kotak mahindra capital company Directors report

Directors

To the Members of

Kotak Mahindra Capital Company Limited

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

FINANCIAL RESULTS

Particulars	Year Ended 31st March, 2014	Year ended 31st March 2013
	Rupees in millions	Rupees in millions
Gross Income	848.8	832.6
Profit before Tax	176.0	235.3
Provision for Tax	33.8	68.2
Profit after Tax	142.2	167.1
Balance of Profit from previous years	3,226.8	4293.9
Less: Utilized for buyback of equity shares	-	1227.4
Less: Transferred to Capital Redemption Reserve	-	6.8
Amount available for appropriation	3,369.0	3226.8
Appropriations:	-	-
Surplus carried forward to the Balance Sheet	3,369.0	3226.8

DIVIDEND

The Directors do not recommend any dividend for the year.

BUSINESS OPERATIONS

A. EQUITIES

The Indian equity capital markets, both primary as well as secondary, remained fairly subdued in FY 2014. The year saw the successful completion of only one meaningful Initial Public Offering ("IPO") from the private sector and only two government divestments in the secondary market through Further Public Offerings ("FPOs"). A total of Rs. 268.09 billion was raised across IPO, FPOs, Qualified Institutional Placements ("QIPs"), Institutional Placement Programs ("IPPs") and Rights Issues, while Rs. 68.59 billion was raised from the secondary market through Offers for Sale ("OFS") (Source: Prime Database).

While the markets remained subdued, KMCC successfully completed 17 marquee transactions across various product formats. On the equity side, KMCC successfully completed two government disinvestments, three Rights Issues, three IPPs, five OFS and one block deal, raising a total of Rs. 152.37 billion. On the debt side, KMCC successfully completed three debt public offers raising a total of Rs. 75.78 billion (Source: PRIME Database).

KMCC dominated the FPO market, being a part of both the government disinvestments (Power Grid Corporation of India Limited and Engineers India Limited) that hit the Indian capital markets in FY 2014 in the FPO format. FPO by Power Grid was the largest equity fund raise in the public market since January 2011, and the first FPO after a gap of almost more than three years.

Some of the notable Equity deals handled by the Company during the year were :

• Power Grid Corporation of India FPO: Rs. 69.59 billion

• Engineers India FPO: Rs. 4.97 billion

• Tata Power Co. Rights: Rs. 19.93 billion

• Godrej Properties Rights: 7 billion

• Kokuyo Camlin Rights: Rs. 1.10 billion

• Mahindra Holidays and Resorts India IPP: Rs. 1.06 billion

• DLF IPP: Rs. 18.63 billion

• Puravankara Projects IPP: Rs. 1.92 billion

• Puravankara Projects OFS: Rs. 1.16 billion

• Hindustan Copper OFS: Rs. 2.60 billion

• Hindustan Media Ventures OFS: Rs. 0.23 billion

• Bajaj Corp OFS: Rs. 3.35 billion

• Oberoi Realty OFS: Rs. 1.94 billion

• Bharat Heavy Electricals block deal: Rs. 18.89 billion

KMCC was ranked the #1 Book Running Lead Manager for FPOs and Rights Issues in FY 2014. KMCC was ranked #4 across all Equity Offerings (IPO, FPO, QIP, OFS, IPP, Rights, Block Deals) in FY 2014 (Source: PRIME Database).

The Debt Deals (Public Issue of NCDs) that were concluded by the Company during the year include:

• NTPC: Rs. 17.50 billion

• Indian Railway Finance Corp. (Tranche I)_: Rs. 40.83 billion

• Indian Railway Finance Corp. (Tranche II): Rs. 17.45 billion

B. M&A, Financial sponsors, infrastructure AND RESTRUCTURING ADVISORY

During the year, KMCC advised on a wide array of twenty one transactions ranging from Acquisitions & India Entry, Divestments, Internal Restructurings, Private Equity investments, Open Offers and Valuation advice and sectors (Financial Services, Technology, Industrials, Auto, Healthcare, Telecom, Water Treatment, etc.) in a highly volatile and uncertain environment.

Some of Advisory deals that were announced/ concluded by the Company during the year include:

– Divestment of Vijai Electricals Ltd. to Toshiba Corporation (Japan) – US$ 200 mn

– Global alliance with Mahindra Group and CIE Automotive (Spain) in Auto components business (merger ongoing) – US$ 829 mn

– Buyback Offer for Great Eastern Shipping Company Limited – INR 2.79 billion

– Buyback Offer for HT Media Limited – INR 0.25 billion

– Acquisition of Branded Domestic Formulation Business of Elder Pharmaceutical by Torrent Pharmaceutical – INR 20.04 billion

– Acquisition of 100% stake in Prizm Payments Services by Hitachi Ltd. – INR 15.40 billion

– Private placement of 2.6% stake by Kotak Mahindra Bank Limited to GIC Singapore – INR 12.96 billion

– Open Offer for OnMobile Global Limited – INR 0.48 billion

– Advisor for the sale of controlling stake in Sterling Gujarat Hospitals Limited by Actis LLP to Addlife Investments Pvt. Ltd – Undisclosed

– Acquisition of 26% strategic stake in UEM India Private Limited by Toshiba Corporation, Japan – Undisclosed

– Advised Varroc Engineering Private Limited on raising private equity investment from Tata Capital Opportunities Fund – INR 3 billion

– Advisor to the committee of Independent Directors for the Open Offer for Glaxo Smithkline Pharmaceuticals Limited – INR 63.89 billion

– Exclusive Financial Advisor to Temasek for investment in Staragri Warehousing and Collateral Management Limited – INR 2.5 billion In the M&A league tables, KMCC was ranked #3 by volume of deals and #9 by value of deals in FY 2014 (Source: Bloomberg)

AWARDS AND RECOGNITIONS

During the year, KMCC received many prestigious industry awards:

Best M&A House in India, Euromoney Awards for Excellence 2013

Best Domestic Equity House by Asiamoney – 2013

Best Domestic Investment Bank in The Asset Country Awards – 2013

Securities Advisory Firm of the Year in India, Corporate Intl Global Awards 2014

HUMAN RESOURCES

Your Company recognizes that human capital is the key to success and growth in the financial sector. Towards this goal, retaining and where appropriate, hiring, good talent and providing career growth is the focus of Company.

DIRECTORS

Mr. Jaimin Bhatt and Mr. Dipak Gupta retire at the ensuing nineteenth Annual General Meeting and are eligible for re-appointment.

Pursuant to the provisions of section 161 of the Companies Act, 2013 and the Articles of Association of the Company, Mr. K. V. S. Manian was appointed as an additional director of the Company w.e.f. April 23, 2014 and he shall hold Office upto the date of the ensuing Annual General Meeting. The Company has received a notice in writing from a member proposing Mr. Manian for appointment as a director of the Company. Ms. Shanti Ekambaram resigned as a director of the Company w.e.f. April 23, 2014.

AUDIT COMMITTEE

The constitution of the Audit Committee of the Company is as set out below:

• Mr. Uday Kotak

• Mr. Dipak Gupta

• Mr. Jaimin Bhatt

AUDITOR

The statutory auditors Messrs. Deloitte Haskins & Sells LLP, Chartered Accountants retire at the ensuing Annual General Meeting and are eligible for reappointment.

STATUTORY INFORMATION

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

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

Your Company’s foreign exchange income was Rs. 30.04 crores while the outgo was Rs. 1.03 crore. The other particulars 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.

DIRECTOR’S RESPONSIBILITY STATEMENT

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

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

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 the Company as at 31st March 2014 and of Profit / loss of the Company for the financial year ended 31st March 2014;

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

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 support received from Securities and Exchange Board of India and Reserve Bank of India and other Government and Regulatory agencies. Your Directors acknowledge and wish to place their appreciation of employees for their commendable efforts, teamwork and professionalism.

	For and on behalf of the Board of Directors
	SD/-
	Uday Kotak
	Chairman
Mumbai
April 23, 2014