high

of 21004 and a low of 16022 before closing the year at 19445.

There were a few changes in the regulation pertaining to the mutual fund industry during FY-11; the highlights of such changes are as given

below:

• Listing of Interval schemes - For all Interval schemes/plans, SEBI has mandated that they be compulsorily listed and no redemption will be

allowed except the specified transaction period. It also stated that Investments shall be permitted only in such securities which mature on or

before the opening of the immediately following specified transaction period.

• Consolidation or merger of schemes - SEBI in an attempt to consolidate similar fund mandates and reduce clutter had decided that merger

or consolidation shall not be seen as change in fundamental attribute of the surviving scheme if mutual funds are able to demonstrate that

the circumstances merit merger

• Additional mode of payment through ASBA(Applications Supported by Blocked amount) in mutual funds - Through this circular, SEBI

mandated mutual fund houses to provide ASBA facility to investors for all NFO's launched on or after 1st October 2010

• Valuation of Debt & Money market instruments -with effect from 1st August 2010 SEBI mandated mutual funds to value money market &

debt securities with residual maturity of over 91 ( from the extant 182 days ) days at the weighted average price at which they were traded

on a particular day or when such securities are not traded, they shall be valued at benchmark yield / matrix of spread over risk free

benchmark yield obtained from agencies entrusted for the said purpose by AMFI. This led to increased transparency in valuation of debt

mutual funds.

MUTUAL FUND INDUSTRY DEVELOPMENTS AND SEGMENT WISE PERFORMANCE

The total industry AUM (Assets Under Management) fell from ` 6,13,979 crores in March 2010 to ` 5, 92,250 crores in March 2011, fall of

3.54% in FY-11. During the same period, AUM with Kotak Mahindra Asset Management Company increased 1.59% i.e. from ` 24071.19 crores

in March 2010 to 24,454.93 crores in March 2011.

Equity schemes in the industry saw a net outflow of Rs 11,795 crores for the FY-11 as markets remained volatile. With its focus on SIP

Investments, Kotak Mahindra Asset Management Company saw its live SIP accounts increase from 1,01,088 in March 2010 to 1,14,592 accounts

in March 2011.

Mutual funds continue to be the cheapest vehicle for accessing capital markets. The issue is about reaching the investors in a most cost effective

manner. The distribution in that sense is extremely important. The distribution is also trying to realign its business models in line with the new

regulatory pattern introduced with the abolition of entry loads in FY-2010. The industry on its part is undertaking all India investor awareness

programs in a standard format. A total of 5817 programs were done pan India covering about 340,383 Investors While we at Kotak have

undertaken about 653 investor meets covering about 19,862 investors.

During the year under review, FMPs as an industry gained in size due to attractive interest rates from the investor point of view. AUM of Close

ended Income schemes & Interval schemes (majority of which are FMPs), in the industry, increased from ̀ 56,923 crores in March 2010 to

` 1,38,754 crores in March 2011 forming around 23% of the total AUM in the Industry.

During the year, Kotak Flexi Debt, Kotak Liquid Institutional Premium Plan & Kotak Gilt were awarded 5 Star ranking over three years by Value

Research. Also, Kotak Flexi Debt & Kotak Floater Long Term have been ranked 7 star and have been awarded the Gold Award for 'Best

Performance' in the category of 'Open Ended Ultra Short Term-IP' and 'Open Ended Floating Rate Fund' respectively for one year period ending

31st December 2010.

Kotak Bond Regular has been awarded most Consistent Performer (based on the annual performance of the past 10 years) in the NDTV Profit

Mutual Fund Awards 2010.

Certain statements in the 'Management Discussion and Analysis' section may be forward-looking and are stated as may be required by applicable

laws and regulations. Many factors may affect the actual results, which could be different from what the Directors envisage in terms of future

performance and outlook. Your Company does not undertake to update these statements.

NEW SCHEMES LAUNCHED DURING 2010-2011

Other than FMPs two new products were launched successfully in FY-11 namely Kotak Credit Opportunities Fund and Kotak Multi Asset

Allocation Fund, garnering ` 361.19 crores and ` 160.89 crores respectively. Kotak Multi Asset Allocation as the name suggests is a hybrid fund

with asset allocation across 3 asset classes viz. Debt, Equity & Gold, allowing investors to take exposure into all the 3 asset classes through

investment in a single scheme.

DIRECTORS

Your Company has five Directors on the Board, three of whom are Independent. During the year, seven meetings of the Board of Directors were

convened.

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We report with profound grief and sorrow, the untimely demise of our Director Mr. Anirudha Barwe. The valuable inputs and guidance provided

by Mr. Anirudha Barwe was immense.

Mr. Noshir Dastur, was appointed as a Director on 21st January 2011 in the casual vacancy caused by the demise of Mr. Anirudha Barwe.

Mr. Girish Sharedalal retires by rotation at the Annual General Meeting and being eligible, offers himself for re-appointment.

COMMITTEES

Pursuant to SEBI circular MFD/CIR/010/024/2000 dated January 17, 2000, your Company has constituted an Audit Committee of the Board

consisting of Mr. Girish Sharedalal, Mr. Amit Desai, Mr. Anirudha Barwe and Mr. Balan Wasudeo. Mr. Girish Sharedalal, Independent Director on

the Board, is the Chairman of the Audit Committee. The committee met five times during the year to review accounts, operations and

compliance relating to schemes. Post the demise Mr. Anirudha Barwe , the Audit Committee comprises of Mr. Girish Sharedalal, Mr. Amit Desai

and Mr. Balan Wasudeo.

APPOINTMENT COMMITTEE

As per the directives laid down by Reserve Bank of India (RBI), your company has constituted an Appointment Committee consisting of Mr. Balan

Wasudeo and Mr. Noshir Dastur. The Scope of the Committee is to ensure 'fit & proper' status of proposed/existing Directors of the organization.

AUDITORS

Your Company's Auditors, M/s. Price Waterhouse, Chartered Accountants, Mumbai, retire at conclusion of the Sixteenth Annual General

Meeting and being eligible, offer themselves for re-appointment on such remuneration as may be fixed by the Board of the Directors of your

Company.

STATUTORY INFORMATION

Your Company did not have any employees during the year, nor did it accept any deposits during the year. It had no foreign exchange earnings

or outgo. The other particulars prescribed under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are not

applicable since your Company is not a manufacturing company.

EMPLOYEES/HUMAN RESOURCES

Your Company does not have personnel or infrastructure of its own and uses the services of Kotak Mahindra Asset Management Company

Limited.

DIRECTORS' RESPONSIBILITY STATEMENT

Based on representations from the Management of KMAMCL who is entrusted with maintenance of the books of account of your Company,

in pursuance of Section 217 (2AA) of the Companies Act, 1956, we state that:

i. Your Company has, in the preparation of the annual accounts for the year ended 31st March 2011, followed the applicable accounting

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

ii. 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 profit and fair view of the state of affairs of your Company as at 31st March 2011 and of the Profit and loss of

your Company for the financial year ended 31st March 2011;

iii. they have taken proper and sufficient care to the best of their knowledge and ability, for the maintenance of adequate accounting records

in accordance with the provisions of the Act for safeguarding the assets of your Company and for preventing and detecting fraud and

other irregularities; and

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

ACKNOWLEDGEMENTS

Your Directors would like to place on record their gratitude for the valuable guidance and support received from the Securities and Exchange

Board of India, Reserve Bank of India and other Government and Regulatory agencies.

For and on behalf of the Board of Directors

Girish Sharedalal Balan Wasudeo

Director Director

Place: Mumbai

Dated: 27th April 2011


Directors’ Reports


To the Members of


1. We have audited the attached Balance Sheet of Kotak Mahindra Trustee Company Limited ("The Company"), as at 31st March 2011 and

the related Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto, 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 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 as amended by the Companies (Auditor's Report) (Amendment) Order, 2004

(together the "Order") issued by the Central Government of India in terms of sub-section (4A) of Section 227 of 'The Companies Act,1956'

of India (the "Act") and on the basis of such checks of the books and records of the Company as we considered appropriate and according

to the information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of

the Order.

4. Further to our comments in paragraph 3 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

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 appears from our examination

of those 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 Section 211 of the Act.

(e) On the basis of written representations received from the directors, as on 31st March 2011, and taken on record by the Board of

Directors, none of the directors are disqualified as on 31st March 2011 from being appointed as a 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 financial statements

together with the notes thereon and attached thereto give, in the prescribed manner, the information required by the Act, 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 31st March 2011;

(ii) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and

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

For Price Waterhouse

Firm Registration Number: 301112E

Chartered Accountants

Vivek Prasad

Partner

Membership Number: F-104941

Place: Mumbai


Auditors’ Report

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Referred to in paragraph 3 of the Auditors' Report of even date to the members of Kotak Mahindra Trustee Company Limited on the financial

statements for the year ended 31st March 2011

1. The Company did not have any fixed assets at anytime during the year. Hence, the requirements of clause (i) of paragraph 4 of the said

Order are not applicable to the Company.

2. The Company did not have any inventory at anytime during the year. Hence, the requirements of clause (ii) of paragraph 4 of the said

Order are not applicable to the Company.

3. The Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the

register maintained under Section 301 of the Act.

4. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate

with the size of the Company and the nature of its business for the sale of services. Further, on the basis of our examination of the books

and records of the Company, and according to the information and explanations given to us, no major weakness have been noticed or

reported.

5. According to the information and explanations given to us, there have been no contracts or arrangements referred to in Section 301 of the

Act during the year to be entered in the register required to be maintained under that Section. Accordingly, the question of commenting

on transactions made in pursuance of such contracts or arrangements does not arise.

6. The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules

framed there under.

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

8. The Central Government of India has not prescribed the maintenance of cost records under clause (d) of sub-section (1) of Section 209 of

the Act for any of the products of the Company.

9. (a) 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 the undisputed statutory dues including income-tax, service tax, cess and other material statutory

dues as applicable with the appropriate authorities. According to the information and explanations given to us and the records of the

company examined by us, investor education and protection fund, employees' state insurance, sales-tax, wealth tax, customs duty

and excise duty are not applicable to the company in the current year.

(b) According to the information and explanations given to us and the records of the company examined by us, there are no dues of

income-tax, service tax, and cess which have not been deposited on account of any dispute. Sales tax, wealth tax, customs duty and

excise duty are not applicable to the company for the current year.

10. The Company has no accumulated losses as at 31st March 2011 and it has not incurred any cash losses in the financial year ended on that

date or in the immediately preceding financial year.

11. According to the records of the Company examined by us and the information and explanation given to us, the Company has not

defaulted in repayment of dues to any financial institution or bank or debenture holders as at the balance sheet date.

12. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The provisions of any special statute applicable to chit fund / nidhi / mutual benefit fund/ societies are not applicable to the Company.

14. In our opinion, the Company has maintained proper records of transactions and contracts relating to dealing or trading in shares, securities,

debentures and other investments during the year and timely entries have been made therein. Further, such securities have been held by

the Company in its own name or are in the process of transfer in its name, except to the extent of the exemption granted under Section 49

of the Act.

15. In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by

others from banks or financial institutions during the year.

16. The Company has not obtained any term loans.

17. On the basis of an overall examination of the balance sheet of the Company, in our opinion and according to the information and

explanations given to us, there are no funds raised on a short-term basis which have been used for long-term investment.

18. 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 during the year.

Annexure to the Auditors’ Report


Auditors’ Reports


19. The Company has not issued any debentures during the year.

20. The Company has not raised any money by public issues during the year.

21. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted

auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of

fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the Management.

For Price Waterhouse

Firm Registration Number: 301112E


Vivek Prasad

Partner

Membership Number: F-104941

Place: Mumbai


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Balance Sheet as at 31st March 2011 (`)

As at As at

Schedules 31st March 31st March

2011 2010

Sources of Funds

Shareholders' Funds:

Capital 1 500,700 500,700

Reserves and Surplus 2 291,970,397 260,075,879

292,471,097 260,576,579

Deferred Tax Liability (Refer Schedule 8 - Note 3) — 123,700

Total 292,471,097 260,700,279

Application of Funds

Investments 3 98,735,263 214,289,740

Current Assets, Loans and Advances

Trusteeship Remuneration Receivable 8,130,332 8,451,407

Cash and Bank Balances 4 223,072,996 20,693,785

Other Current Assets 5 72,123 42,020,612

Loans and Advances 6 123,175 144,008

231,398,626 71,309,812

Less: Current Liabilities and Provisions

Current Liabilities 7 1,327,467 1,304,725

Provisions 36,335,325 23,594,548

37,662,792 24,899,273

Net Current Assets 193,735,834 46,410,539

Total 292,471,097 260,700,279

Notes to the financial statements 8

This is the Balance Sheet referred to in our report of even date

For Price Waterhouse For and on behalf of the Board of Directors

Firms Registration Number: 301112E


Vivek Prasad Girish Sharedalal Balan Wasudeo

Partner Director Director

Membership No. F-104941

Mumbai


Financial Statements

Balance Sheet and P&L A/c

Reports


Profit and Loss Account for the year ended 31st March 2011 (`)

Schedules 1st April 2010 1st April 2009

to to

31st March 2011 31st March 2010

Income

Trusteeship fees - Gross (Tax deducted at source

`10,286,345 (Previous year `11,417,474)) 93,257,915 99,895,235

Dividend on units of mutual fund 1,791,713 129,472

Interest on debentures - Gross (Tax deducted at source `1,114,315

(Previous year ` 1,232,500)) 11,143,151 12,325,000

Interest on Fixed Deposit - Gross (Tax deducted at source `12,873 (Previous year ` 258,541)) 128,731 1,838,649

Profit on sale of current investments 715,558 101,468

Profit on sale of long term investments 1,314,000 —

Total 108,351,068 114,289,824

Expenditure

Compliance and administrative 7,547,006 7,315,199

Directors' sitting fees 450,000 600,000

Insurance 101,863 100,740

Legal and professional 49,938 79,755

Rent, rate and taxes 955,260 859,844

Auditors' remuneration (Refer Schedule 8 -Note 5) 102,510 103,430

Miscellaneous 130,667 6,217

Total 9,337,244 9,065,185

Profit Before Tax 99,013,824 105,224,639

Provision For Taxation

Less: Current tax (including `27,442 (Previous Year `Nil) for prior year) 32,327,442 35,730,000

Deferred tax (123,700) (2,950)

Profit After Tax 66,810,082 69,497,589

Profit and loss account balance brought forward from previous year 245,892,879 206,749,690

Appropriations

Proposed dividend 30,042,000 20,028,000

Corporate dividend tax 4,873,564 3,326,400

Transfer to general reserve 7,000,000 7,000,000

Profit and loss account balance carried forward to the Balance Sheet 270,787,397 245,892,879

Earnings per share - Basic and Diluted 1,334 1,388

Face Value of `10 each (Refer Schedule 8 - Note 9)

Notes to the financial statements 8







Mumbai


This is the Profit and Loss Account referred to in our report of even date

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Cash Flow Statement for the year ended 31st March 2011 (`)

2010-11 2009-10

CASH FLOW FROM OPERATING ACTIVITIES

Profit before taxation 99,013,824 105,224,639

Adjustments for:

Dividend income (1,791,713) (129,472)

Interest on debentures/ Fixed Deposit (11,271,882) (14,163,649)

Profit on sale of Current investments (715,558) (101,468)

Profit on sale of Long Term investments (1,314,000) —

OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 83,920,671 90,830,050

(Increase) / Decrease in trusteeship remuneration receivable 321,075 (3,845,731)

(Increase) / Decrease in loans and advances 20,833 (22,650)

Increase / (Decrease) in current liabilities 22,742 416,488

364,650 (3,451,893)

CASH GENERATED FROM OPERATIONS 84,285,321 87,378,157

Payment of taxes (net of refunds) (31,147,829) (34,011,245)

NET CASH FROM OPERATING ACTIVITIES (A) 53,137,492 53,366,912

CASH FLOW FROM INVESTING ACTIVITIES

(Purchase) / sale of Investments(net) 117,584,035 (70,502,273)

Interest received on Fixed Deposit and Debentures 53,220,371 1,827,424

Dividend received 1,791,713 129,472

NET CASH FROM / (USED) IN INVESTMENT ACTIVITIES (B) 172,596,119 (68,545,377)

CASH FLOW FROM FINANCING ACTIVITIES

Dividend/ Dividend Tax paid (23,354,400) —

CASH FLOW FROM FINANCING ACTIVITIES (C) (23,354,400) —

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (A + B + C) 202,379,211 (15,178,465)

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 20,693,785 35,872,250

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 223,072,996 20,693,785

(202,379,211) 15,178,465

Note:

The above cash flow statement has been prepared under the indirect method setout in

(1) Accounting Standard (AS-3) issued by the Institute of Chartered Accountants of India.

(2) Cash and cash equivalent at the year end includes bank balances of `123,072,996 (Previous year ` 5,993,785) and fixed deposits of

`100,000,000 (Previous year `14,700,000).

This is the Cash Flow Statement referred to in our report of even date







Place: Mumbai



Cash Flow Statement

Reports


Schedules Forming Part of the Balance Sheet (`)

As at As at


Schedule 1 - Capital

Authorised

1,000,000 equity shares of ` 10 each 10,000,000 10,000,000

Issued, Subscribed and Paid Up

50,070 equity shares of ` 10 each, fully paid up 500,700 500,700

(all the above shares are held by Kotak Mahindra Bank Limited,

the Holding Company and its nominees)

500,700 500,700

Schedule 2 - Reserves and Surplus

General Reserve

As per last Balance Sheet 14,183,000 7,183,000

Transferred from Profit and Loss Account 7,000,000 7,000,000

21,183,000 14,183,000

Profit and Loss Account 270,787,397 245,892,879

291,970,397 260,075,879

Schedule 3 - Investments

Long Term Investments: (Non Trade)

(At Cost)

Unquoted, fully paid up

Nil (Previous year - 1,450,000) debentures of `100 each of

Kotak Mahindra Investments Limited — 143,685,999

(rate of interest 8.5% per annum)

Current Investments:

(At Cost or Market Value whichever is lower)

Unquoted, fully paid up

6,812,558.677 (Previous Year 4,952,144.786) units of `10 each of

Kotak Floater Long Term - Growth 98,735,263 70,603,741

98,735,263 214,289,740

Aggregate value of unquoted investments - At book value 98,735,263 214,289,740

Schedule 4 - Cash and Bank Balances

Balances with scheduled banks on – current account 123,072,996 5,993,785

– fixed deposit account 100,000,000 14,700,000

223,072,996 20,693,785

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Schedule 5 - Other Current Assets

Interest Accrued On

– Fixed Deposits 72,123 943,277

– Debentures — 41,077,335

72,123 42,020,612

Schedule 6 - Loans and Advances

(Unsecured, considered good)

Advances recoverable in cash or in kind or for value to be received 123,175 144,008

123,175 144,008

Schedule 7 - Current Liabilites and Provisions

Current Liabilities

Sundry creditors* (other than small scale industrial undertakings/

Companies registered under Micro, Small and Medium Enterprise Development Act, 2006 #) 397,959 411,193

Other Liabilites 929,508 893,532

1,327,467 1,304,725

There are no amounts due and outstanding to be credited to

Investor Education and Protection Fund

* Includes Rs 250,000 (Previous year `250,000) received from Kotak Mahindra Bank Limited

towards corpus of Kotak Mahindra Mutual Fund

# Determined to the extent such parties have been identified on the basis of information

available with the Company. This has been relied upon by the auditors

Provisions

Taxation (Net of advance tax and tax deducted at source `160,964,753

(Previous Year - `129,816,924 )) 1,419,761 240,148

Proposed dividend 30,042,000 20,028,000

Corporate dividend tax 4,873,564 3,326,400

36,335,325 23,594,548

Total 37,662,792 24,899,273

Schedules Forming Part of the Balance Sheet (Contd.) (`)

As at As at



Schedules

Reports


SCHEDULES FORMING PART OF THE BALANCE SHEET AND THE PROFIT AND LOSS ACCOUNT

Schedule 8 - Notes to the Financial Statements

1. Significant Accounting Policies

(a) The financial statements are prepared under the historical cost convention on the accrual basis of accounting and in accordance with

the standards on accounting issued by the Institute of Chartered Accountants of India and referred to in Section 211(3C) of the

Companies Act,1956.

(b) 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

investment in mutual funds, the net asset value of units is considered as market/fair value.

(c) Revenue is recognised when no significant uncertainty as to measurability or collectability exists.

(d) The Income Tax expense comprises of Current Tax and Deferred Tax.Current tax is measured at the amount expected to be paid in

respect of taxable income for the year in accordance with Income Tax Act, 1961. Deferred tax adjustment comprises of changes in the

deferred tax assets and liabilities.Deferred tax asset and liabilities are recognized for the future tax consequences of timing differences

being the difference between the taxable income and accounting income that originate in one period and are capable of reversal in one

or more subsequent periods.Deferred tax assets on account of timing differences are reognised only to the extent that there is

reasonable certainity that sufficient future taxable income will be available against which such deferred tax asset can be realised.

Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantially enacted before

the Balance Sheet date.

Changes in deferred tax assets / liabilities on account of changes in enacted tax rates are given effect to in the Profit and Loss

Account in the period of the change.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.

2. Contingent Liabilities:

Taxation matters in respect of which appeal is pending `178,673 (Previous Year: `263,683)

3. Components of deferred tax balances (`)


Deferred tax liability

Interest accrued and not due on debentures — (123,700)

Net deferred tax liability — (123,700)

4. The following Investments have been purchased and sold during the year:

Purchase Sale

Units of `10 each of Kotak Liquid Instituitional Scheme - Daily Dividend Option 5,087,925.027 5,087,925.027

Units of `10 each of Kotak Floater Long Term - Growth Option 3,824,358.571 1,963,944.680

Units of `10 each of Kotak Floater Long Term - Daily Dividend Option 505,774.322 505,774.322

Units of `10 each of Kotak Floater Short Term - Daily Dividend Option 23,222,726.636 23,222,726.636

5. Auditors' remuneration: (`)


Audit fees 100,000 100,000

Out of pocket expenses 2,510 3,430

102,510 103,430

6. Information with regard to matters specified in paragraph 4, 4A, 4C and 4D of Part II of Schedule VI to the Companies Act,1956 is either nil or

not applicable to the Company for the year ended 31st March 2011.

7. Segment information:

The Company acts as a Trustee for the schemes of Kotak Mahindra Mutual Fund. As the Company is engaged only in one business

segment and no geographical segments, the Balance Sheet as at 31st March 2011 and the Profit and Loss Account for the year ended

31st March 2011 pertain to one business segment.

Its grt 2b 25 13

Its grt 2b 25

8. Related Parties Disclosures:

(I) Relationships (During the year)

A. Related Parties where control exists:

Nature of relationship Related Party

Holding Company Kotak Mahindra Bank Limited (Holds 100% of the equity share capital)

Uday S. Kotak along with relatives and companies controlled by him holds45.56% of the equity share capital of Kotak Mahindra Bank Limited

B. Other Related Parties:

(i) Fellow Subsidiaries: Kotak Mahindra Asset Management Company Limited (KMAMC)

Kotak Mahindra Investments Limited (KMIL)

(ii) Mutual Fund managed by Fellow Subsidiary Kotak Mahindra Mutual Fund (KMMF), managed by KotakMahindra Asset Management Company Limited

(II) The following transactions were carried out with related parties in the ordinary course of business (`)

Nature of Transactions Holding Fellow Mutual Fund

Company Subsidiary Company Managed

by Fellow

Subsidiary (KMMF)

Finance Outstanding

Bank Balance 122,702,124 — —

(5,798,181) (—) (—)

Fixed deposit 100,000,000 — —

(14,700,000) (—) (—)

Investments

Purchase / Subscription of Units — — 358,655,471

(—) (—) (164,782,665)

Sale / Redemption of Units — — 331,239,507

(—) (—) (94,280,392)

Dividend received from investment in Units — — 1,791,713

(—) (—) (129,472)

Purchase / Subscription of Debentures from KMAMC (KMIL) — — —

(—) (—) (—)

Sale/Redemption of Debentures (KMIL) — 145,000,000 —

(—) (—) (—)

Investment in Fixed Deposit 100,000,000 — —

(14,700,000) (—) (—)

Fixed Deposit Matured 14,700,000 — —

(34,000,000) (—) (—)

Income

Trusteeship Fees — — 93,257,915

(—) (—) (99,895,235)

Interest on Fixed Deposit 128,731 — —

(1,838,649) (—) (—)

Interest on Debentures(KMIL) — 11,143,151 —

(—) (12,325,000) (—)

Other Receipts and Payments

Reimbursement of Expenses (KMAMC) — 8,516,871 —

(—) (8,160,143) (—)

Outstandings

Receivables — — 8,130,332

(—) (—) (8,451,407)

Payables 250,000 — —

(250,000) (—) (—)

Interest accrued on Debentures (KMIL) — — —

(—) (41,077,335) (—)

Interest accrued on Fixed Deposits 72,123 — —

(943,277) (—) (—)

Figures in brackets relate to the previous year.


Schedules

Reports


9. Earnings Per Share: (`)


Profit after tax (Rupees) (A) 66,810,082 69,497,589

Number of equity shares (B) 50,070 50,070

Earnings per Share - basic and diluted (Rupees) (A/B) 1,334 1,388

Nominal Value of Equity Share (Rupees) 10 10

10. Previous year's figures have been reclassified,wherever necessary,to confirm with current year's classification

This is the Profit and Loss Account referred to in our report of even date







Place: Mumbai


Its grt 2b 25 15

Its grt 2b 25

VI) BALANCE SHEET ABSTRACT AND COMPANY'S GENERAL BUSINESS PROFILE

I. Registration Details

Registration No. U65 990 MH1 995 PLC 090 279 State Code 1 1

Balance Sheet Date 3 1 3 2 0 1 1

II. Capital raised during the year: (Amount in `̀̀̀̀ Thousand)

Public Issue Rights Issue

Bonus Issue Private Placement

III. Position of mobilisation and deployment of funds: (Amount in `̀̀̀̀ Thousand)

Total Liabilities Total Assets

Source of Funds

Paid-up Capital Reserves and Surplus

Secured Loans Unsecured Loans

Deferred Tax Liability

Application of Funds

Net Fixed Assets Investments

Net Current Assets Miscellaneous Expenditure

IV. Performance of Company: (Amount in `̀̀̀̀ Thousand)

Turnover / Income Total Expenditure

+ / – Profit/(Loss) before Tax + / – Profit/(Loss) after Tax

Earnings per Share (in `) Dividend Rate (%)

V. Generic names of three principal products services of the Company (As per monetary terms):

Item Code No. (ITC Code)

Product Description

N A

T R U S T E E F O R M U T U A L F U N D S

N I L

N I L

N I L

N I L

3 7 6 6 3 3 3 0 1 3 4

5 0 1 2 9 1 9 7 0

N I L N I L

N I L 9 8 7 3 5

1 9 3 7 3 6 N I L

1 0 8 3 5 1 9 3 3 7

+ 9 9 0 1 4 + 6 6 8 1 0

1 3 3 4 6 0 0 0

N I L


Schedules

Reports

ANNUAL REPORT2010-11Its grt 2b 25

Ko

tak Mah

ind

ra Ban

kTW

ENTY

SIXTH

AN

NU

AL REPO

RT 2010-11

content and design consultants

Kotak Infiniti, Malad (E)

Documents

Trustee Company Ltd 2011ir.kotak.com/downloads/annual-reports-2010-11/pdf/KM-Trustee-Company-Ltd.pdfOne important change which could effect our industry is the parity in dividend distribution