Its grt 2b 25

ANNUAL REPORT 2010-11

KOTAK MAHINDRA PENSION FUND LIMITED

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Financial Statements

Reports Directors Report

BOARD OF DIRECTORS : MR. JAIMIN BHATT, MR. RAGHUNATH T. V, MR. GAURANG SHAH, MR. TUSHAR MAVANI, MR. BALAN WASUDEO, MR. SHIVAJI DAM

Directors Report
To the Members of KOTAK MAHINDRA PENSION FUND LIMITED The Directors present their Second Annual Report together with the audited accounts of your Company for the year ended 31st March 2011. FINANCIAL RESULTS (`) 2010-2011 Gross income Profit / (Loss) before Depreciation and Tax Depreciation Profit / (Loss) before Tax Provision after Tax Balance of Profit/(Loss) from previous years Loss carried forward to the Balance Sheet DIVIDEND Your Directors do not recommend any dividend on equity shares for this financial year. OPERATIONS Your company was appointed as a Pension Fund Manager (PFM) by the Pension Fund Regulatory and Development Authority (PFRDA), on 30th April 2009 for a period of three years ending 30th April 2012 for managing the funds under New Pension System (NPS), as per the terms of the Investment Management Agreement dated 30th April 2009. As per the terms of the appointment your Company manages the funds received in the Trustee Bank (Bank of India) and as per the pension fund subscription information provided by the Central record keeping agency (National Securities Depository Limited). The assets are under the custody of the NPS Trustee appointed custodian viz., Stock Holding Corporation of India Limited. Your Company manages seven schemes, and the combined assets under management on 31st March 2011 were ` 330.09 Lakhs. PFRDA has, during the year, introduced new scheme NPS LITE to promote small savings specifically targeting the weaker and economically disadvantaged sections of the society. The scheme wise assets under management as on 31st March 2011 is given below: Scheme NPS Trust A/c Kotak Pension Fund Scheme E NPS Trust A/c Kotak Pension Fund Scheme C NPS Trust A/c Kotak Pension Fund Scheme G NPS Trust A/c Kotak Pension Fund Scheme E Tier II NPS Trust A/c Kotak Pension Fund Scheme C Tier II NPS Trust A/c Kotak Pension Fund Scheme G Tier II NPS Trust A/c Kotak Mahindra Pension Fund Limited NPS Lite Scheme Govt Pattern Aum as on 31st March 2011 (`.in Lakhs) 117.14 82.87 91.16 17.34 11.30 10.28 330.09 The pension fund management business is currently at a nascent stage and considering the low rates of management fees, the revenue generated for the year ended 31st March 2011 is ` 164 (Previous year - `16). Your company has made a net loss of ` 5,724,680 for the financial year. DIRECTORS During the year, Mr. Narayan S. A., resigned as a Director of the Company. The Directors placed on record their sincere appreciation of the valuable service rendered by Mr. Narayan, during his tenure as a Director. Mr. Gaurang Shah, had been appointed as Additional Director on the Board of the Company w.e.f. 1st May 2010. He was elected as a Director at the Annual General Meeting held on 10th June 2010. We report with profound grief and sorrow, the demise of our Director Mr. Anirudha Barwe. The inputs and guidance provided by Mr. Anirudha Barwe were invaluable. Mr. Balan Wasudeo, was appointed as a Director on the Board of the Company on 31st March 2011 in the casual vacancy caused by the demise of Mr. Anirudha Barwe. 390,274 (5,724,680) (5,724,680) (6,217,970) (11,942,650) 2009- 2010 376,843 (6,217,970) (6,217,970) (6,217,970)

Its grt 2b 25

In accordance with the Articles of Association, Mr. Tushar Mavani and Mr. Shivaji Dam retire by rotation from the Board at the forthcoming Annual general Meeting and being eligible have offered their candidature for re-appointment. The Board met four times during the year. AUDIT COMMITTEE In view of the sad demise of Mr. Anirudha Barwe, the Audit Committee was re-constituted at the Board Meeting held on 31st March 2011 and presently consists of Mr. Tushar Mavani, Mr. Jaimin Bhatt and Mr. Balan Wasudeo. The Committee met four times during the year to review the operations and internal controls. APPOINTMENT COMMITTEE As per the directives of Reserve Bank of India (RBI), your company has constituted an Appointment Committee consisting of Mr. Jaimin Bhatt and Mr. Gaurang Shah. The scope of the Committee is to ensure that fit & proper persons are appointed as Directors and Senior Management Personnel of the organization. RISK COMMITTEE Pursuant to the Investment Management Agreement with PFRDA, your company has constituted a Risk Committee consisting of Mr. Tushar Mavani, Mr. Gaurang Shah and Mr. V.R. Narasimhan. The scope of the Risk Committee is to analyse and review the risk associated with managing the Pension Fund business and risk mitigants put in place.. The Risk Committee met twice during the year. INVESTMENT MANAGEMENT COMMITTEE Pursuant to the Investment Management Agreement with PFRDA, your company has constituted an Investment Management Committee. In view of the sad demise of Mr. Anirudha Barwe, the Investment Management Committee was reconstituted at the Board Meeting held on 31st March 2011 and presently consists of Mr. Jaimin Bhatt, Mr. Gaurang Shah, Mr. Shivaji Dam, Mr. Balan Wasudeo and Mr. V.R. Narasimhan. The scope of the Investment Management Committee is the ensure that all investments are carried out as per the provisions of PFRDA Guidelines/ directions. The Investment Management Committee met twice during the year. AUDITORS The Auditors of your Company M/s. Deloitte Haskins & Sells, Chartered Accountants, Mumbai, retire at the conclusion of the forthcoming 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 falling within the scope of sub-section (2A) of Section 217 of the Companies Act, 1956, 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 Mr. Krishnan Ramchandran resigned as the Chief Executive Officer of the Company effective 1st October 2010 and Mr. V. R. Narasimhan has been appointed in his place. Ms. Darshana Baliya has been appointed as the Company Secretary of the Company. DIRECTORS RESPONSIBILITY STATEMENT Based on representations from the Management, the Directors state, in pursuance of Section 217 (2AA) of the Companies Act, 1956, 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. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company as at 31st March 2011 and of Profit and Loss of your Company for the financial year ended 31st March 2011; iii. The Directors have taken proper and sufficient care to the best of their knowledge and ability, for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities; and iv. The Directors have prepared the annual accounts on a going concern basis. ACKNOWLEDGEMENTS Your Directors would like to place on record their gratitude for the valuable guidance and support received from the Pension Fund Regulatory and Development Authority and other Government and Regulatory agencies.

For and on behalf of the Board of Directors Jaimin Bhatt Chairman Place: Mumbai Dated: 21st April 2011

Kotak Mahindra Pension Fund Limited Annual Report 2010-11

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Financial Statements Auditors Report

Reports

Auditors Report
To the members of KOTAK MAHINDRA PENSION FUND LIMITED 1. We have audited the attached Balance Sheet of KOTAK MAHINDRA PENSION FUND LIMITED ("the Company") as at 31st March 2011, 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 31st March 2011; (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 2011 taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March 2011 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) Place: Mumbai Dated: 21st April 2011. NMS /VP

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Annexure to the Auditors' Report

(Referred to in paragraph 3 of our report of even date) 1. (i) (ii) Having regard to the nature of the Company's business / activities / transactions, etc., clauses (i), (ii), (viii), (x), (xi), (xii), (xiii), (xiv), (xv), (xvi), (xviii), (xix) and (xx) of CARO are not applicable. The Company has neither granted nor taken any loan, secured or unsecured, to/from companies, firms or other parties listed 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 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 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. (v) According to the information and explanations given to us, the Company has not accepted any deposit from the public within the meaning of Sections 58A and 58AA of the Companies Act, 1956.

(vi) In our opinion, the Company has an adequate internal audit system commensurate with the size and the nature of its business. (vii) According to the information and explanations given to us in respect of statutory dues: (a) (b) (c) The Company has been regular in depositing undisputed dues, including Provident Fund, Income-tax, Cess and other material statutory dues applicable to it with the appropriate authorities. There were no undisputed amounts payable in respect of Income Tax, Cess and other material statutory dues in arrears as at 31st March 2011 for a period of more than six months from the date they became payable. There were no disputed tax demands which remained to be deposited with the appropriate authorities.

(viii) In our opinion and according to the information and explanations given to us and on an overall examination of the Balance Sheet, we report that funds raised on short-term basis have not been used during the year for long- term investment. (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, 21st April 2011 NMS /VP

Kotak Mahindra Pension Fund Limited Annual Report 2010-11

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Financial Statements Balance Sheet and P&L A/c

Reports

Balance Sheet as at 31st March 2011

Schedule Sources of Funds Shareholders Funds Share Capital Total 1 120,000,000 120,000,000 As at 31st March 2011 As at 31st March 2010

( `)

120,000,000 120,000,000

Application of Funds Investments 2 105,010,742 105,010,742

Current Assets, Loans and Advances Cash & Bank balance Sundry Debtors Loans and Advances 3 4 5 6,221,088 264 203,622 6,424,974 Less: Current Liabilities and Provisions Current Liabilities Provisions 6 2,759,941 618,424 3,378,365 Net Current Assets Deficit as per Profit and Loss Account Total 3,046,608 11,942,650 120,000,000 957,694 205,060 1,162,754 8,771,288 6,217,970 120,000,000 9,785,334 16 148,692 9,934,042

Notes to Accounts

The Schedules referred to above & notes to accounts form an integral part of the Balance Sheet

In terms of our report attached For DELOITTE HASKINS & SELLS Chartered Accountants Nalin M. Shah Partner Mumbai, 21st April 2011 For and on behalf of the Board of Directors

A. Vinod Manager

Jaimin Bhatt Director

Tushar Mavani Director

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Profit and Loss Account for the year ended 31st March 2011
Schedule Income Investment Management fees Dividend on current investments Interest on Fixed Deposits - Gross ( Tax deducted at source ` 173, Previous Year - 10,617) Total 164 388,384 1,726 390,274 For the Year Ended 31st March 2011 For the Year Ended 31st March 2010

( `)

16 325,286 51,541 376,843

Expenditure Payments to and provisions for Employees Salaries, Allowances and Incentives Contribution to Provident Fund Provision for Gratuity (Refer Schedule 7 Note II A) Provision for Compensated Absences 3,593,751 148,642 14,211 139,538 1,726,302 83,317 26,572 64,214

Operating and Other Expenses Membership & Subscription I T Expenses Directors sitting fees Rates and taxes Printing and Stationery Travel Expenses Legal and Professional Fees Auditors Remuneration: Audit Fees Company Law Matters Service Tax Filing Fees Reimbursement of common administrative costs Miscellaneous Expenditure Total 150,000 15,450 165,450 12,329 509,359 55,143 6,114,954 150,000 15,000 16,995 181,995 1,176,780 424,655 10,627 6,594,813 333,863 551,526 210,000 118,544 17 61,937 200,644 1,259,205 1,103,000 180,000 10,200 96,372 71,094 180,480

Kotak Mahindra Pension Fund Limited Annual Report 2010-11

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Financial Statements Balance Sheet and P&L A/c

Reports

Profit and Loss Account for the year ended 31st March 2011 (Contd.)
Schedule For the Year Ended 31st March 2011

( `) For the Year Ended 31st March 2010

Net Loss Before Tax Net Loss After Tax PROFIT / (LOSS) Previous Year C/F loss Net Loss carried forward to the Balance Sheet Earnings per share - Basic and Diluted (Equity Shares, par value of ` 10/- each fully paid up) (Refer Schedule 7 - Note II B) Notes to Accounts 7

(5,724,680) (5,724,680) (5,724,680) (6,217,970) (11,942,650) (0.48)

(6,217,970) (6,217,970) (6,217,970)

(6,217,970) (0.70)

The Schedules referred to above & notes to accounts form an integral part of the Profit and Loss Account

In terms of our report attached For DELOITTE HASKINS & SELLS Chartered Accountants Nalin M. Shah Partner Mumbai, 21st April 2011 For and on behalf of the Board of Directors

A. Vinod Manager

Jaimin Bhatt Director

Tushar Mavani Director

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Cash Flow Statement for the year ended 31st March 2011
Year Ended 31st March 2011 CASH FLOW FROM OPERATING ACTIVITIES Loss Before Tax Adjustments for: Dividend income Provision for Employee Benefits Interest on Fixed Deposits OPERATING LOSS BEFORE WORKING CAPITAL CHANGES Increase in Sundry debtors Increase in Loans and Advances Increase in Current Liabilities and Provisions (248) (54,757) 2,061,862 2,006,858 CASH USED IN OPERATIONS Direct Taxes Paid NET CASH USED IN OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Purchase of Investments (net) Interest received on Fixed Deposits Dividend received NET CASH USED IN INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of Share Capital CASH FLOWS FROM FINANCING ACTIVITIES (C) (B) 1,726 388,384 390,110 (A) (3,954,183) (173) (3,954,356) (388,384) 153,749 (1,726) (5,961,041) (16) (138,075) 1,071,968 (5,724,680)

(` ) Period Ended 31st March 2010

(6,217,970)

(325,286) 90,786 (51,541) (6,504,011)

933,877 (5,570,134) (10,617) (5,580,751)

(105,010,742) 51,541 325,286 (104,633,915)

120,000,000 120,000,000

NET INCREASE IN CASH AND CASH EQUIVALENTS (A + B + C)

(3,564,246)

9,785,334

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR

9,785,334 6,221,088 (3,564,246)

9,785,334

In terms of our report attached For DELOITTE HASKINS & SELLS Chartered Accountants Nalin M. Shah Partner Mumbai, 21st April 2011 For and on behalf of the Board of Directors

A. Vinod Manager

Jaimin Bhatt Director

Tushar Mavani Director

Kotak Mahindra Pension Fund Limited Annual Report 2010-11

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Financial Statements Schedules

Reports

Schedules forming part of Balance Sheet

As at 31st March 2011 Schedule 1 - Share Capital Authorised 15,000,000 equity shares of ` 10 each Issued, Subscribed and Paid up 12,000,000 equity shares of Rs 10 each, fully paid up (Of the above 10,799,940 shares are held by Kotak Mahindra Asset Management Company Ltd. The ulimate holding company is Kotak Mahindra Bank Ltd.) Total 120,000,000 150,000,000

( `) As at 31st March 2010

150,000,000

120,000,000

120,000,000

120,000,000

Schedule 2 - Investments Current Investments (At Cost or Market Value whichever is lower) Non Trade, Unquoted Kotak Floater Long Term Scheme - Growth Option & Daily Dividend Total Notes: i) Following investments were purchased and sold during the year: 982,452.08 units (Previous Year - 1,221,705.18 units) of Kotak Floater Long Term Scheme Daily Dividend Option 782937.23 units (Previous Year - Nil units) of Kotak Floater Short Term Scheme - Daily Dividend Option Nil units (Previous Year - 981,434.28 units) of Kotak Liquid Institutional Scheme - Daily Dividend Option 32,714.37 units (Previous Year - 8,587,658.10 units) of Kotak Liquid Institutional Premium Scheme Daily Dividend Option ii) iii) Aggregate amount of mutual fund investments at Net Asset Value Aggregate amount of unquoted investments at cost 105,010,742 105,010,742 105,010,742 105,010,742

9,902,920 7,920,349

12,314,544 12,001,077

400,034 115,954,475 105,010,742

105,010,742 108,711,227 105,010,742

Schedule 3 - Cash & Bank Balance

Balance with Scheduled Bank in Current Accounts Balance with Scheduled Bank in Fixed Deposits

221,088 6,000,000 6,221,088

9,785,334 9,785,334

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Schedules forming part of Balance Sheet as at 31st March 2011 (Contd.)

As at 31st March 2011 Schedule 4 - Sundry Debtors (Unsecured, considered good) Debts outstanding for a period Less than six months Total 264 264

( `) As at 31st March 2010

16 16

Schedule 5 - Loans and Advances (Unsecured, considered good) Advances recoverable in cash or in kind or for value to be received Tax Deducted At Source Total 192,832 10,790 203,622 138,075 10,617 148,692

Schedule 6 - Current Liabilites and Provisions A. Current Liabilities Sundry Creditors (Other Than Micro,Small and Meduim Enterprises) Amount Payable to Kotak Mahindra Asset Management Company Ltd. Amount Payable to Kotak Mahindra Bank Ltd. Other Liabilities 2,061,986 458,461 239,494 2,759,941 B. Provisions Gratuity Compensated Absenses 343,132 275,292 618,424 69,306 135,754 205,060 620,176 272,992 64,526 957,694

10

Kotak Mahindra Pension Fund Limited Annual Report 2010-11

Its grt 2b 25

Financial Statements Schedules

Reports

Schedules forming part of the Balance Sheet and Profit and Loss Account
Schedule 7 - Significant Accounting Policies and Notes to the Accounts
I. SIGNIFICANT ACCOUNTING POLICIES A. BASIS OF ACCOUNTING The Financial Statements have been prepared on historical cost basis of accounting. The Company adopts the accrual system of accounting and the financial statements conform with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006, the generally accepted accounting principles prevailing in India and the relevant provisions of the Companies Act, 1956. 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, the reported income and expenses during the reporting period. The Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Actual results could differ from these estimates and assumptions. B. REVENUE RECOGNITION Investment Management Fee is recognised at specific rates agreed with the relevant schemes, applied on the average monthly net assets managed. Dividend income is accounted when the right to receive dividend is established. Revenue is recognised only when it is reasonably certain that the ultimate collection will be made. C. INVESTMENTS Investments are classified into long term investments and current investments. Investments which are intended to be held for more than one year are classified as long term investments and investments which are intended to be held for less than one year are classified as current investments. Long term investments are accounted at cost and any decline in value, other than temporary, is provided for. Current investments are valued at cost (calculated by applying weighted average cost method) or market value whichever is lower. Brokerage, stamping and additional charges paid are included in the cost of investments. In case of investments in units of mutual funds, the net asset value of units is considered as the market value. D. EMPLOYEE BENEFITS Defined contribution scheme a. The contributions as required by the statute to Government Provident Fund are charged to the Profit and Loss account when due. Defined Benefit Plan b. The Company accounts for the liability for future gratuity benefits based on an independent actuarial valuation. The gratuity obligation is wholly unfunded. The net present value of the Company's obligation towards the same is actuarially determined based on the projected unit credit method as at the Balance Sheet date. Actuarial gains/losses are immediately recognised in the Profit and Loss Account and are not deferred. Other Long -term Employee Benefits d. The Company accrues the liability for compensated absences based on an actuarial valuation as at the Balance Sheet date conducted by an independent actuary. The net present value of the Company's obligation is determined based on the projected unit credit method as at the Balance Sheet date. Other Employee Benefits e. The undiscounted amount of employee benefits expected to be paid in exchange for the services rendered by employees is recognised during the period when the employee renders the service. These benefits include performance incentives. TAXES ON INCOME The Income Tax expense comprises Current tax, Deferred tax. Current tax is measured at the amount expected to be paid in respect of taxable income for the year in accordance with the Income Tax Act, 1961. Deferred tax adjustments comprise of changes in the deferred tax assets and liabilities. Deferred tax assets and liabilities are recognised for the future tax consequences

c.

E.

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11

of timing differences being the difference between the taxable income and the 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 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 certainity supported by convincing evidence that the same can be realised against future taxable profits. Deferred tax assets and liabilities are measured using tax rates and tax laws that have been 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. II. NOTES TO THE ACCOUNTS A. Employee Benefits Reconciliation of opening and closing balance of the present value of the defined benefit obligation for gratuity benefits is given below. (`) As at 31st March 2011 Change in Unfunded benefit obligations Present value of unfunded benefit obligations, at the beginning of the year Current Service cost Interest cost Actuarial (gain)/loss on obligations Past Service Cost Liabilities assumed Benefits paid Present value of unfunded benefit obligations as at year end Cost recognised for the year/period Current service cost Amount transferred from Holding Company Interest cost Expected return on plan assets Actuarial (gain)/loss Past Service Cost Net gratuity cost Actuarial assumptions used Particulars Discount rate Salary escalation rate Year Ended 31st March 2011 8.26% p.a. 15% p.a. for first the year, 10% p.a. for next 2 years & 6% p.a. thereafter Period Ended 31st March 2010 8.01% p.a. 15% p.a. for first 2 years, 10% p.a. for next 2 years & 6% p.a. thereafter 69,306 34,653 8,076 (95,248) 66,730 2,59,615 3,43,132 Year Ended 31st March 2011 34,653 8,076 (95,248) 66,730 14,211 69,306 69,306 Period Ended 31st March 2010 69,306 (42,734) 26,572 As at 31st March 2010

The estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market. B. Earnings Per Share (EPS) The numerators and denominators used to calculate Basic and Diluted Earnings Per Share: Year ended 31st March 2011 (a) (b) (c) (d) Nominal Value of an Equity Share (`) Net loss available to Equity Shareholders (`) Weighted average number of shares outstanding Basic and Diluted Loss Per Shares (`) = (b) / (c) 10 5,724,680 12,000,000 0.48 Period ended 31st March 2010 10 6,217,970 8,906,986 0.70

12

Kotak Mahindra Pension Fund Limited Annual Report 2010-11

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Financial Statements Schedules

Reports

C.

Segmental Reporting The Companys operations predominantly relate to providing investment management services to the Pension Fund Schemes of the New Pension System Trust and hence there are no separate reportable business / geographic segments.

D.

Related Party Disclosures Parties where control exist: Holding Company Ultimate Holding Company Other related parties: Fellow Subsidiaries with whom there are transactions. Key Management Personnel Kotak Mahindra Investments Limited Narasimhan V.R. Vinod A.N (`) Year Ended 31st March 2011 Period Ended 31st March 2010 Kotak Mahindra Asset Management Company Limited Kotak Mahindra Bank Limited

Statement of Material Related Party Transactions. Particulars Kotak Mahindra Asset Management Company Ltd (Holding Company) 1. Payables 2. Subscription towards Equity Shares 3. Expenses Reimbursed 4. Reimbursement of common administrative cost Kotak Mahindra Bank Limited (Ultimate Holding Company) 1. Payables 2. Balance in Current Account 3. Subscription towards Equity Shares 4. Fixed Deposits placed 5. Fixed Deposits Matured 6. Interest income on Fixed Deposit 7. Reimbursement of common administrative cost. Kotak Mahindra Investments Limited (Fellow Subsidiary) 1. Reimbursement of common administrative cost Key Management Personnel Particulars Salaries, Bonus & Incentives Contribution to provident fund 2010-11 2,614,100/98,500/-

Nil Nil 39,086/284,686/458,461/180,679/Nil 6,000,000/Nil 1,726/588,960 66,180/-

272,992/108,000,000/2,226,980/303,325/Nil 9,776,437/12,000,000/119,500,000/119,500,000/51,541/Nil 121,330/-

2009-10 Nil Nil

Note - As the future liability for gratuity and leave encashment is provided on an actuarial basis for the Company as a whole, the amount pertaining to the key management personnel is not ascertainable and, therefore, not included above. E. F. There are no amounts / interest payable to any vendors covered under the Micro, Small and Medium Enterprises Development Act, 2006. Previous period figures have been regrouped and reclassified wherever necessary to confirm with current years classification.Previous period was the period from 23rd March 2009 (Date of Incorporation) to 31st March 2010.

For and on behalf of the Board of Directors A. Vinod Manager Jaimin Bhatt Director Tushar Mavani Director

Mumbai, 21st April 2011.

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13

L. I.

Balance Sheet Abstract and Company's General Business Profile as per Part IV, Schedule VI of the Companies Act, 1956 Registration Details Registration No. U 6 7 2 0 0 M H 3 1 2 0 3 0 9 P L C 1 9 1 1 4 4 State Code 1 1

Balance Sheet Date II.

2 0 1 1

Capital raised during the year: (Amount in ` Thousand) Public Issue N Bonus Issue N I L I L

Rights Issue N Private Placement N I L I L

III.

Position of mobilisation and deployment of funds: (Amount in ` Thousand) Total Liabilities 1 2 0 0 0 0 Source of Funds Paid-up Capital 1 2 0 0 0 0 Secured Loans N Application of Funds Net Fixed Assets N Deferred Tax Asset N I L I L Investments 1 0 5 0 1 1 Net Current Assets 3 0 4 6 Accumulated Losses L 1 1 9 4 3 I L Reserves and Surplus N I Unsecured Loans N I L L Total Assets 1 2 0 0 0 0

Miscellaneous Expenditure N IV. I

Performance of Company: (Amount in ` Thousand) Turnover / Income 3 9 0 + / Profit/(Loss) before Tax 5 7 2 5 Total Expenditure 6 1 1 5

+ / Profit/(Loss) after Tax 5 7 2 5 Dividend Rate (%) 0 0

(Please tick appropriate box + for profit, for loss) + / Earnings per Share (in `) V. 0 . 4 8

Generic names of three principal products, services of the Company (As per monetary terms): Item Code No. (ITC Code) Product Description N A P E N S I O N F U N D C O M P A N Y

For and on behalf of the Board of Directors A. Vinod Manager Jaimin Bhatt Director Tushar Mavani Director

Mumbai, 21st April 2011

14

Kotak Mahindra Pension Fund Limited Annual Report 2010-11

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Kotak Infiniti, Malad (E)