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Kotak old Mutual Secy - Kotak Mahindra

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									                                                                                                        154 | Kotak Mahindra Old Mutual Life Insurance Limited
                                                                                                              (Formerly known as OM Kotak Mahindra Life Insurance Company Limited)




BOARD OF DIRECTORS: UDAY KOTAK (C), HASAN ASKARI (VC), GAURANG SHAH (MD), SHIVAJI DAM, DIPAK GUPTA, JAMES HARRY SUTCLIFFE,
VINEET NAYYAR, PALLAVI SHROFF, S. S. THAKUR, M. G. DIWAN.


DIRECTORS’ REPORT

Your Directors take pleasure in presenting their Fifth Report on the business and operations of your Company together with the Audited Financial Statements for
the year ended March 31, 2005.
1|   FINANCIAL RESULTS
     Your Company performed exceptionally well this year. The premium income for the year grew to Rs. 466.16 crores (2004 – Rs. 150.72 crores). Of this, the first
     year premium inclusive of single premium was Rs. 373.99 crores (2004 – Rs. 125.51 crores).
     The premium growth rate of 209% compares favourably to the overall industry growth rate of 36% and the private sector life insurance growth rate of 129%.
     The Policyholders’ Account shows a net deficit of Rs. 27.11 crores for the year ended March 31, 2005 (2004 – Surplus Rs. 43.30 crores). The Shareholders’
     Account shows a deficit of Rs. 18.69 crores (2004 – Rs. 92.42 crores).
     Your Directors have declared an addition to the Policyholders’ Accumulation Account for the year ended March 31, 2005 to give a return of 6.75%
     (2004 – 6.5%) to participating policyholders. The amount set aside for this purpose is Rs. 2.44 crores (2004 – Rs. 0.74 crores).
2|   DIVIDEND
     Since your Company is in the initial stages of its business and there is an overall deficit for the year under review, the Directors do not recommend any dividend
     for the year.
3|   CAPITAL
     During the year under review, the Paid-up Share Capital of your Company has increased from Rs. 151.26 crores to Rs. 211.76 crores. This reiterates the
     shareholders’ commitment towards investment in facilitating sustainable growth of your Company.
4|   LICENSE
     The Insurance Regulatory and Development Authority has renewed your Company’s license to carry on the business of life insurance and annuity for the year
     2005-06.
5|   BUSINESS AND DISTRIBUTION CHANNELS
     During the year, your Company has written 63,468 policies (2004 – 51,071 policies) of adjusted first year annualised premium (single premium weighted at
     1/10th) of Rs. 207 crores (2004 – Rs. 104 crores), representing a sum assured of Rs. 5,132 crores (2004 – Rs. 3,584 crores). Riders are not included in the sum
     assured.
     (a) TIED AGENCY
         Your Company believes in a well recruited, well trained, and well-monitored life advisor force that is able to give appropriate advice and solutions to
         consumers on their insurance needs throughout their life cycle.
           As at March 31, 2005, your Company had around 6,500 active life advisors who are continuously being trained to facilitate them to advise customers in
           a proper manner.
           Your Company believes that its investment in offering continuous and consistent training will help to improve the performance of its life advisors. Towards
           this end, your Company has 37 IRDA accredited centres to conduct its training programmes.
           The philosophy of your Company to focus on ‘Quality’ life advisors has started yielding results. Among other areas, your Company is proud to mention
           that 2 life advisors qualified for “Top of the Table” Honours – the highest honour in life insurance agency, 6 life advisors qualified for “Court of the Table”
           Honours and 65 life advisors qualified for the prestigious “Million Dollar Round Table.”
     (b) ALTERNATE CHANNELS
         Your Company has concentrated on building up the Alternate Channels of distribution through Corporate Agents, Brokers and Referral Arrangements. It
         is expected that the alternate distribution channels will generate a larger and substantially cost effective business. As at March 31, 2005, your Company
         had 221 corporate agents and 89 empanelled brokers. Further, your Company continued and maintained important relationships with Kotak Mahindra
         Bank and Kotak Securities to distribute its products.
     (c)   GROUP INSURANCE
           Insurance to groups in the form of term insurance and employee benefit schemes is sold through your Company’s own employee force. As at the end of
           the year under review, 70 policies were on the books. Your Company generated a premium income of Rs. 15.1 crores from its group insurance business.
6|   BRANCH NETWORK
     During the year under review 4 new branches were opened. Your Company now operates from 43 branches in 31 cities with a primary focus on the middle
     class and affluent population.
     The new branch opened at Kochi is based on the distribution model of Old Mutual Personal Financial Advice (OMPFA) that has been used to great success in
     South Africa. This model is based on appointing full time Life advisers who can be managed actively every day. The model was suitably modified to fit to the
     Indian life insurance environment.
7|   BRAND
     Your Company continues to have a high brand recall among consumers. AC Nielson – ORG MARG’s March 2005 survey in Mumbai and Delhi placed your
     Company at the 4th position among the life insurance companies in terms of brand awareness.
                                                                                                     155 | Kotak Mahindra Old Mutual Life Insurance Limited
                                                                                                            (Formerly known as OM Kotak Mahindra Life Insurance Company Limited)




 8 | PRODUCTS
   During the year, your Company introduced Kotak Flexi Plan, Kotak Easy Growth Plan with 5 times and 1.02 times cover, Kotak Premium Return Plan and Kotak
   Retirement Income Plan (Unit Linked) with cover/without cover/single premium. The Kotak Safe Investment Plan was also introduced in its modified form, and
   met with considerable success in the market.

 9 | RURAL AND SOCIAL SECTOR
   As per the Insurance Regulatory and Development Authority (Obligations of Insurers to Rural and Social Sectors) Regulations, 2002, your Company’s obligation
   to the rural sector was 14% of the total policies written in the financial year 2004-05. The obligation to the social sector was 15,000 lives for the financial year
   under review.
   During the year, 9,978 policies (Previous year – 7,129) were written in the rural sector representing 15.72% (Previous year – 14.10%) of the total policies and
   26,326 lives (Previous year – 12,533 lives) were covered in the social sector.

10 | INDUSTRY SCENARIO
   Private sector insurance companies continued to garner a higher market share at 22% in the current year in comparison with 13% in the previous year.
   Introduction of new products and focus on service delivery were primary drivers to this result. Consumer confidence in the private sector has substantially
   improved over the years, and going by the current trends, it is expected that the private sector will improve upon the perceived value to the consumer.

11 | HUMAN RESOURCES
   Your Company believes that employees offer the cutting edge to a progressive organisation. The endeavour is to create the right environment that would
   nurture and encourage novel ideas and superior performance. Training and development programmes are organised to enhance employee skill sets.

12 | INFORMATION TECHNOLOGY
   Your Company now has a strong core insurance system and continuously invests on business process automation covering all key businesses. During the year
   under review your Company successfully commissioned the Life Asia policy administration system, which has been very well accepted by the end users.
   Effective January 2005, new business transactions were processed in the new system. The migration of old policies to the new system is as per schedule and
   management is confident of meeting the deadlines set forth.

13 | COMPLIANCE AND INTERNAL CONTROL
   The Compliance function counsels other functions within the Company on the dynamic regulatory framework associated with a new and growing industry.
   Your Company’s accent on total compliance is instilled through independent audits across locations.
   Internal Auditors periodically report to the Audit Committee their findings on the adherence to processes and general compliance.
   Your Directors have also adopted the Whistle Blower Policy to enable any of its employees to raise concerns internally and to disclose information, which the
   individual believes shows malpractice, serious irregularities, fraud, unethical business conduct, abuse or wrong doing or violation of any law.

14 | INVESTMENTS
   Your Company manages its investments within the overall framework laid out by the Investment Committee. During the year, your Company has performed
   well especially in the unit-linked funds. Your Directors believe that it will continue to differentiate itself from competition through superior investment
   performance.

15 | CORPORATE GOVERNANCE
   Your Company has consciously endeavoured to follow the policy of transparency, accountability and always held the interest of all its stakeholders to be of
   paramount importance. Your Company is committed toward corporate governance and complies with most provisions of the Listing Agreement of the Stock
   Exchanges with regards to corporate governance, although the same are not applicable.

16 | BOARD OF DIRECTORS AND COMMITTEES
   Your Company has ten Directors on its Board, eight of whom are non-executive directors and four are independent directors. The Chairman of the Board
   holds a non-executive position.
   Mr. James Harry Sutcliffe and Mr. Dipak Gupta are liable to retire by rotation at the ensuing Annual General Meeting of the Company and are eligible for
   re-appointment.
   During the year under review, Mr. Shivaji Dam and Mr. Gaurang Shah were appointed as Additional Directors of the Company. They hold office as Directors only
   up to the date of the ensuing Annual General Meeting, but are eligible to be appointed as Directors. The Company has received the required notice, pursuant
   to the provisions of Section 257 of the Companies Act, 1956 from a member signifying an intention to propose the appointment of Mr. Shivaji Dam and
   Mr. Gaurang Shah as Directors of the Company.
   Mr. Gaurang Shah was also appointed as the Managing Director of the Company for a period of three years with effect from November 1, 2004. The Insurance
   Regulatory and Development Authority has approved the appointment under Section 34A of the Insurance Act, 1938.
   Mr. James Thompson, Alternate Director to Mr. James Harry Sutcliffe tendered his resignation with effect from March 18, 2005, which has since been accepted.
   Mr. Andre Classens was appointed as an Alternate Director to Mr. James Harry Sutcliffe on March 22, 2005. Subsequently Mr. Classens has also tendered his
   resignation with effect from April 28, 2005, which has since been accepted.
   Your Directors would like to place on record their sincere appreciation of the valuable services rendered by Mr. James Thompson and Mr. Andre Classens
   during their tenure as Directors.
                                                                                                     156 | Kotak Mahindra Old Mutual Life Insurance Limited
                                                                                                           (Formerly known as OM Kotak Mahindra Life Insurance Company Limited)




     The members of the Board of Directors along with their positions in respective Committees of the Board are:
       Member of the Board of Directors                                      Audit                 Investment              Banking                   Remuneration
                                                                             Committee             Committee               Committee                 Committee
       Uday Kotak                              Chairman                      —                     —                       —                         Chairman
       Hasan Askari                            Vice-Chairman                 Chairman              Member                  —                         Member
       Gaurang Shah                            Managing Director             Invitee               Member                  Member                    Member
       Shivaji Dam                             Director                      —                     Member                  Chairman                  —
       James H. Sutcliffe                      Director                      —                     —                       —                         —
       Dipak Gupta                             Director                      Member                Chairman                —                         —
       Pallavi Shroff                          Independent Director          —                     —                       —                         —
       S. S. Thakur                            Independent Director          Member                —                       —                         —
       Vineet Nayyar                           Independent Director          —                     —                       —                         —
       M. G. Diwan                             Independent Director          Member                —                       —                         —
      During the year under review meetings of the Board of Directors and the Committees of the Board were held on the following dates;
       Board Meeting                                             Audit Committee Meeting                                  Investment Committee Meeting
       April 29, 2004                                                May 17, 2004                                                 May 18, 2004
       May 18, 2004                                                  August 18, 2004                                              August 18, 2004
       August 19, 2004                                               February 2, 2005                                             October 14, 2004
       October 14, 2004                                              —                                                            February 2, 2005
       October 20, 2004                                              —                                                            —
       February 3, 2005                                              —                                                            —
       March 30, 2005                                                —                                                            —
17 | AUDITORS
     M/s BSR & Co. (formerly known as Bharat S Raut & Co.) and M/s Lovelock and Lewes, Joint Auditors of your Company hold office until the conclusion of the ensuing
     Annual General Meeting of the Company. They are eligible to be re-appointed as Auditors and have given their consent to act as auditors of your Company.
18 | MANAGEMENT REPORT
     Pursuant to the provisions of Regulation 3 of the Insurance Regulatory and Development Authority (Preparation of Financial Statements and Auditors’ Report
     of Insurance Companies) Regulations, 2000, the Management Report forms a part of the financial statements.
19 | STATUTORY INFORMATION
     During the period under review, your Company has not accepted any deposits from the public.
     The information required under Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 is disclosed in
     Note 22 of Schedule 16 to the financial statements.
     During the year ended March 31, 2005, expenditure in foreign exchange amounted to Rs. 5.44 crores. 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.
20 | DIRECTORS’ RESPONSIBILITY STATEMENT
     Based on representations from the Management, your Directors state, in pursuance of Section 217(2AA) of the Companies Act, 1956, that:
     (a) Your Company has, in the preparation of the annual accounts for the year ended March 31, 2005, followed the applicable accounting standards along
          with proper explanations relating to material departures, if any;
     (b) 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 March 31, 2005, of the deficit in the Revenue Account and the loss in the
          Profit and Loss Account of your Company for the financial year ended March 31, 2005;
     (c) 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
     (d) The Directors have prepared the annual accounts on a going concern basis.
21 | ACKNOWLEDGEMENTS
     The Directors thank the Insurance Regulatory and Development Authority for its continuous support. The Directors are grateful for the continued faith that the
     policyholders have reposed. The Directors acknowledge the support extended by their shareholders and express their appreciation of the fine performance of
     the employees that made this year a notable one.

                                                                                                                    For and on behalf of the Board of Directors
                                                                                                                                                               Uday Kotak
Mumbai                                                                                                                                                           Chairman
May 14, 2005
                                                                                                       157 | Kotak Mahindra Old Mutual Life Insurance Limited
                                                                                                              (Formerly known as OM Kotak Mahindra Life Insurance Company Limited)




MANAGEMENT REPORT FOR THE YEAR ENDED MARCH 31, 2005

In accordance with the Insurance Regulatory and Development Authority (Preparation of Financial Statements and Auditor’s Report of Insurance Companies)
Regulations, 2002, the Board of Directors presents its Management Report for the year ended March 31, 2005.

 1 | VALIDITY OF REGISTRATION:
     Your Directors confirm that the registration granted to the Company by the Insurance Regulatory and Development Authority is valid on this date.

 2 | STATUTORY DUES:
     Your Directors certify that all the dues payable to the statutory authorities have been duly paid.

 3 | SHAREHOLDING PATTERN:
     Your Directors confirm that the shareholding pattern is in accordance with the statutory and regulatory requirements. During the year, shares of the Company
     were not transferred.

 4 | INVESTMENT OF POLICYHOLDERS’ FUNDS:
     During the year, your Company has not directly or indirectly invested outside India the funds of the holders of policies issued in India.

 5 | SOLVENCY MARGINS:
     Your Directors confirm that the solvency margins as required by regulations prescribed by Insurance Regulatory and Development Authority of India have been
     maintained.

 6 | VALUES OF ASSETS:
     Your Directors certify that the values of all the assets have been reviewed on the date of the Balance Sheet and that the assets set forth in the Balance Sheet
     are shown in the aggregate at amounts not exceeding their realisable or market value under the several headings – “Investments”, “Loans” “Outstanding
     Premiums”, “Interest, Dividends and Rents outstanding”, “Interest, Dividends and Rents accruing but not due”, “Amounts due from other persons or bodies
     carrying on insurance business”, “Advances and other assets”, “ Cash” and the several items specified under “Other Accounts.”

 7 | APPLICATION OF LIFE INSURANCE FUNDS:
     Your Directors certify that no part of the life insurance fund has been directly or indirectly applied in contravention of the provisions of the Insurance Act, 1938
     (4 of 1938) relating to the application and investment of the life insurance funds.

 8 | RISK EXPOSURE:
     Your Company recognises the risks associated with the life insurance business and plans to manage it by adopting prudent policies commensurate with the
     needs of the life insurance business. The key risks affecting the operations of the Company are underwriting risks and investment risks.
     The underwriting risk is managed by the Company’s underwriting function and further by establishing reinsurance treaties with various reinsurance
     companies. All risks above the pre-determined retention limits are automatically reinsured.
     The investment risk is managed by creating a portfolio of different asset classes and of varied maturities so as to spread the risk across a wide category of
     investee companies. Your Company has constituted an Investment Committee, which acts as the policy making body for the investment operations. The
     Investment Committee lays down various internal policies and norms governing the functioning of the Investment Department. The Investment Committee
     periodically discusses the investment strategy, portfolio structures, performance of the portfolio and other issues relating to the investment portfolio.

 9 | OPERATIONS IN OTHER COUNTRIES:
     Your Directors confirm that during the year ended March 31, 2005, your Company had no operations in other countries.

10 | AGEING OF CLAIMS:
     The Company does not have claims that have been undisputed and are not provided in the books of account as at March 31, 2005. Claims, lodged during the
     year, were settled within the internal processing standards.

11 | VALUATION OF INVESTMENTS:
     Your Company considers its debt securities as ‘held to maturity’ and measures them at historical cost subject to amortisation. Debt securities purchased at a
     discount are carried at a value after accruing the implied yield thereon. As at March 31, 2005, in respect of equity shares, the difference between the purchase
     price and the market value is shown under the ‘Fair Value Change Account.’ The market value of quoted securities is taken at the closing value of the
     respective securities on the Balance Sheet date. All the shares in the Company’s portfolio are quoted. In respect of the unit-linked business, all securities are
     valued on a ‘Mark to Market’ basis.

12 | REVIEW OF ASSET QUALITY AND PERFORMANCE OF INVESTMENT:
     Your Company has investments in debt securities issued by the Government of India, public financial institutions, select multinational banks and public sector
     undertakings with a AAA rating/ guaranteed by the Government. Shares of blue chip companies quoted on Indian Stock Exchanges are also a part of your
     Company’s investment portfolio.
                                                                                                       158 | Kotak Mahindra Old Mutual Life Insurance Limited
                                                                                                            (Formerly known as OM Kotak Mahindra Life Insurance Company Limited)




13 | RESPONSIBILITY STATEMENT:
    Your Directors state that:
    (a)   In the preparation of financial statements, the applicable accounting standards, principles and policies have been followed;
    (b)   The accounting policies have been adopted and applied consistently and the judgements and estimates made 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 year and of the deficit under Revenue Account and of the loss in the Profit and
          Loss Account for the year ended March 31, 2005;
    (c)   Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the applicable provisions of the
          Insurance Act 1938 (4 of 1938)/Companies Act, 1956 (1 of 1956), for safeguarding the assets of the company and for preventing and detecting fraud
          and other irregularities;
    (d)   The financial statements are prepared on a going concern basis;
    (e)   An internal audit system commensurate with the size and nature of the business exists and is operating effectively.

14 | SCHEDULE OF PAYMENTS MADE TO INDIVIDUALS, FIRMS, COMPANIES AND ORGANIZATIONS IN WHICH THE DIRECTORS ARE
     INTERESTED:
    Your Company has made the following payments to individuals, firms, companies and organizations in which the Directors are interested:

                  Company the                                 Name of                            Interested                                 Amount paid in
           Director/s is/ are interested                      Director/s                             as                                    the financial year
                                                                                                                                           2004-05 (Rs. ‘000)

          Kotak Mahindra Bank Ltd.                          Uday Kotak,                     Director                                                77,879
                                                            Shivaji Dam,
                                                            Dipak Gupta

          Old Mutual Life Assurance Co.                     James Harry                     Director                                                 6,338
          (South Africa) Ltd.                               Sutcliffe

          Aero Agencies Ltd.                                Uday Kotak                      Relative of a Director                                   6,278

          Kotak Securities Ltd.                             Uday Kotak                      Director                                                 7,746

          Kotak Mahindra Primus Ltd.                        Uday Kotak,                     Director                                                     44
                                                            Dipak Gupta,
                                                            Gaurang Shah



                                                                                                           Kotak Mahindra Old Mutual Life Insurance Limited

                                                                                                           Uday Kotak                            Gaurang Shah
                                                                                                           Chairman                              Managing Director
Mumbai
May 14, 2005
                                                                                                         159 | Kotak Mahindra Old Mutual Life Insurance Limited
                                                                                                                (Formerly known as OM Kotak Mahindra Life Insurance Company Limited)




AUDITORS’ REPORT

To the members of
KOTAK MAHINDRA OLD MUTUAL LIFE INSURANCE LIMITED
(Formerly known as OM Kotak Mahindra Life Insurance Company Limited)
1|   We have audited the attached Balance Sheet of Kotak Mahindra Old Mutual Life Insurance Limited (‘the Company’) (formerly known as OM Kotak Mahindra
     Life Insurance Company Limited) as at March 31, 2005, the related Revenue Account, the Profit & Loss Account and the Receipts and Payments Account of
     the Company 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 management of the Company. 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 as to 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 statements presentation. We believe that our audit provides a reasonable basis for our
     opinion.

3|   The Balance Sheet, the Revenue Account, the Profit & Loss Account and the Receipts and Payments Account referred to in this report are in compliance with
     the accounting standards referred to in Section 211(3C) of the Companies Act, 1956.

4|   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 and
           have found them satisfactory;
     (b)   As the Company’s accounting system is centralised, no returns for the purposes of our audit are prepared at the branches of the Company;
     (c)   The Balance Sheet, Revenue Account, Profit and Loss Account and the Receipts and Payments Account referred to in this report are in agreement with
           the books of account;
     (d)   The actuarial valuation of liabilities for life policies in force is the responsibility of the Company’s Appointed Actuary. The actuarial valuation of these
           liabilities as at March 31, 2005 has been certified by the Appointed Actuary, and in his opinion, the assumptions for such valuation are in accordance
           with the guidelines and norms issued by the Insurance Regulatory and Development Authority (IRDA) and the Actuarial Society of India in concurrence
           with the Authority. We have relied upon the Appointed Actuary’s certificate in this regard for forming our opinion on the financial statements of the
           Company;
     (e)   On the basis of written representations received from the Directors and taken on record by the Board of Directors of the Company, no Director is
           disqualified, as at March 31, 2005, 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, proper books of account as required by law have been
           maintained by the Company so far as appears from our examination of those books;
     (g)   In our opinion, and to the best of our information and according to the explanations given to us, the investments have been valued in accordance with
           the provisions of the Insurance Act, 1938 and the Insurance Regulatory and Development Authority (Preparation of Financial Statements and Auditors’
           Report of Insurance Companies) Regulations, 2002 (‘the Regulations’) and orders/directions issued by IRDA in this behalf;
     (h)   In our opinion, and to the best of our information and according to the explanations given to us, the accounting policies selected by the Company are
           appropriate and are in compliance with applicable accounting standards referred to under sub-section (3C) of Section 211 of the Companies Act, 1956
           and with accounting principles as prescribed in the Insurance Regulatory and Development Authority (Preparation of Financial Statements and Auditors’
           Report of Insurance Companies) Regulations, 2002 and orders/directions issued by Insurance Regulatory and Development Authority in this behalf.
     (i)   In our opinion and to the best of our information and according to the explanations given to us, the Balance Sheet, Revenue Account, Profit and Loss
           Account and the Receipts and Payments Account together with the notes thereon and attached thereto are prepared in accordance with the provisions
           of the Insurance Regulatory and Development Authority (Preparation of Financial Statements and Auditors’ Report of Insurance Companies) Regulations,
           2002, Insurance Act, 1938, the Insurance Regulatory and Development Act, 1999 and the Companies Act, 1956, to the extent applicable and in the
           manner so required and give a true and fair view in conformity with accounting principles generally accepted in India:
           (i)    of the state of affairs of the Company in so far as it relates to the Balance Sheet as at March 31, 2005;
           (ii)   of the surplus in so far as it relates to ‘Non-Participating’ and ‘Annuities Linked Non-Participating’ segments, of the deficit in so far as it relates to
                  ‘Unit Linked Non-Participating’ segment and of the results of activities in so far as it relates to ‘Participating’ and ‘Annuities Participating’ segments
                  of the Revenue Account for the year ended March 31, 2005;
           (iii) of the loss in so far as it relates to the Profit and Loss Account for the year ended March 31, 2005;
           (iv) of the receipts and payments in so far as it relates to the Receipts and Payments Account for the year ended March 31, 2005.
                                                                                                     160 | Kotak Mahindra Old Mutual Life Insurance Limited
                                                                                                            (Formerly known as OM Kotak Mahindra Life Insurance Company Limited)




5|   Further, we certify to the best of our knowledge and belief that:

     1.   On the basis of our examination of books and records of the Company and according to the information and explanations given to us, we have reviewed
          the management report and have found no apparent mistake or material inconsistencies with the financial statements;

     2.   On the basis of our examination of books and records of the Company and according to the information and explanations given to us, and based upon
          management representations and compliance certificates noted by the audit committee, nothing has come to our attention which causes us to believe
          that the Company has not complied with the terms and conditions of registration stipulated by the Insurance Regulatory and Development Authority.



Sharmila A. Karve                                                                                       Akeel Master
Partner                                                                                                 Partner
Membership No. 43229                                                                                    Membership No. 46768
For and on behalf of                                                                                    For and on behalf of
Lovelock & Lewes                                                                                        BSR & Co.
Chartered Accountants                                                                                   (Formerly Bharat S. Raut & Co.)
Mumbai, May 14, 2005                                                                                    Chartered Accountants




AUDITORS’ CERTIFICATE
In accordance with the information and explanations given to us and to the best of our knowledge and belief and based on our examination of the books of
account and other records maintained by Kotak Mahindra Old Mutual Life Insurance Limited (‘the Company’) for the year ended March 31, 2005, we certify that:

1|   We have verified the cash balances, to the extent considered necessary, and securities relating to the Company’s investments as at March 31, 2005, by actual
     inspection or on the basis of certificates/confirmations received from the depository participant appointed by the Company, as the case may be. As
     at March 31, 2005, the Company had no reversions and life interests;

2|   The Company is not the trustee of any trust; and

3|   No part of the assets of the policyholders’ funds has been directly or indirectly applied in contravention to the provisions of the Insurance Act, 1938, relating
     to the application and investments of the policyholders’ funds.

This certificate is issued to comply with Schedule C of Insurance Regulatory and Development Authority (Preparation of Financial Statements and Auditors’ Report of
Insurance Companies) Regulations, 2002, (‘the Regulations’), read with Regulation 3 of such Regulations and may not be suitable for any other purpose.



Sharmila A. Karve                                                                                       Akeel Master
Partner                                                                                                 Partner
Membership No. 43229                                                                                    Membership No. 46768
For and on behalf of                                                                                    For and on behalf of
Lovelock & Lewes                                                                                        BSR & Co.
Chartered Accountants                                                                                   (Formerly Bharat S. Raut & Co.)
Mumbai, May 14, 2005                                                                                    Chartered Accountants
                                                                                                          161 | Kotak Mahindra Old Mutual Life Insurance Limited
                                                                                                                 (Formerly known as OM Kotak Mahindra Life Insurance Company Limited)




                                                                           FORM A-RA
Registration No: 107; Date of Registration: January 10, 2001
REVENUE ACCOUNT FOR THE YEAR ENDED MARCH 31, 2005
Policyholders’ Account (Technical Account)
(Amounts in thousands of Indian Rupees)

                                                                                                         Year ended March 31, 2005
Particulars                                                     Schedule          Partici-           Non-     Annuities     Annuities Unit-Linked                           Total
                                                                                  pating           Partici-     Partici- Linked Non- Non-Partici-
                                                                                                   pating       pating Participating       pating
Premiums earned, net
(a) Premium                                                        1            1,210,346        164,777          74,168             11,397         3,200,950         4,661,638
(b) Re-insurance ceded                                                            (16,707)       (39,819)          (338)                 (4)          (10,977)          (67,845)
(c) Re-insurance accepted                                                               —              —              —                   —                 —                 —
Income from investments
(a) Interest, Dividends & Rent – Gross                                            54,467           26,754             5,262              105            37,305          123,893
(b) Profit on sale/redemption of investments                                      14,141              278             1,769               —             20,680            36,868
(c) (Loss on sale/redemption of investments)                                      (5,127)           (610)             (708)               —           (20,811)          (27,256)
(d) Transfer/Gain on revaluation/change in fair value                                  —               —                 —                —             48,368            48,368
Other Income
(a) Contribution from Shareholders’ Account
     (Refer Schedule 16 – Note 11)                                                214,978              —           2,319                 —                 —            217,297
(b) Miscellaneous income                                                            2,016              99             75                 —                 61             2,251
(c) Profit on sale of fixed assets (Net)                                              108              21              4                  1               217               351
     TOTAL (A)                                                                  1,474,222         151,500         82,551             11,499         3,275,793         4,995,565
Commission                                                         2             198,946            7,879             2,487              477          179,215           389,004
Operating Expenses related to Insurance Business                   3             530,333           31,956             5,764            1,725          543,524         1,113,302
Provision for doubtful debts                                                          —                —                 —                —                —                 —
Bad debts written off                                                                 —                —                 —                —                —                 —
Provision for tax                                                                     —                —                 —                —                —                 —
Provisions (other than taxation)
(a) For diminution in the value of investments (Net)                                  —                —                 —                —                —                 —
(b) Premium on investments amortized                                              15,018            7,684             1,491               —               137            24,330
       TOTAL (B)                                                                 744,297           47,519             9,742            2,202          722,876         1,526,636
Benefits paid (Net)                                                4               15,457          25,950             1,263                —              2,890           45,560
Interim Bonuses paid                                                                   —               —                 —                 —                 —                —
Change in valuation of liability in respect of life policies,
(a) Gross                                                                        692,627           56,614         68,947                 389           11,078           829,655
(b) Amount ceded in reinsurance                                                       —                —              —                   —                —                 —
(c) Amount accepted in reinsurance                                                    —                —              —                   —                —                 —
Provision for Linked Liabilities                                                      —                —              —                8,161        2,832,204         2,840,365
       TOTAL (C)                                                                 708,084           82,564         70,210               8,550        2,846,172         3,715,580
SURPLUS/(DEFICIT) (D) = (A)-(B)-(C)                                                21,841          21,417             2,599              747         (293,255)        (246,651)
APPROPRIATION:
Accumulated fund addition to Policyholders (E)                                     21,841               —             2,599                —                  —           24,440
SURPLUS/(DEFICIT) BROUGHT FORWARD (F)                                                  —        (118,287)                —                 —         (107,317)        (225,604)
SURPLUS/(DEFICIT) CARRIED FORWARD TO
BALANCE SHEET (G) = (D)-(E)-(F)                                                        —         (96,870)                —               747         (400,572)        (496,695)
As required by Section 40-B(4) of the Insurance Act, 1938, we certify that all expenses of Management in respect of life insurance business transacted in India by
the Insurer have been fully debited in this Revenue Account.
The Schedules and accompanying notes are an integral part of this Revenue Account.
As per our report of even date attached                                                     For and on behalf of the Board of Directors

Sharmila A. Karve                             Akeel Master                                  Uday Kotak                                     Hasan Askari
Partner                                       Partner                                       Chairman                                       Vice-Chairman
Membership No. 43229                          Membership No. 46768
For and on behalf of                          For and on behalf of                          Dipak Gupta                                    Gaurang Shah
Lovelock & Lewes                              BSR & Co.                                     Director                                       Managing Director
Chartered Accountants                         (Formerly Bharat S. Raut & Co.)
                                              Chartered Accountants                         G. Murlidhar                                   James Thompson
Mumbai                                                                                      Chief Financial Officer                        Appointed Actuary
May 14, 2005                                                                                & Company Secretary
                                                                                                      162 | Kotak Mahindra Old Mutual Life Insurance Limited
                                                                                                              (Formerly known as OM Kotak Mahindra Life Insurance Company Limited)




                                                                           FORM A-RA
Registration No: 107; Date of Registration: January 10, 2001
REVENUE ACCOUNT FOR THE YEAR ENDED MARCH 31, 2004
Policyholders’ Account (Technical Account)
(Amounts in thousands of Indian Rupees)


                                                                                                    Year ended March 31, 2004
Particulars                                                     Schedule          Partici-           Non-       Annuities    Unit-Linked                                 Total
                                                                                  pating     Participating   Participating          Non-
                                                                                                                            Participating
Premiums earned, net
(a) Premium                                                        1             758,389           134,365               60,173               554,283              1,507,210
(b) Re-insurance ceded                                                            (8,616)          (29,144)                 (87)               (1,944)               (39,791)
(c) Re-insurance accepted                                                              —                 —                    —                     —                      —
Income from investments
(a) Interest, Dividends & Rent – Gross                                            17,955            20,208                 2,415                 4,232                 44,810
(b) Profit on sale/redemption of investments                                      11,055             8,575                 1,350                 4,508                 25,488
(c) (Loss on sale/redemption of investments)                                        (110)               —                    (14)                 (161)                 (285)
(d) Transfer/Gain on revaluation/change in fair value                                  —                —                      —                 7,384                  7,384
Other Income
(a) Contribution from Shareholders’ Account
      (Refer Schedule 16 – Note 11)                                               929,575               —                46,238                    —                 975,813
(b) Miscellaneous income                                                              317               74                   25                   240                    656
      TOTAL (A)                                                                 1,708,565          134,078              110,100               568,542              2,521,285
Commission                                                         2             155,098             5,452                2,904                28,503                191,957
Operating Expenses related to Insurance Business                   3             705,734            39,445               17,951               135,265                898,395
Provision for doubtful debts                                                          —                 —                    —                     —                      —
Bad debts written off                                                                 —                 —                    —                     —                      —
Provision for tax                                                                     —                 —                    —                     —                      —
Provisions (other than taxation)
(a) For diminution in value of investments (Net)                                      —                 —                    —                     —                      —
(b) Premium on investments amortized                                               3,329             3,733                  643                    14                  7,719
(c) Others                                                                            —                 —                    —                     —                      —
       TOTAL (B)                                                                 864,161            48,630               21,498               163,782              1,098,071
Benefits paid (Net)                                                4               7,120            33,125                   599                     —                 40,844
Interim Bonuses paid                                                                  —                 —                     —                      —                     —
Change in valuation of liability in respect of life policies,
(a) Gross                                                                        309,509            77,232               43,195                 9,001                438,937
(b) Amount ceded in reinsurance                                                       —                 —                    —                     —                      —
(c) Amount accepted in reinsurance                                                    —                 —                    —                     —                      —
Provision for Linked Liabilities                                                      —                 —                    —                503,076                503,076
       TOTAL (C)                                                                 316,629           110,357               43,794               512,077                982,857
SURPLUS/(DEFICIT) (D) = (A)-(B)-(C)                                              527,775           (24,909)              44,808             (107,317)                440,357
APPROPRIATION:
Accumulated fund addition to Policyholders (E)                                     6,434                 —                   926                     —                  7,360
SURPLUS/(DEFICIT) CARRIED FORWARD TO
BALANCE SHEET (F) = (D)-(E)                                                      521,341           (24,909)              43,882             (107,317)                432,997

As required by Section 40-B(4) of the Insurance Act, 1938, we certify that all expenses of Management in respect of life insurance business transacted in India by
the Insurer have been fully debited in this Revenue Account.
The Schedules and accompanying notes are an integral part of this Revenue Account.
As per our report of even date attached                                                 For and on behalf of the Board of Directors
Sharmila A. Karve                             Akeel Master                              Uday Kotak                                      Hasan Askari
Partner                                       Partner                                   Chairman                                        Vice-Chairman
Membership No. 43229                          Membership No. 46768
For and on behalf of                          For and on behalf of                      Dipak Gupta                                     Gaurang Shah
Lovelock & Lewes                              BSR & Co.                                 Director                                        Managing Director
Chartered Accountants                         (Formerly Bharat S. Raut & Co.)
                                              Chartered Accountants                     G. Murlidhar                                    James Thompson
Mumbai                                                                                  Chief Financial Officer                         Appointed Actuary
May 14, 2005                                                                            & Company Secretary
                                                                                                   163 | Kotak Mahindra Old Mutual Life Insurance Limited
                                                                                                          (Formerly known as OM Kotak Mahindra Life Insurance Company Limited)




                                                                         FORM A-PL
Registration No: 107; Date of Registration: January 10, 2001
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2005
Shareholders’ Account (Non-Technical Account)
(Amounts in thousands of Indian Rupees)

Particulars                                                                    Schedule                                                                   Year ended
                                                                                                                                                       March 31, 2005
Amounts transferred from Policyholders’ Account (Technical Account)                                                                                                —
Income from Investments
(a)   Interest, Dividends & Rent                                                                                                                                   54,460
(b)   Profit on sale/redemption of investments                                                                                                                           —
(c)   (Loss on sale/redemption of investments)                                                                                                                       (972)
Other Income                                                                                                                                                            37
      TOTAL (A)                                                                                                                                                    53,525
Expenses other than those directly related to the insurance business                                                                                                   701
Bad debts written off                                                                                                                                                    —
Provisions (other than taxation)
(a)   For diminution in the value of investments (Net)                                                                                                                   —
(b)   Provision for doubtful debts                                                                                                                                       —
(c)   Others                                                                                                                                                             —
      — Contribution to the Policyholders’ Fund
           (i)    Participating                                                                                                                                  214,978
           (ii)   Non-participating                                                                                                                                      —
           (iii) Annuities – Participating                                                                                                                          2,319
           (iv) Unit-linked – Non-participating                                                                                                                          —
      — Premium on investments amortized                                                                                                                           22,448
      TOTAL (B)                                                                                                                                                  240,446
Profit/(Loss) before tax                                                                                                                                       (186,921)
Provision for taxation                                                                                                                                                   —
Profit/(Loss) after tax                                                                                                                                        (186,921)
Appropriations
(a)   Balance at the beginning of the year                                                                                                                     (922,985)
(b)   Interim dividends paid during the year                                                                                                                             —
(c)   Proposed final dividend                                                                                                                                            —
(d)   Tax on dividend distributed                                                                                                                                        —
(e)   Transfer to reserves/other accounts                                                                                                                                —
Profit/(Loss) carried to the Balance Sheet                                                                                                                   (1,109,906)
Earnings per share (Basic and Diluted) (in Rs.)                                                                                                                     (0.99)
The Schedules and accompanying notes are an integral part of this Profit and Loss Account.

As per our report of even date attached                                              For and on behalf of the Board of Directors

Sharmila A. Karve                            Akeel Master                            Uday Kotak                                     Hasan Askari
Partner                                      Partner                                 Chairman                                       Vice-Chairman
Membership No. 43229                         Membership No. 46768
For and on behalf of                         For and on behalf of                    Dipak Gupta                                    Gaurang Shah
Lovelock & Lewes                             BSR & Co.                               Director                                       Managing Director
Chartered Accountants                        (Formerly Bharat S. Raut & Co.)
                                             Chartered Accountants                   G. Murlidhar                                   James Thompson
Mumbai                                                                               Chief Financial Officer                        Appointed Actuary
May 14, 2005                                                                         & Company Secretary
                                                                                                    164 | Kotak Mahindra Old Mutual Life Insurance Limited
                                                                                                           (Formerly known as OM Kotak Mahindra Life Insurance Company Limited)




                                                                         FORM A-PL
Registration No: 107; Date of Registration: January 10, 2001
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2004
Shareholders’ Account (Non-Technical Account)
(Amounts in thousands of Indian Rupees)

Particulars                                                                     Schedule                                                                   Year ended
                                                                                                                                                        March 31, 2004
Amounts transferred from Policyholders’ Account (Technical Account)                                                                                                       —
Income from Investments
(a)   Interest, Dividends & Rent                                                                                                                                    61,484
(b)   Profit on sale/redemption of investments                                                                                                                      13,155
(c)   (Loss on sale/redemption of investments)                                                                                                                        (196)
Other Income (including fund management fees)                                                                                                                           803
      TOTAL (A)                                                                                                                                                     75,246
Expenses other than those directly related to the insurance business                                                                                                    372
Bad debts written off                                                                                                                                                     —
Provisions (other than taxation)
(a)   For diminution in the value of investments (Net)                                                                                                                    —
(b)   Provision for doubtful debts                                                                                                                                        —
(c)   Others                                                                                                                                                              —
      — Contribution to the Policyholders’ Fund
          (i)     Participating                                                                                                                                   929,575
          (ii)    Non-participating                                                                                                                                       —
          (iii)   Annuities – Participating                                                                                                                         46,238
          (iv)    Unit-linked – Non-participating                                                                                                                         —
      — Premium on investments amortized                                                                                                                            23,275
      TOTAL (B)                                                                                                                                                   999,460
Profit/(Loss) before tax                                                                                                                                         (924,214)
Provision for taxation                                                                                                                                                    —
Profit/(Loss) after tax                                                                                                                                          (924,214)
Appropriations
(a)   Balance at the beginning of the year                                                                                                                           1,229
(b)   Interim dividends paid during the year                                                                                                                              —
(c)   Proposed final dividend                                                                                                                                             —
(d)   Tax on dividend distributed                                                                                                                                         —
(e)   Transfer to reserves/other accounts                                                                                                                                 —
Profit carried to the Balance Sheet                                                                                                                              (922,985)
Earnings per share (Basic and Diluted) (in Rs.)                                                                                                                      (6.46)
The Schedules and accompanying notes are an integral part of this Profit and Loss Account.

As per our report of even date attached                                               For and on behalf of the Board of Directors
Sharmila A. Karve                             Akeel Master                            Uday Kotak                                     Hasan Askari
Partner                                       Partner                                 Chairman                                       Vice-Chairman
Membership No. 43229                          Membership No. 46768
For and on behalf of                          For and on behalf of                    Dipak Gupta                                    Gaurang Shah
Lovelock & Lewes                              BSR & Co.                               Director                                       Managing Director
Chartered Accountants                         (Formerly Bharat S. Raut & Co.)
                                              Chartered Accountants                   G. Murlidhar                                   James Thompson
Mumbai                                                                                Chief Financial Officer                        Appointed Actuary
May 14, 2005                                                                          & Company Secretary
                                                                                                  165 | Kotak Mahindra Old Mutual Life Insurance Limited
                                                                                                         (Formerly known as OM Kotak Mahindra Life Insurance Company Limited)




                                                                        FORM A-BS
Registration No: 107; Date of Registration: January 10, 2001
BALANCE SHEET AS AT MARCH 31, 2005
(Amounts in thousands of Indian Rupees)
Particulars                                                                  Schedule                                                                               2005

SOURCES OF FUNDS
Shareholders’ Funds
Share Capital                                                                 5 & 5A                                                                          2,113,337
Reserves and Surplus                                                            6                                                                               520,363
Credit/[Debit] Fair Value Change Account                                                                                                                             —
      Sub-Total                                                                                                                                               2,633,700
Borrowings                                                                     7                                                                                        —
Policyholders’ Funds:
Credit/[Debit] Fair Value Change Account                                                                                                                         15,135
Policy Liabilities — Participating                                                                                                                            1,128,051
                   — Non-participating                                                                                                                          286,880
                   — Annuities Participating                                                                                                                    132,899
                   — Annuities Unit-linked Non-participating                                                                                                        389
                   — Unit-linked Non-participating
                      (Refer Schedule 16 – Note 4)                                                                                                               20,079
Provision for Linked Liabilities                                                                                                                              3,343,441
       Sub-Total                                                                                                                                              4,926,874
Funds for Future Appropriation                                                                                                                                     1,009
      Total                                                                                                                                                   7,561,583
APPLICATION OF FUNDS
Investments
— Shareholders’                                                                8                                                                                588,216
— Policyholders’                                                               8A                                                                             1,571,730
Assets Held to Cover Linked Liabilities                                        8B                                                                             3,369,209
Loans                                                                          9                                                                                  2,305
Fixed Assets                                                                   10                                                                               230,694
Current Assets
Cash and Bank Balances                                                         11                                                                               526,985
Advances and Other Assets                                                      12                                                                               205,057
      Sub-Total (A)                                                                                                                                             732,042
Current Liabilities                                                            13                                                                               516,456
Provisions                                                                     14                                                                                22,758
      Sub-Total (B)                                                                                                                                             539,214
Net Current Assets (C) = (A-B)                                                                                                                                  192,828
Miscellaneous Expenditure (To the extent not written off or adjusted)          15                                                                                    —
Debit Balance in Profit and Loss Account (Shareholders’ Account)                                                                                              1,109,906
Deficit in the Revenue A/c (Policyholders’ Account)
      — Non-participating                                                                                                                                        96,870
      — Annuities Unit-linked Non-participating                                                                                                                   (747)
      — Unit-linked Non-participating                                                                                                                           400,572
      Total                                                                                                                                                   7,561,583
The accompanying notes are an integral part of this Balance Sheet.
As per our report of even date attached                                             For and on behalf of the Board of Directors
Sharmila A. Karve                          Akeel Master                             Uday Kotak                                     Hasan Askari
Partner                                    Partner                                  Chairman                                       Vice-Chairman
Membership No. 43229                       Membership No. 46768
For and on behalf of                       For and on behalf of                     Dipak Gupta                                    Gaurang Shah
Lovelock & Lewes                           BSR & Co.                                Director                                       Managing Director
Chartered Accountants                      (Formerly Bharat S. Raut & Co.)
                                           Chartered Accountants                    G. Murlidhar                                   James Thompson
Mumbai                                                                              Chief Financial Officer                        Appointed Actuary
May 14, 2005                                                                        & Company Secretary
                                                                                                  166 | Kotak Mahindra Old Mutual Life Insurance Limited
                                                                                                         (Formerly known as OM Kotak Mahindra Life Insurance Company Limited)




                                                                        FORM A-BS
Registration No: 107; Date of Registration: January 10, 2001
BALANCE SHEET AS AT MARCH 31, 2004
(Amounts in thousands of Indian Rupees)
Particulars                                                                  Schedule                                                                               2004

SOURCES OF FUNDS
Shareholders’ Funds
Share Capital                                                                 5 & 5A                                                                          1,506,186
Reserves and Surplus                                                           6                                                                                520,363
Credit/[Debit] Fair Value Change Account                                                                                                                             —
      Sub-Total                                                                                                                                               2,026,549
Borrowings                                                                     7                                                                                        —
Policyholders’ Funds:
Credit/[Debit] Fair Value Change Account                                                                                                                          2,243
Policy Liabilities — Participating                                                                                                                              413,583
                   — Non-participating                                                                                                                          230,266
                   — Annuities Participating                                                                                                                     61,353
                   — Unit-linked Non-participating
                      (Refer Schedule 16 – Note 4)                                                                                                                9,001
Provision for Linked Liabilities                                                                                                                                503,076
      Sub-Total                                                                                                                                               1,219,522
Funds for Future Appropriation                                                                                                                                     1,009
      Total                                                                                                                                                   3,247,080
APPLICATION OF FUNDS
Investments
— Shareholders’                                                                8                                                                                571,783
— Policyholders’                                                               8A                                                                               727,121
Assets Held to Cover Linked Liabilities                                        8B                                                                               503,076
Loans                                                                          9                                                                                  2,637
Fixed Assets                                                                   10                                                                               229,578
Current Assets
Cash and Bank Balances                                                         11                                                                               294,176
Advances and Other Assets                                                      12                                                                               170,352
      Sub-Total (A)                                                                                                                                             464,528
Current Liabilities                                                            13                                                                               389,458
Provisions                                                                     14                                                                                10,774
      Sub-Total (B)                                                                                                                                             400,232
Net Current Assets (C) = (A-B)                                                                                                                                    64,296
Miscellaneous Expenditure (To the extent not written off or adjusted)          15                                                                                    —
Debit Balance in Profit and Loss Account (Shareholders’ Account)                                                                                                922,985
Deficit in the Revenue A/c (Policyholders’ Account)
       — Non-participating                                                                                                                                      118,287
       — Unit-linked Non-participating                                                                                                                          107,317
                                                                                                                                                                225,604
      Total                                                                                                                                                   3,247,080
The accompanying notes are an integral part of this Balance Sheet.
As per our report of even date attached                                             For and on behalf of the Board of Directors
Sharmila A. Karve                          Akeel Master                             Uday Kotak                                     Hasan Askari
Partner                                    Partner                                  Chairman                                       Vice-Chairman
Membership No. 43229                       Membership No. 46768
For and on behalf of                       For and on behalf of                     Dipak Gupta                                    Gaurang Shah
Lovelock & Lewes                           BSR & Co.                                Director                                       Managing Director
Chartered Accountants                      (Formerly Bharat S. Raut & Co.)
                                           Chartered Accountants                    G. Murlidhar                                   James Thompson
Mumbai                                                                              Chief Financial Officer                        Appointed Actuary
May 14, 2005                                                                        & Company Secretary
                                                                                   167 | Kotak Mahindra Old Mutual Life Insurance Limited
                                                                                        (Formerly known as OM Kotak Mahindra Life Insurance Company Limited)




Registration No: 107; Date of Registration: January 10, 2001
SCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS
(Amounts in thousands of Indian Rupees unless otherwise stated)
Schedule 1 : Premium
Particulars                                                                                              2005
                                                                       Par   Non-Par    Annuities        Annuities              Unit-              Total
                                                                                             Par           Linked             Linked
                                                                                                          Non-Par            Non-Par
First year Premiums                                                616,325   121,440       20,047             9,897        1,125,024         1,892,733
Renewal Premiums                                                   594,021    32,200       54,121                —           241,363           921,705
Single Premiums                                                         —     11,137           —              1,500        1,834,563         1,847,200
       Total Premiums                                            1,210,346   164,777       74,168            11,397        3,200,950         4,661,638
Particulars                                                                                              2004
                                                                       Par   Non-Par    Annuities        Annuities              Unit-              Total
                                                                                             Par           Linked             Linked
                                                                                                          Non-Par            Non-Par
First year Premiums                                               541,411     85,499       39,959                  —          346,802        1,013,671
Renewal Premiums                                                  216,978     14,873       20,214                  —               —           252,065
Single Premiums                                                        —      33,993           —                   —          207,481          241,474
       Total Premiums                                             758,389    134,365       60,173                  —          554,283        1,507,210
Note: (a) All the premium income relates to business in India.
      (b) Refer Schedule 16 – Note 2(a)

Schedule 2 : Commission
Particulars                                                                                              2005
                                                                       Par   Non-Par    Annuities        Annuities              Unit-              Total
                                                                                             Par           Linked             Linked
                                                                                                          Non-Par            Non-Par
Commission paid
Direct— First year Premiums                                       176,437       7,716       1,638                454         150,503           336,748
      — Renewal Premiums                                           24,235       1,183         854                 —             7,249           33,521
      — Single Premiums                                                 —         207           —                 23          23,977            24,207
      Sub-total                                                   200,672       9,106       2,492                477         181,729           394,476
Add: Commission on Re-insurance accepted                                —          —            —                 —                —                 —
Less: Commission on Re-insurance ceded                             (1,726)    (1,227)          (5)                —           (2,514)           (5,472)
      Net Commission                                              198,946       7,879       2,487                477         179,215           389,004
Particulars                                                                                              2004
                                                                       Par   Non-Par    Annuities        Annuities              Unit-              Total
                                                                                             Par           Linked             Linked
                                                                                                          Non-Par            Non-Par
Commission paid
Direct— First year Premiums                                       147,360      5,513         2,550                 —           25,290          180,713
      — Renewal Premiums                                            9,046        587           361                 —               —             9,994
      — Single Premiums                                                —         527            —                  —            3,692            4,219
      Sub-total                                                   156,406      6,627         2,911                 —           28,982          194,926
Add: Commission on Re-insurance accepted                                —          —             —                 —                —                —
Less: Commission on Re-insurance ceded                             (1,308)    (1,175)           (7)                —             (479)          (2,969)
      Net Commission                                              155,098       5,452        2,904                 —           28,503          191,957
Note: Refer Schedule 16 – Note 2(b)
Break up of Gross Commission
Particulars                                                                                                        2005                            2004
Agents                                                                                                         245,562                         120,904
Brokers                                                                                                          7,716                             743
Corporate Agents                                                                                               138,473                          72,174
Referral                                                                                                         2,725                           1,105
     Total                                                                                                     394,476                         194,926
                                                                               168 | Kotak Mahindra Old Mutual Life Insurance Limited
                                                                                    (Formerly known as OM Kotak Mahindra Life Insurance Company Limited)




Registration No: 107; Date of Registration: January 10, 2001
SCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS
(Amounts in thousands of Indian Rupees unless otherwise stated)
Schedule 3 : Operating Expenses Related To Insurance Business


Particulars                                                                                          2005
                                                                    Par   Non-Par   Annuities        Annuities              Unit-              Total
                                                                                         Par           Linked             Linked
                                                                                                      Non-Par            Non-Par
Employees’ remuneration and welfare benefits
(Refer Schedule 16 – Note 6 and 2(g))                           230,241    10,330        2,137               623         227,688           471,019
Travel, conveyance and vehicle running expenses                  25,674     1,152          238                69          25,389            52,522
Training expenses                                                 9,786       439           91                26           9,691            20,033
Rents, Rates and Taxes                                           44,827     2,132          496                91          38,999            86,545
Repairs                                                           9,214       413           86                25           9,112            18,850
Printing and Stationery                                          11,553       759          289               138           7,377            20,116
Communication expenses                                           20,411     1,127          362               157          16,356            38,413
Legal and Professional charges                                   18,687       838          173                51          18,480            38,229
Medical fees                                                      4,556       664           64                11           4,361             9,656
Auditors’ fees, expenses etc.
(a) as auditor                                                     681        30              6                 2              672            1,391
(b) as adviser or in any other capacity, in respect of
       — Taxation matters                                            —         —            —                 —                —                —
       — Insurance matters                                           —         —            —                 —                —                —
       — Management services; and                                    —         —            —                 —                —                —
(c) in any other capacity (including out of pocket)                  12         1           —                 —                13               26
Advertisement and publicity                                      64,072     3,410          844               216           90,722          159,264
Interest and Bank charges                                         2,152        97           20                 6            2,128            4,403
Depreciation                                                     44,513     1,997          413               120           44,019           91,062
Information Technology expenses                                  20,193       906          187                55           19,969           41,310
Electricity charges                                              10,225       459           95                28           10,112           20,919
Recruitment expenses                                              5,339       240           50                14            5,280           10,923
Brokerage                                                           249        14            2                 1              246              512
Stamp Duty                                                        1,360     4,695           86                32            2,948            9,121
Membership fees                                                     205         9            2                 1              202              419
Preliminary and Share Issue Expenses                              2,431       109           23                 7            2,404            4,974
Service Tax on Premium                                            2,994     2,092           91                50            6,035           11,262
Other expenses                                                      958        43            9                 2            1,321            2,333
      Total                                                     530,333    31,956        5,764             1,725         543,524         1,113,302
Note: Refer Schedule 16 – Note 2(c)


Particulars                                                                                          2004
                                                                    Par   Non-Par   Annuities        Annuities              Unit-              Total
                                                                                         Par           Linked             Linked
                                                                                                      Non-Par            Non-Par
Employees’ remuneration and welfare benefits
(Refer Schedule 16 – Note 6 and 2(g))                           257,621    10,471        4,420                 —           50,164          322,676
Travel, conveyance and vehicle running expenses                  47,675     1,938          818                 —            9,283           59,714
Training expenses                                                19,074       775          327                 —            3,714           23,890
Rents, Rates and Taxes                                           64,019     2,627        1,126                 —           12,058           79,830
Repairs                                                          15,172       617          260                 —            2,954           19,003
Printing and Stationery                                          14,259       774          599                 —            2,295           17,927
Communication expenses                                           26,224     1,280          848                 —            4,593           32,945
Legal and Professional charges                                   18,250       740          313                 —            3,547           22,850
Medical fees                                                      3,046     4,207          253                 —            1,555            9,061
                                                                                169 | Kotak Mahindra Old Mutual Life Insurance Limited
                                                                                     (Formerly known as OM Kotak Mahindra Life Insurance Company Limited)




Registration No: 107; Date of Registration: January 10, 2001
SCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS
(Amounts in thousands of Indian Rupees unless otherwise stated)

Schedule 3 : Operating Expenses Related To Insurance Business (Contd.)


Particulars                                                                                           2004
                                                                   Par    Non-Par    Annuities        Annuities              Unit-              Total
                                                                                          Par           Linked             Linked
                                                                                                       Non-Par            Non-Par
Auditors’ fees, expenses etc.
(a) as auditor                                                     679         28             11                —               132               850
(b) as adviser or in any other capacity, in respect of
     — Taxation matters                                             —          —              —                 —                 —                —
     — Insurance matters                                            —          —              —                 —                 —                —
     — Management services; and                                     —          —              —                 —                 —                —
(c) in any other capacity (including out of pocket)                 98         4              2                 —                 19              123
Advertisement and publicity                                    122,948      4,641         6,837                 —           20,276          154,702
Interest and Bank charges                                         1,933        79             33                —             1,469            3,514
Depreciation                                                    63,708      2,589         1,093                 —           12,405            79,795
Information Technology expenses                                 23,244        945           399                 —             4,526           29,114
Electricity charges                                            14,666         596           252                 —             2,856           18,370
Recruitment expenses                                              6,152       250           106                 —             1,198            7,706
Brokerage                                                          988         45             17                —               192            1,242
Stamp Duty                                                        1,669     6,664           163                 —             1,190            9,686
Membership fees                                                   1,255        51             22                —               244            1,572
Preliminary and Share Issue Expenses                              1,664        68             29                —               324            2,085
Other expenses                                                    1,390        56             23                —               271            1,740
      Total                                                    705,734     39,445       17,951                  —          135,265          898,395



Schedule 4 : Benefits Paid (Net)
Particulars                                                                                           2005
                                                                   Par    Non-Par    Annuities        Annuities              Unit-              Total
                                                                                          Par           Linked             Linked
                                                                                                       Non-Par            Non-Par
Insurance Claims
(a) Claims by Death                                            15,705      37,380        1,102                  —               875           55,062
(b) Claims by Maturity                                             —           —            —                   —                —                —
(c) Annuities/Pension payment                                      —           —            —                   —               222              222
(d) Others (Refer note (c) below)                               2,089       1,044          161                  —             1,883            5,177
(Amount ceded in reinsurance)
(a) Claims by Death                                            (2,337)    (12,474)            —                 —               (90)        (14,901)
(b) Claims by Maturity                                              —           —             —                 —                 —               —
(c) Annuities/Pension payment                                       —           —             —                 —                 —               —
(d) Others (Refer note (c) below)                                   —           —             —                 —                 —               —
Amount accepted in reinsurance
(a) Claims by Death                                                 —          —              —                 —                 —                 —
(b) Claims by Maturity                                              —          —              —                 —                 —                 —
(c) Annuities/Pension payment                                       —          —              —                 —                 —                 —
(d) Others                                                          —          —              —                 —                 —                 —
      Total                                                    15,457      25,950        1,263                  —             2,890           45,560
                                                                                                 170 | Kotak Mahindra Old Mutual Life Insurance Limited
                                                                                                       (Formerly known as OM Kotak Mahindra Life Insurance Company Limited)




Registration No: 107; Date of Registration: January 10, 2001
SCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS
(Amounts in thousands of Indian Rupees unless otherwise stated)

Schedule 4 : Benefits Paid (Net) (Contd.)
Particulars                                                                                                             2004
                                                                                Par      Non-Par      Annuities         Annuities              Unit-              Total
                                                                                                           Par            Linked             Linked
                                                                                                                         Non-Par            Non-Par
Insurance Claims
(a) Claims by Death                                                           7,019        35,961             524                 —                 —           43,504
(b) Claims by Maturity                                                           —             24              —                  —                 —               24
(c) Annuities/Pension payment                                                    —             —               —                  —                 —               —
(d) Others                                                                    1,936        11,520             300                 —                 —           13,756
(Amount ceded in reinsurance)
(a) Claims by Death                                                            (600)      (14,380)              —                 —                 —         (14,980)
(b) Claims by Maturity                                                            —             —               —                 —                 —               —
(c) Annuities/Pension payment                                                     —             —               —                 —                 —               —
(d) Others                                                                   (1,235)            —            (225)                —                 —          (1,460)
Amount accepted in reinsurance
(a) Claims by Death                                                              —              —               —                 —                 —                 —
(b) Claims by Maturity                                                           —              —               —                 —                 —                 —
(c) Annuities/Pension payment                                                    —              —               —                 —                 —                 —
(d) Others                                                                       —              —               —                 —                 —                 —
     Total                                                                    7,120        33,125             599                 —                 —           40,844

Notes:
(a) The Insurer does not have any claims, which are settled and unpaid for more than six months.
(b) All the claims are paid in India.
(c) Includes surrender payments and rider benefits.
(d) Refer Schedule 16 – Note 2(e)


Schedule 5 : Share Capital
Particulars                                                                                                                       2005                            2004
Authorized Capital
212,000,000 (2004 – 161,300,000) Equity Shares of Rs. 10 each                                                               2,120,000                       1,613,000
Issued Capital
211,760,643 (2004 – 151,257,600) Equity Shares of Rs. 10 each                                                               2,117,606                       1,512,576
Subscribed Capital
211,760,643 (2004 – 151,257,600) Equity Shares of Rs. 10 each                                                               2,117,606                       1,512,576
Called-up Capital
211,760,643 (2004 – 151,257,600) Equity Shares of Rs. 10 each                                                               2,117,606                       1,512,576
Less: Calls unpaid                                                                                                                  —                               —
Add: Shares forfeited (Amount originally paid up)                                                                                   —                               —
Less: Par Value of Equity Shares Bought back                                                                                        —                               —
Less: Preliminary Expenses                                                                                                     (2,855)                         (4,269)
Less: Expenses on issue of shares                                                                                              (1,414)                         (2,121)
     Total                                                                                                                  2,113,337                       1,506,186

Notes:
(a) Of the above, 156,702,877 (2004 – 111,930,624) fully paid-up Equity Shares of Rs. 10 each fully paid-up are held by Kotak Mahindra Bank Limited, the
      holding company and its nominees.
(b) During the year, the Insurer has issued 60,503,043 (2004 – 19,957,600) Equity Shares of Rs. 10 each fully paid-up at par, by way of rights to its existing
      shareholders.
                                                                                      171 | Kotak Mahindra Old Mutual Life Insurance Limited
                                                                                           (Formerly known as OM Kotak Mahindra Life Insurance Company Limited)




Registration No: 107; Date of Registration: January 10, 2001
SCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS
(Amounts in thousands of Indian Rupees unless otherwise stated)

Schedule 5A : Pattern of Shareholding
(As certified by the Management)

Particulars                                                                                    2005                                2004
Shareholder                                                                         Number               % of                Number                 % of
                                                                                   of Shares          Holding               of Shares             Holding
Promoters
— Indian                                                                         156,702,877          74.00%             111,930,624               74.00%
— Foreign                                                                         55,057,766          26.00%              39,326,976               26.00%
Others                                                                                    —                —                      —                     —
      Total                                                                      211,760,643          100.00%            151,257,600             100.00%

Schedule 6 : Reserves and Surplus
Particulars                                                                                                           2005                            2004
Capital Reserve                                                                                                        —                               —
Capital Redemption Reserve                                                                                             —                               —
Share Premium                                                                                                     520,363                         520,363
Revaluation Reserve                                                                                                    —                               —
General Reserves
Less: Debit balance in Profit and Loss Account                                                                           —                                —
Less: Amount utilized for Buy-back                                                                                       —                                —
Catastrophe Reserve                                                                                                      —                                —
Balance of profit in Profit and Loss Account                                                                             —                                —
      Total                                                                                                       520,363                         520,363

Schedule 7 : Borrowings
Particulars                                                                                                           2005                            2004
Debentures/Bonds                                                                                                        —                               —
Banks                                                                                                                   —                               —
Financial Institutions                                                                                                  —                               —
Others                                                                                                                  —                               —
      Total                                                                                                              —                                —

Schedule 8 : Investments — Shareholders’
Particulars                                                                                                           2005                            2004
LONG TERM INVESTMENTS
Government securities and Government guaranteed bonds including Treasury Bills
[Refer Schedule-16, Note 15 (B)]                                                                                  245,006                           70,341
Other Approved Securities                                                                                              —                                —
Other Investments
(a) Shares
      (aa) Equity                                                                                                      13                               —
      (bb) Preference                                                                                                  —                                —
(b) Mutual Funds                                                                                                       —                                —
(c) Derivative Instruments                                                                                             —                                —
(d) Debentures/Bonds                                                                                                9,857                               —
(e) Other Securities                                                                                                   —                                —
(f) Subsidiaries                                                                                                       —                                —
(g) Investment Properties — Real Estate                                                                                —                                —
Investments in Infrastructure and Social Sector [Refer Note (d) below]                                            128,304                           97,742
Other than Approved Investments                                                                                        —                                —
                                                                                                                  383,180                         168,083
                                                                                      172 | Kotak Mahindra Old Mutual Life Insurance Limited
                                                                                           (Formerly known as OM Kotak Mahindra Life Insurance Company Limited)




Registration No: 107; Date of Registration: January 10, 2001
SCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS
(Amounts in thousands of Indian Rupees unless otherwise stated)

Schedule 8 : Investments — Shareholders’ (Contd.)
Particulars                                                                                                           2005                            2004
SHORT TERM INVESTMENTS
Government securities and Government guaranteed bonds including Treasury Bills                                    125,517                         238,358
Other Approved Securities                                                                                              —                               —
Other Investments
(a) Shares
      (aa) Equity                                                                                                       —                              —
      (bb) Preference                                                                                                   —                              —
(b) Mutual Funds                                                                                                        —                              —
(c) Derivative Instruments                                                                                              —                              —
(d) Debentures/Bonds                                                                                                    —                          52,274
(e) Other Securities (Fixed Deposits)                                                                               60,519                        113,068
(f)   Subsidiaries                                                                                                      —                              —
(g) Investment Properties — Real Estate                                                                                 —                              —
Investments in Infrastructure and Social Sector [Refer Note (d) below]                                              19,000                             —
Other than Approved Investments                                                                                         —                              —
                                                                                                                  205,036                         403,700
      Total                                                                                                       588,216                         571,783

Notes:
(a) All the above investments except term deposits under “Short Term Investments”
      are quoted as at March 31, 2005.
(b) Aggregate market value of quoted investments as at March 31, 2005 is
      Rs. 527,453 (2004 – Rs. 462,168). The aggregate book value of unquoted
      investments as at March 31, 2005 is Rs. 60,519 (2004 – Rs. 113,068).
(c) Aggregate historical cost of equity shares as at March 31, 2005 is
      Rs. 15 (2004 – Nil)
(d) The Insurer has not made any investments in the social sector, as securities of
      acceptable grade were not available.
(e) Refer Schedule 16 – Note 2(d).


Schedule 8A : Investments — Policyholders’
Particulars                                                                                                           2005                            2004
LONG TERM INVESTMENTS
Government securities and Government guaranteed bonds including Treasury Bills                                    840,974                         284,539
Other Approved Securities                                                                                              —                               —
Other Investments
(a) Shares
     (aa) Equity                                                                                                  202,444                         107,243
     (bb) Preference                                                                                                   —                               —
(b) Mutual Funds                                                                                                       —                               —
(c) Derivative Instruments                                                                                             —                               —
(d) Debentures/Bonds
     Quoted                                                                                                         52,589                              —
     Unquoted                                                                                                       26,238                          23,637
(e) Other Securities                                                                                                    —                               —
(f)  Subsidiaries                                                                                                       —                               —
(g) Investment Properties – Real Estate                                                                                 —                               —
Investments in Infrastructure and Social Sector [Refer Note (d) below]                                            348,118                         197,670
Other than Approved Investments                                                                                        —                               —
                                                                                                                1,470,363                         613,089
                                                                                      173 | Kotak Mahindra Old Mutual Life Insurance Limited
                                                                                           (Formerly known as OM Kotak Mahindra Life Insurance Company Limited)




Registration No: 107; Date of Registration: January 10, 2001
SCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS
(Amounts in thousands of Indian Rupees unless otherwise stated)

Schedule 8A : Investments — Policyholders’(Contd.)
Particulars                                                                                                           2005                            2004
SHORT TERM INVESTMENTS
Government securities and Government guaranteed bonds including Treasury Bills              `                       22,302                        114,032
Other Approved Securities                                                                                               —                              —
Other Investments
(a) Shares
      (aa) Equity                                                                                                      —                               —
      (bb) Preference                                                                                                  —                               —
(b) Mutual Funds                                                                                                       —                               —
(c) Derivative Instruments                                                                                             —                               —
(d) Debentures/Bonds                                                                                               52,065                              —
(e) Other Securities (Fixed Deposits)                                                                              21,000                              —
(f) Subsidiaries                                                                                                       —                               —
(g) Investment Properties – Real Estate                                                                                —                               —
Investments in Infrastructure and Social Sector [Refer Note (d) below]                                              6,000                              —
Other than Approved Investments                                                                                        —                               —
                                                                                                                  101,367                         114,032
     Total                                                                                                      1,571,730                         727,121
Notes:
(a) All the above investments are quoted, other than Fixed Deposits under Short
     Term Investments.
(b) Aggregate market value of quoted investments as at March 31, 2005 is
     Rs. 1,503,331 (2004 – Rs. 717,701). The aggregate book value of unquoted
     investments as at March 31, 2005 is Rs. 47,238 (2004 – Rs. 23,627).
     The aggregate market value for quoted investments without equity shares as at
     March 31, 2005 is Rs. 1,300,887 (2004 – Rs. 610,458).
(c) Aggregate historical cost of equity shares as at March 31, 2005 is Rs. 187,310
     (2004 – Rs. 105,000).
(d) The Insurer has not made any investments in the Social Sector, as securities of
     acceptable grade were not available.
(e) Refer Schedule 16 – Note 2(d).

Schedule 8B : Assets held to cover linked Liabilities
Particulars                                                                                                           2005                            2004
LONG TERM INVESTMENTS
Government securities and Government guaranteed bonds including Treasury Bills                                  1,181,732                         245,135
Other Approved Securities                                                                                              —                               —
Other Investments
(a) Shares
      (aa) Equity                                                                                                 925,420                         176,662
      (bb) Preference                                                                                                  —                               —
(b) Mutual Funds                                                                                                       —                               —
(c) Derivative Instruments                                                                                             —                               —
(d) Debentures/Bonds                                                                                              461,163                          50,739
(e) Other Securities                                                                                                   —                               —
(f) Subsidiaries                                                                                                       —                               —
(g) Investment Properties – Real Estate                                                                                —                               —
Investments in Infrastructure and Social Sector                                                                        —                               —
Other than Approved Investments                                                                                        —                               —
                                                                                                                2,568,315                         472,536
SHORT TERM INVESTMENTS
Government securities and Government guaranteed bonds including Treasury Bills                                      96,545                          16,455
Other Approved Securities                                                                                               —                               —
Other Investments
(a) Shares
     (aa) Equity                                                                                                         —                                —
     (bb) Preference                                                                                                     —                                —
                                                                                      174 | Kotak Mahindra Old Mutual Life Insurance Limited
                                                                                           (Formerly known as OM Kotak Mahindra Life Insurance Company Limited)




Registration No: 107; Date of Registration: January 10, 2001
SCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS
(Amounts in thousands of Indian Rupees unless otherwise stated)

Schedule 8B : Assets held to cover linked Liabilities (Contd.)

Particulars                                                                                                           2005                            2004
(b) Mutual Funds                                                                                                       —                                —
(c) Derivative Instruments                                                                                             —                                —
(d) Debentures/Bonds                                                                                                   —                                —
(e) Other Securities (Term Deposit)                                                                               418,391                           46,427
(f)   Subsidiaries                                                                                                     —                                —
Investment Properties – Real Estate                                                                                    —                                —
Investments in Infrastructure and Social Sector                                                                        —                                —
Other than Approved Investments                                                                                        —                                —
Net Current Assets*                                                                                               285,958                         (32,342)
                                                                                                                  800,894                           30,540
      Total                                                                                                     3,369,209                         503,076

* Refer Schedule 16 – Note 23
Notes:
(a) All the above investments except term deposits under “Other Securities” and
      “Net Current Assets” are quoted as at March 31, 2005.
(b) Aggregate historical cost of quoted investments as at March 31, 2005 is
      Rs. 2,609,108 (2004 – Rs. 481,607). The aggregate historical cost of unquoted
      investments as at March 31, 2005 is Rs. 418,391 (2004 – Rs. 46,427).

Schedule 9 : Loans

Particulars                                                                                                           2005                            2004
SECURITY-WISE CLASSIFICATION
Secured
(a) On mortgage of property
      (aa) In India                                                                                                     —                               —
      (bb) Outside India                                                                                                —                               —
(b) On Shares, Bonds, Govt. Securities etc.                                                                             —                               —
(c) Loans against policies                                                                                             849                             811
(d) Others                                                                                                              —                               —
Unsecured                                                                                                            1,456                           1,826
      Total                                                                                                          2,305                           2,637
BORROWER-WISE CLASSIFICATION
(a) Central and State Governments                                                                                       —                               —
(b) Banks and Financial Institutions                                                                                    —                               —
(c) Subsidiaries                                                                                                        —                               —
(d) Companies                                                                                                           —                               —
(e) Loans against policies                                                                                             849                             811
(f) Others – Employees                                                                                               1,456                           1,826
      Total                                                                                                          2,305                           2,637
PERFORMANCE-WISE CLASSIFICATION
(a) Loans classified as standard
     (aa) In India                                                                                                   2,305                           2,637
     (bb) Outside India                                                                                                 —                               —
(b) Non-standard loans less provisions
     (aa) In India                                                                                                        —                               —
     (bb) Outside India                                                                                                   —                               —
      Total                                                                                                          2,305                           2,637
MATURITY-WISE CLASSIFICATION
(a) Short term                                                                                                          —                               —
(b) Long Term                                                                                                        2,305                           2,637
      Total                                                                                                          2,305                           2,637
                                                                                           175 | Kotak Mahindra Old Mutual Life Insurance Limited
                                                                                                (Formerly known as OM Kotak Mahindra Life Insurance Company Limited)




Registration No: 107; Date of Registration: January 10, 2001
SCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS
(Amounts in thousands of Indian Rupees unless otherwise stated)

Schedule 10 : Fixed Assets

Particulars                          Cost/Gross Block                                  Depreciation                                      Net Block
                     April 1,        Addi-    On Sale/     March 31,       April 1,   For the   On Sale/        March 31,        March 31,          March 31,
                       2004           tion     Adjust-         2005          2004       year     Adjust-            2005             2005               2004
                                                 ment                                              ment
Goodwill                   —              —           —          —              —          —             —                —                —                   —
Intangibles —
Software*             89,070        55,004            —     144,074         40,452    29,584             —          70,036           74,038              48,618
Land-Freehold              —              —           —          —              —          —             —                —                —                   —
Leasehold property         —              —           —          —              —          —             —                —                —                   —
Buildings                  —              —           —          —              —          —             —                —                —                   —
Furniture &
fittings **          130,844        10,601           144    141,301         31,281    22,905            52          54,134           87,167              99,563
Information
technology
equipment             90,483        18,139            —     108,622         46,951    26,858             —          73,809           34,813              43,532
Vehicles              12,475         6,843       4,738       14,580          7,244     2,824          3,710          6,358             8,222              5,231
Office equipment      42,849         3,489            20     46,318         12,983     8,891              1         21,873           24,445              29,866
Total                365,721        94,076       4,902      454,895        138,911    91,062          3,763       226,210           228,685            226,810
Work-in-progress                                                                                                                       2,009              2,768
Grand Total                                                                                                                         230,694            229,578
Previous Year        249,079       123,029      (6,387)     365,721         63,095    79,795      (3,979)         138,911           226,810                    —
*       Includes licenses
**      Includes leasehold improvements
Notes:
Refer Schedule 16 – Notes 2(f) and 2(i)



Schedule 11 : Cash and Bank Balances
Particulars                                                                                                                2005                            2004
Cash (including cheques on hand, drafts and stamps)                                                                    307,107                           34,712
Bank Balances
(a) Deposit Accounts
     (aa) Short-term (due within 12 months of the date of Balance Sheet)                                                    —                               —
     (bb) Others                                                                                                            —                               —
(b) Current accounts                                                                                                   219,878                         259,464
(c) Others                                                                                                                  —                               —
Money at Call and Short Notice
(a) With Banks                                                                                                                —                                —
(b) With other Institutions                                                                                                   —                                —
Others                                                                                                                        —                                —
        Total                                                                                                          526,985                         294,176
Balance with non-scheduled banks included in above                                                                            —                                —
Cash and Bank balance
In India                                                                                                               526,985                         294,176
Outside India                                                                                                               —                               —
        Total                                                                                                          526,985                         294,176
                                                                                           176 | Kotak Mahindra Old Mutual Life Insurance Limited
                                                                                                (Formerly known as OM Kotak Mahindra Life Insurance Company Limited)




Registration No: 107; Date of Registration: January 10, 2001
SCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS
(Amounts in thousands of Indian Rupees unless otherwise stated)

Schedule 12 : Advances and Other Assets
Particulars                                                                                                                2005                            2004
ADVANCES
Reserve deposits with ceding companies                                                                                       —                               —
Application money for investments                                                                                            —                            7,320
Prepayments                                                                                                               2,050                           7,069
Advance to Directors/Officers                                                                                                —                               —
Advance tax paid and taxes deducted at source (Net of provision for taxation – Rs. Nil )                                 10,866                          11,053
Advances to suppliers                                                                                                     1,362                           3,291
Advances to employees                                                                                                     2,635                           2,700
      Total (A)                                                                                                          16,913                          31,433
OTHER ASSETS
Income accrued on investments                                                                                            58,233                          24,380
Outstanding Premiums                                                                                                     32,927                          23,116
Agents Balances                                                                                                              —                               —
Foreign Agencies Balances                                                                                                    —                               —
Due from other entities carrying on insurance business (including reinsurers)                                                —                             3260
Due from holding company                                                                                                     —                               —
Deposits pursuant to Section 7 of Insurance Act, 1938 [Refer Schedule-16, Note 15 (B)]                                       —                               —
Security and other deposits                                                                                              76,003                          88,163
Service Tax Unutilised Credit                                                                                            20,475                              —
Other Receivables                                                                                                           506                              —
      Total (B)                                                                                                        188,144                         138,919
      Total (A + B)                                                                                                    205,057                         170,352

Schedule 13 : Current Liabilities
Particulars                                                                                                                2005                            2004
Agents’ balances                                                                                                        97,172                          42,129
Balance due to other insurance companies (net)                                                                          49,501                          20,518
Deposits held on re-insurance ceded                                                                                         —                               —
Premium received in advance                                                                                                 —                           30,195
Unallocated premium (proposals pending underwriting)                                                                    81,453                          71,434
Sundry creditors                                                                                                       105,908                         127,889
Due to holding company                                                                                                   3,014                           8,264
Claims outstanding                                                                                                      11,516                           9,176
Annuities due                                                                                                               —                               —
Due to Officers/Directors                                                                                                   —                               —
Accrued expenses                                                                                                       129,149                          61,802
Taxes deducted at source, payable                                                                                       29,552                          12,987
Statutory dues payable                                                                                                   9,191                           5,064
      Total                                                                                                            516,456                         389,458
Schedule 14 : Provisions
Particulars                                                                                                               2005                            2004
For taxation (less payments and taxes deducted at source)                                                                    —                               —
For proposed dividend                                                                                                        —                               —
For dividend distribution tax                                                                                                —                               —
Provision for gratuity                                                                                                    9,245                           4,563
Provision for leave encashment                                                                                            6,555                           6,211
Others [Refer Schedule 16, Note-26]                                                                                       6,958                              —
       Total                                                                                                             22,758                          10,774
Schedule 15 : Miscellaneous Expenditure
(To the extent not written off or adjusted)
Particulars                                                                                                                2005                            2004
Discount Allowed in issue of shares/debentures                                                                               —                               —
Others                                                                                                                       —                               —
      Total                                                                                                                  —                               —
                                                                                                      177 | Kotak Mahindra Old Mutual Life Insurance Limited
                                                                                                            (Formerly known as OM Kotak Mahindra Life Insurance Company Limited)




Registration No: 107; Date of Registration: January 10, 2001
SCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS
(Amounts in thousands of Indian Rupees unless otherwise stated)
Schedule 16 : Notes to the Financial Statements
1|   BACKGROUND
     Kotak Mahindra Old Mutual Life Insurance Limited (‘the Insurer’) was incorporated on August 31, 2000 as a company under the Companies Act, 1956 to
     undertake and carry on the business of life insurance and annuity. The Insurer has obtained a license from the Insurance Regulatory and Development
     Authority (‘IRDA’) dated January 10, 2001 for carrying on the business of life insurance and annuity. The license has been renewed regularly and is in force
     as at March 31, 2005. During the year, effective June 28, 2004 the Insurer changed its name from OM Kotak Mahindra Life Insurance Company Limited to
     Kotak Mahindra Old Mutual Life Insurance Limited.

2|   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
     The financial statements are prepared and presented under the historical cost convention, on accrual basis of accounting, to comply in all material aspects
     with the applicable accounting standards issued by the Institute of Chartered Accountants of India to the extent applicable, the Companies Act, 1956 of India
     to the extent applicable, and in accordance with the provisions of the Insurance Act, 1938, the Insurance Regulatory and Development Authority Act, 1999
     and the regulations framed thereunder to the extent applicable and the practices prevailing within the insurance industry in India.
     The preparation of the financial statements in conformity with generally accepted accounting principles requires the Management to make estimates and
     assumptions that affect the reported amount of assets, liabilities, revenues and expenses and disclosure of contingent liabilities as of the date of the financial
     statements. The estimates and assumptions used in the accompanying financial statements are based upon the Management’s evaluation of the relevant
     facts and circumstances as of the date of the financial statements. Actual results may differ from the estimates and assumptions used in preparing the
     accompanying financial statements. Any revision to accounting estimates is recognised prospectively in current and future periods.
     The significant accounting policies adopted by the Insurer are as follows:

     (a)   Revenue recognition on Insurance policies
           •    Premium is recognised as income when due from policyholders except on unit linked policies, where the premium is recognised when associated
                units are allotted.
           •     In accordance with the terms of insurance policies, uncollected premium on lapsed policies is not recognised as income until revived.
           •     Lump sum contributions are accounted as a part of the first year premium.
           •     Income from linked policies, which include asset management fees and other charges are recovered in accordance with the terms and conditions
                 of the policies and are accounted on accrual basis.
           •     Premium payable on re-insurance ceded is accounted at the time of recognition of the premium income in accordance with the treaty
                 arrangements with the re-insurers.
           •     Reinsurance premium and reinsurance commission is recognised over the period of risk.

     (b)   Acquisition Costs
           Acquisition costs such as commission and medical fees are costs that vary with and are primarily related to the acquisition of new and renewal insurance
           contracts. Such costs are expensed in the year in which they are incurred.

     (c)   Operating Expenses relating to Insurance Business
           Operating expenses relating to insurance business are assigned to participating, non-participating, annuities and linked business segments as follows:
           •    Expenses directly identifiable to the business segments are allocated on an actual basis.

           •     Other expenses, which are not directly identifiable, are apportioned to the business segments on the basis of either (a) total number of policies
                 issued during the year, or (b) annualized first year premium income, or (c) sum assured during the year, or (d) first year commission, as considered
                 appropriate by the Management.

     (d)   Investments and Investment Income
           •    Investments are made in accordance with the Insurance Act, 1938, the Insurance Regulatory and Development Authority (Investment
                Regulations), 2000 and IRDA (Investment) (Amendment) Regulations, 2004.
           •     Interest income is recognized on accrual basis. Dividend income is recognized when the right to receive is established.
           •     Investments maturing within twelve months from the Balance Sheet date and investments made with the specific intention to dispose them of
                 within twelve months from the Balance Sheet date are classified as ‘Short Term Investments.’ Investments other than Short Term Investments are
                 classified as ‘Long Term Investments.’
           •     In case of impairment in the value of investment as at the Balance Sheet date that is not temporary, the amount of loss is recognised as an
                 expense in the Revenue/Profit and Loss Account.
           Shareholders’ and non-linked policyholders’ investments
           •    Gain/Loss on transfer/sale of securities is the difference between the sale price and the net amortized cost/book value on the date of sale.
                                                                                                        178 | Kotak Mahindra Old Mutual Life Insurance Limited
                                                                                                              (Formerly known as OM Kotak Mahindra Life Insurance Company Limited)




Registration No: 107; Date of Registration: January 10, 2001
SCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS
(Amounts in thousands of Indian Rupees unless otherwise stated)

Schedule 16 : Notes to the Financial Statements (Contd.)
           •     All debt securities are considered as ‘held to maturity’ and accordingly recorded at historical cost (excluding interest paid, if any). Debt securities
                 including government securities are stated at net amortized cost. The premium/discount, if any, on purchase of debt securities is amortized/
                 accrued over the period to maturity on a straight-line basis.
           •     Listed equity shares as at balance sheet date are stated at fair value being the last quoted closing price on the Stock Exchange Mumbai (“BSE”).
                 Unrealised gains/losses arising due to changes in the fair value of listed equity shares are taken to “Fair Value Change Account” and carried
                 forward to balance sheet. The profit or loss on actual sale of listed equity includes the accumulated changes in the fair value previously recognised
                 under “Fair Value Change Account”.

           Unit-Linked business
           •     Gain/loss on transfer/sale of investment for linked business is the difference between the sale consideration and the book cost, which is computed
                 on weighted average basis, as on date of sale.
           •     All debt securities, except treasury bills, for linked business are valued at prices obtained from Fixed Income Money Market and Derivatives
                 Association of India. The discount on purchase of treasury bills is amortized over the period to maturity.
           •     Listed equity shares are valued at fair value, being the last quoted closing price on the BSE. Unrealised gains and losses are recognized in the
                 respective scheme’s revenue account.

           Transfer of investments
           •     Transfer of debt securities from shareholders to policyholders’ fund is transacted at net amortised cost. Effective March 2005, transfers were
                 recorded at the lower of net amortised cost or market value.
     (e)   Claims
           Claims for death, including the reinsurance benefits to the Insurer, are accounted for when intimated. Maturity claims are accounted on the date of
           maturity. Surrender expenses are accounted when incurred.

     (f)   Fixed Assets and Depreciation
           •     Fixed assets are stated at cost less accumulated depreciation. The Insurer capitalises all costs relating to acquisition and installation of fixed assets.
           •     Depreciation on fixed assets is provided under the straight-line method based on the economic useful lives of assets as estimated by the
                 Management. Depreciation is charged on assets from the month the asset is capitalized and up to previous month in case of disposal. Significant
                 software purchases/improvements are capitalized and depreciated over their economic useful lives.
           •     Assets costing up to Rs. 5,000 are written off in the year of acquisition.
           •     The Management estimates the economic useful lives of the various fixed assets as follows:
                 Buildings                                                                                                      30 years
                 Information technology equipment (including software)                                                           3 years
                 Furniture and fittings (including leasehold improvements)                                                       6 years
                 Office equipment                                                                                                5 years
                 Vehicles                                                                                                        4 years
           •     The Management assesses using external and internal sources, whether there is an indication that an asset may be impaired. Impairment occurs
                 where the carrying value exceeds the present value of future cash flows expected to arise from the continuing use of the asset and its eventual
                 disposal. The impairment loss to be expensed is determined as the excess of the carrying amount over the higher of the asset’s net sales price or
                 present value as determined above.

     (g)   Employee Retirement Benefits
           •     Gratuity: The Insurer’s liability toward gratuity, a defined benefit plan, is accounted for on the basis of an actuarial valuation carried out as at the
                 year-end.
           •     Provident Fund: The Insurer’s liability toward statutory provident fund, a defined contribution plan, is accrued each month.
           •     Superannuation Fund: The Insurer’s liability toward superannuation fund, a defined contribution plan, is accrued for the relevant period of
                 employee participation.

     (h)   Accounting for Operating Leases
           Leases where the lessor effectively retains substantially all the risks and benefits of ownership over the lease term are classified as Operating Leases.
           Operating lease rentals are recognized as an expense over the lease period.
                                                                                                     179 | Kotak Mahindra Old Mutual Life Insurance Limited
                                                                                                            (Formerly known as OM Kotak Mahindra Life Insurance Company Limited)




Registration No: 107; Date of Registration: January 10, 2001
SCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS
(Amounts in thousands of Indian Rupees unless otherwise stated)

Schedule 16 : Notes to the Financial Statements (Contd.)
     (i)   Foreign Currency Transactions
           Transactions denominated in foreign currency are recorded at the rate of exchange prevailing on the transaction date. Monetary assets and liabilities
           denominated in foreign currencies at the Balance Sheet date are translated using the rate of exchange prevailing on that date.
           Exchange differences either on settlement or on translation are recognised in the Revenue Account / Profit and Loss Account, as applicable, except in
           cases where they relate to the acquisition of fixed assets, in which case, they are adjusted to the carrying cost of such assets.
     (j)   Segment reporting
           1.    Business Segments
                 In accordance with the Insurance Regulatory and Development Authority (Preparation of Financial Statements and Auditor’s Report of Insurance
                 Companies) Regulations, 2002 (referred to as ‘Accounting Regulations’) read with Accounting Standard 17 on ‘Segment Reporting’ issued by the
                 Institute of Chartered Accountants of India, the Insurer’s business in India is segmented into Participating business, Non-participating business,
                 Annuities Participating business, Annuities Linked Non-participating business, Unit-Linked Non-participating business and Investment of the
                 Shareholders’ funds.
           2.    Segmental revenues and expenses
                 All segment revenues are directly attributed to the respective individual segments. There are no inter-segment revenues.
                 Costs for Participating, Non-participating, Annuity Participating, Annuities Linked Non-participating business and Unit-Linked business:
                 Refer 2 (c) above.
           3.    Segmental assets and liabilities
                 Segment assets and liabilities include those that are employed by a segment in its operating activity.
           4.    Secondary Geographical Segments
                 There are no reportable geographical segments since the Company provides services to customers in the Indian market only and does not
                 distinguish any reportable regions within India.
     (k)   Taxation
           Provision for current income tax, if any, is made on an accrual basis after taking credit for allowances and exemptions in accordance with Income Tax
           Act, 1961. Deferred income tax is recognized for future tax consequences attributable to timing differences between income as determined by the
           financial statements and the recognition for tax purposes. The effect on deferred tax assets and liabilities of a change in tax rates is recognized using
           the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date.
           Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future. However, where there is
           unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognised only if there is virtual certainty of realization of
           such assets. Deferred tax assets are reviewed as at each balance sheet date and written down or written up to reflect the amount that is reasonably or
           virtually certain to be realized.
     (l)   Preliminary and Share Issue expenses
           Share Issue expenses in relation to increase in share capital are written off when incurred. Preliminary Expenses and Initial Share Issue expenses are
           amortised over a period of 3 years. Unamortised Preliminary Expenses and Share Issue expenses are adjusted in the schedule of Share Capital as
           prescribed under the Regulations.
     (m) Service Tax
           Service tax liability on risk premium is set-off against available Cenvat credits. Unutilised credits, if any, are carried forward under “Advances and Other
           Assets” for set-off in subsequent periods.
     (n)   Provisions and Contingencies
           A provision is created 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.
           Contingent liability is disclosed when there is a possible or present obligation that may but probably will not, require an outflow of resources. When
           there is a possible or present obligation where the likelihood of outflow of resources is remote, provision or disclosure is not made.


3|   ACTUARIAL METHOD AND ASSUMPTIONS
     •     The actuarial liabilities have been calculated in accordance with accepted actuarial practice and the requirements of the Insurance Act, 1938, IRDA
           regulations and the guidance notes of the Actuarial Society of India. The method adopted for all non-unitized policies is a Gross Premium valuation. For
           all unitized and unit linked policies two reserves are held a non-unit reserve based on a Gross Premium basis and a unit reserve equal to the
           accumulation fund value of policies.
                                                                                                        180 | Kotak Mahindra Old Mutual Life Insurance Limited
                                                                                                             (Formerly known as OM Kotak Mahindra Life Insurance Company Limited)




Registration No: 107; Date of Registration: January 10, 2001
SCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS
(Amounts in thousands of Indian Rupees unless otherwise stated)

Schedule 16 : Notes to the Financial Statements (Contd.)

     •       The assumptions used in the Gross Premium valuation are based on conservative best estimates together with appropriate margins for adverse deviations
             from experience. The principal assumptions are interest, inflations, return to policyholders’ accounts, lapses, expenses, mortality and morbidity. The
             bases of the assumptions are:

              !      Interest:                                     5.3% to 6.65% depending on the product (2004: 4.5% to 6.65%)

              !      Inflation:                                    5%

              !      Policyholders returns:                        Rates consistent with the earning rates and charges

              !      Lapses:                                       Future policy lapses have been assumed based on the type of policy and the duration for which the
                                                                   policy has been in force

              !      Expenses:                                     Best estimates bearing in mind future business plans and pricing assumptions
              !      Mortality:                                    Based on LIC 94-96 mortality table adjusted for AIDS.

              !      Morbidity:                                    Based on reinsurers’ rates

     •       Reserves for group life business are calculated as the risk premium for the unexpired term with an allowance for expenses and a margin for adverse
             deviations.


4|   POLICY LIABILITIES
     (Forming part of Policyholders’ Funds)

     Particulars                                                                       2005                                                    2004
                                                  Par Non-Par Annuities Annuities               Unit-     Total         Par Non-Par Annuities               Unit-        Total
                                                                            Unit-             Linked                                                      Linked
                                                                          Linked

         At start of the year                 413,583   230,266     61,353              —      9,001    714,203    97,640 153,034               17,232          — 267,906

         Add: Change in valuation
              against policies in force
              (Refer Note 3 above)            692,627   56,614     68,947          389        11,078    829,655 309,509          77,232         43,195      9,001 438,937

         Add: Accumulated
              Fund Addition
              (Refer Note 10 below)           21,841*        —     2,599*               —         —     24,440     6,434*              —          926*          —       7,360

         At end of the year               1,128,051     286,880    132,899             389    20,079 1,568,298 413,583 230,266                  61,353      9,001 714,203
     *Forms part of “Change in Valuation of Liability in respect of life policies – Gross” in the Revenue Account.



5|   CONTINGENT LIABILITIES

     Particulars                                                                                                                        2005                            2004
     1.      Partly paid-up investments                                                                                                     —                               —
     2.      Claims, other than against policies, not acknowledged as debts by the company                                                  —                               —
     3.      Underwriting commitments outstanding (in respect of shares and securities)                                                     —                               —
     4.      Guarantees given by or on behalf of the Company                                                                              500                             500
     5.      Statutory demands/liabilities in dispute, not provided for (Income Tax)                                                   8,270                           8,270
     6.      Reinsurance obligation to the extent not provided for in accounts                                                              —                               —
     7.      Others – Insurance claims in appeal [Gross value of claims Rs. 12,338 (2004 – Rs. 12,000),
             out of which reinsured Rs. 10,875 (2004 - Rs. 10,875)]                                                                    1,463                           1,125

             Total                                                                                                                    10,233                           9,895
                                                                                                      181 | Kotak Mahindra Old Mutual Life Insurance Limited
                                                                                                            (Formerly known as OM Kotak Mahindra Life Insurance Company Limited)




Registration No: 107; Date of Registration: January 10, 2001
SCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS
(Amounts in thousands of Indian Rupees unless otherwise stated)

Schedule 16 : Notes to the Financial Statements (Contd.)

6|   COMPUTATION OF MANAGERIAL REMUNERATION
     (i)    Managing Director’s remuneration, which is included under “Employees’ remuneration and welfare benefits”, is as follows:
                    Particulars                                                                                                        2005                            2004

            (a)     Salary                                                                                                            7,034                           3,023
            (b)     Contribution to provident and superannuation funds                                                                   800                             778
            (c)     Employee Share Option Plans (Refer Note 25)                                                                       1,001                                —
            (d)     Value of perquisites                                                                                                 253                              79
                         Total                                                                                                        9,088                           3,880

     Note: (a)      The above remuneration is in accordance with the requirements of Section 34A of the Insurance Act, 1938 and as approved by the IRDA.
            (b)    The remuneration excludes gratuity and leave encashment, which is accrued based on an actuarial valuation for the Insurer’s overall liability.

     (ii)   Sitting fees paid to Independent Directors amounts to Rs. 75 (2004 – Rs. 60).


7|   CAPITAL COMMITMENTS

     Particulars                                                                                                                       2005                            2004
     Estimated amount of contracts remaining to be executed on capital account
     and not provided for (net of advances)                                                                                          25,613                          10,842


8|   RISK RETENTION
     During the year ended March 31, 2005, the Insurer wrote policies with sum at risk worth Rs. 51,319 million (2004 – Rs. 51,642 million), reinsured therefrom
     Rs. 24,073 million (2004 – Rs. 25,538 million) and thereby retained risk of 53.09 per cent (2004 – 50.5 per cent).


9|   BUSINESS, SECTOR-WISE
     Particulars                                                                     2005                                                      2004
                                                                          Policies          Premium Income                          Policies           Premium Income

     Rural Sector                                                 15.72 per cent               1.12 per cent                14.10 per cent                   1.65 per cent
     Urban Sector                                                 84.27 per cent              98.67 per cent                85.89 per cent                  98.34 per cent
     Social Sector                                                  0.01 per cent              0.21 per cent                 0.01 per cent                   0.01 per cent

     The Insurer has issued 7 policies (2004 – 4 policies), covered 26,326 lives (2004 – 12,533 lives) and underwritten gross premium of Rs. 8,028 (2004 – Rs. 147)
     in the social sector.

10 | ACCUMULATED FUND ADDITION TO PARTICIPATING POLICYHOLDERS
     The Board of Directors has at its meeting held on May 14, 2005, declared an accumulated fund addition of Rs. 24.4 million, as actuarially determined,
     to meet an effective 6.75 per cent return on each participating policyholders’ accumulated fund (2004 – Rs. 7.36 million to meet an effective 6.5 per cent
     return).


11 | CONTRIBUTION MADE TO THE POLICYHOLDERS’ ACCOUNT
     In the year under review, the shareholders contributed Rs. 217,297 (2004 – Rs. 975,813) to the Policyholders’ Account to meet fully the deficit in the
     Participating Policyholders’ Account. The Shareholders’ contribution is irreversible in nature and shall not be recouped to the Shareholders at any point of time.
     Approval from the Shareholders will be obtained for such contribution at the ensuing Annual General Meeting of Company.


12 | ENCUMBRANCES ON ASSETS
     Apart from fixed deposits worth Rs. 500 (2004 – Rs. 500) marked under lien with the postal authorities, there are no encumbrances on the assets of the
     Insurer as at the Balance Sheet date.
                                                                                                    182 | Kotak Mahindra Old Mutual Life Insurance Limited
                                                                                                         (Formerly known as OM Kotak Mahindra Life Insurance Company Limited)




Registration No: 107; Date of Registration: January 10, 2001
SCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS
(Amounts in thousands of Indian Rupees unless otherwise stated)

Schedule 16 : Notes to the Financial Statements (Contd.)

13 | OPERATING LEASE COMMITMENTS
     The Insurer has taken various office and residential premises on operating lease and leave & license agreements. Lease payments are recognized in the Revenue
     Account under ‘Rent, Rates and Taxes.’ The future minimum lease payments under non-cancellable operating leases for such premises are as follows:

     Particulars                                                                                                                    2005                            2004

     Not later than one year                                                                                                      11,318                          22,457
     Later than one year not later than five years                                                                                 4,994                          14,637
     Later than five years                                                                                                            —                               —

14 | RATIOS (in per cent)
                                               Participating       Non-participating         Annuities-              Annuities- Linked                Unit Linked
                                                                                            Participating            Non-participating              Non-participating
                                               2005         2004        2005    2004        2005      2004              2005         2004             2005          2004
      1.   New business premium
           income growth                      13.84     168.37          10.95   (7.59)    (49.83)    89.77                NA           NA           433.95             NA


                                                                                                                                    2005                            2004
      2.   Net retention ratio                                                                                                    98.54                            97.36
      3.   Ratio of expenses of management                                                                                        23.88                            59.61
      4.   Commission ratio                                                                                                         8.46                           12.93
      5.   Ratio of policyholders’ liabilities to shareholders’ funds                                                            322.39                          110.30
      6.   Growth rate of shareholders’ funds                                                                                     38.06                           (39.64)
      7.   Ratio of surplus to policyholders’ liabilities                                                                        (10.09)                          (18.45)
      8.   Change in net worth                                                                                                    16.97                           (24.91)
      9.   Profit after tax/Total Income                                                                                           (3.66)                         (35.02)
     10.   (Total real estate + loans)/(Cash + Invested Assets)                                                                     0.04                            0.12
     11.   Total Investments/(Capital + Surplus)                                                                                 537.80                          208.69
     12.   Total affiliated investments/(Capital + Surplus)                                                                         0.00                            0.00


15 | INVESTMENTS
     A.    All the investments of the Insurer are performing investments in accordance with the directions issued by the Insurance Regulatory and Development
           Authority.
     B.    For the purposes of meeting the requirement of Section 7 of the Insurance Act, 1938, the Company has earmarked 11.68% Government of India,
           2006, having face value Rs. 50,000 and 13.85% Government of India, 2006, having face value Rs. 50,000, in a constituent SGL Account with its
           Bankers (2004 – 11.68% Government of India, 2006, having face value Rs. 50,000). These investments are classified under Investments - Shareholders’
           (Refer Schedule 8).
     C.    Value of contracts in relation to investments for:
           Particulars                                                                                                              2005                            2004
           Purchases where deliveries are pending                                                                               143,972                         140,420
           Sales where payments are due                                                                                              —                               —


16 | TAXATION
     The Company carries on life insurance business and therefore the provisions of Section 44 read with the First Schedule to the Income Tax Act, 1961 are
     applicable for computation of profit and gains of business.
     The Company has not made any provision for taxation in the financial statements since it does not have any taxable income for the year ended March 31, 2005.
     Since life insurance is a long gestation period business, as a matter of prudence the Company has not taken any credit for deferred tax on losses incurred.
                                                                                                   183 | Kotak Mahindra Old Mutual Life Insurance Limited
                                                                                                         (Formerly known as OM Kotak Mahindra Life Insurance Company Limited)




Registration No: 107; Date of Registration: January 10, 2001
SCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS
(Amounts in thousands of Indian Rupees unless otherwise stated)
Schedule 16 : Notes to the Financial Statements (Contd.)

17 | RELATED PARTIES DISCLOSURES
     A. Related Parties where control exists
         Nature of relationship                                                         Related Party
         Holding Company                                                                Kotak Mahindra Bank Ltd.
     B.    Related parties (where transactions have taken place during the years ended March 31, 2005 and March 31, 2004)
           (i)     Holding Company                                                      Kotak Mahindra Bank Ltd.
           (ii)    Associate Company/Joint Venture Partner                              Old Mutual plc
                                                                                        Old Mutual Life Assurance Company
                                                                                        (South Africa) Ltd.
           (iii)   Fellow Subsidiaries                                                  Kotak Securities Ltd.
                                                                                        Kotak Mahindra Capital Company Ltd.
                                                                                        Kotak Mahindra Asset Management Company Ltd.
                                                                                        Kotak Mahindra Primus Ltd.
                                                                                        Kotak Mahindra International Ltd.
           (iv)    Significant influence                                                Aero Agencies Ltd.
                                                                                        OM Kotak Mahindra Superannuation Fund
           (v)     Key management personnel                                             Non-Executive Directors
                                                                                        Mr. Uday Kotak, Chairman
                                                                                        Mr. Hasan Askari, Vice-Chairman
                                                                                        Mr. James Harry Sutcliffe, Director
                                                                                        Mr. Dipak Gupta, Director
                                                                                        Mr. Shivaji Dam, Director (Managing Director up to October 31, 2004)
                                                                                        Executive Director
                                                                                        Mr. Gaurang Shah, Managing Director
     C.    The following are transactions and closing balances of related parties in the ordinary course of business:
                                                               2005                                                                     2004
           Nature of transaction               Holding       Associate           Fellow      Others       Holding        Associate           Fellow              Others
                                              Company        Company        Subsidiaries                 Company         Company          Subsidiary
           Expenses/ reimbursement
           for services received *               29,159 a         6,338 b       3,222          6,278 i     28,169 a           7,774 b             889 g           7,523 i
           Expenses/ reimbursement
           for services given                     6,151a             —          1,771 c           —         3,819 a             488h              66 e                 —
           Premium Income                        33,965a             —          3,145d            —         2,301 a              —                —                    —
           Commission paid                       54,871a             —          6,114e            —         9,967 a              —             9,306 e                 —
           Superannuation Fund
           Contribution                              —               —              —         7,418 f           —                  —                —             7,761 f
           Fixed Assets (net)                       805a             —              —            —             942 a               —                —                —
           Advances                               3,000a             —              —            —              —                  —                —                —
           Outstanding Receivables/
           (Payables)                           (3,014)a       (2,125)b           410          (477)i    (12,662)           (7,088)            (1,579)              (136)
           Issue of share capital              447,722 a      157,308b             —             —       147,686 a          51,890b                —                  —

           * Relates to rent, administrative, information technology infrastructure, tax and legal services, ESOP reimbursement and share in corporate
               advertisements, as applicable.
           (a) Kotak Mahindra Bank Ltd.
           (b) Old Mutual Life Assurance Company (South Africa) Ltd.
           (c) Kotak Securities Ltd. – 1,177, Kotak Mahindra Asset Management Company Ltd. – 289, others – 305
           (d) Kotak Securities Ltd. – 1,838, Kotak Mahindra Capital Company – 981, Kotak Mahindra Asset Management Co. Ltd. – 326
           (e) Kotak Securities Ltd.
           (f) OM Kotak Mahindra Superannuation Fund
           (g) Kotak Securities Ltd. – 655, Kotak Asset Management Co. Ltd. – 111, Others – 123
           (h) Old Mutual Plc
           (i) Aero Agencies

     D.    Refer Note (6) above for the details of managerial remuneration for the details of payments to Directors.
                                                                                                             184 | Kotak Mahindra Old Mutual Life Insurance Limited
                                                                                                                     (Formerly known as OM Kotak Mahindra Life Insurance Company Limited)




Registration No: 107; Date of Registration: January 10, 2001
SCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS
(Amounts in thousands of Indian Rupees unless otherwise stated)
Schedule 16 : Notes to the Financial Statements (Contd.)

18 | SEGMENTAL BALANCE SHEET
    Particulars                 Participating     Non-Participating        Annuities -        Annuities-             Unit-Linked            Shareholders                 Total
                                  business            business            Participating      Linked Non-                Non-
                                                                                             Participating          Participating
                                2005       2004      2005       2004      2005     2004      2005     2004         2005       2004         2005        2004          2005         2004

  Investments               1,130,286   413,807   287,388 242,437       133,061   61,835      516       —        20,479      9,042      588,216     571,783     2,159,946 1,298,904

  Assets held to cover
  linked liabilities               —         —          —         —          —        —     8,161       —      3,361,048   503,076            —           —     3,369,209     503,076
  Loans against policies          36         —        813        811         —        —         —       —             —          —            —           —           849          811
  Reinsurance premium
  for future period            9,445      8,827    22,510      4,997       191      249         2       —         6,206      5,991            —           —        38,354        20,064
  Outstanding Premium         27,711     19,898     3,518      1,364      1,698    1,854        —       —             —          —            —           —        32,927        23,116

  Unallocated Assets               —         —          —         —          —        —         —       —             —          —    2,499,512 1,801,341       2,499,512 1,801,341

  Total Assets              1,167,478   442,532   314,229 249,609       134,950   63,938    8,679       —      3,387,733   518,109    3,087,728 2,373,124       8,100,797 3,647,312

  Proposal Deposits           21,148     16,987     2,879     40,684      1,296    1,348      199       —        55,931     12,415            —           —        81,453        71,434
  Premium received
  in advance                       —         —          —     30,195         —        —         —       —             —          —            —           —             —        30,195
  Balance due to
  reinsurance
  companies                   22,811     20,438     3,105      3,688      1,398     335       215       —        60,326     16,120            —           —        87,855        40,581

  Policy liabilities        1,128,051   413,583   286,880 230,266       132,899   61,353      389       —        20,079      9,001            —           —     1,568,298     714,203
  Provision for linked
  liabilities                      —         —          —         —          —        —     8,161       —     3,335,280    503,076            —           —     3,343,441     503,076
  Insurance reserve                —         —     96,870         —          —        —      (747)      —       400,572          —            —           —       496,695            —

  Shareholders’ Funds        (4,532)*   (8,476)* (75,505)*   (55,224)    (643)*    902*      462*       — (484,455)*       (22,503)   3,087,728 2,373,124       2,523,055 2,287,823

  Total Liabilities         1,167,478   442,532   314,229 249,609       134,950   63,938    8,679       —      3,387,733 518,109 3,087,728 2,373,124 8,100,797 3,647,312

  * Balancing figure




19 | ADDITIONAL SEGMENTAL REPORTING
    Particulars                 Participating      Non-Participating       Annuities -     Annuities-Linked         Unit-Linked              Shareholders                Total
                                  business            business            Participating    Non-Participating      Non-Participating
                                2005       2004      2005       2004      2005     2004     2005     2004         2005       2004         2005         2004          2005         2004

  Non-cash expenses

  other than depreciation

  – Liability against
    life policies            692,627    309,509    56,614      77,232    68,947   43,195     389       —        11,078       9,001           —            —      829,655      438,937

  – Transfer to linked
    fund                          —          —          —          —         —        —    8,161       —     2,832,204     503,076           —            —    2,840,365      503,076

  – Accumulated fund
    addition to
    policyholders             21,841      6,434         —          —      2,599     926       —        —             —          —            —            —        24,440         7,360

  – Amortization of
    premium on
    investments               15,018      3,329     7,684       3,733     1,491     643       —        —           137          14      22,448       23,275        46,778        30,994

  – Gratuity and leave
    encashment                 2,241      2,854       101         116       21       49        6       —         2,216         556           —            —         4,585         3,575
                                                                                                 185 | Kotak Mahindra Old Mutual Life Insurance Limited
                                                                                                         (Formerly known as OM Kotak Mahindra Life Insurance Company Limited)




Registration No: 107; Date of Registration: January 10, 2001
SCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS
(Amounts in thousands of Indian Rupees)
Schedule 16 : Notes to the Financial Statements (Contd.)

20 | SUMMARY OF FINANCIAL STATEMENTS
     Particulars                                                               2005              2004                  2003                 2002                    2001
    Policyholders’ Account
 1. Gross premium income                                                 4,661,638         1,507,210              403,234                75,779                      —
 2. Net premium income                                                   4,593,793         1,467,419              397,227                73,716                      —
 3. Income from investments (Net)                                          181,873            77,397                4,142                    —                       —
 4. Other Income                                                           219,899           976,469                   —                     —                       —
 5. Total Income                                                         4,995,565         2,521,285              401,369                73,716                      —
 6. Commission                                                             389,004           191,957               76,053                18,122                      —
 7. Brokerage/Amortisation                                                  24,330             7,719                   —                     —                       —
 8. Operating expenses related to insurance business                     1,113,302           898,395              613,776               369,852                  28,739
 9. Total Expenses                                                       1,526,636         1,098,071              689,829               387,974                  28,739
10. Payment to policy holders                                               45,560            40,844                2,144                    —                       —
11. Increase in actuarial liability                                        829,655           438,937              231,961                34,693                      —
12. Surplus/(Deficit) from operations                                     (246,651)          440,357             (522,565)             (348,951)                (28,739)
      Shareholders’ Account
13.   Total income under Shareholders’ Account                               53,525            75,246             127,034               140,303                  33,142
14.   Profit/(Loss) before tax                                             (186,921)         (924,214)                 —                     —                    1,229
15.   Provision for tax                                                          —                  —                  —                     —                       —
16.   Profit/(Loss) after tax                                              (186,921)         (924,214)                 —                     —                    1,229
17.   Profit/(Loss) carried to Balance Sheet                             (1,109,906)         (922,985)              1,229                 1,229                   1,229
    Miscellaneous
18. (A) Policyholders’ account:*
         Total Funds                                                     1,568,298           714,203              267,906              34,864                      —
         Total Investments                                               1,571,730           727,121              267,906              34,864                      —
         Yield on Investments (%)                                            6.26%             8.63%              10.05%         Not applicable         Not applicable
      (B)   Shareholders’ account:
            Total Funds                                                  1,028,108           878,969           1,170,610             1,292,999               1,525,900
            Total Investments                                              588,216           571,783             882,563             1,003,091               1,198,220
            Yield on Investments (%)                                         5.35%             7.49%              8.60%                 8.35%                   9.21%
19.   Yield on Total Investments                                             5.95%             7.85%              8.64%                 8.35%                   9.21%
20.   Paid-up Equity Capital                                             2,117,606         1,512,576           1,313,000             1,010,000               1,010,000
21.   Net Worth                                                          1,028,108           878,969           1,170,610             1,292,999               1,525,900
22.   Total Assets                                                       5,954,982         2,098,491           1,438,516             1,327,863               1,525,900
23.   Earnings per share (Rupees)                                             (0.99)            (6.46)                Nil                   Nil                  0.001
24.   Book Value per share (Rupees)                                            4.86              5.81               8.92                 12.80                   15.11

* Excludes Unit-Linked Business


21 | EARNINGS PER SHARE
      Earnings Per Share is calculated by dividing the Profit in the Shareholders’ Account by the weighted average number of equity shares outstanding during
      the year. The numbers used in calculating basic and diluted earnings per equity share are as follows:
      Particulars                                                                                                                           2005                    2004
      Profit after taxation and before exceptional items                                                                             (186,921)               (924,214)
      Profit after taxation                                                                                                          (186,921)               (924,214)
      Weighted average number of shares                                                                                           188,250,100             143,110,525
      Earnings per share before exceptional items (Basic and Diluted)                                                                (Rs. 0.99)               (Rs. 6.46)
      Earnings per share (Basic and Diluted)                                                                                         (Rs. 0.99)               (Rs. 6.46)
      Face value per share                                                                                                              Rs. 10                   Rs. 10
                                                                                                  186 | Kotak Mahindra Old Mutual Life Insurance Limited
                                                                                                       (Formerly known as OM Kotak Mahindra Life Insurance Company Limited)




Registration No: 107; Date of Registration: January 10, 2001
SCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS
(Amounts in thousands of Indian Rupees)
Schedule 16 : Notes to the Financial Statements (Contd.)

22 | ADDITIONAL INFORMATION ON REMUNERATION
     Information as per Section 217 (2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975

     1.    Employed for the full year

               Name                 Gross           Designation              Qualifications           Exp.        Age Date of                 Last Employment
                                    Remuneration                                                      Years       Years commence-             held
                                    (Rs.)                                                                               ment
              Arun Patil            2,830,410       Vice President,          M.A.                     24          49       02-Dec-02          ICICI Prudential Life
                                                    Sales Development                                                                         Insurance Co. Ltd.
              Deepak Varma          3,671,897       Branch Manager, Sales    B. Com.                  11          31       11-Feb-02          G E Countrywide
                                                                                                                                              Consumer Finance Ltd.
              G Murlidhar           5,414,586       Chief Financial Officer B. Sc., ACA, ACS, ICWA 22             44       01-Apr-01         Kotak Mahindra
                                                    and Company Secretary                                                                    Finance Ltd.
              Gagan Bhalla          2,400,520       Manager, Sales           B.Com.                   7           28       22-Apr-02         LG Electronics Ltd.
              J Eksteen de Waal     7,721,009       Head, Sales Training     Biuris, LLB, FILPA       23          47       06-Jan-03          PFA
              James Thompson        9,108,925       Appointed Actuary        FIA, FIAA, FASI          29          58       30-Apr-02          Old Mutual Life
                                                                                                                                              Assurance Co.
                                                                                                                                              (South Africa) Ltd.
              Karan Bhalla          5,065,670       Senior Vice President,   B.Com., CA               24          46       03-Apr-04          Standard Chartered
                                                    Alternate Channels                                                                        Bank
              Nandip Vaidya         5,191,984       Senior Vice President,   B. Tech (IIT), PGDM (IIM) 19         41       01-Oct-02         Kotak Mahindra
                                                    Tied Agency                                                                              Finance Ltd.
              Nihar Rao             4,708,906       Vice President, IT       B.E. (IIT), PGDM (IIM)   20          46       01-Jul-01         Indian Hotels
                                                                                                                                             Company Ltd.
              S. Srikanth           2,451,159       Senior Manager, Sales    B. Com., PGD             4           26       01-Jun-01         First Employment
                                                                             (Rural Management)
              Sandeep Shrikhande    2,471,316       Vice President, Sales    B. Com., CA              19          43       01-Dec-02          Kotak Mahindra
                                                                                                                                              Finance Ltd.
              Shekhar Bhandari      2,507,366       Vice President, Sales    B. Com., ACA, ACS,       8           33       01-Dec-00         Matrix Information
                                                                             AICWA
              Sudipto Roy            2,486,533      Vice President, Sales    B. Com., ACA, AICWA       11         39        16-Apr-02        Birla Sunlife
                                                                                                                                             Insurance Co. Ltd.
              Suresh Agarwal        3,852,838       Vice President, Sales    B. Com., ACA, ACS,       10          35       01-Jun-01          Kotak Mahindra
                                                                             AICWA                                                            Finance Ltd.
              Yograj Sharma         2,730,973       Vice President, Sales    M.A.                     20          46       30-Apr-01          Life Insurance
                                                                                                                                              Corporation of India


     2.       Employed for part of the year

               Name                 Gross           Designation              Qualifications           Exp.        Age Date of                 Last Employment
                                    Remuneration                                                      Years       Years commence-             held
                                    (Rs.)                                                                               ment
              Andre Classens        4,141,418       Business Head            Fellowship               30          49       01-Jul-04          Old Mutual Life
                                                                                                                                               Assurance Co
                                                                                                                                              (South Africa) Ltd.
              Gaurang Shah*          4,399,155      Managing Director        M. Com., ACA, ACS,        22         44        13-Jul-04        Kotak Mahindra
                                                                             AICWA                                                           Bank Ltd.
              K. Madhava Rao        1,988,763       Vice President, HR       M. A., PMIR (TISS)       26          47       19-Oct-01         Syntel India Ltd.
              Shivaji Dam*          6,673,396       Managing Director        B. Com., ACA, ACS,       23          48       06-Jan-01          Kotak Mahindra
                                                                             AICWA                                                            Finance Ltd.
              Yash Mohan Prasad     1,279,786       Vice President, Sales    B.A.                     16          44       01-Jan-01          Kotak Mahindra
                                                                                                                                              Finance Ltd.


     Notes:
     1.    Gross remuneration includes salary, house rent allowance, reimbursement of medical expenses and leave travel passage, Company’s contribution to
           Provident and Superannuation funds, cost of employee share option plans and monetary value of perquisites calculated in accordance with the
           provisions of the Income Tax Act, 1961 and the Rules made thereunder.

     2.    The nature of employment in all cases is non-contractual except in cases marked (*) and the terms and conditions of employment are as per the
           Company’s rules.

     3.    None of the above employees is related to any Director of the Company and holds more than 2% of the total share capital of the Company.
                                                                                187 | Kotak Mahindra Old Mutual Life Insurance Limited
                                                                                     (Formerly known as OM Kotak Mahindra Life Insurance Company Limited)




Registration No: 107; Date of Registration: January 10, 2001
SCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS
(Amounts in thousands of Indian Rupees)
Schedule 16 : Notes to the Financial Statements (Contd.)

23 | BALANCE SHEET OF LINKED BUSINESS AS AT MARCH 31, 2005
     Particulars                            Bond    Money         Gilt   Balanced     Growth         Aggressive            Floating             Total
                                            Fund    Market                                                                     rate

     SOURCES OF FUNDS

     Policyholders’ Contribution          566,757    3,303     811,581    355,039     958,442              90,318           510,439       3,295,879
     Revenue account                        1,509      387       5,782     11,438      53,421                  422                371         73,330
     Total                                568,266    3,690     817,363    366,477   1,011,863              90,740           510,810       3,369,209


     APPLICATION OF FUNDS
     Investments
     – Equity                                  —        —           —     174,322     661,658              89,440                   —       925,420
     – Debt                               428,046    3,660     780,524    181,554     371,972                3,777          388,298       2,157,831
     Current Assets
     Interest Receivable                    5,870      30       31,703      2,512        4,554                   88            8,447          53,204
     Dividend Receivable                       —        —           —        110           483                   44                 —             637
     Cash and Bank                        134,369       —        5,159     44,975      34,474              37,707           114,082         370,766
     Sub-Total (A)                        140,239      30       36,862     47,597      39,511              37,839           122,529         424,607
     Current Liabilities
     Outstanding purchases                     —        —           —      36,978      61,227              40,304                   —        138,509
     Other current liabilities                19        —          23         18             51                  12                17             140

     Sub-Total (B)                            19        —          23      36,996      61,278              40,316                  17       138,649
     Net Current Assets (C) = (A-B)       140,220      30       36,839     10,601     (21,767)             (2,477)          122,512         285,958
     Total                                568,266    3,690     817,363    366,477   1,011,863              90,740           510,810       3,369,209




     REVENUE ACCOUNT FOR LINKED BUSINESS FOR THE PERIOD ENDED MARCH 31, 2005
     Particulars                            Bond    Money         Gilt   Balanced     Growth         Aggressive            Floating             Total
                                            Fund    Market                                                                     rate

     INCOME
     Dividend income                           —        —           —       1,071        6,140                 152                  —           7,363
     Interest income                        1,865      445       9,604      4,126      12,820                    98               450         29,408
     Net unrealised gain                     (30)       —          (2)      6,860      41,293                  239                   8        48,368
     Net profit on sale of Investments       (13)       —      (2,466)       996         1,231                 154                  —             (98)
     Total                                  1,822      445       7,136     13,053      61,484                  643                458         85,041

     EXPENSES
     Custody charges                           1        —           —         47           200                   20                 —             267
     Fund management fees                    312       58        1,354      1,568        7,863                 201                 87         11,443
     Total                                   313        58       1,354      1,615        8,063                 221                 87         11,710

     Net Income carried to
     Balance Sheet                          1,509      387       5,782     11,438      53,421                  422                371         73,330
                                                                                                 188 | Kotak Mahindra Old Mutual Life Insurance Limited
                                                                                                         (Formerly known as OM Kotak Mahindra Life Insurance Company Limited)




Registration No: 107; Date of Registration: January 10, 2001
SCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS
(Amounts in thousands of Indian Rupees)
Schedule 16 : Notes to the Financial Statements (Contd.)

24 | BALANCE SHEET OF LINKED BUSINESS AS AT MARCH 31, 2004
     Particulars                                   Bond Fund        Money Market                  Gilt           Balanced                Growth                     Total

     SOURCES OF FUNDS
     Policyholders Contribution                           764                16,357           239,703               39,493              192,027                 488,344
     Revenue account                                       26                    98               172                2,113               12,323                  14,732
     Total                                                790                16,455           239,875               41,606              204,350                 503,076

     APPLICATION OF FUNDS
     Investments
     — Equity                                              —                     —                 —                22,534              154,128                 176,662
     — Debt                                               763                16,455           233,337               26,201               82,000                 358,756
     Current Assets
     Interest Receivable                                    27                    —             6,545                   110                   252                  6,934
     Sub-Total (A)                                          27                    —             6,545                   110                   252                  6,934
     Current Liabilities
     Outstanding purchases                                  —                     —                 —                 7,236               32,014                  39,250
     Other current liabilities                              —                     —                 7                     3                   16                      26
     Sub-Total (B)                                          —                     —                 7                 7,239               32,030                  39,276
     Net Current Assets (C) = (A-B)                         27                    —             6,538               (7,129)             (31,778)                (32,342)
     Total                                                790                16,455           239,875               41,606              204,350                 503,076

     REVENUE ACCOUNT FOR LINKED BUSINESS FOR THE PERIOD ENDED MARCH 31, 2004
     Particulars                                   Bond Fund        Money Market                  Gilt           Balanced                Growth                     Total
     INCOME
     Dividend income                                        —                     —                —                     51                   385                    436
     Interest income                                        26                   112              214                   392                 2,938                  3,682
     Net unrealised gain                                    —                     —                —                    888                 6,496                  7,384
     Net profit on sale of Investments                      —                     —                —                    922                 3,398                  4,320
     Other income                                           —                     —                —                      3                    —                       3
     Total                                                  26                   112              214                 2,256               13,217                  15,825
     EXPENSES
     Custody charges                                        —                     —                 —                    37                   192                     229
     Fund management fees                                   —                     14                42                  106                   702                     864
     Total                                                  —                     14                42                  143                   894                  1,093
     Net Income carried to Balance Sheet                    26                    98              172                 2,113               12,323                  14,732


25 | EMPLOYEE SHARE OPTION PLANS (ESOP)
     During the year, the Company reimbursed Kotak Mahindra Bank Rs. 4,311 (2004 – Nil) toward ESOP granted to the employees of the Company. These costs
     are a part of Employees’ remuneration and welfare benefits in Schedule 3. The expected future ESOP cost for the granted options is Rs. 5,399 (2004 – Nil).

26 | PROVISIONS
     Additional information in respect of other provisions in Schedule 14:
     As at April 1, 2004                   Nil
     Additional provision made             Rs. 6,958
     Incurred and charged                  Nil
     Unused amounts reversed               Nil
     As at March 31, 2005                  Rs. 6,958
     Nature of obligation                  Guaranteed Performance-cum-Loyalty Bonus to Sales Managers
     Expected timing                       June 2005, June 2006
     Assumptions                           Attrition rate, Performance rating

27 | PRIOR YEAR COMPARATIVES
     Prior year amounts have been reclassified wherever necessary to conform to current year’s presentation.
                                                                                                  189 | Kotak Mahindra Old Mutual Life Insurance Limited
                                                                                                         (Formerly known as OM Kotak Mahindra Life Insurance Company Limited)




Registration No: 107; Date of Registration: January 10, 2001
STATEMENT OF RECEIPTS & PAYMENTS FOR THE YEAR ENDED MARCH 31, 2005
(Amounts in thousands of Indian Rupees)
Particulars                                                                                                              Year ended                      Year ended
                                                                                                                      March 31, 2005                  March 31, 2004
Cash Flows from Operating Activities
Premium and Deposits from Policyholders                                                                                      4,631,651                        1,567,989
Cash paid to Agents, Suppliers and Employees                                                                                (1,215,792)                        (924,231)
Advances/Loans/Deposits placed                                                                                                   12,492                         (14,539)
Reinsurance premium (net)                                                                                                       (15,229)                          (8,131)
Claims paid (net of reinsurance)                                                                                                (58,121)                        (48,108)
Deposits held for regulatory purposes                                                                                                  —                           5,500
Income-tax paid                                                                                                                      187                           3,193
Net cash from/(deployed in) Operating Activities                                                                             3,355,188                          581,673

Cash Flows from Investing Activities
Purchase of fixed assets                                                                                                        (94,076)                      (123,029)
Interest received on Investments (net of interest expended on purchase of investments)                                         144,537                          106,411
Decrease/(Increase) in investments (net)                                                                                    (3,777,266)                        (549,113)
Advances to Suppliers of fixed assets                                                                                                759                          11,305
Proceeds on sale of fixed assets                                                                                                  1,490                            2,408
Net cash deployed in Investing Activities                                                                                    (3,724,556)                      (552,018)

Cash Flows from Financing Activities
Proceeds from issue of Share Capital                                                                                           605,030                          199,576
Expenses on subscription of shares                                                                                               (2,853)                                —
Net cash from Financing Activities                                                                                             602,177                          199,576
Net (decrease)/increase in Cash and Cash Equivalents                                                                           232,809                          229,231
Cash and Cash Equivalents at start of year                                                                                     294,176                            64,945
Cash and Cash Equivalents at end of year                                                                                       526,985                          294,176

Notes:
(a) Cash and cash equivalents at the end of the year includes:
                                                                                                                                    2005                            2004
      Cash (including cheques on hand, drafts and stamps)                                                                       307,107                           34,712
      Bank Balances (including deposits)                                                                                        219,878                         259,464
                                                                                                                                526,985                         294,176

(b)   The above Statement of Receipts and Payments has been prepared as prescribed by Insurance Regulatory (Preparation of Financial Statements & Auditor’s
      Report of Insurance Companies) Regulations, 2002 under the ‘Direct Method’ laid out in Accounting Standard 3 – ‘Cash Flow Statements’ issued by the
      Institute of Chartered Accountants of India.

(c)   Due to large volume of investments transactions, cash flow is reported on net basis in accordance with Accounting Standard 3 issued by the Institute of
      Chartered Accountants of India.

As per our report of even date attached                                             For and on behalf of the Board of Directors

Sharmila A. Karve                            Akeel Master                           Uday Kotak                                     Hasan Askari
Partner                                      Partner                                Chairman                                       Vice-Chairman
Membership No. 43229                         Membership No. 46768
For and on behalf of                         For and on behalf of                   Dipak Gupta                                    Gaurang Shah
Lovelock & Lewes                             BSR & Co.                              Director                                       Managing Director
Chartered Accountants                        (Formerly Bharat S. Raut & Co.)
                                             Chartered Accountants                  G. Murlidhar                                   James Thompson
Mumbai                                                                              Chief Financial Officer                        Appointed Actuary
May 14, 2005                                                                        & Company Secretary

								
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