Annual Report 09 - 10 IDFC SUBSIDIARIES ANNUAL REPORT 09 - 10 by sdfgsg234

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									I D F C S U B S I D I A R I E S A N N U A L R E P O R T 09 - 10
CONTENTS


     I D F C P R I VAT E E Q U I T Y     02   IDFC FINANCE LIMITED                 63
     C O M PA N Y L I M I T E D
                                              IDFC SECURITIES                      75
     I D F C T R U ST E E C O M PA N Y   18   LIMITED
     LIMITED
                                              I D F C C A P I TA L L I M I T E D   94
     IDFC INVESTMENT                     28
     ADVISORS LIMITED                         IDFC SSKI STOCK                      112
                                              BROKING LIMITED
     IDFC PROJECT EQUITY                 46
     C O M PA N Y L I M I T E D               I D F C C A P I TA L C O M PA N Y    126
                                              LIMITED
IDFC PPP TRUSTEESHIP              136   I D F C C A P I TA L          210
C O M PA N Y L I M I T E D              (SINGAPORE) PTE
                                        LIMITED
IDFC PROJECTS LIMITED             146
                                        IDFC FUND OF FUNDS            226
IDFC ASSET                              LIMITED
                                  163
M A N AG E M E N T C O M PA N Y
LIMITED                                 IDFC GENERAL                  236
                                        PA RT N E R S L I M I T E D
IDFC AMC TRUSTEE                  184
C O M PA N Y L I M I T E D              DHEERU POWERGEN               246
                                        P R I VAT E L I M I T E D
IDFC PENSION FUND                 196
MANAGEMENT LIMITED
    IDFC private
    equity company
    limited

    B O A R D O F D I R E CTO R S
    ■   Dr. Rajiv B. Lall
        Chairman
    ■   Mr. Vikram Limaye
    ■   Mr. Kishor Chaukar
    ■   Mr. N. S. Raghavan
    ■   Mr. Jaithirth Rao
    ■   Mr. Dominic Price

    A U D I TO R S
    ■   Deloitte Haskins & Sells
        Chartered Accountants

    P R I N C I PA L B A N K E R S
    ■   HDFC Bank Limited

    R E G I ST E R E D O F F I C E
    Naman Chambers, C-32, G-Block,
    Bandra-Kurla Complex, Bandra (East),
    Mumbai 400 051.
    TEL +91 22 42222000
    FAX +91 22 26523803




2    I D F C A N N U A L R E P O R T 09 –10
  D I R E CT O R S ’ R E P O R T


TO THE MEMBERS                                                                 recommended confirmation of the said interim dividend as final
Your directors have pleasure in presenting the Eighth Annual Report            dividend for the year.
together with the audited accounts for the year ended March 31,
                                                                               PARTICULARS REGARDING CONSERVATION OF ENERGY
2010.
                                                                               AND TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
OPERATIONAL REVIEW                                                             EARNINGS AND EXPENDITURE
Your Company continues to be committed to the development                      Since the Company does not carry out any manufacturing activity, the
of infrastructure in the country and manages three funds – India               particulars regarding conservation of energy, technology absorption
Development Fund, IDFC Private Equity Fund II and IDFC Private                 and other particulars as required by the Companies (Disclosure of
Equity Fund III having a total capital commitment of INR 59.92 billion.        Particulars in the Report of the Board of Directors) Rules, 1998 are
Your Company closed only two deals during the year and these deals             not applicable.
were related to earlier deals done by IDFC Private Equity Fund II. No          The Company has no earnings in Foreign Exchange. The particulars
‘new’ deal was closed during the year. This was primarily driven by the        regarding foreign exchange expenditure are furnished at Item No. 6 in
fact that, in our view, valuations were too high.                              the Notes to Accounts.
Your Company, therefore, focused a lot of its efforts on managing              PARTICULARS OF EMPLOYEES’ REMUNERATION
the existing portfolio and on completing exits to reduce the size of           The Company has eleven employees in receipt of remuneration of
the portfolio. As a result, there were 5 liquidity events (including 3         more than Rs.24 lakh per annum. In accordance with the provisions of
full exits and 1 partial exit) during the year and also fully exited our       Section 217 (2A) of the Companies Act, 1956 and the rules framed
holding in one company that we had taken public earlier                        thereunder, the names and other particulars of employees are set out
Your Company won three awards this year:                                       in the Annexure to the Directors’ Report.
INFRASTRUCTURE INVESTOR AWARDS 2009                                            DIRECTORS
i. Asian Infrastructure Fund Manager of the Year.                              Mr. Vikram Limaye and Mr. Kishor Chaukar retire by rotation at the
ii. Asian Infrastructure Deal of the Year.                                     ensuing Annual General Meeting and being eligible offer themselves
                                                                               for re-appointment.
PRIVATE EQUITY INTERNATIONAL AWARDS 2009
                                                                               The Board recommends their re-appointment as Directors of the
Best Private Equity Firm in India.
                                                                               Company.
FINANCIAL RESULTS
                                                                               AUDITORS
                                                        RUPEES (IN MILLIONS)
                                                                               M/s. Deloitte Haskins & Sells, Chartered Accountants will retire
                                                FOR THE        FOR THE         as the statutory auditors of the Company at the ensuing Annual
                                             YEAR ENDED     YEAR ENDED         General Meeting. The Board at its meeting held on April 22, 2010 has
                                              MARCH 31,      MARCH 31,
                                                                               proposed their re-appointment as Auditors to audit the accounts of
                                                   2010           2009
                                                                               the Company for the financial year ending March 31, 2011.
Total Income                                      990.55           983.22
Less: Total Expenses                              285.38           195.81      M/s. Deloitte Haskins & Sells, the retiring Auditors, have confirmed
Profit before Tax                                 705.17           787.41      that their re-appointment, if made, would be in conformity with the
Less: Provision for Tax                           236.94           271.44      provisions of Sections 224 and 226 of the Companies Act, 1956 and
Profit after Tax                                  468.23           515.97      also indicated their willingness to be re-appointed. You are requested
Add: Balance Brought Forward                      721.89           725.50      to consider their re-appointment.
Total Available for Appropriation                1,190.12         1,241.47
                                                                               DEPOSITS
APPROPRIATIONS:                                                                The Company has not accepted any fixed deposits during the year
Transfer to General Reserve                        46.82             51.60
                                                                               under review.
Interim Dividend                                  600.00           400.00
Tax on Dividend                                   101.97             67.98     AUDIT COMMITTEE
Balance Carried Forward                           441.33           721.89      The Audit Committee comprises of the following Directors as its
                                                                               Members:
DIVIDEND
Given the strong financial performance, the Board had approved                 Mr. Dominic Price, Chairman
interim dividend distribution amounting to Rs.600 million resulting            Mr. N.S. Raghavan, Member
in an aggregate dividend rate of 120000% i.e. Rs.12000/- per share.            Mr. Vikram Limaye, Member
Your Directors have not recommended any further dividend and
                                                                               The Audit Committee met four times during the year.




                                                                                           I D F C P R I V A T E E Q U I TY C O M P A N Y L I M I T E D   3
DIRECTORS’ RESPONSIBILITY STATEMENT                                          The Board would like to express its gratitude for the unstinted
Based on the information and explanation furnished by the Company,           support and guidance received from Infrastructure Development
the Directors confirm:                                                       Finance Company Limited (IDFC), the parent organisation, and also
¬ the applicable accounting standards have been followed in                  from other group companies.
preparation of annual accounts and there are no material departures;         The Board would also like to express their sincere thanks and
¬ that they have selected such accounting policies and applied them          appreciation to all the employees for their commendable teamwork,
consistently and made judgements and estimates that are reasonable           exemplary professionalism and enthusiastic contribution during the
and prudent, so as to give a true and fair view of the state of affairs of   year.
the Company as at March 31, 2010 and of the profit of the Company for
the year ended on that date;
¬ that they have taken proper and sufficient care for the maintenance
of adequate accounting records, in accordance with the provisions of
the Companies Act, 1956 for safeguarding the assets of the Company           FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
and for preventing and detecting fraud and other irregularities; and
¬   that they have prepared the annual accounts on a going concern basis.
                                                                             RAJIV B. LALL
APPRECIATION
                                                                             Chairman
The Board wishes to thank the investors of India Development
Fund, IDFC Private Equity Fund II and IDFC Private Equity Fund III,
the Ministry of Finance, Reserve Bank of India and Securities and            Mumbai
Exchange Board of India for their continued support.                         April 22, 2010




    4    I D F C A N N U A L R E P O R T 09 –10
  AU D I TO RS ’ R E PO RT

To The Members of IDFC Private Equity Company Limited                    (d) in our opinion, the Balance Sheet, the Profit and Loss Account
1. We have audited the attached Balance Sheet of IDFC PRIVATE                and the Cash Flow Statement dealt with by this report are in
EQUITY COMPANY LIMITED (“the Company”) as at March 31, 2010,                 compliance with the Accounting Standards referred to in Section
the Profit and Loss Account and the Cash Flow Statement of the               211(3C) of the Companies Act, 1956;
Company for the year ended on that date, both annexed thereto.           (e) in our opinion and to the best of our information and according
These financial statements are the responsibility of the Company’s           to the explanations given to us, the said accounts give the
Management. Our responsibility is to express an opinion on these             information required by the Companies Act, 1956 in the manner
financial statements based on our audit.                                     so required and give a true and fair view in conformity with the
2. We conducted our audit in accordance with the auditing standards          accounting principles generally accepted in India:
generally accepted in India. Those Standards require that we plan            (i)   in the case of the Balance Sheet, of the state of affairs of
and perform the audit to obtain reasonable assurance about whether                 the Company as at March 31, 2010;
the financial statements are free of material misstatements. An              (ii) in the case of the Profit and Loss Account, of the profit of
audit includes examining, on a test basis, evidence supporting the                the Company for the year ended on that date and
amounts and the disclosures in the financial statements. An audit also
                                                                             (iii) in the case ofthe Cash Flow Statement, of the cash flows of
includes assessing the accounting principles used and the significant
                                                                                   the Company for the year ended on that date.
estimates made by the Management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a   5. On the basis of the written representations received from the
reasonable basis for our opinion.                                        Directors as on March 31, 2010 taken on record by the Board of
                                                                         Directors, none of the Directors is disqualified as on March 31, 2010
3. As required by the Companies (Auditor’s Report) Order, 2003
                                                                         from being appointed as a director in terms of Section 274(1)(g) of
(CARO) issued by the Central Government in terms of Section 227(4A)
                                                                         the Companies Act, 1956.
of the Companies Act, 1956, we enclose in the Annexure a statement
on the matters specified in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in
paragraph 3 above, we report as follows:
                                                                         FOR DELOITTE HASKINS & SELLS
(a) we have obtained all the information and explanations which          Chartered Accountants
    to the best of our knowledge and belief were necessary for the       (Registration No. 117366W)
    purposes of our audit;
(b) in our opinion, proper books of account as required by law           NALIN M. SHAH

    have been kept by the Company so far as it appears from our          Partner
    examination ofthose books;                                           Membership No. 15860

(c)   the Balance Sheet, the Profit and Loss Account and the Cash
      Flow Statement dealt with by this report are in agreement with     Mumbai
      the books of account;                                              April 22, 2010




                                                                                     I D F C P R I V A T E E Q U I TY C O M P A N Y L I M I T E D   5
      ANNEXURE                                                                                                                            TO THE AUDITORS’ REPORT


(Referred to in paragraph 3 of our report of even date)                                       (vii) In our opinion, the internal audit functions carried out during
(i)       Having regard to the nature ofthe Company’s business /                                    the year by a firm of Chartered Accountants appointed by the
          activities / result / transactions, etc. clauses (i)(c), (ii), (viii), (x),               Management have been commensurate with the size of the
          (xi), (xii), (xiii), (xiv), (xv), (xvi), (xvii), (xviii), (xix), and (xx) of CARO         Company and the nature of its business.
          are not applicable.                                                                 (viii) According to the information and explanations given to us in
(ii) In respect of its fixed assets:                                                                 respect of statutory dues:
          (a) The Company has maintained proper records showing full                               (a) The Company has been regular in depositing undisputed
              particulars, including quantitative details and situation of                             dues, including Provident Fund, Income-tax, Service Tax,
              the fixed assets.                                                                        Cess and other material statutory dues applicable to it with
                                                                                                       the appropriate authorities.
          (b) The fixed assets were physically verified during the year by
              the Management in accordance with a regular programme                                (b) There were no undisputed amounts payable in respect of
              of verification which, in our opinion, provides for physical                             Income-tax and other material statutory dues in arrears
              verification of all the fixed assets at reasonable intervals.                            as at March 31, 2010 for a period of more than six months
              According to the information and explanations given to us,                               from the date they became payable.
              no material discrepancies were noticed on such verification.                         (c)   There were no disputed Income Tax, Service Tax and any
(iii) The Company has neither granted nor taken any loans, secured                                       other material statutory dues which were not deposited as
      or unsecured, to/from companies, firms or other parties listed                                     on March 31, 2010.
      in the Register maintained under Section 301 of the Companies                           (ix) To the best of our knowledge and according to the information
      Act, 1956.                                                                                   and explanations given to us, no fraud by or on the Company has
(iv) In our opinion and according to the information and explanations                              been noticed or reported during the year.
     given to us, there is an adequate internal control system
     commensurate with the size of the Company and the nature of
     its business with regard to purchases of fixed assets and the                            FOR DELOITTE HASKINS & SELLS
     sale of services. During the course of our audit, we have not                            Chartered Accountants
     observed any major weakness in such internal control system.
                                                                                              (Registration No. 117366W)
(v) To the best of our knowledge and belief and according to
    the information and explanations given to us, there were no                               NALIN M. SHAH
    contracts or arrangements that needed to be entered in the
                                                                                              Partner
    Register maintained under Section 301 of the Companies Act,
    1956.                                                                                     Membership No. 15860

(vi) According to the information and explanations given to us, the
     Company has not accepted any deposit from the public during                              Mumbai
     the year.                                                                                April 22, 2010




      6      I D F C A N N U A L R E P O R T 09 –10
   BALANCE SHEET                                                                                                    AS AT MARCH 31, 2010



                                                                                                      RUPEES                              RUPEES

                                                                SCHEDULE          AS AT MARCH 31, 2010            AS AT MARCH 31, 2009
SOURCES OF FUNDS
Shareholders’ Funds
  Capital                                                                  1                         500,000                         500,000
  Reserves and Surplus                                                     2                    539,750,213                     773,497,207
Deferred Tax Liability (See Schedule 14 Note 10)                                                  10,612,000                       3,800,000
TOTAL                                                                                           550,862,213                     777,797,207
APPLICATION OF FUNDS
 Fixed Assets                                                              3
  Gross Block                                                                                   548,149,622                     544,283,104
  Less: Depreciation and Amortisation                                                             40,599,956                      10,605,439
  Net Block                                                                                     507,549,666                     533,677,665
Investments                                                                4                            1,840                   100,001,840
Current Assets, Loans and Advances
  Sundry Debtors                                                           5                                 –                  103,493,773
  Interest Accrued on term deposits with banks                                                        43,124                      16,598,846
  Cash and Bank Balances                                                   6                    321,260,172                     219,957,618
  Loans and Advances                                                       7                      57,826,606                      84,602,703
                                                                                                379,129,902                     424,652,940
Less: Current Liabilities and Provisions
     Current Liabilities                                                   8                    321,739,710                     269,305,975
     Provisions                                                            9                      14,079,485                      11,229,263
                                                                                                335,819,195                     280,535,238
Net Current Assets                                                                                43,310,707                    144,117,702
TOTAL                                                                                           550,862,213                     777,797,207
Notes to the Accounts                                                      14
Schedules 1 to 14 form an integral part of the Accounts.




IN TERMS OF OUR REPORT ATTACHED

FOR DELOITTE HASKINS & SELLS                               FOR AND ON BEHALF OF THE BOARD
Chartered Accountants


NALIN M . S H A H                                          RAJIV B. LALL                        VIKRAM LIMAYE
Partner                                                    Chairman                             Director



Mumbai | April 22, 2010

                                                                           I D F C P R I V A T E E Q U I TY C O M P A N Y L I M I T E D       7
   PROFIT AND LOSS ACCOUNT                                                                       FOR THE YEAR ENDED MARCH 31, 2010



                                                                                                       RUPEES               RUPEES

                                                                                           APRIL 1, 2009 TO       APRIL 1, 2008 TO
                                                                         SCHEDULE          MARCH 31, 2010         MARCH 31, 2009
 INCOME
 Operating and Other Income                                                         10          990,547,242            983,216,965
 TOTAL                                                                                          990,547,242            983,216,965
 EXPENDITURE
 Staff Expenses                                                                     11          215,108,063            138,720,160
 Establishment Expenses                                                             12               5,004,478          12,788,079
 Other Expenses                                                                     13           35,275,178             39,899,280
 Depreciation & Amortisation                                                                     29,994,517               4,398,536
 TOTAL                                                                                          285,382,236            195,806,055
 PROFIT BEFORE TAXATION                                                                         705,165,006            787,410,910
 Less: Provision for Taxation
      Current Tax                                                                               230,130,000            260,500,000
      Deferred Tax (See Schedule 14 Note 10)                                                         6,812,000            7,339,608
      Fringe Benefit Tax                                                                                    –             3,600,000
 PROFIT AFTER TAXATION                                                                          468,223,006            515,971,302
 Add: Balance as per last Balance Sheet                                                         721,899,207            725,505,905
 AVAILABLE FOR APPROPRIATION                                                                   1,190,122,213          1,241,477,207
 Appropriations:
 General Reserve                                                                                 46,823,000             51,598,000
 Interim Dividend                                                                               600,000,000            400,000,000
 Tax on Dividend                                                                                101,970,000             67,980,000
 Balance carried forward                                                                        441,329,213            721,899,207
                                                                                               1,190,122,213          1,241,477,207
 Earnings per share (Face Value Rs. 10) (See Schedule 14 Note 11)
 Basic and Diluted                                                                                    9,364.46            10,319.43
 Notes to Accounts                                                                  14
 Schedules 1 to 14 form an integral part of the Accounts




IN TERMS OF OUR REPORT ATTACHED

FOR DELOITTE HASKINS & SELLS                                        FOR AND ON BEHALF OF THE BOARD
Chartered Accountants


NALIN M . S H A H                                                   RAJIV B. LALL               VIKRAM LIMAYE
Partner                                                             Chairman                    Director



Mumbai | April 22, 2010

  8       I D F C A N N U A L R E P O R T 09 –10
     C A S H F L OW ST AT E M E N T                                                                              FOR THE YEAR ENDED MARCH 31, 2010



                                                                                                                       RUPEES                             RUPEES

                                                                                                         APRIL 1, 2009 TO                APRIL 1, 2008 TO
                                                                                                         MARCH 31, 2010                  MARCH 31, 2009
A.    CASH FLOW FROM OPERATING ACTIVITIES
      Profit Before Taxation                                                                                    705,165,006                     787,410,910
      Adjustments for:
      Depreciation and Amortisation                                                                               29,994,517                       4,398,536
      Provision for Employee Benefits                                                                              2,850,222                       3,152,349
      Profit on sale of Investments                                                                             (12,905,626)                    (25,888,360)
      Dividend on Investments                                                                                     (8,242,502)                                     -
      Interest Received                                                                                             (831,046)                   (21,580,536)
      Operating Profit Before Working Capital Changes                                                           716,030,571                     747,492,899
      Changes in:
      Current Assets, Loans and Advances                                                                        142,486,799                    (112,861,970)
      Current Liabilities                                                                                         52,433,735                      (2,953,604)
      Direct Taxes Paid                                                                                        (225,791,206)                   (270,317,046)
      NET CASH FROM OPERATING ACTIVITIES                                                                        685,159,899                     361,360,279
B.    CASH FLOWS FROM INVESTING ACTIVITIES
      Purchase of Fixed Assets                                                                                    (3,866,518)                   (85,181,677)
      Short term loan given                                                                                     (70,000,000)                                      -
      Proceeds of repayment of short term loan                                                                    70,000,000                                      -
      Sale Proceeds of Investments                                                                            2,156,753,753                    1,326,488,360
      Purchase of Investments                                                                                (2,035,605,626)                 (1,400,600,000)
      Interest Received                                                                                              831,046                      21,580,536
      NET CASH FROM / (USED IN) INVESTING ACTIVITIES                                                            118,112,655                    (137,712,781)
C.    CASH FLOWS FROM FINANCING ACTIVITIES
      Dividend paid (including dividend tax)                                                                   (701,970,000)                   (467,980,000)
      NET CASH USED IN FINANCING ACTIVITIES                                                                    (701,970,000)                   (467,980,000)
      Net Increase / (Decrease) in Cash and Cash Equivalents                                                    101,302,554                    (244,332,502)
      Cash and Cash Equivalents at the beginning of the year as per Schedule 6                                  219,957,618                     464,290,120
      Cash and Cash Equivalents at the end of the year as per Schedule 6                                        321,260,172                     219,957,618
                                                                                                                101,302,554                    (244,332,502)




IN TERMS OF OUR REPORT ATTACHED

FOR DELOITTE HASKINS & SELLS                                               FOR AND ON BEHALF OF THE BOARD
Chartered Accountants


NALIN M . S H A H                                                          RAJIV B. LALL                        VIKRAM LIMAYE
Partner                                                                    Chairman                             Director



Mumbai | April 22, 2010

                                                                                           I D F C P R I V A T E E Q U I TY C O M P A N Y L I M I T E D       9
   SCHEDULES                                                                                                                                      ANNEXED TO AND FORMING PART OF THE ACCOUNTS




SCHEDULE 1 Capital                                                                                                                                                                RUPEES                                            RUPEES

                                                                                                                                                 AS AT MARCH 31, 2010                                  AS AT MARCH 31, 2009
AUTHORISED:
5,000,000 Equity Shares of Rs.10 each                                                                                                                                         50,000,000                                        50,000,000
ISSUED, SUBSCRIBED AND PAID-UP:
50,000 Equity Shares of Rs.10 each                                                                                                                                              500,000                                           500,000
(All the above Equity Shares are held by Infrastructure Development
Finance Company Limited, the holding company and its nominees)
                                                                                                                                                                                500,000                                           500,000




SCHEDULE 2 Reserves and Surplus                                                                                                                                                   RUPEES                                            RUPEES

                                                                                                                                                 AS AT MARCH 31, 2010                                  AS AT MARCH 31, 2009
GENERAL RESERVE
Opening Balance                                                                                                                                                               51,598,000                                                      –
Add: Transfer from Profit & Loss Account                                                                                                                                      46,823,000                                        51,598,000
                                                                                                                                                                              98,421,000                                        51,598,000
PROFIT AND LOSS ACCOUNT                                                                                                                                                   441,329,213                                          721,899,207
                                                                                                                                                                          539,750,213                                          773,497,207




SCHEDULE 3 Fixed Assets                                                                                                                                                                                                             RUPEES

DESCRIPTION                                         GROSS BLOCK                                                    DEPRECIATION AND AMORTISATION                                                            NET BLOCK
                                                                                                March 31, 2010




                                                                                                                                                                                      March 31, 2010




                                                                                                                                                                                                              March 31, 2010




                                                                                                                                                                                                                                       March 31, 2009
                                                                                                                                                            during the year
                                                                                                                                                            On deductions
                                   April 1, 2009




                                                                                                                      April 1, 2009




                                                                                                                                            Charge for
                                                           Additions




                                                                             Deletions




                                                                                                                                            the year
                                   As at




                                                                                                As at




                                                                                                                      As at




                                                                                                                                                                                      As at




                                                                                                                                                                                                              As at




                                                                                                                                                                                                                                       As at
Tangible
  Buildings                  523,563,116                      –                 –         523,563,116              1,147,536           26,120,779                     –          27,268,315             496,294,801              522,415,580
  Computer Hardware            5,780,017             1,757,670                  –           7,537,687              4,084,149            1,238,889                     –           5,323,038               2,214,649                1,695,868
  Furniture, Fittings and
  Office Equipments           10,854,110             1,567,661                  –          12,421,771              2,761,392            1,530,708                     –           4,292,100               8,129,671                8,092,718
  Vehicles                     1,085,660                      –                 –           1,085,660               681,895              104,535                      –            786,430                 299,230                  403,765
Intangible
  Computer Software            3,000,201              541,187                   –           3,541,388              1,930,467             999,606                      –           2,930,073                611,315                 1,069,734
Total                       544,283,104             3,866,518                   –        548,149,622             10,605,439           29,994,517                      –         40,599,956             507,549,666              533,677,665
Previous year                 21,102,256           530,191,677         7,010,829          544,283,104            13,217,732             4,398,536        7,010,829              10,605,439              533,677,665




10         I D F C A N N U A L R E P O R T 09 –10
SCHEDULE 4 Investments                                                                                             RUPEES                              RUPEES

                                                                                               AS AT MARCH 31, 2010            AS AT MARCH 31, 2009
I. LONG TERM (NON-TRADE)
VENTURE CAPITAL UNITS (UNQUOTED)                              NUMBER OF         FACE VALUE
                                                                  UNITS               RUPEES

IDFC Infrastructure Fund 2 -
  IDFC Private Equity Fund II -Class C                                184                 10                         1,840                              1,840
II. CURRENT (TRADE)
    MUTUAL FUNDS (UNQUOTED)
Nil Units (Previous Year 9,337,765.659 units) of IDFC
Mutual Fund - IDFC Cash Fund - Growth
Option ( Net asset Value Rs. Nil; Previous Year
Rs. 100,019,609)                                                                                                         –                    100,000,000
                                                                                                                     1,840                    100,001,840




SCHEDULE 5 Sundry Debtors (Unsecured and considered good)                                                          RUPEES                              RUPEES

                                                                                               AS AT MARCH 31, 2010            AS AT MARCH 31, 2009
Outstanding For Over Six Months                                                                                           –                    58,948,302
Others                                                                                                                    –                    44,545,471
                                                                                                                          –                   103,493,773




SCHEDULE 6 Cash and Bank Balances                                                                                  RUPEES                              RUPEES

                                                                                               AS AT MARCH 31, 2010            AS AT MARCH 31, 2009
CASH                                                                                                                 7,396                              6,528
BALANCE WITH SCHEDULED BANKS
  - In Current Account                                                                                          2,252,776                       2,451,090
  - In Deposit Account                                                                                       319,000,000                      217,500,000
                                                                                                             321,260,172                      219,957,618




SCHEDULE 7 Loans and Advances (Unsecured and considered good)                                                      RUPEES                              RUPEES

                                                                                               AS AT MARCH 31, 2010            AS AT MARCH 31, 2009
Advances recoverable in cash or in kind or for value to be received                                             2,659,576                      24,877,939
Deposits                                                                                                        4,688,400                       4,907,341
Advance payment of Income Tax & Fringe Benefit Tax (Net of provision)                                         50,478,630                       54,817,423
                                                                                                              57,826,606                       84,602,703




SCHEDULE 8 Current Liabilities                                                                                     RUPEES                              RUPEES

                                                                                               AS AT MARCH 31, 2010            AS AT MARCH 31, 2009
Management Fees Received in Advance                                                                          213,640,450                      232,103,686
Sundry Creditors (Other than Micro and Small Enterprises) (See Schedule 14 Note 12)                          107,863,554                       36,517,852
Other Liabilities                                                                                                 235,706                         684,437
                                                                                                             321,739,710                      269,305,975




SCHEDULE 9 Provisions                                                                                              RUPEES                              RUPEES

                                                                                               AS AT MARCH 31, 2010            AS AT MARCH 31, 2009
Provision for Employee Benefits (See Schedule 14 Note 5)                                                       14,079,485                      11,229,263
                                                                                                               14,079,485                      11,229,263


                                                                                        I D F C P R I V A T E E Q U I TY C O M P A N Y L I M I T E D      11
SCHEDULE 10 Operating and Other Income                                                       RUPEES              RUPEES

                                                                                  APRIL 01, 2009 TO   APRIL 01, 2008 TO
                                                                                   MARCH 31, 2010      MARCH 31, 2009
OPERATING INCOME
Management Fees                                                                         968,500,071         935,748,069
  (Tax deducted at source Rs. 115,929,975/-; Previous Year Rs.123,960,478/-)
                                                                                        968,500,071         935,748,069
OTHER INCOME
Interest on Deposits with Banks                                                             159,220          21,580,536
  (Tax deducted at source Rs. 69,726/-; Previous Year Rs.4,888,800/-)
Profit on sale/redemption of current investments                                         12,905,626          25,888,360
Interest on Income Tax Refund                                                                67,997                   –
Dividend on Current Investments (non-trade)                                               8,242,502                   –
Interest Income on Short Term Loans                                                         671,826                   –
  (Tax deducted at source Rs.152,236 /-; Previous Year Rs. Nil)
                                                                                         22,047,171          47,468,896
                                                                                        990,547,242         983,216,965




SCHEDULE 11 Staff Expenses                                                                   RUPEES              RUPEES

                                                                                  APRIL 01, 2009 TO   APRIL 01, 2008 TO
                                                                                   MARCH 31, 2010      MARCH 31, 2009
Salaries (See Schedule 14 Note 6)                                                       198,996,909         117,286,322
Contribution to Provident and Other Funds (See Schedule 14 Note 5)                       11,271,952          15,147,896
(including Provision for Gratuity Rs.3,253,783/-; Previous Year Rs.7,103,505/-)
Staff Welfare Expenses                                                                    4,839,202           6,285,942
                                                                                        215,108,063         138,720,160




SCHEDULE 12 Establishment Expenses                                                           RUPEES              RUPEES

                                                                                  APRIL 01, 2009 TO   APRIL 01, 2008 TO
                                                                                   MARCH 31, 2010      MARCH 31, 2009
Rent (See Schedule 14 Note 9)                                                             1,320,000           8,270,939
Rates and Taxes                                                                             328,897           1,765,709
Electricity                                                                               2,020,833           1,094,873
REPAIRS AND MAINTENANCE
  Equipments                                                                                  2,272             188,112
  Others                                                                                  1,189,359           1,365,024
Insurance Charges                                                                           143,117             103,422
                                                                                          5,004,478          12,788,079




SCHEDULE 13 Other Expenses                                                                   RUPEES              RUPEES

                                                                                  APRIL 01, 2009 TO   APRIL 01, 2008 TO
                                                                                   MARCH 31, 2010      MARCH 31, 2009
Travelling and Conveyance (See Schedule 14 Note 3)                                       15,286,819          13,298,246
Realised Loss on Foreign Currency Transactions                                               27,961                   –
Printing and Stationery                                                                     870,595           1,235,952
Postage, Telephone and Fax                                                                2,141,780           2,213,149
Advertisement and Publicity                                                               5,414,573           9,268,160
Professional Fees                                                                         6,517,036           9,306,879
Directors’ Fees                                                                             240,000             320,000
Auditors’ Remuneration (See Schedule 14 Note 2)                                           1,052,198           1,080,014
Miscellaneous Expenses                                                                    3,724,216           3,176,880
                                                                                         35,275,178          39,899,280



12     I D F C A N N U A L R E P O R T 09 –10
SCHEDULE 14 Notes Forming Part of the Accounts
1 Significant Accounting Policies

A. Accounting Convention
These accounts have been prepared in accordance with historical cost convention, applicable Accounting Standards notified by the Companies
(Accounting Standards) Rules, 2006 and relevant provisions of the Companies Act, 1956.

B. System of Accounting
The Company adopts the accrual concept in the preparation of the accounts. The preparation of financial statements requires the Management
to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date
of the financial statements and the reported income and expenses during the reporting period. The Management believes that the estimates
used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.

C. Inflation
Assets and liabilities are recorded at historical cost to the Company. These costs are not adjusted to reflect the changing value in the
purchasing power of money.

D. Investments
Long Term Investments are carried at acquisition cost. A provision is made for diminution other than temporary on an individual basis.
Current Investments are carried at the lower of cost or fair value on an individual basis.

E. Fixed Assets
Fixed assets are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated
depreciation.

F. Intangible Assets
Intangible Assets comprising of system software are stated at cost of acquisition, including any cost attributable for bringing the asset to its
working condition, less accumulated amortisation. Any expenses on such software for support and maintenance payable annually are charged to
the Profit and Loss Account.

G. Depreciation and Amortisation
    Tangible Assets
     Depreciation for all Fixed Assets, excluding certain electronic items, is provided on the written down value method, at the rates prescribed
     by Schedule XIV of the Companies Act, 1956. Certain electronic items are depreciated over a period of two years on a straight line method
     based on the Management’s estimate of useful life of assets. Depreciation on additions during the year is provided on a pro-rata basis.
     Assets costing less than Rs. 5,000 each are written off in the year of capitalisation.
    Intangible Assets
     Intangible assets consisting of computer software are being amortised over a period of three years on the straight line method.

H. Operating Leases
Leases of assets under which all the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases.
Payments made under operating leases are charged to the Profit and Loss Account, on a straight line basis, over the lease term.

I. Employee Benefits
Defined Contribution Plans
¬ The Company’s contribution to Provident Fund is deposited with Regional Provident Fund Commissioner and is charged to the Profit and Loss
Account every year.
¬ The Company has taken a superannuation policy for future payment of superannuation and the Company’s contribution paid / payable during the
year is charged in the Profit and Loss Account every year.
¬   Defined Benefit Plan
¬ The net present value of the Company’s obligation towards Gratuity to employees is unfunded and actuarially determined at the year end based
on the projected unit credit method. Actuarial gains and losses are recognised in the Profit and Loss Account.
¬   Other Long Term Employee Benefit
¬ Liability for compensated absences in respect of sick leave which is of a long term nature is actuarially determined at the year end based on the
projected unit credit method.



                                                                                         I D F C P R I V A T E E Q U I TY C O M P A N Y L I M I T E D   13
J. Income-Tax
The accounting treatment for income-tax in respect of the Company’s income is based on the Accounting Standard 22 on ‘Accounting for Taxes
on Income’ as notified by the Companies (Accounting Standards) Rules, 2006. The provision made for income-tax in the accounts comprises
both, the current tax and the deferred tax. The deferred tax assets and liabilities for the year, arising on account of timing differences, are
recognised in the Profit & Loss Account and the cumulative effect thereof is reflected in the Balance Sheet.
Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax
asset is recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which
such deferred tax asset can be realised.

K. Revenue Recognition
(a) Management Fees are recognised on accrual basis
(b) Interest and other dues are accounted on accrual basis.
(c) Dividend is accounted when the right to receive is established.

L. Foreign Currency Transactions
Foreign currency transactions are accounted at the exchange rates prevailing on the date of the transaction. Foreign currency monetary
items outstanding as at the Balance Sheet date are reported using the closing rate. Gains and losses resulting from the settlement of such
transactions and translation of monetary assets and liabilities denominated in foreign currencies are recognised in the Profit and Loss Account.

2 Auditors’ Remuneration:
 PARTICULARS                                                                                             CURRENT YEAR           PREVIOUS YEAR
                                                                                                                   RUPEES                   RUPEES

 Audit Fees                                                                                                       600,000                 600,000
 Tax Audit Fees                                                                                                   150,000                 150,000
 Other Services                                                                                                   300,000                 225,000
 Out of Pocket Expenses                                                                                             2,198                   11,660
 Service Tax                                                                                                      108,376                 198,414
                                                                                                                1,160,574                1,185,074
 Less: Service tax set off                                                                                        108,376                 105,060
                                                                                                                1,052,198                1,080,014
3 Expenditure in foreign currencies (on payment basis):
 PARTICULARS                                                                                             CURRENT YEAR           PREVIOUS YEAR
                                                                                                                   RUPEES                   RUPEES

 Travelling Expenses                                                                                              899,296                   77,763
 Others                                                                                                         3,026,903                6,018,217
4 Earnings in foreign currencies:
There are no earnings in foreign currencies.
 5 In accordance with the Accounting Standard 15 on “Employee Benefits” as notified by the Companies (Accounting Standards) Rules, 2006,
the following disclosures have been made:
i.        The Company has recognised the following amounts in the Profit and Loss Account towards contribution to defined contribution plans which
          are included under Contribution to Provident and Other Funds:
 PARTICULARS                                                                                             CURRENT YEAR           PREVIOUS YEAR
                                                                                                                   RUPEES                   RUPEES

 Provident Fund                                                                                                 3,563,625                3,583,692
 Superannuation Fund                                                                                            4,454,544                4,460,699




     14      I D F C A N N U A L R E P O R T 09 –10
ii.   The details of the Company’s post – retirement benefit plans for gratuity for its employees are given below which is certified by the actuary
      and relied upon by the auditors:
 PARTICULARS                                                                                                 CURRENT YEAR                PREVIOUS YEAR
                                                                                                                         RUPEES                          RUPEES

 CHANGE IN THE DEFINED BENEFIT OBLIGATIONS:
 Liability at the beginning of the year                                                                               7,328,873                   1,475,176
 Current Service Cost                                                                                                 2,299,802                   2,420,569
 Interest Cost                                                                                                          757,377                     311,660
 Benefits Paid                                                                                                      (1,327,255)                  (1,249,808)
 Actuarial Loss / (Gain)                                                                                                196,604                   4,371,276
 Liability at the end of the year                                                                                     9,255,401                   7,328,873
 AMOUNT RECOGNISED IN THE BALANCE SHEET:
 Liability at the end of the year                                                                                     9,255,401                   7,328,873
 Fair Value of Plan Assets at the end of the year                                                                              –                             –
 Amount recognised in the Balance Sheet under “Provision for Employee Benefits”                                       9,255,401                   7,328,873
 EXPENSE RECOGNISED IN THE PROFIT AND LOSS ACCOUNT:
 Current Service Cost                                                                                                 2,299,802                   2,420,569
 Interest Cost                                                                                                          757,377                     311,660
 Expected Return on Plan Assets                                                                                                –                             –
 Net Actuarial Loss / (Gain) to be recognised                                                                           196,604                   4,371,276
 Expense recognised in the Profit and Loss Account under staff expenses                                               3,253,783                   7,103,505
 RECONCILIATION OF THE LIABILITY RECOGNISED IN THE BALANCE SHEET:
 Opening Net Liability                                                                                                7,328,873                   1,475,176
 Expense recognised                                                                                                   3,253,783                   7,103,505
 Contribution by the Company                                                                                        (1,327,255)                  (1,249,808)
 Amount recognised in the Balance Sheet under “Provision for Employee Benefits”                                       9,255,401                   7,328,873
 EXPECTED EMPLOYER’S CONTRIBUTION FOR THE NEXT YEAR                                                                     386,750                     323,000

EXPERIENCE ADJUSTMENTS:                                                                                                                                  RUPEES

 PARTICULARS                                          YEAR ENDED         YEAR ENDED        PERIOD ENDED
                                                    MARCH 31, 2010     MARCH 31, 2009     MARCH 31, 2008         MARCH 31, 2007          MARCH 31, 2006
 Defined Benefit Obligation                               9,255,401          7,328,873             1,475,176                        –                         –
 Plan Assets                                                      –                  –                       –                      –                         –
 Surplus/(Deficit)                                       (9,255,401)        (7,328,873)           (1,475,176)                       –                         –
 Experience Adjustment on Plan Liabilities                (708,140)          7,628,333                       –                      –                         –
 Experience Adjustment on Plan Assets                             –                  –                       –                      –                         –

 PARTICULARS                                                                                                 CURRENT YEAR                PREVIOUS YEAR
                                                                                                                               %                             %

 PRINCIPAL ASSUMPTIONS
 Discount Rate (per annum)                                                                                                  8.10                           8.00
 Salary Escalation rate (per annum)                                                                                         8.00                           7.00

The estimate of future salary increases takes into account inflation, seniority, promotion and other relevant factors.

6 Salaries include Rs. Nil (Previous year: 18,832,369), being amount paid towards a long term employee benefit scheme applicable to select
employees, by way of contribution to Class C units of IDFC Private Equity Fund III.
7 The Company’s main business is to provide asset management services. All other activities revolve around the main business. The Company
does not have any geographic segments. As such, there are no separate reportable segments as per Accounting Standard 17 on ‘Segment Re-
porting’ as notified by the Companies (Accounting Standards) Rules, 2006.

 8 As per the Accounting Standard 18 on ‘Related Party Disclosures’ as notified by the Companies (Accounting Standards) Rules, 2006, the
related parties of the Company are as follows:
      I.    HOLDING COMPANY:
            Infrastructure Development Finance Company Limited
      II.   FELLOW SUBSIDIARY (with whom there are transactions):
            IDFC Asset Management Company Private Limited
      III. KEY MANAGEMENT PERSONNEL:
            Mr. Luis Miranda – President and CEO

                                                                                          I D F C P R I V A T E E Q U I TY C O M P A N Y L I M I T E D      15
The nature and volume of transactions carried out with the above related parties in the ordinary course of business are as follows:
 NAME OF RELATED PARTY AND NATURE OF RELATIONSHIP                    PARTICULARS                           CURRENT YEAR               PREVIOUS YEAR
                                                                                                                        RUPEES                      RUPEES

HOLDING COMPANY
Infrastructure Development Finance Company Limited                   Rent recovered                                         –                      120,000
                                                                     Interim Dividend paid                         600,000,000               400,000,000
FELLOW SUBSIDIARY
IDFC Asset Management Company Private Limited                        Asset purchased                                        –                       55,250
KEY MANAGEMENT PERSONNEL
Mr. Luis Miranda                                                     Remuneration paid*                             31,116,265                   28,088,768
* Excludes contribution of gratuity and insurance premium.
9 In accordance with the Accounting Standard 19 on ‘Leases’ as notified by the Companies (Accounting Standards) Rules, 2006, the following
disclosure in respect of Operating Leases is made:
Establishment expenses include gross rental expenses of Rs.1,320,000 (Previous Year Rs. 8,270,939). The committed lease rentals in the
future are:
PARTICULARS                                                                                                CURRENT YEAR               PREVIOUS YEAR
                                                                                                                        RUPEES                      RUPEES

Not later than one year                                                                                                376,129                    1,320,000
Later than one year and not later than five years                                                                            -                     376,129

10 In compliance with the Accounting Standard 22 on ‘Accounting for Taxes on Income’ as notified by the Companies (Accounting Standards)
Rules, 2006, the Company has debited an amount of Rs. 6,812,000 to the Profit and Loss Account towards deferred tax liability. (Previous year;
Rs.7,339,608). The major components of deferred tax assets and liabilities arising on account of timing differences are:
       PARTICULARS                                                       CURRENT YEAR        PREVIOUS YEAR     CURRENT YEAR           PREVIOUS YEAR
                                                                                 ASSETS (RUPEES)                          LIABILITIES (RUPEES)

(a)    Depreciation                                                                    -                   -            15,288,325                7,610,752
(b)    Provisions                                                             4,676,325            3,810,752                      -                       -
       NET DEFERRED TAX LIABILITY                                                                                       10,612,000                3,800,000

11 Earnings Per Share:
In accordance with the Accounting Standard 20 on ‘Earnings Per Share’, as notified under the Companies (Accounting Standards) Rules, 2006 the
Earning Per Share has been computed as under:
PARTICULARS                                                                                                    CURRENT YEAR           PREVIOUS YEAR
(a)   Profit after taxation (Rs.)                                                                                     468,223,006           515,971,302
(b) Weighted average number of Equity Shares outstanding                                                                   50,000                   50,000
(c)   Earnings Per Share (Rs.)                                                                                            9,364.46               10,319.43
      (a)/(b) (Basic and Diluted)

12 There is no interest paid/payable during the year, by the Company to the “suppliers” covered under the Micro, Small and Medium
Enterprises Development Act, 2006. The above information takes into account only those suppliers who have responded to the inquiries made
by the Company for this purpose.

13 The figures for the previous year have been regrouped / rearranged wherever necessary.




                                                    FOR AND ON BEHALF OF THE BOARD


                                                    R A J I V B . LALL                                  VIKRAM LIMAYE
                                                    Chairman                                            Director

Mumbai | April 22, 2010

 16     I D F C A N N U A L R E P O R T 09 –10
      B A L A N C E S H E E T A B ST R A CT                                                                                            AND COMPANY’S GENERAL BUSINESS PROFILE




I.      REGISTRATION DETAILS

        Registration No.           U   6   7   1    9       0       M         H       2       0       0   2   P   L   C   1    3       7   7   9   8

        State Code                 1   1

        Balance Sheet Date         3   1       0    3               2         0       1       0

II.     CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000)

                                                                                  Public Issue                                                                                 Right Issue
                                                                                  N       I       L                                                                            N     I   L


                                                                                  Bonus Issue                                                                           Private Placement
                                                                                  N       I       L                                                                            N     I   L
III.    POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000)
                                                                            Total Liabilities                                                                                 Total Assets

                                                        8       8       6         6       8       1                                                            8    8     6    6     8   1
        SOURCES OF FUNDS
                                                                            Paid-up Capital                                                                        Reserves and Surplus

                                                                                  5       0       0                                                            5    3     9    7     5   0

                                                                             Secured Loans                                                                               Unsecured Loans

                                                                                  N       I       L                                                                            N     I   L

                                                   Deferred Tax Liability (Net)

                                                                1       0         6       1       2
        APPLICATION OF FUNDS
                                                                     Net Fixed Assets                                                                                         Investments

                                                        5       0       7         5       5       0                                                                                      2

                                                                Net Current Assets                                                                          Miscellaneous Expenditure

                                                                4       3         3       1       0                                                                            N     I   L

IV.     PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000)
                                                                    Turnover / Income                                                                                   Total Expenditure
                                                        9       9       0         5       4       7                                                            2    8     5    3     8   2

                                                                     Profit Before Tax                                                                                    Profit After Tax

                                                        7       0       5         1       6       5                                                            4    6     8    2     2   3

                                                    Earnings per Share (in Rs.)                                                                                               Dividend %

                                                                        9         3       6       4                                                            1    2     0    0     0   0

V.      GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS)

        Item Code No. (ITC Code)           N   I     L

        Product Description                A   S     S      E        T                M       A       N   A   G   E   M    E   N       T

        Item Code No. (ITC Code)           N   I     L


        Product Description                I   N     V      E        S         T      M       E       N   T       A   D   V        I   S   O   R   Y

                                           S   E     R      V           I      C      E       S



                                                                                                                      I D F C P R I V A T E E Q U I TY C O M P A N Y L I M I T E D       17
     IDFC trustee
     company limited

     B O A R D O F D I R E CTO R S
     ■   Mr. S. B. Mathur
         Chairman
     ■   Dr. Rajiv B. Lall
     ■   Mr. U. Sundararajan
     ■   Mr. Vikram Limaye

     A U D I TO R S
     ■   Deloitte Haskins & Sells
         Chartered Accountants

     P R I N C I PA L B A N K E R S
     ■   HDFC Bank Limited

     R E G I ST E R E D O F F I C E
     Naman Chambers, C-32, G-Block,
     Bandra-Kurla Complex, Bandra (East),
     Mumbai 400 051.
     TEL +91 22 422 22000
     FAX +91 22 265 40354




18       I D F C A N N U A L R E P O R T 09 –10
  D I R E CT O R S ’ R E P O R T


TO THE MEMBERS                                                            Ahmedabad, as statutory auditors for the financial year ending March
Your Directors have pleasure in presenting their Eighth Annual Report     31, 2011.
with the audited accounts for the year ended March 31, 2010.              As required under the provisions of Section 224 of the Companies
OPERATIONAL REVIEW                                                        Act, 1956 the Company has obtained a written confirmation from
The main object of the Company is to act as trustee for various           the Auditors proposed to be appointed to the effect that their
investment funds under the asset management business primarily            appointment, if made, would be in conformity with the provisions of
established by Infrastructure Development Finance Company Limited         Sections 224 and 226 of the Companies Act, 1956. The shareholders
and its subsidiaries.                                                     are requested to appoint the auditors and fix their remuneration.

The Company continues to act as the trustee of India Infrastructure       FOREIGN EXCHANGE EARNINGS AND EXPENDITURE
Fund, IDFC Infrastructure Fund 2 – IDFC Private Equity Fund II, IDFC      There was no income or expenditure in foreign currency during the
Infrastructure Fund 3 – IDFC Private Equity Fund III, IDFC Project        year under review.
Equity Domestic Investors Trust – I and IDFC Project Equity Domestic
                                                                          PERSONNEL AND OTHER MATTERS
Investors Trust – II.
                                                                          Since your Company does not have any employees, the provisions of
During the year under review, the Company has been appointed as           Section 217(2A) of the Companies Act, 1956 read with the Companies
Trustee of IDFC Private Equity Employees Fund III Benefits Trust,         (Disclosure of Particulars in the Report of Board of Directors) Rules,
IDFC Project Equity Employees Benefits Trust and IDFC Employees           1988, are not applicable and hence not given.
Benefits Trust.
                                                                          Since the Company does not own any manufacturing facility, the
FINANCIAL RESULTS                                                         disclosure of information on other matters required to be disclosed
The summary of the financial results for the year under review is as      in terms of Section 217(1)(e) of the Companies Act, 1956 read with
follows:                                                                  the Companies (Disclosure of Particulars in the Report of Board of
                                                                RUPEES
                                                                          Directors) Rules, 1998, are not applicable and hence not given.
                                        FISCAL 2010      FISCAL 2009      DIRECTORS’ RESPONSIBILITY STATEMENT
Gross Income                                5,869,823        5,695,162    The Directors confirm that:
Profit Before Tax                           5,638,553        5,512,692    ¬ the applicable accounting standards have been followed in
Provision for tax                           1,663,000        1,650,000
                                                                          preparation of annual accounts and there are no material departures;
Profit After Tax                            3,975,553        3,862,692
                                                                          ¬ they have selected such accounting policies and applied them
DIVIDEND                                                                  consistently and made judgments and estimates that are reasonable
Your Directors do not recommend payment of dividend for the year          and prudent, so as to give a true and fair view of the state of affairs of
ended March 31, 2010.                                                     the Company as at March 31, 2010 and the profits of the Company for
PUBLIC DEPOSITS                                                           the year ended on that date;
During the year under review, your Company has not accepted public        ¬ they have taken proper and sufficient care for the maintenance of
deposits under the provisions of Section 58-A of the Companies Act,       adequate accounting records in accordance with the provisions of the
1956.                                                                     Companies Act, 1956, for safeguarding the assets of the Company and
                                                                          detecting fraud and other irregularities; and
DIRECTORS
In terms of the provisions of the Articles of Association of the
                                                                          ¬   they have prepared the annual accounts on a going concern basis.
Company, Mr. Vikram Limaye and Mr. U. Sundararajan would retire           ACKNOWLEDGEMENTS
at the ensuing Annual General Meeting and being eligible, offer           Your Company is grateful to Securities and Exchange Board of India
themselves for re-appointment.                                            for its support and advice during the period under review.
AUDITORS                                                                  The Company would also like to express its gratitude for the unstinted
M/s. B. S. Mehta & Co., Chartered Accountants will retire as the          support and guidance received from Infrastructure Development
statutory auditors of the Company at the ensuing Annual General           Finance Company Limited and other group companies.
Meeting. They have expressed their unwillingness to be reappointed
as the statutory auditors and have given the notice in terms of Section   FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
224(2)(b) of the Companies Act, 1956 for the same. The Board
of Directors has placed on record its sincere appreciation of the
                                                                          S. B. MATHUR
professional service rendered by M/s. B. S. Mehta & Co. as statutory
                                                                          Chairman
auditors.
In view of this, the Board has proposed the appointment of                Mumbai
M/s. Deloitte Haskins & Sells, Chartered Accountants,                     April 21, 2010


                                                                                                 I D F C T R U ST E E C O M P A N Y L I M I T E D   19
  AU D I TO RS ’ R E PO RT

To The Members of IDFC Trustee Company Limited                           (d) In our opinion, the said Balance Sheet, Profit and Loss Account
1. We have audited the attached Balance Sheet of IDFC TRUSTEE                and Cash Flow Statement comply with the Accounting Standards
COMPANY LIMITED (“the Company”) as at March 31, 2010, the                    referred to in Section 211(3C) of the Act, to the extent
annexed Profit and Loss Account and the Cash Flow Statement of               applicable;
the Company for the year ended on that date, which we have signed        (e) On the basis of written representations / information received
under reference to this report. These financial statements are the           from Directors as on March 31, 2010 and taken on record by
responsibility of the Company’s management. Our responsibility is to         the Board of Directors, none of the Directors are prima facie,
express an opinion on these financial statements based on our audit.         disqualified from being appointed as Director in terms of clause
2. We conducted our audit in accordance with auditing standards              (g) of sub-section (1) of Section 274 of
generally accepted in India. Those standards require that we plan            the Act;
and perform the audit to obtain reasonable assurance about whether       (f)   In our opinion and to the best of our information and according
the financial statements are free of material misstatement. An                 to the explanations given to us, the said accounts read together
audit includes examining, on a test basis, evidence supporting the             with the notes thereon, give the information required by the Act
amounts and disclosures in the financial statements. An audit also             in the manner so required and give a true and fair view:
includes assessing the accounting principles used and significant
                                                                               (i)   In the case of the Balance Sheet, of the state of affairs of
estimates made by management, as well as evaluating the overall
                                                                                     the Company as at March 31, 2010;
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.                                              (ii) In the case of the Profit and Loss Account, of the profit for
                                                                                    the year ended on March 31, 2010; and
3. As required by the Companies (Auditor’s Report) Order, 2003 (“the
Order”) issued by the Company Law Board in terms of Section 227(4A)            (iii) In the case of the Cash Flow Statement, of the cash flows for
of the Companies Act, 1956 (“the Act”) and on the basis of such checks               the year ended on March 31, 2010.
as we considered appropriate, we annex hereto a statement on the
matters specified in paragraph 4 of the said Order, to the extent
applicable.
4. Further to our comments in the Annexure referred to above, we
report that:
                                                                         FOR B. S. MEHTA & CO.
(a) We have obtained all the information and explanations which
                                                                         Chartered Accountants
    to the best of our knowledge and belief were necessary for the
                                                                         Firm Registration No. 106190W
    purpose of our audit;
(b) In our opinion, proper books of account as required by law,          H. G. BUCH
    have been kept by the Company, so far as appears from our            Partner
    examination of such books;                                           (Membership No.: 33114)

(c)   The Balance Sheet, Profit and Loss Account and Cash Flow
      Statement dealt with by this report are in agreement with the      Mumbai

      books of account;                                                  April 21, 2010




 20     I D F C A N N U A L R E P O R T 09 –10
       ANNEXURE                                                                                                              TO THE AUDITORS’ REPORT



Statement referred to in paragraph 3 of our Report to the                    ix.   The Company has not borrowed any sums during the year and
                                                                                   hence does not have any dues payable to a financial institution, a
Members of IDFC TRUSTEE COMPANY LIMITED                                            bank or debenture holders.
i.     The Company does not have any fixed assets and hence items (i)
                                                                             x.    The Company has not granted any loans and advances on the
       (a), (b), & (c) of paragraph 4 of the Order are not applicable.
                                                                                   basis of security by way of pledge of shares, debentures and
ii.    The nature of the Company’s activities is such that requirements            other securities.
       of items (ii), (vii) and (viii) of paragraph 4 of the Order are not
                                                                             xi.   a)   The provisions of any special statute applicable to chit
       applicable.
                                                                                        fund / nidhi / mutual fund / societies do not apply to the
iii.   a)   The Company has not granted any loans, secured or                           Company.
            unsecured to companies, firms or other parties covered in
                                                                                   b)   Accordingly, the information required at items (xiii) (a), (b)
            the register maintained under Section 301 of the Act.
                                                                                        (c) & (d) of paragraph 4 of the Order is not provided.
       b)   Accordingly, the information required at items (iii) (b),
                                                                             xii. The Company has not dealt or traded in shares, securities,
            (c) & (d) of paragraph 4 of the Order is not provided.
                                                                                  debentures and other investments. The Company does not hold
       c)   The Company has not taken any loans, secured or unsecured             any shares, securities, debentures and other investments.
            from companies, firms or other parties covered in the
                                                                             xiii. As informed to us, the Company has not given any guarantee for
            register maintained under Section 301 of the Act.
                                                                                   loans taken by others from banks or financial institutions.
       d)   Accordingly, the information required at items (iii) (f) & (g)
                                                                             xiv. The Company has not taken any term loans.
            of paragraph 4 of the Order is not provided.
                                                                             xv. The Company has not raised any funds on short term basis.
iv.    The Company has not purchased any inventory or fixed assets
       nor sold any goods during the year. In respect of services            xvi. The Company has not made any preferential allotment of shares
       rendered during the year it has adequate internal control system           to parties and companies covered in the register maintained
       commensurate with its size and the nature of its business.                 under Section 301 of the Act.
v.     There are no transactions exceeding Rs. 5 lakhs in respect of any     xvii. The Company has not issued any debentures.
       party entered into during the year that need to be entered into a     xviii. The Company has not raised any money by public issue.
       register in pursuance of Section 301 of the Act. Accordingly, the     xix. As informed to us and on the basis of information available with
       information required at items (v) (a) & (b) of paragraph 4 of the          us, no fraud on or by the Company has been noticed or reported
       Order is not provided.                                                     during the year.
vi.    The Company has not accepted any deposits from public during
       the year.
vii. The Company does not have any employee and hence the
     provisions of item (ix) (a) of paragraph 4 of the Order in respect      FOR B. S. MEHTA & CO.
     of statutory dues of Provident Fund, Employees State Insurance          Chartered Accountants
     do not apply. No undisputed amounts in respect of Investor              Firm Registration No. 106190W
     Education and Protection Fund, Income tax, Sales tax, Wealth
     tax, Service tax, Custom duty, Excise duty, Cess and any other
                                                                             H. G. BUCH
     statutory dues were outstanding at the year end for a period of
     more than six months from the date they became payable.                 Partner
                                                                             (Membership No.: 33114)
viii. The Company has no accumulated losses at the end of the
      financial year. The Company has not incurred cash loss in the
      current financial year and in the immediately preceding financial      Mumbai
      year.                                                                  April 21, 2010




                                                                                                    I D F C T R U ST E E C O M P A N Y L I M I T E D   21
   BALANCE SHEET                                                                                                         AS AT MARCH 31, 2010



                                                                                              RUPEES                RUPEES             RUPEES

                                                                         SCHEDULE                      MARCH 31, 2010         MARCH 31, 2009
SOURCES OF FUNDS
Shareholders’ Funds
Capital                                                                             1                              500,000            500,000
Profit and Loss Account                                                                                           9,692,904         5,717,351
                                                                                                              10,192,904            6,217,351
APPLICATION OF FUNDS
Investments                                                                         2                             9,755,556         5,960,656
Current Assets, Loans and Advances
Current Assets                                                                      3        311,320                                  142,483
Loans and Advances                                                                  4        199,302                                  177,495
                                                                                             510,622                                  319,978
Less: Current Liabilities and Provisions                                            5
Current Liabilities                                                                           73,274                                   63,283
Net Current Assets                                                                                                 437,348            256,695
                                                                                                              10,192,904            6,217,351
Notes to the Financial Statements                                                   6
The Schedules referred to herein form an integral part of the Balance Sheet




THIS IS THE BALANCE SHEET REFERRED TO IN OUR REPORT OF EVEN DATE.
FOR AND ON BEHALF OF                                                    FOR AND ON BEHALF OF THE BOARD
B. S. M E H TA & CO .                                                   IDFC TRUSTEE COMPANY LIMITED
Chartered Accountants


H. G. BUC H                                                             S. B. MATHUR                   RAJIV B. LALL
Partner                                                                 Chairman                       Director
Membership No. 033114

Mumbai | April 21, 2010

 22       I D F C A N N U A L R E P O R T 09 –10
    PROFIT AND LOSS ACCOUNT                                                                               FOR THE YEAR ENDED MARCH 31, 2010



                                                                                                               RUPPES                             RUPEES

                                                                                                  APRIL 1, 2009 TO               APRIL 1, 2008 TO
                                                                                SCHEDULE          MARCH 31, 2010                 MARCH 31, 2009
INCOME
Trusteeship Fees                                                                                            5,600,000                       5,482,877
(TDS Rs. 1,374,807, Previous Year Rs. 1,546,568)
Dividend on Mutual Fund Units                                                                                 269,823                        209,759
Interest on Income tax Refunds                                                                                        –                            2,526
                                                                                                            5,869,823                       5,695,162
EXPENDITURE
Payment to Auditors
Audit Fees                                                                                                     30,000                             20,000
Tax Audit Fees                                                                                                 15,000                             10,000
Other Services                                                                                                 15,000                             15,000
Service Tax                                                                                                     6,386                              4,944
Filing Fees                                                                                                     1,400                              1,200
Other Admin expenses                                                                                           38,561                               984
Sitting Fees                                                                                                  120,000                        120,000
Professional Fees                                                                                               5,000                              9,577
Loss/(Profit) on Sale of Investments                                                                                (77)                            765
                                                                                                              231,270                        182,470
Profit Before Tax                                                                                           5,638,553                       5,512,692
Provision for Taxation
-   Current Tax (including interest)                                                                        1,663,000                       1,650,000
Profit After Tax                                                                                            3,975,553                       3,862,692
Balance Brought Forward                                                                                     5,717,351                       1,854,659
Balance Carried to Balance Sheet                                                                            9,692,904                       5,717,351
Earnings Per Share (Face value Rs.10) (See Schedule 6 Note 4)
Basic and Diluted                                                                                               79.51                              77.25
Notes to the Financial Statements                                                          6
The Schedules referred to herein form an integral part of the Profit and Loss Account




THIS IS THE PROFIT AND LOSS ACCOUNT REFERRED TO IN OUR REPORT OF EVEN DATE.
FOR AND ON BEHALF OF                                                     FOR AND ON BEHALF OF THE BOARD
B. S. M E H TA & CO .                                                    IDFC TRUSTEE COMPANY LIMITED
Chartered Accountants


H. G. BUC H                                                              S. B. MATHUR                    RAJIV B. LALL
Partner                                                                  Chairman                        Director
Membership No. 033114

Mumbai | April 21, 2010

                                                                                               I D F C T R U ST E E C O M P A N Y L I M I T E D      23
     C A S H F L OW ST AT E M E N T                                                                          FOR THE YEAR ENDED MARCH 31, 2010



                                                                                                                  RUPEES                RUPEES

                                                                                                    APRIL 01, 2009 TO        APRIL 01, 2008 TO
                                                                                                     MARCH 31, 2010           MARCH 31, 2009
A.    CASH FLOW FROM OPERATING ACTIVITIES
      Profit Before Tax                                                                                        5,638,553             5,512,692
      Adjustments for:
      Dividend on Current Investments                                                                          (269,823)              (209,759)
      OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES                                                          5,368,730             5,302,933
      Changes in :
        Current Assets and Loans and Advances                                                                  (110,300)               262,172
        Current Liabilities                                                                                        9,991                (1,368)
                                                                                                               (100,309)               260,804
      Income Taxes (Paid) / Received (Net of TDS)                                                             (1,684,807)           (1,931,042)
      Net Cash from Operating Activities                                                     (A)               3,583,614             3,632,695
B.    CASH FLOW FROM INVESTING ACTIVITIES
      Dividend on Current Investments                                                                            269,823               209,759
      Purchase of Investments                                                                                (14,325,316)           (6,695,369)
      Sale of Investments                                                                                     10,530,416             2,858,758
      Net Cash used in Investing Activities                                                  (B)              (3,525,077)           (3,626,852)
C.    CASH FLOW FROM FINANCING ACTIVITIES
      Net Cash (used in)/ from Financing Activities                                          (C)                        –                    –
      Net change in cash and cash equivalents                                            (A+B+C)                  58,537                 5,843
      Cash and cash equivalents as at the April 1, 2009 (as per Schedule 3)                                       21,221                15,378
      Cash and cash equivalents as at the March 31, 2010 (as per Schedule 3)                                      79,758                21,221
                                                                                                                  58,537                 5,843




THIS IS THE CASH FLOW STATEMENT REFERRED TO IN OUR REPORT OF EVEN DATE.
FOR AND ON BEHALF OF                                                          FOR AND ON BEHALF OF THE BOARD
B. S. M E H TA & CO .                                                         IDFC TRUSTEE COMPANY LIMITED
Chartered Accountants


H. G. BUC H                                                                   S. B. MATHUR                   RAJIV B. LALL
Partner                                                                       Chairman                       Director
Membership No. 033114

Mumbai | April 21, 2010

 24     I D F C A N N U A L R E P O R T 09 –10
    SCHEDULES                                                                                    ANNEXED TO AND FORMING PART OF THE ACCOUNTS




SCHEDULE 1 Capital                                                                                                 RUPEES                             RUPEES

                                                                                                 AS AT MARCH 31, 2010         AS AT MARCH 31, 2009
AUTHORISED:
100,000 (Previous Year: 100,000) Equity shares of Rs. 10/- each                                                 1,000,000                      1,000,000
ISSUED, SUBSCRIBED AND PAID UP:
50,000 (Previous Year: 50,000) Equity Shares of Rs.10/- each fully paid up                                       500,000                         500,000
(All the above shares are held by Infrastructure Development
Finance Company Limited, the Holding Company and its nominees)
                                                                                                                 500,000                         500,000


SCHEDULE 2 Investments (Unquoted, Non-Trade)                                                                       RUPEES                             RUPEES
(AT LOWER OF COST AND MARKET VALUE)

                                                                                                 AS AT MARCH 31, 2010           AS AT MARCH 31, 2009
                                                                    NUMBER OF FACE VALUE
                                                                        UNITS      RUPEES

Mutual Fund Units (Current)
IDFC Liquid Fund - Daily Dividend                                             –              –                           –                      5,960,656
IDFC Savings Advantage Fund – Plan A – Growth                           7560.134        1,000                   9,755,556                                  –
    (Market Value as on March 31, 2010 Rs. 9,775,671)
                                                                                                                9,755,556                       5,960,656
Note:
Market value of Investments in Unquoted Mutual Funds represents the repurchase price of the units issued by the Mutual Funds.



SCHEDULE 3 Current Assets                                                                                          RUPEES                             RUPEES

                                                                                                 AS AT MARCH 31, 2010         AS AT MARCH 31, 2009
Sundry Debtor (Unsecured, Considered Good)
    More than six months                                                                                         176,412                              65,082
    Others                                                                                                         55,150                             56,180
                                                                                                                 231,562                         121,262
Bank Balance
Balance with Scheduled Bank
-   in Current Account                                                                                             79,758                             21,221
                                                                                                                 311,320                         142,483


SCHEDULE 4 Loans and Advances                                                                                      RUPEES                             RUPEES

                                                                                                 AS AT MARCH 31, 2010         AS AT MARCH 31, 2009
Unsecured, Considered good
Advance Payment of Income-Tax (net of provisions)                                                                199,302                         177,495
                                                                                                                 199,302                         177,495




SCHEDULE 5 Current Liabilities and Provisions                                                                      RUPEES                             RUPEES

                                                                                                 AS AT MARCH 31, 2010         AS AT MARCH 31, 2009
CURRENT LIABILITIES
Sundry Creditors for Expenses                                                                                      49,635                             49,944
    (other than Micro, Medium and Small Enterprises)
Other Liabilities                                                                                                  23,639                             13,339
                                                                                                                   73,274                             63,283




                                                                                                   I D F C T R U ST E E C O M P A N Y L I M I T E D      25
SCHEDULE 6 Notes to the Financial Statements
1 Significant Accounting Policies
A. System of Accounting
The Company adopts the accrual concept in the preparation of accounts. The preparation of financial statements requires the Management to
make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of
the financial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in
preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.
B. Revenue Recognition
a) Trusteeship fees are accounted for on accrual basis.
b) Dividend income is recognised when the right to receive is established.
C. Taxation
The accounting treatment for Income Tax in respect of the Company’s income is based on the Accounting Standard 22 on ‘Accounting for Taxes
on Income’ as notified by the Companies (Accounting Standards) Rules, 2006. The provision for Income Tax comprises both current tax and
the deferred tax. Deferred tax is recognised, subject to the consideration of prudence in respect of deferred tax asset, on timing differences,
being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more
subsequent periods.
D. Investments
Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other
investments are classified as long-term investments. Current investments are carried at lower of cost and market value determined on an
individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognise a decline
other than temporary in the value of the investments.
 2 The Central Government approval of the application for payment of sitting fees to Directors in excess of Rule 10B of the Companies
(Central Government’s) General Rules and Forms, 1956 under Section 310 of The Companies Act, 1956 is awaited. There was no other
remuneration to Directors.
3 Information with regard to other matters specified in paragraphs 3, 4A, 4C and 4D of Part II of Schedule VI of the Companies Act, 1956 are
either Nil or not applicable to the Company for the year ended March 31, 2010.
4 Earning Per Share
 PARTICULARS                                                                                       CURRENT YEAR                PREVIOUS YEAR
 a)   Profit After Tax (Rs.)                                                                               3,975,553                   3,862,692
 b) Weighted average number of equity shares (Nos.)                                                          50,000                       50,000
 c)   Basic & Diluted Earnings Per Share (Rs.)                                                                 79.51                       77.25
 d)   Nominal Value Per Share (Rs.)                                                                            10.00                       10.00
5 Segment Information
The Company is engaged in the business of providing trusteeship services. As such, there is no separate reportable primary business segment or
geographical segment as per Accounting Standard 17 on ‘Segment Reporting’ as notified by the Companies (Accounting Standards) Rules, 2006.
6 Related Party Disclosures Under Accounting Standard 18:
A.    RELATIONSHIPS:

      HOLDING COMPANY:

      Infrastructure Development Finance Company Limited
7 There are no contingent liabilities as at March 31, 2010.
8 Refer Annexure for additional information pursuant to Part IV of the Schedule VI of the Companies Act, 1956.
9 The figures for the previous year have been regrouped / rearranged wherever necessary.

SIGNATURES TO SCHEDULES 1 TO 6 FORMING PART OF THE FINANCIAL STATEMENTS
FOR AND ON BEHALF OF                                                FOR AND ON BEHALF OF THE BOARD
B.S. M E H TA & CO .                                                IDFC TRUSTEE COMPANY LIMITED
Chartered Accountants


H.G. BUC H                                                          S.B. MATHUR                          RAJIV B. LALL
Partner                                                             Chairman                             Director
Membership No. 033114

Mumbai | April 21, 2010

 26      I D F C A N N U A L R E P O R T 09 –10
      B A L A N C E S H E E T A B ST R A CT                                                                                      AND COMPANY’S GENERAL BUSINESS PROFILE




I.      REGISTRATION DETAILS

        Registration No.           U   6   5   9   9   0       M       H       2       0       0   2       P   L   C   1   3     7   5    3    3

        State Code                 1   1

        Balance Sheet Date         3   1       0   3           2       0       1       0

II.     CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000)

                                                                           Public Issue                                                                                     Right Issue

                                                                           N       I       L                                                                                N     I   L

                                                                           Bonus Issue                                                                               Private Placement

                                                                           N       I       L                                                                                N     I   L

III.    POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000)
                                                                   Total Liabilities                                                                                       Total Assets
                                                           1       0       2       6       6                                                                     1     0    2     6   6
        SOURCES OF FUNDS
                                                                   Paid-up Capital                                                                             Reserves and Surplus

                                                                           5       0       0                                                                           9    6     9   3

                                                                       Secured Loans                                                                                  Unsecured Loans
                                                                           N       I       L                                                                                N     I   L
        APPLICATION OF FUNDS
                                                                Net Fixed Assets                                                                                           Investments

                                                                           N       I       L                                                                           9    7     5   6

                                                            Net Current Assets                                                                                    Deferred tax Asset

                                                                           4       3       7                                                                                N     I   L

IV. PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000)
                                                               Turnover / Income                                                                                     Total Expenditure
                                                                   5       8       7       0                                                                                2     3   1

                                                                Profit Before Tax                                                                                      Profit After Tax

                                                                   5       6       3       9                                                                           3    9     7   5

                                                   Earnings per Share (in Rs.)                                                                                             Dividend %

                                                        7          9       .       5       1                                                                                N     I   L

V.      GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS)

        Item Code No. (ITC Code)           N   I   L

        Product Description                T   R   U    S       T       E      E       S       H       I   P       S   E   R     V    I   C    E    S




                                                                                                                               I D F C T R U ST E E C O M P A N Y L I M I T E D       27
 IDFC investment
 advisors limited

 B O A R D O F D I R E CTO R S
 ■   Mr. Vikram Limaye
     Chairman
 ■   Mr. Naval Bir Kumar
 ■   Mr. Mahendra N. Shah

 A U D I TO R S
 ■   S. R. Batliboi & Co.
     Chartered Accountants

 P R I N C I PA L B A N K E R S
 ■   HDFC Bank Limited

 R E G I ST E R E D O F F I C E
 Naman Chambers, C-32, G-Block,
 Bandra-Kurla Complex, Bandra (East),
 Mumbai 400 051.
 TEL +91 22 42222000
 FAX +91 22 26540354




28    I D F C A N N U A L R E P O R T 09 –10
  D I R E CT O R S ’ R E P O R T


TO THE MEMBERS                                                             equities. The portfolio shall endeavor to invest in companies that
We are pleased to present the Fourth Annual Report to the Members,         are expected to benefit from agriculture and agri-products related
along with the Audited Profit and Loss Account for the period ended        opportunities in India over the next 5 to 6 Years.
March 31, 2010 and the Balance Sheet as at March 31, 2010.                 The fourth PMS product offering was IDFC Farm to Fork Portfolio
FINANCIAL RESULTS                                                          with an objective of ensuring capital appreciation over the medium
                                                                           term by investing in a diversified pool of listed equities. The portfolio
                                                                 RUPEES
                                                                           shall endeavor to invest in companies that are expected to benefit
PARTICULARS                       YEAR ENDED           YEAR ENDED          from the growth in prices of food and food-related products in India
                                MARCH 31, 2010      MARCH 31, 2009
                                                                           over the next 5 to 6 years.
Gross Income                          272,062,246           26,149,413
Profit before Interest,                76,012,609          (35,699,453)    The Company is also acting as Investment Advisor to India
Depreciation & Tax                                                         Infrastructure Opportunities Fund Ltd (“the Fund”), and its activities
Provision for Tax                       5,031,104              301,234     are to provide investment advisory services, identify, evaluate
Profit after Tax                       69,469,803          (36,890,708)    investment opportunities to the Fund and to monitor investments of
                                                                           the Fund in the Indian companies.
PRINCIPAL ACTIVITIES
                                                                           DIVIDEND
The Company is registered as a Portfolio Manager with the
                                                                           The Company wishes to plough back profits into the business. In view
Securities and Exchange Board of India (SEBI) to carry out Portfolio
                                                                           of this, the Directors do not recommend any dividend for the year
Management Services pursuant to SEBI (Portfolio Managers)
                                                                           ended March 31, 2010.
Regulations, 1993.
IDFC Hybrid Infrastructure Portfolio (HIP) was the first portfolio         PUBLIC DEPOSITS
offering for domestic retail investors under the PMS platform of the       During the year under review, your Company has not accepted
Company. The investment objective of HIP is to invest in permitted         deposits under the provisions of Section 58-A of the Companies Act,
securities / instruments issued by companies operating in the              1956.
Infrastructure space, and endeavor to achieve risk adjusted medium         SHARE CAPITAL
to long term capital appreciation. The proposed investment strategy        Rs. 2 crore equity share capital was issued by the Company during the
would be to provide growth capital for business opportunities              year.
especially to mid-sized companies with sound track record and
reputation and ride the growth curve with them and to optimise             DIRECTORS
Returns through Portfolio Diversification.                                 In terms of the provisions of the Articles of Association of the
                                                                           Company and Companies Act, 1956, Mr. Mahendra Shah would retire
This PMS offering received overwhelming response from investors.
                                                                           at the ensuing Annual General Meeting and being eligible, offers
HIP - discretionary portfolio collected approximately Rs.449.98
                                                                           himself for re-appointment.
crs in capital commitment and approx Rs. 134.58 crs of initial
contribution. The average portfolio size was approx Rs. 19.16 lacs.        AUDIT COMMITTEE
The HIP discretionary portfolio has been offered to all IDFC               The Audit Committee consists of three Directors, Mr. Mahendra N. Shah
employees, where the minimum commitment amount was Rs. 5 lac.              as Chairman, Mr. Naval Bir Kumar and Mr. Vikram Limaye. The functions
So far, 15 employee accounts have been opened and Rs. 1.35 cr in           of the Committee include reviewing the half yearly and annual financial
commitment amount has been received.                                       statements, internal control systems and significant accounting policies
                                                                           of the Company and discussing the audit findings and recommendations
HIP investors have been given online access wherein they can log into
                                                                           of the internal and statutory auditors of the Company.
the website for an 24*7 access to Portfolio and Capital Registers.
More reports are planned and would be subsequently added to the            AUDITORS
bouquet of existing Reports. The quarterly newsletters from the Fund       M/s. S. R. Batliboi & Co., Chartered Accountants will retire as the
Managers would also be made available on the site.                         statutory auditors of the Company at the ensuing Annual General
The second PMS product offering was IDFC Growth Portfolio (IGP).           Meeting. They have expressed their unwillingness to be reappointed
The investment objective of IGP is to seek to generate capital             as the statutory auditors and have given the notice in terms of
appreciation over the medium term by investing in a diversified pool       Section 224(2)(b) of the Companies Act, 1956 for the same. The
of listed equities. This portfolio shall endeavor to invest in companies   Board of Directors has placed on record its sincere appreciation
that are expected to benefit from the consumption boom that is             of the professional service rendered by M/s. S. R. Batliboi & Co. as
expected to take place in India over the next few years.                   statutory auditors.
The third PMS product offering was IDFC Agriculture Opportunities          In view of this, the Board has proposed the appointment of
Portfolio (AOP) with an objective of ensuring capital appreciation         M/s. M.P. Chitale & Co., as statutory auditors for the financial year
over the medium term by investing in a diversified pool of listed          ending March 31, 2011.


                                                                                           I D F C I N V E ST M E N T A D V I S O R S L I M I T E D   29
As required under the provisions of Section 224 of the Companies             the Company as at March 31, 2010 and the loss of the Company for the
Act, 1956 the Company has obtained a written confirmation from               year ended on that date;
the Auditors proposed to be appointed to the effect that their               ¬ they have taken proper and sufficient care for the maintenance of
appointment, if made, would be in conformity with the provisions of          adequate accounting records in accordance with the provisions of the
Sections 224 and 226 of the Companies Act, 1956. The shareholders            Companies Act, 1956, for safeguarding the assets of the Company and
are requested to appoint the auditors and fix their remuneration.            detecting fraud and other irregularities; and
FOREIGN EXCHANGE EARNINGS AND EXPENDITURE                                    ¬   they have prepared the annual accounts on a going concern basis.
The details of income or expenditure in foreign currency are given in
                                                                             ACKNOWLEDGEMENTS
Note No. 11 of Schedule 12 to the Financial Statement.
                                                                             The Directors thank the investors of India Infrastructure
PERSONNEL AND OTHER MATTERS                                                  Opportunities Fund, clients of discretionary PMS and regulatory
As required by the provisions of Section 217(2A) of the Companies            authorities such as The Reserve Bank of India and the Securities and
Act, 1956, read with the Companies (Particulars of Employees) Rules,         Exchange Board of India for their continued support to the Company.
1975, as amended, names and other particulars of the employees are           The Directors also express their gratitude for the unstinted support
set out in the annexure to the Directors’ Report.                            and guidance received from IDFC Asset Management Company
Since the Company does not own any manufacturing facility, the               Limited and other IDFC group companies.
disclosure of information on other matters required to be disclosed
in terms of Section 217(1)(e) of the Companies Act, 1956 read with
the Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1998, are not applicable and hence not given.
                                                                             FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors confirm that:
¬ the applicable accounting standards have been followed in
                                                                             VIKRAM LIMAYE
preparation of annual accounts and there are no material departures;
                                                                             Chairman
¬ they have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable            Mumbai
and prudent, so as to give a true and fair view of the state of affairs of   April 20, 2010




    30   I D F C A N N U A L R E P O R T 09 –10
  AU D I TO RS ’ R E PO RT


To The Members of IDFC Investment Advisors Limited                           (iv) In our opinion, the Balance Sheet, Profit and Loss Account
1. We have audited the attached Balance Sheet of IDFC Investment                  and Cash Flow Statement dealt with by this report comply
Advisors Limited (‘the Company’) as at March 31, 2010 and also the                with the accounting standards referred to in sub-section
Profit and Loss Account and the Cash Flow Statement for the year                  (3C) of section 211 of the Companies Act, 1956.
ended on that date annexed thereto. These financial statements are           (v) On the basis of the written representations received from
the responsibility of the Company’s management. Our responsibility               the directors, as on March 31, 2010, and taken on record by
is to express an opinion on these financial statements based on our              the Board of Directors, we report that none of the directors
audit.                                                                           is disqualified as on March 31, 2010 from being appointed
2. We conducted our audit in accordance with auditing standards                  as a director in terms of clause (g) of sub-section (1) of
generally accepted in India. Those Standards require that we plan                section 274 of the Companies Act, 1956;
and perform the audit to obtain reasonable assurance about whether           (vi) In our opinion and to the best of our information and
the financial statements are free of material misstatement. An                    according to the explanations given to us, the said accounts
audit includes examining, on a test basis, evidence supporting the                give the information required by the Companies Act, 1956,
amounts and disclosures in the financial statements. An audit also                in the manner so required and give a true and fair view
includes assessing the accounting principles used and significant                 in conformity with the accounting principles generally
estimates made by management, as well as evaluating the overall                   accepted in India;
financial statement presentation. We believe that our audit provides
                                                                                  (a) in the case of the Balance Sheet, of the state of affairs
a reasonable basis for our opinion.
                                                                                      of the Company as at March 31, 2010;
3. As required by the Companies (Auditor’s Report) Order, 2003 (as
                                                                                  (b) in the case of the Profit and Loss Account, of the profit
amended) (‘Order’) issued by the Central Government of India in terms
                                                                                      for the year ended on that date; and
of sub-section (4A) of Section 227 of the Companies Act, 1956, we
enclose in the Annexure a statement on the matters specified in                   (c)    in the case of Cash Flow Statement, of the cash flows
paragraphs 4 and 5 of the said Order.                                                    for the year ended on that date.

4. Further to our comments in the Annexure referred to above, we
report that:
                                                                        FOR S. R. BATLIBOI & CO.
    (i)   We have obtained all the information and explanations,
                                                                        Chartered Accountants
          which to the best of our knowledge and belief were
                                                                        Firm registration number: 301003E
          necessary for the purposes of our audit;
    (ii) In our opinion, proper books of account as required by law     per SHRAWAN JALAN
         have been kept by the Company so far as appears from our       Partner
         examination of those books;                                    Membership No. 102102
    (iii) The Balance Sheet, Profit and Loss Account and Cash Flow
          Statement dealt with by this report are in agreement with     Mumbai
          the books of account;                                         April 20, 2010




                                                                                          I D F C I N V E ST M E N T A D V I S O R S L I M I T E D   31
      ANNEXURE                                                                                                             TO THE AUDITOR’S REPORT



Annexure referred to in paragraph 3 of our report of even date                           comment upon the regularity or otherwise of the company
Re: IDFC Investment Advisors Limited (‘the Company’)                                     in depositing the same.
(i)    (a) The Company has maintained proper records showing full                  (b) According to the information and explanations given to us,
           particulars, including quantitative details and situation of                no undisputed amounts payable in respect of income-tax,
           fixed assets.                                                               service tax, cess and other undisputed material statutory
       (b) Fixed assets have been physically verified by the                           dues applicable to the company, were outstanding, at the
           management during the year and no material discrepancies                    year end, for a period of more than six months from the
           were identified on such verification.
                                                                                       date they became payable.
       (c)     There was no substantial disposal of fixed assets during the
                                                                                   (c)   According to the information and explanation given to
               year.
                                                                                         us, there are no dues of income tax, sales-tax, service tax
(ii) The Company provides investment management services and                             and cess which have not been deposited on account of any
     does not maintain inventories. Therefore, the provisions of                         dispute.
     clause 4(ii) of the Order are not applicable to the Company.
                                                                              NAME         NATURE OF DUES        AMOUNT PERIOD            FORUM
(iii) (a) As informed, the Company has not granted any loans,                 OF THE                                (RS) TO WHICH         WHERE
          secured or unsecured to companies, firms or other parties           STATUTE                                    THE              DISPUTE IS
          covered in the register maintained under section 301 of the                                                    AMOUNT           PENDING
                                                                                                                         RELATES
          Companies Act, 1956.
                                                                              Income-      Non-deduction of      3,224,881 AY 2007-08     CIT(A)
       (b) As informed, the Company has not taken any loans, secured          tax Act,     tax on payments
           or unsecured to companies, firms or other parties covered          1961         made to IDFC Ltd.
           in the register maintained under section 301 of the
           Companies Act, 1956.                                               (x) The Company has been registered for a period of less than five
                                                                                  years and hence we are not required to comment on whether
(iv) In our opinion and according to the information and explanations
                                                                                  or not the accumulated losses at the end of the financial year
     given to us, there is an adequate internal control system
                                                                                  is fifty per cent or more of its net worth and whether it has
     commensurate with the size of the Company and the nature of
                                                                                  incurred cash losses in such financial year and in the immediately
     its business, for the purchase of fixed assets and for the sale of
                                                                                  preceding financial year.
     services. During the course of our audit, no major weakness has
     been noticed in the internal control system in respect of these          (xi) Based on our audit procedures and as per the information and
     areas.                                                                        explanations given by the management, we are of the opinion
                                                                                   that the Company has not defaulted in repayment of dues to a
(v) According to the information and explanations provided by
                                                                                   financial institution. The Company has no outstanding dues in
    the management, we are of the opinion that there were no
                                                                                   respect of banks or debenture holders.
    particulars of contracts or arrangements referred to in section
    301 of the Act that need to be entered into the register                  (xii) According to the information and explanations given to us and
    maintained under section 301.                                                   based on the documents and records produced to us, the Company
                                                                                    has not granted loans and advances on the basis of security by
(vi) The Company has not accepted any deposits from the public.
                                                                                    way of pledge of shares, debentures and other securities.
(vii) In our opinion, the Company has an internal audit system
                                                                              (xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual
      commensurate with the size and nature of its business.
                                                                                     benefit fund/society. Therefore, the provisions of clause 4(xiii)
(viii) To the best of our knowledge and as explained, the Central                    of the Order are not applicable to the Company.
       Government has not prescribed maintenance of cost records
                                                                              (xiv) In our opinion, the Company is not dealing in or trading in shares,
       under clause (d) of sub-section (1) of section 209 of the
                                                                                    securities, debentures and other investments. Accordingly, the
       Companies Act, 1956 for the products of the Company.
                                                                                    provisions of clause 4(xiv) of the Order are not applicable to the
(ix) (a) The Company is regular in depositing with appropriate                      Company.
         authorities undisputed statutory dues including income-
                                                                              (xv) According to the information and explanations given to us, the
         tax, service tax, cess and other material statutory dues
                                                                                   Company has not given any guarantee for loans taken by others
         applicable to it. The provisions relating to provident fund,
                                                                                   from bank or financial institutions.
         employees’ state insurance, investors’ education and
         protection fund, sales-tax, wealth-tax, customs duty and             (xvi) The Company did not have any term loans outstanding during the
         excise duty are not applicable to the Company.                             year.

               Further, since the Central Government has till date not        (xvii)According to the information and explanations given to us and on
               prescribed the amount of cess payable under section 441              an overall examination of the balance sheet of the Company, we
               A of the Companies Act, 1956, we are not in a position to            report that no funds raised on short-term basis have been used
                                                                                    for long-term investment.

  32         I D F C A N N U A L R E P O R T 09 –10
(xviii) The Company has not made any preferential allotment of shares
        to parties or companies covered in the register maintained under
        section 301 of the Companies Act, 1956.
(xix) The Company did not have any outstanding debentures during
      the year.
(xx) The Company has not raised money in the year by public issue.
(xxi) Based upon the audit procedures performed for the purpose
      of reporting the true and fair view of the financial statements
      and as per the information and explanations given by the
      management, we report that no fraud on or by the Company has
      been noticed or reported during the course of our audit.


FOR S. R. BATLIBOI & CO.
Chartered Accountants
Firm registration number: 301003E


per SH R AWA N J A L A N
Partner
Membership No. 102102


Mumbai
April 20, 2010




                                                                           I D F C I N V E ST M E N T A D V I S O R S L I M I T E D   33
   BALANCE SHEET                                                                                                               AS AT MARCH 31, 2010


                                                                                                                    RUPEES                   RUPEES

                                                                                 SCHEDULE          AS AT MARCH 31, 2010       AS AT MARCH 31, 2009
SOURCES OF FUNDS
Shareholders’ Funds
  Share Capital                                                                               1              100,000,000                 80,000,000
Reserves and Surplus                                                                          2                   8,921,109                       -
Deferred Tax Liability (Net)                                                                  3                    381,104                        -
                                                                                                             109,302,213                 80,000,000
APPLICATION OF FUNDS
Fixed Assets                                                                                  4
  Gross Block                                                                                                     9,194,361               3,693,184
  Less: Accumulated Depreciation and Amortisation                                                                 3,460,917               1,980,601
  Net Block                                                                                                       5,733,444               1,712,583
Investments                                                                                   5                  40,043,030              13,742,877
Current Assets, Loans and Advances
  Sundry Debtors (less than six months) (Unsecured, Considered good)                                         100,046,505                  2,995,226
  Cash and Bank Balances                                                                      6                    705,336                1,292,068
  Loans and Advances                                                                          7                  44,921,152              16,421,535
                                                                                    (A)                      145,672,993                 20,708,829
Less: Current Liabilities and Provisions                                                      8
      Current Liabilities                                                                                        59,939,937              12,152,617
      Provisions                                                                                                 22,207,317               4,560,366
                                                                                    (B)                          82,147,254              16,712,983
Net Current Assets                                                                (A)-(B)                        63,525,739               3,995,846
Debit Balance in Profit and Loss Account                                                                                  -              60,548,694
                                                                                                             109,302,213                 80,000,000
Notes to the Financial Statements                                                             14
The schedules referred to above and notes to accounts form an integral part of the Accounts




AS PER OUR REPORT OF EVEN DATE

FOR S.R. BATLIBOI & CO.                                           FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF
Chartered Accountants                                             IDFC INVESTMENT ADVISORS LIMITED


per SH R AWA N J A L A N                                          NAVAL BIR KUMAR                     MAHENDRA N. SHAH
Partne r                                                          Director                            Director
Membership No. 102102

                                                                  RAJENDRA L. PATIL
Mumbai | April 20, 2010                                           Company Secretary

 34     I D F C A N N U A L R E P O R T 09 –10
   PROFIT AND LOSS ACCOUNT                                                                                          FOR THE YEAR ENDED MARCH 31, 2010



                                                                                                                         RUPEES                              RUPEES

                                                                                                           APRIL 1, 2009 TO                 APRIL 1, 2008 TO
                                                                                  SCHEDULE                 MARCH 31, 2010                   MARCH 31, 2009
INCOME
Fee Income                                                                                    9                    269,842,048                       24,178,275
Other Income                                                                                 10                       2,220,198                       1,971,138
Total                                                                                                              272,062,246                       26,149,413
EXPENDITURE
Personnel Expenses                                                                           11                     57,205,940                       30,070,588
Establishment Expenses                                                                       12                         740,679                       9,664,477
Operating and Other Expenses                                                                 13                    138,103,018                       14,375,801
Depreciation and Amortisation                                                                 4                       1,511,702                         890,021
                                                                                                                   197,561,339                       55,000,887
PROFIT/(LOSS) BEFORE TAX AND PRIOR PERIOD ITEMS                                                                     74,500,907                     (28,851,474)
   Income Taxes
   -    Current Tax                                                                                                   4,650,000                                    -
   -    Deferred Tax Charge / (Credit)                                                                                  381,104                        (108,766)
   -    Fringe Benefit Tax                                                                                                      -                       410,000
PROFIT/(LOSS) AFTER TAX AND BEFORE PRIOR PERIOD ITEMS                                                               69,469,803                     (29,152,708)
Prior Period Item                                                                                                               -                    (7,738,000)
Net Profit/(Loss) After Tax                                                                                         69,469,803                     (36,890,708)
Balance Brought Forward                                                                                            (60,548,694)                    (23,657,986)
Balance Carried to Balance Sheet                                                                                      8,921,109                    (60,548,694)
Earnings/(Loss) per share
Basic and Diluted (Face value Rs.10)                                                                                        7.48                              (6.14)
Number of equity shares in calculating basic earnings per share                                                       9,282,192                       6,005,479
Notes to the Financial Statements                                                            14
The schedules referred to above and the notes to accounts form an integral part of the Accounts




AS PER OUR REPORT OF EVEN DATE

FOR S.R. BATLIBOI & CO.                                           FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF
Chartered Accountants                                             IDFC INVESTMENT ADVISORS LIMITED


per SH R AWA N J A L A N                                          NAVAL BIR KUMAR                        MAHENDRA N. SHAH
Partne r                                                          Director                               Director
Membership No. 102102

                                                                  RAJENDRA L. PATIL
Mumbai | April 20, 2010                                           Company Secretary

                                                                                                  I D F C I N V E ST M E N T A D V I S O R S L I M I T E D      35
     C A S H F L OW ST AT E M E N T                                                                        FOR THE YEAR ENDED MARCH 31, 2010



                                                                                                               RUPEES                 RUPEES

                                                                                                 APRIL 1, 2009 TO           APRIL 1, 2008 TO
                                                                                                 MARCH 31, 2010             MARCH 31, 2009
A.     CASH FLOW FROM OPERATING ACTIVITIES
       Profit / (Loss) Before Tax and Prior Period Items                                                   74,500,907            (28,851,474)
       Adjustments for:
           Prior Period Item                                                                                         -            (7,738,000)
           Depreciation/Amortisation                                                                        1,511,702                890,021
           Fixed Asset Writen off                                                                              27,217                       -
           Dividend Earned                                                                                 (2,200,153)              (860,817)
           Profit on Sale of Investments                                                                          (45)                (1,295)
       Operating loss before Working Capital Changes                                                       73,839,628            (36,561,565)
       Movements in working capital :
           (Increase) / Decrease in Loans and Advances                                                 (21,792,405)               (9,281,069)
           (Increase) / Decrease in Sundry Debtors                                                     (97,051,279)               25,998,976
           Increase / (Decrease) in Current Liabilities                                                    47,787,321             (9,390,245)
           Increase / (Decrease) in Provisions                                                             17,804,135             (6,487,899)
       Cash generated from Operations                                                                      20,587,400            (35,721,803)
       Direct Taxes Paid (Including Fringe Benefit Tax)                                                (11,514,397)                 (555,745)
       NET CASH (USED IN)/ FROM OPERATING ACTIVITIES                                   (A)                  9,073,003            (36,277,549)
B.     CASH FLOW FROM INVESTING ACTIVITIES
       Purchase of Fixed Assets                                                                            (5,559,779)               (80,594)
       Dividend Earned                                                                                      2,200,153                860,817
       Purchase of Investments                                                                        (160,700,109)             (119,594,786)
       Sale Proceeds of Investments                                                                    134,400,000               106,366,277
       NET CASH (USED IN) / FROM INVESTING ACTIVITIES                                  (B)             (29,659,735)              (12,448,286)
C.     CASH FLOW FROM FINANCING ACTIVITIES
       Proceeds from Issue of Share Capital                                                                20,000,000             50,000,000
       NET CASH FROM FINANCING ACTIVITIES                                              (C)                 20,000,000             50,000,000
       Net change in Cash and Cash Equivalents                                     (A)+(B+(C)               (586,732)              1,274,165
       Cash and Cash Equivalents as at the beginning of the year                                            1,292,068                 17,903
       Cash and Cash Equivalents as at the end of the year                                                    705,336              1,292,068
       Components of cash and cash equivalents as at March 31, 2010
       Cash on hand                                                                                                  -                 1,737
       Balances with Scheduled Bank on Current Account                                                        705,336              1,290,331
                                                                                                              705,336              1,292,068




AS PER OUR REPORT OF EVEN DATE

FOR S.R. BATLIBOI & CO.                                            FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF
Chartered Accountants                                              IDFC INVESTMENT ADVISORS LIMITED


per SH R AWA N J A L A N                                           NAVAL BIR KUMAR              MAHENDRA N. SHAH
Partne r                                                           Director                     Director
Membership No. 102102

                                                                   RAJENDRA L. PATIL
Mumbai | April 20, 2010                                            Company Secretary

 36     I D F C A N N U A L R E P O R T 09 –10
  SCHEDULES                                                                                                                                             ANNEXED TO AND FORMING PART OF THE ACCOUNTS



SCHEDULE 1 Share Capital                                                                                                                                                              RUPEES                                                           RUPEES

                                                                                                                                                       AS AT MARCH 31, 2010                                        AS AT MARCH 31, 2009
AUTHORISED:
10,000,000 (Previous Year : 10,000,000) Equity shares of Rs.10/- each                                                                                                  100,000,000                                                                100,000,000
ISSUED, SUBSCRIBED AND PAID UP
10,000,000 (Previous Year: 8,000,000) Equity shares of Rs.10/- each, fully paid up                                                                                     100,000,000                                                                 80,000,000
(All the above shares are held by IDFC Asset Management Company Limited, the Holding
Company and its Nominees)
(Previous Year: All the above shares are held by Infrastructure Development Finance
Company Limited, the Utilmate Holding Company and its Nominees)
                                                                                                                                                                       100,000,000                                                                 80,000,000


SCHEDULE 2 Reserves & Surplus                                                                                                                                                         RUPEES                                                           RUPEES

                                                                                                                                                       AS AT MARCH 31, 2010                                        AS AT MARCH 31, 2009
Profit and Loss Account
Balance as per Last account                                                                                                                                                                    –                                                                         –
Transferred from Profit & Loss Account                                                                                                                                              8,921,109                                                                            –
                                                                                                                                                                                    8,921,109                                                                            –




SCHEDULE 3 Deferred Tax                                                                                                                                                               RUPEES                                                           RUPEES

                                                                                                                                                       AS AT MARCH 31, 2010                                        AS AT MARCH 31, 2009
DEFERRED TAX LIABILITY
Effect of preliminary expenditure debited to profit and loss account in the current year / period                                                                                     33,218                                                                             –
but allowed for tax purposes in following years
Differences in depreciation and other differences in block of fixed assets as per tax and financial                                                                                  347,886                                                          187,134
books
Gross Deferred Tax Liability                                                                                                                                                         381,104                                                          187,134
DEFERRED TAX ASSET                                                                                                                                                                             –                                                                         –
Effect of preliminary expenditure debited to profit and loss account in the current year / period                                                                                              –                                                       50,985
but allowed for tax purposes in following years
Carry forward unabsorbed tax losses                                                                                                                                                            –                                                      136,149
Gross Deferred Tax Asset                                                                                                                                                                       –                                                      187,134
Net Deferred Tax Liability                                                                                                                                                           381,104                                                                             –




SCHEDULE 4 - Fixed Assets                                                                                                                                                                                                                             RUPEES

DESCRIPTION                                              GROSS BLOCK                                                                 DEPRECIATION AND AMORTISATION                                                          NET BLOCK
                               As at April 1,




                                                                                                                         As at April 1,
                                                                                             As at March




                                                                                                                                                                                          As at March




                                                                                                                                                                                                                         As at March




                                                                                                                                                                                                                                                        As at March
                                                              Additions




                                                                                                                                                        Additions
                                                                              Deletions




                                                                                                                                                                        Deletions
                                                                                                           31, 2010




                                                                                                                                                                                                        31, 2010




                                                                                                                                                                                                                                       31, 2010




                                                                                                                                                                                                                                                                      31, 2009
                                                2009




                                                                                                                                          2009




TANGIBLES
Furniture and Fittings         73,400                             -        7,290            66,110                      42,445                      5,603            3,780                44,268                        21,842                         30,955
Office Equipment           1,011,536                    185,950           29,508          1,167,978                    362,787                    158,272           11,138               509,921                       658,057                        648,749
Computer Hardware          1,489,532                     30,278           21,804          1,498,006                   1,023,870                   196,031           16,467             1,203,434                       294,572                        465,662
INTANGIBLES
Computer Software          1,118,716                   5,343,551                  -       6,462,267                    551,498                   1,151,796                  -          1,703,294                      4,758,973                       567,217
Total                      3,693,184                   5,559,779          58,602          9,194,361                   1,980,600                  1,511,702          31,385             3,460,917                      5,733,444                      1,712,583
Previous Year              3,612,590                     80,594                   -       3,693,184                   1,090,580                   890,021                   -          1,980,601                      1,712,583




                                                                                                                                                     I D F C I N V E ST M E N T A D V I S O R S L I M I T E D                                                         37
SCHEDULE 5 Investment - (Current)
(At lower of cost and market value)                                                                                 RUPEES                  RUPEES

                                                                                                   AS AT MARCH 31, 2010       AS AT MARCH 31, 2009
(Unquoted, Non Trade)
Units in Mutual Fund
3,976,349.31 units (March 31, 2009: 1,364,693.91 units) of Rs. 10 each in IDFC Money Manager                    40,043,030               13,742,877
Fund-Treasury Plan -Inst Plan B (Daily Dividend Reinvestment Plan)
Net Assets Value: Rs. 40,043,030 (Previous Year: Rs 13,742,877)
                                                                                                                40,043,030               13,742,877
The following investments were purchased (including Dividend Reinvestment) and sold during the year:
15,957,831.762 units (March 31, 2009: 3,668,839.363 units) of Rs. 10 each in IDFC Money Manager Fund - Treasury Plan - Inst Plan B
(Daily Dividend Reinvestment Plan)
13,346,176.372 units (March 31, 2009: 1,062,530.411 units) of Rs. 10 each in IDFC Money Manager Fund - Treasury Plan - Inst Plan B
(Daily Dividend Reinvestment Plan)




SCHEDULE 6 Cash and Bank Balances                                                                                   RUPEES                  RUPEES

                                                                                                   AS AT MARCH 31, 2010       AS AT MARCH 31, 2009
Cash on Hand                                                                                                              -                  1,737
Balance with a Scheduled Bank in Current Account                                                                   705,336                1,290,331
                                                                                                                   705,336                1,292,068




SCHEDULE 7 Loan and Advances                                                            RUPEES                      RUPEES                  RUPEES

                                                                                                   AS AT MARCH 31, 2010       AS AT MARCH 31, 2009
(Unsecured, considered good)
Advance Recoverable in Cash or in Kind or for value to be received                  23,868,208                                             933,114
Service Tax Input Credit                                                             7,893,923                                            9,036,613
Advance Payment of Income Tax (Net of Provisions)                                   13,159,021                                            6,451,808
(Unsecured, considered doubtful)                                                                               44,921,152                16,421,535
Advance Recoverable in Cash or in Kind or for value to be received                             -                          -               2,811,516
Less: Provisions                                                                               -                          -               2,811,516
                                                                                                                          -                       -
                                                                                                               44,921,152                16,421,535




SCHEDULE 8 Current Liabilities and Provisions                                                                       RUPEES                  RUPEES

                                                                                                   AS AT MARCH 31, 2010       AS AT MARCH 31, 2009
CURRENT LIABILITIES
Sundry Creditors for Expenses                                                                                  30,960,526                10,309,007
  (Other than Micro, Medium and Small Enterprises)
Fees Accrued in Advance                                                                                        27,604,722                 1,555,111
Statutory Dues                                                                                                   1,374,689                 288,499
                                                                                                               59,939,937                12,152,617
PROVISIONS
Provision for Fringe Benefit Tax (Net of advance tax)                                                             107,316                  264,501
Provision for Leave Encashment                                                                                   1,200,000                 720,865
Provision for Bonus                                                                                            20,900,000                 3,575,000
                                                                                                               22,207,316                 4,560,366
                                                                                                               82,147,254                16,712,983




38     I D F C A N N U A L R E P O R T 09 –10
SCHEDULE 9 Fees Income                                                                        RUPEES                              RUPEES

                                                                                APRIL 1, 2009 TO                 APRIL 1, 2008 TO
                                                                                MARCH 31, 2010                   MARCH 31, 2009
Portfolio Management Fees                                                               135,625,714                        3,070,826
  (Service Tax Rs. 13,969,448; Previous Year: Rs. 343,328)
  (Tax Deducted at Source Rs. 1,457,213; Previous Year: Rs. 167,055)
Performance Fees                                                                        108,292,077                                    -
Advisory Fees                                                                            25,924,257                       21,107,449
  (Service Tax Rs. 167,731; Previous Year: Rs. 17,764)
  (Tax Deducted at Source Rs. 161,515; Previous Year: Rs. Nil)
                                                                                        269,842,048                       24,178,275




SCHEDULE 10 Other Income                                                                      RUPEES                              RUPEES

                                                                                APRIL 1, 2009 TO                 APRIL 1, 2008 TO
                                                                                MARCH 31, 2010                   MARCH 31, 2009
Dividend from Units of Mutual Fund                                                         2,200,153                         860,817
Foreign Exchange Gains (Net)                                                                         -                       189,415
Profit on Sale of Investments                                                                      45                              1,295
Excess Provision no longer required written back                                                     -                       917,011
Miscellaneous Income                                                                          20,000                               2,600
                                                                                           2,220,198                       1,971,138




SCHEDULE 11 Personnel Expenses (See Schedule 14 Note 7)                                       RUPEES                              RUPEES

                                                                                APRIL 1, 2009 TO                 APRIL 1, 2008 TO
                                                                                MARCH 31, 2010                   MARCH 31, 2009
Salaries and Bonus                                                                       54,940,501                       27,599,947
Contribution to Provident Fund and Other Funds                                             2,049,989                       2,327,792
Staff Training and Welfare Expenses                                                         215,450                          142,849
                                                                                         57,205,940                       30,070,588




SCHEDULE 12 Establishment Expenses                                                            RUPEES                              RUPEES

                                                                                APRIL 1, 2009 TO                 APRIL 1, 2008 TO
                                                                                MARCH 31, 2010                   MARCH 31, 2009
Lease Rent for Employee Residence                                                           579,216                                    -
Lease Rent for Office Premises                                                                       -                     8,201,200
Muncipal Taxes for Office Premises                                                                   -                       601,772
Electricity Expenses                                                                                 -                       492,300
Repairs and Maintenance - Building                                                             8,625                                   -
Repairs and Maintenance - Others                                                            152,838                          369,205
                                                                                            740,679                        9,664,477




                                                                       I D F C I N V E ST M E N T A D V I S O R S L I M I T E D      39
SCHEDULE 13 Operating And Other Expenses                   RUPEES             RUPEES

                                                 APRIL 1, 2009 TO   APRIL 1, 2008 TO
                                                 MARCH 31, 2010     MARCH 31, 2009
Brokerage Expenses                                    125,522,013          3,118,767
Travelling and Conveyance                               1,344,874          1,492,444
Advertisement and Publicity                             1,078,148            624,026
Postage, Telephone and Telex                              982,686            556,609
Printing and Stationery                                 1,501,423          1,658,748
Professional Fees                                       3,783,537            472,653
Loss on Foreign Exchange Fluctuation                       16,808                  -
Arzak India Fund (Sharia) Expenses                              -          2,811,516
Membership and Subscription                             2,300,030          2,187,887
Computer Software Expenses                                417,889                  -
Office Maintenance                                         27,750            428,472
Stamp Duty & Franking Expenses                            344,994            249,000
Relocation Expenses                                        26,800                  -
Operational Losses                                         12,813                  -
Fixed Asset Written off                                    27,217                  -
Miscellaneous Expenses                                    159,428            211,622
AUDITORS’ REMUNERATION
-   Audit Fees                                            489,333            425,000
-   Tax Audit Fees                                         67,275             75,000
-   Service Tax                                                 -             56,625
-   Out of Pocket Expenses                                      -              7,432
                                                      138,103,018         14,375,801




40      I D F C A N N U A L R E P O R T 09 –10
SCHEDULE 14 Notes Forming Part of the Accounts

1 Nature of Operations

IDFC Investment Advisors Limited (“the Company”) was incorporated on April 3, 2006. The Company entered into an Investment Advisory
Agreement with the India Infrastructure Opportunities Fund Ltd. (“the Fund”) on August 14, 2006 to provide investment advisory services,
identify and evaluate investment opportunities to the Fund and to monitor investments of the Fund in Indian companies. Under the agreement,
the Company is entitled to receive advisory fees computed on the basis of the net assets of the Fund plus a performance fee. During the year
the Company has started rendering portfolio management services to the IDFC Hybrid Infrastructure Portfolio (“HIP”), IDFC Growth Portfolio
(“IGP”) and IDFC Agriculture Opportunities Portfolio (“AOP”).

2 Statement of Significant Accounting Policies

A. Basis of Preparation
The financial statements have been prepared to comply in all material respects with the Accounting Standards notified by Companies
(Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956 (‘the Act’). The financial statements
have been prepared under the historical cost convention on an accrual basis except in case of assets for which provision for impairment is made
and revaluation is carried out. The accounting policies applied by the Company are consistent with those used in the previous year.

B. Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial
statements and the results of operations during the reporting period end. Although these estimates are based upon management’s best
knowledge of current events and actions, actual results could differ from these estimates.

C. Fixed Assets and Intangible Assets
Fixed assets are stated at cost less accumulated depreciation and provision for impairment, if any. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition for its intended use.

D. Depreciation and Amortisation
Depreciation is provided using the written down value method, at the rates prescribed under schedule XIV of the Companies Act, 1956.
Depreciation on additions during the period is provided on a pro-rata basis. Fixed assets having an original cost of less than Rs. 5,000
individually are depreciated fully in the year/period of purchase. Intangible assets are amortised over period of 3 years on straight line method.

E. Impairment
i.    The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external
      factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable
      amount is the greater of the asset’s net selling price and value in use. In assessing value in use, the estimated future cash flows are
      discounted to their present value at the weighted average cost of capital.

ii.   After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

F. Investments
Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other
investments are classified as long-term investments. Current investments are carried at lower of cost and fair value determined on an individual
investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognise a decline other
than temporary in the value of the investments.

G. Revenue Recognition
Advisory Fee is measured on a quarterly basis in advance and is computed on the Assets Under Management of the Fund as at last day of the
preceding quarter.

Performance Fee is recognized on an annual basis on March 31, every year based on terms of the agreement.

Fees earned from rendering Portfolio Management Services is recognized as per Portfolio Management Service Agreement.

Interest income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

Dividend income on investments is recognised when unconditional right to receive is established.


                                                                                             I D F C I N V E ST M E N T A D V I S O R S L I M I T E D   41
H. Brokerage Expenses
Brokerage is paid to brokers for IDFC Hybrid Infrastructure Portfolio (“HIP”), IDFC Growth Portfolio (“IGP”) and IDFC Agriculture Opportunities
Portfolio (“AOP”) as per the terms of agreement entered into with respective brokers. In case of IDFC Hybrid Infrastructure Portfolio (“HIP”)
product, the Company amortises the brokerage expenses (excluding Service tax) of corporate brokers over the tenure of agreement and
unamortised brokerage is lying under Loans and Advances. In case of Individual brokers the entire brokerage expenses are charged to Profit &
Loss A/c in the year it is incurred. For IDFC Growth Portfolio (“IGP”) and IDFC Agriculture Opportunities Portfolio (“AOP”) the entire brokerage
expenses are charged to Profit & Loss A/c in the year it is incurred.

I. Operating Leases
Leases of assets under which all the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases.
Payments under operating leases are charged to the Profit and Loss Account, on a straight line basis, over the lease term.

J. Income Taxes
Tax expense comprises of current, deferred and fringe benefit tax. Current income tax and fringe benefit tax is measured at the amount
expected to be paid to the tax authorities in accordance with the Indian Income Tax Act of 1961. Deferred income taxes reflects the impact of
current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax
assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which
such deferred tax assets can be realised. In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred
tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable
profits.

At each balance sheet date the Company re-assesses unrecognised deferred tax assets. It recognises unrecognised deferred tax assets to
the extent that it has become reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available
against which such deferred tax assets can be realised.

The carrying amount of deferred tax assets are reviewed at each balance sheet date. The Company writes-down the carrying amount of a
deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

K. Foreign Currency Transactions
(i) Initial recognition

      Foreign currency transactions are recorded in Indian Rupees, the Company’s reporting currency, by applying to the foreign currency amount
      the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

(ii) Conversion

      Foreign currency monetary items are reported using the closing rate. There are no non-monetary items.

(iii) Exchange differences

      Exchange differences arising on the settlement of monetary items or the Company’s monetary items at rates different from those at which
      they were initially recorded during the year, or reported in the previous financial statements, are recognised as income or as expense in the
      year in which they arise.

L. Provisions
A provision is recognised when the Company has a present obligation as a result of past event; it is probable that an outflow of resources will be
required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are
determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date
and adjusted to reflect the current best estimates.

3 Cash and Cash Equivalents

Cash and cash equivalents in the Balance Sheet comprise of cash at bank and in hand and short-term investments with an original maturity of
three months or less.




 42      I D F C A N N U A L R E P O R T 09 –10
4 Segment Information
The Company is engaged in the business of providing investment advisory services. During the year, the Company was engaged in only one
business segment and no geographical segments. As such, there are no separate reportable segments as per Accounting Standards 17 on
‘Segment Reporting’ issued by Institute of Chartered Accountants of India.

5 Employee residence is obtained on operating lease. There is no escalation clause in the lease agreement. There are no restrictions imposed
by lease arrangements. There are no subleases.

6 Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year. The relevant details as described above are as follows:

PARTICULARS                                                                                         APRIL 1, 2009 TO                  APRIL 1, 2008 TO
                                                                                                    MARCH 31, 2010                    MARCH 31, 2009
Net Profit /(Loss) (Rs.)                                                                                     69,469,803                      (36,890,708)
Weighted average number of equity shares (Nos.)                                                                9,282,192                        6,005,479
Basic Profit /(Loss) Per Share (Rs.)                                                                                 7.48                               (6.14)
Face Value Per Share (Rs.)                                                                                          10.00                               10.00

 7 The Company does not have any employee on its payroll. Personnel expenses include salaries, allowances, bonus, reimbursements and
contribution to provident fund and other funds. These expenses represent reimbursement of cost of employees, to Infrastructure Development
Finance Company Limited, the (Ultimate Holding Company) & IDFC Asset Management Company Limited, the (Holding Company), on deputation
to the Company. Therefore, all employees related benefits and statutory obligation of such personnel on deputation are charged by the Holding
Company & Ultimate Holding Company.

8 Performance Fees
During the year Performance Fees on Advisory Service has been recognized based on return over high water mark from India Infrastructure
Opportunities Fund, since there was appreciation in Net Asset Value of the units.

9 Related Party Disclosures Under Accounting Standard 18
(a) Relationships:
    ULTIMATE HOLDING COMPANY:

    Infrastructure Development Finance Company Limited
    HOLDING COMPANY:

    IDFC Asset Management Company Limited
    FELLOW SUBSIDIARIES:

    IDFC AMC Trustee Company Limited
    IDFC Pension Fund Management Company Limited
    KEY MANAGEMENT PERSONNEL:

    Mr. Vikram Limaye, Chairman
    Mr. Naval Bir Kumar, Director
(b) The following transactions were carried out with the related parties in the ordinary course of business during the year :
                                                                                                                                                       RUPEES

NAME OF THE RELATED PARTY AND NATURE OF                PARTICULARS                                            APRIL 1, 2009 TO        APRIL 1, 2008 TO
RELATIONSHIP                                                                                                  MARCH 31, 2010          MARCH 31, 2009
Infrastructure Development Finance Company Limited     Reimbursement of expenses (Based on the debit                   38,387,406              48,898,321
(Ultimate Holding Company)                             notes received)
                                                       Subscription towards Equity Share Capital                                  -            50,000,000
                                                       Management Fee Income                                            1,946,125                            -
                                                       Management Fees Received in Advance                              5,888,875                            -
IDFC Asset Management Company Limited                  Subscription towards Equity Share Capital                     100,000,000                             -
(Holding Company)
                                                       Reimbursement of expenses (Based on the debit                    6,630,697               24,07,975
                                                       notes received)




                                                                                            I D F C I N V E ST M E N T A D V I S O R S L I M I T E D      43
(c) Following are the balances outstanding as at the year end:
                                                                                                                                       RUPEES

NAME OF THE RELATED PARTY AND NATURE OF RELATIONSHIP                                       AS AT MARCH 31, 2010       AS AT MARCH 31, 2009
Payable to Infrastructure Development Finance Company Limited (Ultimate Holding Company)                  4,137,462                 3,207,727
IDFC Asset Management Company Limited (Holding Company)                                                           -                 24,07,975

10 Other Statutory Information
                                                                                                                                       RUPEES

                                                                                                APRIL 1, 2009 TO           APRIL 1, 2008 TO
                                                                                                MARCH 31, 2010             MARCH 31, 2009
EARNINGS IN FOREIGN CURRENCY
  Advisory Fees                                                                                        132,512,497                 20,934,987
EXPENDITURE IN FOREIGN CURRENCY
  Travelling Expense                                                                                        98,637                    133,571
  Membership and Subscription Charges                                                                      242,940                     85,576
                                                                                                           341,577                    219,147

11 The Company has no amounts due to any micro, small and medium enterprises as defined under section 7 (1) (a)/ 7 (1) (b)/ 7 (1) of Micro
Small and Medium Enterprises Development Act, 2006 as on March 31, 2010.

12 Contingent liabilities not provided for in respect of :
On 24th December, 2009, the Company received an Order from by Commissioner of Income Tax under section 156 of the Income Tax Act, 1961
for Assessment Year 2007-2008 (‘the Order’).

The Assessing Officer had assessed the income of Assessment Year 2007-2008 at Rs. 15,194,780 as against loss of Rs. 20,112,503 reported
by the Company. Accordingly, the Assessing Officer raised a demand of Rs. 6,624,881 on account of non deduction of tax on the payment made
to IDFC Ltd. Subsequently, the Company filed an appeal to the CIT(A) and also made a request to the Commissioner of Income Tax to keep the
demand in abeyance till such time the appeal is disposed off. On receipt of directions to pay 50% of the above demand in two installments the
Company paid Rs. 3,400,000.

Aggrieved by the Order, the Company has filed an appeal to the CIT(A). Pending the submission of the Appeal and subsequent settlement of the
same, Rs. 3,224,881 (i.e. Rs. 6,624,881 Less Rs. 3,400,000) is being disclosed as contingent liability.

13 There are no contracts remaining to be executed on capital account and not provided for as at March 31, 2010 (Previous Year Rs. Nil).
14 The figures for the previous year have been regrouped / rearranged wherever necessary to conform to the current year’s classification.




FOR S. R. BATLIBOI & CO.                                         FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF
Chartered Accountants                                            IDFC INVESTMENT ADVISORS LIMITED


per SH R AWA N J A L A N                                         NAVAL BIR KUMAR               MAHENDRA N. SHAH
Partne r                                                         Director                      Director
Membership No. 102102

                                                                 RAJENDRA L. PATIL
Mumbai | April 20, 2010                                          Company Secretary


 44     I D F C A N N U A L R E P O R T 09 –10
      B A L A N C E S H E E T A B ST R A CT                                                                                    AND COMPANY’S GENERAL BUSINESS PROFILE




(Submitted in terms of Part IV of the Companies Act, 1956)
I       REGISTRATION DETAILS

Registration No.               U    7   4   9    2       0        M       H       2       0       0   6   P   L   C   1   6   0    9    3    7

State Code                     1    1

Balance Sheet Date             3    1       0    3                2       0       1       0

II      CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000)

                                                                              Public Issue                                                                                 Right Issue
                                                                              N       I       L                                                                            N     I   L
                                                                              Bonus Issue                                                                           Private Placement
                                                                              N       I       L                                                                 2     0    0     0   0
III     POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000)
                                                                      Total Liabilities                                                                                   Total Assets
                                                     1       9        1       4       4       9                                                            1    9     1    4     4   9
SOURCES OF FUNDS
                                                                      Paid-up Capital                                                                          Reserves and Surplus

                                                     1       0        0       0       0       0                                                                       8    9     2   1

                                                                          Secured Loans                                                                              Unsecured Loans

                                                                              N       I       L                                                                            N     I   L

                                                         Deferred Tax Liability
                                                                              3       8       1
APPLICATION OF FUNDS
                                                                   Net Fixed Assets                                                                                       Investments

                                                                      5       7       3       3                                                                 4     0    0     4   3


                                                                 Net Current Assets

                                                             6        3       5       2       6

IV      PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000)
                                                                 Turnover / Income                                                                                  Total Expenditure

                                                     2       7        2       0       6       2                                                            1    9     7    5     6   1

                                                                  Profit Before Tax                                                                                   Profit After Tax

                                                             7        4       5       0       1                                                                 6     9    4     7   0

                                                 Earnings per Share (in Rs.)                                                                                              Dividend %

                                                                      7       .       4       8                                                                            N     I   L

V       GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS)

Item Code No. (ITC Code)                N    I   L

Product Description                     A    D   V           I     S       O      R       Y           S   E   R   V   I   C    E    S




                                                                                                                      I D F C I N V E ST M E N T A D V I S O R S L I M I T E D       45
     IDFC project
     equity company
     limited

     B O A R D O F D I R E CTO R S
     ■    Dr. Rajiv B. Lall
          Chairman
     ■    Mr. Vikram Limaye
     ■    Mr. Mahendra N. Shah

     A U D I TO R S
     ■    S. R. Batliboi & Co.
          Chartered Accountants

     P R I N C I PA L B A N K E R S
     ■    HDFC Bank Limited

     R E G I ST E R E D O F F I C E
     Naman Chambers, C-32, G-Block,
     Bandra-Kurla Complex, Bandra (East),
     Mumbai 400 051.
     TEL +91 22 42222000
     FAX +91 22 26540354




46       I D F C A N N U A L R E P O R T 09 –10
  D I R E CT O R S ’ R E P O R T


TO THE MEMBERS                                                                also indicated their willingness to be re-appointed. You are requested
Your directors have pleasure in presenting the Fourth Annual Report           to consider their re-appointment.
together with the audited accounts for the year ended March 31,
                                                                              PERSONNEL AND OTHER MATTERS
2010.
                                                                              The Company has 11 employees in receipt of remuneration of more
OPERATIONAL REVIEW                                                            than Rs.24 lakh per annum. In accordance with the provisions of
Your Company is the Investment Manager to India Infrastructure Fund           Section 217 (2A) of the Companies Act, 1956 and the rules framed
(“Fund”), which was set up as a part of ‘India Infrastructure Financing       thereunder, the names and other particulars of employees are set out
Initiative’, a collaborative effort between Government of India and           in the Annexure to the Directors’ Report.
leading Indian and global financial institutions for providing capital        Since the Company does not own any manufacturing facility, the
to infrastructure projects in India. The Fund has achieved the Final          disclosure of information on other matters required to be disclosed
Close on June 8, 2009 with total commitments of INR 38.37 billion.            in terms of Section 217(1)(e) of the Companies Act, 1956 read with
The Fund’s investors include leading Indian and global institutional          the Companies (Disclosure of Particulars in the Report of Board of
investors. The Fund focuses on investing equity for the long-term in a        Directors) Rules, 1998, are not applicable and hence not given.
diversified portfolio of infrastructure assets in India.
                                                                              FOREIGN EXCHANGE EARNINGS AND EXPENDITURE
FINANCIAL RESULTS                                                             The particulars regarding foreign exchange expenditure are furnished
                                                        RUPEES (IN MILLION)   in note no 13 to Schedule 10 of Notes to Accounts. There was no
                                     FOR THE YEAR       FOR THE YEAR          foreign currency income earned during the year.
                                     ENDED MARCH        ENDED MARCH
                                          31, 2010           31, 2009
                                                                              DIRECTORS’ RESPONSIBILITY STATEMENT
Total Income                                  643.46              443.08
                                                                              The Directors confirm that:
Less: Total Expenses                          355.51              546.40      ¬ the applicable accounting standards have been followed in
Profit/(Loss) before Tax                      287.95             (103.32)     preparation of annual accounts and there are no material departures;
Less: Provision for Tax                        57.86                 2.26     ¬ they have selected such accounting policies and applied them
Profit/(Loss) after Tax                       230.09             (105.58)     consistently and made judgments and estimates that are reasonable
Add: Profit/(Loss) brought forward           (106.66)               (1.08)    and prudent, so as to give a true and fair view of the state of affairs of
Profit/(Loss) carried forward                 123.43             (106.66)     the Company as at March 31, 2010 and the Profit of the Company for
                                                                              the year ended on that date;
DIVIDEND
                                                                              ¬ they have taken proper and sufficient care for the maintenance of
The Directors do not recommend any dividend for the year ended
                                                                              adequate accounting records in accordance with the provisions of the
March 31, 2010.
                                                                              Companies Act, 1956, for safeguarding the assets of the Company and
PUBLIC DEPOSITS                                                               detecting fraud and other irregularities; and
During the year under review, your Company has not accepted public            ¬ they have prepared the annual accounts on a going concern basis.
deposits under Section 58-A of the Companies Act, 1956.
                                                                              ACKNOWLEDGEMENTS
DIRECTORS                                                                     The Directors thank the investors of India Infrastructure Fund,
In terms of the provisions of the Articles of Association of the              Reserve Bank of India and the Securities and Exchange Board of India
Company and Companies Act, 1956, Mr. Mahendra N. Shah would                   for their continued support to the Company.
retire at the ensuing Annual General Meeting and being eligible, offers       The Directors also express their gratitude for the unstinted support
himself for re-appointment.                                                   and guidance received from Infrastructure Development Finance
AUDITORS                                                                      Company Limited and other group companies.
M/s. S.R. Batliboi & Co., Chartered Accountants will retire as the
statutory auditors of the Company at the ensuing Annual General
                                                                              FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Meeting. The Board at its meeting held on April 19, 2010 has
proposed their re-appointment as Auditors to audit the accounts of            RAJIV B. LALL
the Company for the financial year ending March 31, 2011.                     Chairman
M/s. S. R. Batliboi & Co., the retiring Auditors, have confirmed that
their re-appointment, if made, would be in conformity with the                Mumbai
provisions of Sections 224 and 226 of the Companies Act, 1956 as              April 19, 2010




                                                                                           I D F C P R O J E C T E Q U I TY C O M P A N Y L I M I T E D   47
      AU D I TO RS ’ R E PO RT

To The Members of IDFC Project Equity Company Limited                   (iv) In our opinion, the Balance Sheet, Profit and Loss Account and
                                                                             Cash Flow Statement dealt with by this report comply with the
1. We have audited the attached Balance Sheet of IDFC Project
                                                                             accounting standards referred to in sub-section (3C) of Section
Equity Company Limited (‘the Company’) as at March 31, 2010 and
                                                                             211 of the Companies Act, 1956.
also the Profit and Loss Account and the Cash Flow Statement
for the year ended on that date annexed thereto. These financial        (v) On the basis of the written representations received from
statements are the responsibility of the Company’s management. Our          the directors, as on March 31, 2010, and taken on record by
responsibility is to express an opinion on these financial statements       the Board of Directors, we report that none of the directors is
based on our audit.                                                         disqualified as on March 31, 2010 from being appointed as a
                                                                            director in terms of Clause (g) of sub-section (1) of Section 274
2. We conducted our audit in accordance with auditing standards
                                                                            of the Companies Act, 1956;
generally accepted in India. Those Standards require that we plan
and perform the audit to obtain reasonable assurance about whether      (vi) In our opinion and to the best of our information and according
the financial statements are free of material misstatement. An               to the explanations given to us, the said accounts give the
audit includes examining, on a test basis, evidence supporting the           information required by the Companies Act, 1956, in the manner
amounts and disclosures in the financial statements. An audit also           so required and give a true and fair view in conformity with the
includes assessing the accounting principles used and significant            accounting principles generally accepted in India;
estimates made by management, as well as evaluating the overall              (a) in the case of the Balance Sheet, of the state of affairs of
financial statement presentation. We believe that our audit provides             the Company as at March 31, 2010;
a reasonable basis for our opinion.                                          (b) in the case of the Profit and Loss Account, of the profit for
3. As required by the Companies (Auditor’s Report) Order, 2003 (as               the year ended on that date; and
amended) (‘Order’) issued by the Central Government of India in terms        (c)   in the case of Cash Flow Statement, of the cash flows for
of sub-section (4A) of Section 227 of the Companies Act, 1956, we                  the year ended on that date.
enclose in the Annexure a statement on the matters specified in
paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to above, we
report that:
                                                                        FOR S. R. BATLIBOI & CO.
(i)    We have obtained all the information and explanations, which
                                                                        Chartered Accountants
       to the best of our knowledge and belief were necessary for the
                                                                        Firm registration number: 301003E
       purposes of our audit;
(ii) In our opinion, proper books of account as required by law         per SHRAWAN JALAN
     have been kept by the Company so far as appears from our           Partner
     examination of those books;                                        Membership No.: 102102
(iii) The Balance Sheet, Profit and Loss Account and Cash Flow
      Statement dealt with by this report are in agreement with the     Mumbai
      books of account;                                                 April 19, 2010




  48     I D F C A N N U A L R E P O R T 09 –10
      ANNEXURE                                                                                                               TO THE AUDITORS’ REPORT



Annexure referred to in paragraph 3 of our report                                (c)   According to the information and explanations given to
                                                                                       us, there are no dues of income-tax, sales-tax, service tax
of even date                                                                           and cess which have not been deposited on account of any
Re: IDFC Project Equity Company Limited (‘the Company’)                                dispute.
(i)   (a) The Company has maintained proper records showing full            (x) The Company has been registered for a period of less than five
          particulars, including quantitative details and situation of          years and hence we are not required to comment on whether
          fixed assets.                                                         or not the accumulated losses at the end of the financial year
                                                                                is fifty per cent or more of its net worth and whether it has
      (b) Fixed assets have been physically verified by the
                                                                                incurred cash losses in such financial year and in the immediately
          management during the year and no material discrepancies
                                                                                preceding financial year.
          were identified on such verification.
                                                                            (xi) Based on our audit procedures and as per the information and
      (c)   There was no substantial disposal of fixed assets during the
                                                                                 explanations given by the management, we are of the opinion
            year.
                                                                                 that the Company has not defaulted in repayment of dues to a
(ii) The Company provides investment management services and                     financial institution. The Company has no outstanding dues in
     does not maintain inventories. Therefore, the provisions of                 respect of banks or debenture holders.
     clause 4(ii) of the Order are not applicable to the Company.
                                                                            (xii) According to the information and explanations given to us
(iii) (a) As informed, the Company has not granted any loans,                     and based on the documents and records produced to us, the
          secured or unsecured to companies, firms or other parties               Company has not granted loans and advances on the basis
          covered in the register maintained under Section 301 of the             of security by way of pledge of shares, debentures and other
          Companies Act, 1956.                                                    securities.
      (b) As informed, the Company has not taken any loans, secured         (xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual
          or unsecured to companies, firms or other parties covered                benefit fund/society. Therefore, the provisions of Clause 4(xiii)
          in the register maintained under Section 301 of the                      of the Order are not applicable to the Company.
          Companies Act, 1956.
                                                                            (xiv) In our opinion, the Company is not dealing in or trading in shares,
(iv) In our opinion and according to the information and explanations             securities, debentures and other investments. Accordingly, the
     given to us, there is an adequate internal control system                    provisions of Clause 4(xiv) of the Order are not applicable to the
     commensurate with the size of the Company and the nature of                  Company.
     its business, for the purchase of fixed assets and for the sale of
                                                                            (xv) According to the information and explanations given to us, the
     services. During the course of our audit, no major weakness has been
                                                                                 Company has not given any guarantee for loans taken by others
     noticed in the internal control system in respect of these areas.
                                                                                 from bank or financial institutions.
(v) According to the information and explanations provided by
                                                                            (xvi) The Company did not have any term loans outstanding during the
    the management, we are of the opinion that there were no
                                                                                  year.
    particulars of contracts or arrangements referred to in Section
    301 of the Act that need to be entered into the register                (xvii) According to the information and explanations given to us and on
    maintained under Section 301.                                                  an overall examination of the balance sheet of the Company, we
                                                                                   report that no funds raised on short-term basis have been used
(vi) The Company has not accepted any deposits from the public.
                                                                                   for long-term investment.
(vii) In our opinion, the Company has an internal audit system
                                                                            (xviii)The Company has not made any preferential allotment of shares
      commensurate with the size and nature of its business.
                                                                                   to parties or companies covered in the register maintained under
(viii) To the best of our knowledge and as explained, the Central                  Section 301 of the Companies Act, 1956.
       Government has not prescribed maintenance of cost records
                                                                            (xix) The Company did not have any outstanding debentures during
       under Clause (d) of sub-Section (1) of Section 209 of the
                                                                                  the year.
       Companies Act, 1956 for the products of the Company.
                                                                            (xx) The Company has not raised money in the year by public issue.
(ix) (a) The Company is regular in depositing with appropriate
         authorities undisputed statutory dues including                    (xxi) Based upon the audit procedures performed for the purpose
         provident fund, income-tax, service tax, cess and other                  of reporting the true and fair view of the financial statements
         material statutory dues applicable to it. The provisions                 and as per the information and explanations given by the
         relating to employees’ state insurance, investors’ education             management, we report that no fraud on or by the Company has
         and protection fund, sales-tax, wealth-tax, customs duty                 been noticed or reported during the course of our audit.
         and excise duty are not applicable to the Company.
            Further, since the Central Government has till date not         FOR S. R. BATLIBOI & CO.
            prescribed the amount of cess payable under Section 441         Chartered Accountants
            A of the Companies Act, 1956, we are not in a position to       Firm registration number: 301003E
            comment upon the regularity or otherwise of the company
            in depositing the same.
                                                                            per SHRAWAN JALAN
      (b) According to the information and explanations given to us,
          no undisputed amounts payable in respect of provident             Partner
          fund, income-tax, service tax, cess and other undisputed          Membership No.: 102102
          material statutory dues applicable to the Company, were
          outstanding, at the year end, for a period of more than six       Mumbai
          months from the date they became payable.
                                                                            April 19, 2010

                                                                                         I D F C P R O J E C T E Q U I TY C O M P A N Y L I M I T E D   49
   BALANCE SHEET                                                                                                                AS AT MARCH 31, 2010


                                                                                                                  RUPEES                      RUPEES

                                                                             SCHEDULE           AS AT MARCH 31, 2010        AS AT MARCH 31, 2009
SOURCES OF FUNDS
Shareholders’ Funds
      Share Capital                                                                     1                        500,000                     500,000
Reserves and Surplus                                                                    2                   123,425,847                            –
TOTAL                                                                                                       123,925,847                      500,000
 APPLICATION OF FUNDS
Fixed Assets                                                                            3
      Gross Block                                                                                               3,677,171                  1,029,979
      Less: Accumulated Depreciation/Amortisation                                                               1,177,816                    356,062
      Net Block                                                                                                 2,499,355                    673,917
Deferred Tax Asset (Refer Schedule 10 Note 11)                                                                  3,318,835                          –
Current Assets, Loans and Advances
      Interest Accrued on term deposits with Banks                                                                34,726                      50,301
      Cash and Bank Balances                                                            4                   391,593,298                  113,914,406
      Loans and Advances                                                                5                   181,756,159                  127,495,988
                                                                                                            573,384,183                  241,460,695
Less: Current Liabilities and Provisions                                                6
      Current Liabilities                                                                                   343,029,674                  326,492,338
      Provisions                                                                                            112,246,852                   21,801,447
                                                                                                            455,276,526                  348,293,785
  Net Current Assets / (Liabilities)                                                                        118,107,657                 (106,833,090)
  Profit and Loss Account                                                                                              –                 106,659,173
TOTAL                                                                                                       123,925,847                      500,000
Notes to the Accounts                                                                   10
The Schedules referred to above form an integral part of the Balance Sheet




THIS IS THE BALANCE SHEET REFERRED TO IN OUR REPORT OF EVEN DATE.                           FOR AND ON BEHALF OF BOARD OF DIRECTORS OF
FOR S. R. BATLIBOI & CO.                                                                    IDFC PROJECT EQUITY COMPANY LIMITED
Chartered Accountants


per SHRAWAN JALAN                                                                           VIKRAM LIMAYE            MAHENDRA N. SHAH
Partner                                                                                     Director                 Director
Membership No. 102102

                                                                                            SANJAY AJGAONKAR
Mumbai | April 19, 2010                                                                     Company Secretary


 50     I D F C A N N U A L R E P O R T 09 –10
   PROFIT AND LOSS ACCOUNT                                                                                        FOR THE YEAR ENDED MARCH 31, 2010



                                                                                                                        RUPEES                             RUPEES

                                                                                                          APRIL 1, 2009 TO                APRIL 1, 2008 TO
                                                                                 SCHEDULE                 MARCH 31, 2010                  MARCH 31, 2009
INCOME
Investment Management Fees                                                                                       605,593,024                      436,629,371
  (Service Tax Rs. 64,469,267; Previous Year: 53,952,286)
  (Tax deducted at Source Rs. 76,670,295; Previous Year: 68,426,737)
  (Refer Schedule 10 - Note 2(H))
Interest on Fixed Deposits                                                                                            124,843                         455,185
  (Tax deducted at Source Rs. 28,926; Previous Year: 83,406)
Dividend on Mutual Fund Units                                                                                       9,140,599                        5,873,003
Profit on Sale of Mutual Fund Units                                                                                           –                       121,752
Foreign Currency Gain (net) (Refer Schedule 10 - Note 2(I))                                                        28,532,594                                  –
Miscellaneous Income                                                                                                    70,968                                 –
                                                                                                                 643,462,028                      443,079,311
EXPENDITURE
Bank Charges                                                                                                             1,686                        993,351
Personnel Expenses                                                                          7                    187,629,119                       85,643,191
Establishment Expenses                                                                      8                       4,990,743                         909,030
Administrative Expenses                                                                     9                    162,071,275                      458,501,098
Depreciation/ Amortisation                                                                  3                         821,754                         356,062
TOTAL                                                                                                            355,514,577                      546,402,732
PROFIT/ (LOSS) BEFORE TAXATION                                                                                   287,947,451                    (103,323,421)
Provision for Taxation (Refer Schedule 10 Notes 2(K) and 11)
- Current Tax                                                                                                      61,181,266                                  –
- Deferred Tax                                                                                                     (3,318,835)                              5,099
- Fringe Benefit Tax                                                                                                          –                      2,250,000
PROFIT/ (LOSS) AFTER TAXATION                                                                                    230,085,020                    (105,578,520)
Profit and Loss Account Balance Brought Forward                                                                 (106,659,173)                      (1,080,653)
Profit and Loss Account Balance Carried to Balance Sheet                                                         123,425,847                    (106,659,173)
Earnings Per Share (Refer Schedule 10 Notes 2(N) and 10)
Basic and Diluted (Face Value Rs.10)                                                                                  4,601.70                      (2,111.57)
Notes to the Accounts                                                                       10
The Schedules referred to above form an integral part of the Profit and Loss Account




THIS IS THE BALANCE SHEET REFERRED TO IN OUR REPORT OF EVEN DATE.                            FOR AND ON BEHALF OF BOARD OF DIRECTORS OF
FOR S. R. BATLIBOI & CO.                                                                     IDFC PROJECT EQUITY COMPANY LIMITED
Chartered Accountants


per SHRAWAN JALAN                                                                            VIKRAM LIMAYE                MAHENDRA N. SHAH
Partner                                                                                      Director                     Director
Membership No. 102102

                                                                                             SANJAY AJGAONKAR
Mumbai | April 19, 2010                                                                      Company Secretary


                                                                                            I D F C P R O J E C T E Q U I TY C O M P A N Y L I M I T E D      51
     C A S H F L OW ST AT E M E N T                                             FOR THE PERIOD APRIL 1, 2009 TO MARCH 31, 2010



                                                                                                RUPEES                     RUPEES

                                                                                     APRIL 1, 2009 TO         APRIL 1, 2008 TO
                                                                                     MARCH 31, 2010           MARCH 31, 2009
CASH FLOW FROM OPERATING ACTIVITIES
Net Profit / (Loss) Before Taxation                                                        287,947,451            (103,323,421)
Adjustments for:
     Depreciation / Amortisation                                                               821,754                    356,062
     Foreign Currency Gains / Losses on revaluation                                        (27,128,008)                (1,319,564)
     Dividend on Mutual Fund Units                                                          (9,140,599)                (5,873,003)
     Profit on Sale of Mutual Fund Units                                                             –                  (121,752)
     Interest on Fixed Deposits                                                               (124,843)                 (455,185)
Operating Profit / (Loss) Before Working Capital Changes                                   252,375,755            (110,736,863)
(Increase) / Decrease in Interest Accrued                                                       15,575                    (50,301)
Increase in Loans and Advances                                                             (32,942,216)               (39,355,532)
Increase in Current Liabilities and Provisions                                             134,110,749                329,043,839
Cash Generated from Operations                                                             353,559,863                178,901,143
Direct Taxes Paid (including Fringe Benefit Tax)                                           (82,499,221)               (70,797,686)
NET CASH FROM OPERATING ACTIVITIES                                         A               271,060,642                108,103,457
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Fixed Assets                                                                    (2,647,192)                (1,029,979)
Dividend on Mutual Fund Units                                                                 9,140,599                 5,873,003
Interest on Fixed Deposits                                                                     124,843                    455,185
Purchase of Current Investments                                                           (701,300,000)           (499,900,000)
Proceeds from Sale of Current Investments                                                  701,300,000                500,021,752
NET CASH FROM INVESTING ACTIVITIES                                         B                  6,618,250                 5,419,961
NET INCREASE IN CASH AND CASH EQUIVALENTS                                 A+B              277,678,892                113,523,418
Cash and Cash Equivalents at the beginning of the Year                                     113,914,406                    390,988
Cash and Cash Equivalents at the end of the Year                                           391,593,298                113,914,406
NOTE:
                                                                                     MARCH 31, 2010           MARCH 31, 2009
                                                                                                RUPEES                     RUPEES

Cash and Cash Equivalents include:
 -    Cash in Hand                                                                               9,366                     10,262
 -    Balance with a Scheduled Bank in Current Account                                        1,583,932                 1,904,144
 -    Balance with a Scheduled Bank in Deposit Accounts                                    390,000,000                112,000,000


                                                                                           391,593,298                113,914,406




THIS IS THE CASH FLOW STATEMENT REFERRED TO IN OUR REPORT OF EVEN DATE.   FOR AND ON BEHALF OF BOARD OF DIRECTORS OF
FOR S. R. BATLIBOI & CO.                                                  IDFC PROJECT EQUITY COMPANY LIMITED
Chartered Accountants


per SHRAWAN JALAN                                                         VIKRAM LIMAYE            MAHENDRA N. SHAH
Partner                                                                   Director                 Director
Membership No. 102102

                                                                          SANJAY AJGAONKAR
Mumbai | April 19, 2010                                                   Company Secretary


 52       I D F C A N N U A L R E P O R T 09 –10
    SCHEDULES                                                                                                                                                 ANNEXED TO AND FORMING PART OF THE ACCOUNTS




SCHEDULE 1 Share Capital                                                                                                                                                                RUPEES                                               RUPEES

                                                                                                                                                              AS AT MARCH 31, 2010                        AS AT MARCH 31, 2009
AUTHORISED:
10,000,000 (Previous year 10,000,000) Equity Shares of Rs.10 each                                                                                                             100,000,000                                             100,000,000
ISSUED, SUBSCRIBED AND PAID-UP:
50,000 (Previous Year 50,000) Equity Shares of Rs.10 each                                                                                                                              500,000                                            500,000
fully paid up
[The above Equity Shares are held by Infrastructure
Development Finance Company Limited (the “Holding
Company”) and its nominees]
                                                                                                                                                                                       500,000                                            500,000


SCHEDULE 2 Reserves and Surplus                                                                                                                                                         RUPEES                                              RUPEES

                                                                                                                                                              AS AT MARCH 31, 2010                        AS AT MARCH 31, 2009
Profit and Loss Account                                                                                                                                                       123,425,847                                                                    –
                                                                                                                                                                              123,425,847                                                                    –



SCHEDULE 3 Fixed Assets                                                                                                                                                                                                                      RUPEES

DESCRIPTION OF ASSET                                      GROSS BLOCK                                              ACCUMLATED DEPRECIATION/ AMORTISATION                                                            NET BLOCK
                                         April 1, 2009




                                                                                                                             April 1, 2009
                                                                                                March 31,




                                                                                                                                                                                       March 31,




                                                                                                                                                                                                                   March 31,




                                                                                                                                                                                                                                                 March 31,
                                                                Additions




                                                                                                                                                  Additions
                                                                            Deletions




                                                                                                                                                                  Deletions
                                                                                                            2010




                                                                                                                                                                                                   2010




                                                                                                                                                                                                                               2010




                                                                                                                                                                                                                                                             2009
                                 As at




                                                                                        As at




                                                                                                                     As at




                                                                                                                                                                               As at




                                                                                                                                                                                                           As at




                                                                                                                                                                                                                                         As at
TANGIBLE
Computer Hardware            598,882                      509,853              –        1,108,735                   227,278                  244,496                 –            471,774                     636,961                       371,604
Furniture & Fixtures             74,187                   137,162              –           211,349                   15,232                   27,540                 –                 42,772                 168,577                            58,955
Office Equipments            327,268                      406,195              –           733,463                  105,324                  210,708                 –            316,032                     417,431                       221,944
Vehicles                                     –           1,540,571             –        1,540,571                                –           319,083                 –            319,083                  1,221,488                                          –
INTANGIBLE
Computer Software                29,642                    53,411              –                83,053                8,228                   19,927                 –                 28,155                      54,898                        21,414
Total                      1,029,979                     2,647,192             –        3,677,171                   356,062                  821,754                 –         1,177,816                   2,499,355                        673,917
Previous Year                                –           1,029,979             –        1,029,979                                –           356,062                 –            356,062                     673,917                                         –




SCHEDULE 4 Cash and Bank Balances                                                                                                                                                       RUPEES                                               RUPEES

                                                                                                                                                              AS AT MARCH 31, 2010                        AS AT MARCH 31, 2009
Cash in hand                                                                                                                                                                                9,366                                            10,262
Balance with a Scheduled Bank
-   In Current Account                                                                                                                                                          1,583,932                                               1,904,144
-   In Term Deposit Accounts                                                                                                                                                  390,000,000                                             112,000,000
                                                                                                                                                                              391,593,298                                             113,914,406



SCHEDULE 5 Loans and Advances                                                                                                                                                           RUPEES                                               RUPEES

                                                                                                                                                              AS AT MARCH 31, 2010                        AS AT MARCH 31, 2009
Advance Payment of Tax and Tax Deducted at Source                                                                                                                              89,865,641                                              68,547,686
(net of provisions)
Service Tax Input Credit (net)                                                                                                                                                     973,504                                              9,666,302
Security Deposits                                                                                                                                                              77,511,881                                              27,500,000
Advances recoverable in cash or in kind or for value to be received
-   Prepaid Expenses                                                                                                                                                           10,767,479                                              15,562,222
-   Others                                                                                                                                                                      2,637,654                                               6,219,778
                                                                                                                                                                              181,756,159                                             127,495,988


                                                                                                                                                I D F C P R O J E C T E Q U I TY C O M P A N Y L I M I T E D                                             53
SCHEDULE 6 Current Liabilities                                                            RUPEES                  RUPEES

                                                                           AS AT MARCH 31, 2010    AS AT MARCH 31, 2009
Sundry Creditors for Expenses
-   to Micro, Small and Medium Enterprises (Refer Schedule 10 - Note 17)                      –                       –
-   to Others                                                                        233,200,245             225,250,701
Investment Management Fees Received in Advance                                       108,794,774             100,784,574
Statutory Dues                                                                         1,034,655                 457,063
                                                                                     343,029,674             326,492,338
Provisions
- Employee Benefits (Refer Schedule 10 - Note 6)                                     112,246,852              21,801,447
                                                                                     455,276,526             348,293,785



SCHEDULE 7 Personnel Expenses (Refer Schedule 10 - Note 4)                                RUPEES                  RUPEES

                                                                               APRIL 1, 2009 TO        APRIL 1, 2008 TO
                                                                               MARCH 31, 2010          MARCH 31, 2009
Salaries and Bonus                                                                   175,955,517              78,625,267
Contribution to Provident Fund and Other Funds                                         6,281,579               6,108,990
Staff Training and Welfare                                                             5,392,023                 908,934
                                                                                     187,629,119              85,643,191



SCHEDULE 8 Establishment Expenses                                                         RUPEES                  RUPEES

                                                                                APRIL 1, 2009 TO        APRIL 1, 2008 TO
                                                                                MARCH 31, 2010          MARCH 31, 2009
Rent                                                                                   1,267,893                 546,500
Rates and Taxes                                                                        1,918,487                  62,862
Electricity                                                                            1,527,003                       –
Repairs and Maintenance
-   Buildings                                                                             50,288                 288,707
-   Equipments                                                                             5,250                       –
-   Others                                                                               199,480                       –
Insurance                                                                                 22,342                  10,961
                                                                                       4,990,743                 909,030



SCHEDULE 9 Administrative Expenses                                                        RUPEES                  RUPEES

                                                                               APRIL 1, 2009 TO         APRIL 1, 2008 TO
                                                                               MARCH 31, 2010           MARCH 31, 2009
Travelling and Conveyance                                                             13,366,893               6,984,159
Printing and Stationery                                                                  168,791                   9,787
Postage, Telephone, Fax                                                                1,158,423               1,533,044
Conference and Sponsorships                                                            6,258,012               5,690,344
Professional Fees                                                                      4,162,785               8,848,576
Placement Fees (Refer Schedule 10 - Note 5)                                           48,570,000             358,876,350
Service Fees                                                                          82,714,585              66,014,110
Foreign Currency Loss (Refer Schedule 10 - Note 2(I))                                         –                5,533,580
Auditors Remuneration
-   Statutory Audit Fees                                                                 400,000                 400,000
-   Tax Audit Fees                                                                       100,000                 100,000
-   Out of Pocket Expenses                                                                 9,537                   6,055
Miscellaneous Expenses                                                                 5,162,249               4,505,093
                                                                                     162,071,275             458,501,098




54      I D F C A N N U A L R E P O R T 09 –10
SCHEDULE – 10 Notes to the Accounts
1 Nature of Operations
IDFC Project Equity Company Limited (“the Company”) was incorporated on February 6, 2007. The Company has entered into an Investment
Management Agreement with IDFC Trustee Company Limited on March 11, 2008 to act as the Investment Manager of the India Infrastructure
Fund (“Fund”) – a domestic venture capital fund registered under the Securities and Exchange Board of India (Venture Capital Funds)
Regulations, 1996. In accordance with the agreement, the Company is entitled to receive an investment management fee for managing the Fund
beginning from the Initial Closing of the Fund.

2 Statement of Significant Accounting Policies
(A) BASIS OF PREPARATION
The financial statements have been prepared to comply in all material respects with the notified accounting standards by Companies
(Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956 (‘the Act’). The financial statements
have been prepared under the historical cost convention on an accrual basis. The accounting policies have been consistently applied by the
Company and are consistent with those used in the previous year.
(B) USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial
statements and the results of operations during the reporting year end. Although these estimates are based upon management’s best
knowledge of current events and actions, actual results could differ from these estimates.
(C) CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash in hand and at bank and short-term investments with an original maturity of three months or less.
(D) FIXED ASSETS
Fixed assets are stated at cost of acquisition less accumulated depreciation. Cost comprises the purchase price and any attributable cost of
bringing the asset to its working condition for its intended use.
(E) INTANGIBLE ASSETS
Intangible assets comprising of software are stated at cost of acquisition, including any cost attributable for bringing the asset to its working
condition, less accumulated amortisation. Any expense on such software for support and maintenance payable annually is charged to the Profit
and Loss Account.
Website development cost is charged to the Profit and Loss Account in the year in which such cost is incurred.
(F) DEPRECIATION AND AMORTISATION
Tangible Assets – Depreciation on fixed assets is provided on written down value method, at the rates prescribed by Schedule XIV of the
Companies Act, 1956. Mobile handsets are depreciated over a period of two years on straight line method. Depreciation on additions during the
year is provided on pro-rata basis. Assets costing less than Rs. 5,000 are depreciated fully in the year of capitalization.
Intangible Assets – Computer software is amortised over a period of three years on straight line method.
(G) IMPAIRMENT
(i) The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external
    factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable
    amount is the greater of the asset’s net selling price and value in use. In assessing value in use, the estimated future cash flows are
    discounted to their present value at the weighted average cost of capital.
(ii) After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
(H) REVENUE RECOGNITION
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably
measured.
Investment Management Fees for managing the Fund is accrued from the date of initial closing as stipulated in the Investment Management
Agreement dated March 11, 2008 entered into by the Company with IDFC Trustee Company Limited.
Interest is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.
Dividend is accounted when the right to receive payment is established by the balance sheet date.
(I) FOREIGN CURRENCY TRANSACTIONS
(i) Initial Recognition
    Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between
    the reporting currency and the foreign currency at the date of the transaction.



                                                                                        I D F C P R O J E C T E Q U I TY C O M P A N Y L I M I T E D   55
(ii) Conversion
          Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost
          denominated in a foreign currency are reported using the exchange rate at the date of the transaction; and non-monetary items which are
          carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when
          the values were determined.
(iii) Exchange Differences
          Exchange differences arising on the settlement of monetary items or on reporting monetary items of company at rates different from those
          at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as expenses
          in the year in which they arise.
(J) PROVISIONS
A provision is recognised when an enterprise has a present obligation as a result of past event; it is probable that an outflow of resources will be
required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are
determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date
and adjusted to reflect the current best estimates.
(K) INCOME TAX
Tax expense comprises of current, deferred and fringe benefit tax. Current income tax and fringe benefit tax is measured at the amount
expected to be paid to the tax authorities in accordance with the Indian Income Tax Act of 1961. Deferred income taxes reflects the impact of
current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax
assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and
the deferred tax assets and deferred tax liabilities relate to the taxes on income levied by same governing taxation laws. Deferred tax assets
are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such
deferred tax assets can be realised. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax
assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits.
At each balance sheet date, the Company re-assesses unrecognised deferred tax assets. It recognises unrecognised deferred tax assets to
the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available
against which such deferred tax assets can be realised.
The carrying amount of deferred tax assets are reviewed at each balance sheet date. The Company writes-down the carrying amount of a
deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.
(L) OPERATING LEASES
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased term, are classified as operating
leases. Operating lease payments are recognized as an expense in the Profit and Loss account on a straight-line basis over the lease term.
(M) INVESTMENTS
Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other
investments are classified as long-term investments. Current investments are carried at lower of cost and fair value determined on an individual
investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognise a decline other
than temporary in the value of the investments.
(N) EARNINGS PER SHARE
Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting
attributable taxes) by the weighted average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted
average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
(O) EMPLOYEE BENEFITS
i.        Defined Contribution Plans
          The Company’s contribution paid/payable during the year towards Provident Fund and Superannuation Fund is charged in the Profit and
          Loss Account every year.
ii.       Defined Benefit Obligation
          Gratuity liability is a defined benefit obligation and is provided for on the basis of actuarial valuation on projected unit credit method made
          at the end of each financial year. Actuarial gains and losses are recognized in the Profit and Loss Account.




     56      I D F C A N N U A L R E P O R T 09 –10
iii. Other long-term employee benefits
      Long-term compensated absences are provided for on the basis of actuarial valuation on projected unit credit method made at the end of
      each financial year. Actuarial gains and losses are recognized in the Profit and Loss Account.
iv. Short-term employee benefits
      Short-term compensated absences are paid to the employees at the end of every year along with the monthly salary.

3 Investment Management Fees
On June 9, 2008, the Fund achieved its Initial Closure and as per the Investment Management Agreement (“the Agreement”) dated March 11,
2008, the Company has started accruing and receiving investment management fees from that date. The Fund has achieved Final Closure on
June 8, 2009 and as per the Agreement, the Investment Management Fees are charged on aggregate commitments received as at the Final
Closure during the commitment period of the Fund.
4 Infrastructure Development Finance Company Limited, the Holding Company has transferred the employees to the payroll of the Company
effective April 1, 2009 who were deputed to the Company in the previous year.

5 Placement Fees
Placement Fees represents fees in respect of Capital Commitments arranged by Citigroup Global Markets Limited, UK in the Fund pursuant to
the Placement Agreement dated February 20, 2008 entered into with the Company.
During the year, an amount of Rs. 48.6 million (USD 1.0 million) has been accrued based on the additional Capital Commitments received during
the year ended March 31, 2010. This is in addition to placement fees accrued during the previous year of Rs. 358.9 million (USD 7.3 million). Of
the above, the Company has paid Rs. 23.5 million (USD 0.5 million) during the current year.

6 Employee Benefits
In accordance with Accounting Standard 15 (Revised) on ‘Employee Benefits’ as notified by the Companies (Accounting Standards) Rules, 2006,
the following disclosures have been made:
i.    The Company has recognised the following amounts in the Profit and Loss Account towards contribution to defined contribution plans which
      are included under Contribution to Provident and Other Funds:
                                                                                                         APRIL 1, 2009 TO               APRIL 1, 2008 TO
                                                                                                         MARCH 31, 2010                 MARCH 31, 2009
                                                                                                                       RUPEES                            RUPEES

 Provident Fund                                                                                                     2,800,569                     2,715,143
 Superannuation Fund                                                                                                3,481,010                     3,393,847
                                                                                                                    6,281,579                     6,108,990

ii.   The details of post – retirement benefit plans for gratuity are given below which is certified by the actuary and relied upon by the auditors:
                                                                                                                                        APRIL 1, 2009 TO
                                                                                                                                        MARCH 31, 2010
                                                                                                                                       NON-FUNDED (RUPEES)

 CHANGE IN THE DEFINED BENEFIT OBLIGATIONS:
 Liability at the beginning of the year                                                                                                                      –
 Unfunded Obligation on transfer of employees from holding company                                                                                5,426,826
 Current Service Cost                                                                                                                               867,115
 Interest Cost                                                                                                                                      275,706
 Benefits Paid                                                                                                                                     (635,396)
 Actuarial Loss / (Gain)                                                                                                                            447,077
 Liability at the end of the year                                                                                                                 6,381,328
 FAIR VALUE OF PLAN ASSETS:
 Fair Value of Plan Assets at the beginning of the year                                                                                                      –
 Expected Return on Plan Assets                                                                                                                              –
 Contributions                                                                                                                                               –
 Benefits paid                                                                                                                                               –
 Actuarial Loss on Plan Assets                                                                                                                               –
 Fair Value of Plan Assets at the end of the year                                                                                                            –
 Total Actuarial Loss to be recognised                                                                                                                       –




                                                                                          I D F C P R O J E C T E Q U I TY C O M P A N Y L I M I T E D      57
                                                                                                                               APRIL 1, 2009 TO
                                                                                                                               MARCH 31, 2010
                                                                                                                               NON-FUNDED (RUPEES)

ACTUAL RETURN ON PLAN ASSETS:
Expected Return on Plan Assets                                                                                                                  –
Actuarial Loss on Plan Assets                                                                                                                   –
Actual Return on Plan Assets                                                                                                                    –
AMOUNT RECOGNISED IN THE BALANCE SHEET:
Liability at the end of the year                                                                                                        6,381,328
Fair Value of Plan Assets at the end of the year                                                                                                –
Amount recognised in the Balance Sheet under “Provision for Employee Benefits”                                                          6,381,328
EXPENSE RECOGNISED IN THE PROFIT AND LOSS ACCOUNT:
Unfunded Obligation on transfer of employees from holding company                                                                       5,426,826
Current Service Cost                                                                                                                      867,115
Interest Cost                                                                                                                             275,706
Expected Return on Plan Assets                                                                                                                  –
Net Actuarial Loss to be recognised                                                                                                       447,077
Recovery of the Past service cost from the holding company                                                                             (1,885,505)
Expense recognised in the Profit and Loss Account under staff expenses                                                                  5,131,219
RECONCILIATION OF THE LIABILITY RECOGNISED IN THE BALANCE SHEET:
Opening Net Liability                                                                                                                           –
Expense recognised                                                                                                                      5,131,219
Contribution by the Group                                                                                                                       –
Amount recognised in the Balance Sheet under “Provision for Employee Benefits”                                                          6,381,328
Estimated Contribution                                                                                                                          –
EXPERIENCE ADJUSTMENTS: (*)
Defined Benefit Obligation                                                                                                              6,381,328
Plan Assets                                                                                                                                     –
Deficit                                                                                                                                (6,381,328)
Experience Adjustments on Plan Liabilities                                                                                               (177,117)
Experience Adjustments on Plan Assets                                                                                                           –

                                                                                                                                                %

INVESTMENT PATTERN OF PLAN ASSETS:
Insurer Managed Fund                                                                                                                                –
The Company’s Gratuity liability is unfunded.                                                                                                       –
PRINCIPAL ASSUMPTIONS:
Discount Rate (p.a.)                                                                                                                        8.10%
Expected Rate of Return on Assets (p.a.)                                                                                                            –
Salary Escalation (p.a.)                                                                                                                    8.00%
(*) The Company was incorporated on February 6, 2007 and did not have any employees on its payroll until April 1, 2009. Consequently, no
disclosure has been made for previous 4 years in terms of Accounting Standard 15 on ‘Employee Benefits’.
The estimate of future salary increase, considered in the actuarial valuation takes account of inflation, seniority, promotion and other relevant
factors.




 58       I D F C A N N U A L R E P O R T 09 –10
7 Purchase and Redemption of Current Investments
The Company has purchased and redeemed the following investments during the year.
                                                                           APRIL 1, 2009 TO MARCH 31, 2010            APRIL 1, 2008 TO MARCH 31, 2009
                                                                               PURCHASE           REDEMPTION                 PURCHASE             REDEMPTION
                                                                                  UNITS                UNITS                    UNITS                  UNITS
IDFC MUTUAL FUND
IDFC Cash Fund Super Institutional Plan C – Daily Dividend Option            30,484,293.705      30,484,293.705          48,908,355.454          48,908,355.454
IDFC Money Manager Fund Investment Plan Institutional Plan B –                           –                       –       19,931,193.575          19,931,193.575
Daily Dividend Option
IDFC Money Manager Fund Investment Plan Super Institutional                  10,209,910.011      10,209,910.011                          –                        –
Plan C – Daily Dividend Option
IDFC Money Manager Fund Treasury Plan Institutional Plan B –                             –                       –         1,149,807.991          1,149,807.991
Daily Dividend Option
IDFC Money Manager Fund Treasury Plan Super Institutional Plan               70,658,140.120      70,658,140.120          35,442,919.295          35,442,919.295
C – Daily Dividend Option
IDFC Fixed Maturity Plan - Quarterly Series 32 – Dividend                                –                       –         1,150,000.000          1,150,000.000
IDFC Fixed Maturity Plan – Monthly Series 3 – Dividend                                   –                       –         1,007,240.000          1,007,240.000
IDFC Fixed Maturity Plan – Monthly Series 5 – Dividend                                   –                       –         1,014,905.096          1,014,905.096
IDFC Fixed Maturity Plan - Quarterly Series 43 – Dividend                                –                       –           675,285.600            675,285.600
Total                                                                       111,352,343.836     111,352,343.836         109,279,707.011         109,279,707.011

8 Segment Information
The Company is an asset management company engaged in managing a domestic venture capital fund registered with the Securities and
Exchange Board of India. During the year, the Company was engaged in only one business segment and no geographical segments. As such, there
are no separate reportable segments as per Accounting Standard 17 on Segment Reporting as provided under the Companies (Accounting
Standards) Rules, 2006.

9 Related Party Disclosures under Accounting Standard 18
(a) Relationships:
    HOLDING COMPANY:                                     Infrastructure Development Finance Company Limited
    FELLOW SUBSIDIARIES:                                 IDFC Private Equity Company Limited
                                                         IDFC Capital Singapore Pte. Limited
    KEY MANAGERIAL PERSONNEL:                            M.K. Sinha (President and CEO)
(b) The transactions / balances outstanding with related parties in the ordinary course of business during the year are as follows:
NAME OF RELATED PARTY AND                                   PARTICULARS                                         APRIL 1, 2009 TO             APRIL 1, 2008 TO
NATURE OF RELATIONSHIP                                                                                          MARCH 31, 2010               MARCH 31, 2009
                                                                                                                              RUPEES                          RUPEES

(A) HOLDING COMPANY
Infrastructure Development Finance Company Limited          Guarantee commission**                                         1,770,836                              –
                                                            Reimbursement of Expenses **                                 10,004,222                   89,248,141
                                                            Recovery of Expenses **                                        2,079,712                              –
                                                            Rent paid **                                                     407,399                              –
                                                            Repayment of Security Deposit                                50,000,000                               –
                                                            Advances received and repaid                                            –                 11,150,000
                                                            Purchase of Fixed Assets                                         489,261                     822,045
                                                            Equity share capital outstanding                                 500,000                     500,000
                                                            Amount payable                                                          –                    236,245
(B) FELLOW SUBSIDIARY
IDFC Private Equity Company Limited                         Reimbursement of Expenses **                                     155,426                              –


IDFC Capital Singapore Pte Limited                          Reimbursement of Expenses **                                     369,239                          74,530
(C) KEY MANAGERIAL PERSONNEL
M.K. Sinha                                                  Remuneration paid #                                          43,451,565                               –

** - Includes Service tax
# - Excludes gratuity and insurance premium

                                                                                               I D F C P R O J E C T E Q U I TY C O M P A N Y L I M I T E D      59
10 Earnings Per Share
Basic profit / (loss) per share is calculated by dividing the net profit / (loss) for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year.
PARTICULARS                                                                                             APRIL 1, 2009 TO           APRIL 1, 2008 TO
                                                                                                        MARCH 31, 2010             MARCH 31, 2009
Profit / (Loss) After Tax (Rs.)                                                                                230,085,020               (105,578,520)
Weighted average number of equity shares outstanding (Nos.)                                                         50,000                     50,000
Basic and Diluted Earnings / (Loss) Per Share (Rs.)                                                                4,601.70                 (2,111.57)
Face Value Per Share (Rs.)                                                                                               10                          10

11 Deferred Tax
In compliance with the Accounting Standard 22 on “Accounting for Taxes on Income” as notified by the Companies (Accounting Standards)
Rules, 2006, the Company has credited an amount of Rs. 3,318,835 to the Profit and Loss Account towards Deferred Tax Asset (Previous Year:
expense of Rs. 5,099 towards Deferred Tax Liability). The major components of the deferred tax assets and liabilities arising on account of
timing differences are:
                                                                                                                  AS AT                      AS AT
                                                                                                         MARCH 31, 2010             MARCH 31, 2009
                                                                                                                    RUPEES                     RUPEES

Preliminary Expenses                                                                                                 1,661                      3,399
Provision for Employee Benefits                                                                                  3,304,096                     20,292
Depreciation                                                                                                        13,078                           –
Gross Deferred Tax Asset                                                                                         3,318,835                     23,691
Depreciation                                                                                                              –                   (23,691)
Gross Deferred Tax Liability                                                                                              –                   (23,691)
Net Deferred Tax Asset                                                                                           3,318,835                           –

12 Leases
Residential premise for staff and office premises are obtained on operating lease. There are no non-cancellable operating lease agreements
entered into by the Company.
                                                                                                        APRIL 1, 2009 TO           APRIL 1, 2008 TO
                                                                                                        MARCH 31, 2010             MARCH 31, 2009
                                                                                                                    RUPEES                     RUPEES

Lease payments recognized in Profit and Loss Account                                                             1,267,893                   5,46,500

13 Expenditure in Foreign Currency (on accrual basis)
                                                                                                        APRIL 1, 2009 TO           APRIL 1, 2008 TO
                                                                                                        MARCH 31, 2010             MARCH 31, 2009
                                                                                                                    RUPEES                     RUPEES

Travelling                                                                                                       1,653,767                    596,636
Placement Fees                                                                                                  48,570,000                358,876,350
Service Fees                                                                                                    28,506,537                 22,736,811
Sponsorships and Conference Expenses                                                                             4,030,368                           –
Staff Training and Welfare                                                                                       3,104,060                           –
Others                                                                                                             274,862                    978,401
Total                                                                                                           86,139,594                383,188,198
14 There are no contingent liabilities as at March 31, 2010 (Previous Year: Nil).
15 There are no contracts remaining to be executed on capital account and not provided for as at March 31, 2010 (Previous Year: Nil).
 16 Unhedged foreign currency exposure as at March 31, 2010: Rs. 220,647,229 i.e. USD 4,909,818.19 @ Closing Rate of 1 USD = Rs. 44.94
(Previous Year: 224,105,891 i.e. USD 4,398,545.46 @ Closing Rate of 1 USD = Rs. 50.95).




 60      I D F C A N N U A L R E P O R T 09 –10
17 The Company has initiated the process of identification of suppliers registered under “The Micro, Small and Medium, Enterprises
Development (‘MSMED’) Act, 2006” by obtaining confirmations from suppliers. Based on the intimation received by the Company, three
suppliers have confirmed to be registered under MSMED Act, 2006. The Company has no amounts due to any Micro, Small and Medium
Enterprises as defined under Section 7(1) (a)/7 (1) (b) / 7 (1) of MSMED as on March 31, 2010.
18 Previous year’s figures have been regrouped wherever necessary in order to conform to current year’s classification.




FOR S. R. BATLIBOI & CO.                                                              FOR AND ON BEHALF OF BOARD OF DIRECTORS OF
CHART E R E D ACCOU N TA N TS                                                         IDFC PROJECT EQUITY COMPANY LIMITED


per SHRAWAN JALAN                                                                     VIKRAM LIMAYE               MAHENDRA N. SHAH
Partner                                                                               Director                    Director
Membership No. 102102

                                                                                      SANJAY AJGAONKAR
Mumbai | April 19, 2010                                                               Company Secretary

                                                                                    I D F C P R O J E C T E Q U I TY C O M P A N Y L I M I T E D   61
      B A L A N C E S H E E T A B ST R A CT                                                                                           AND COMPANY’S GENERAL BUSINESS PROFILE




I.        REGISTRATION DETAILS

          Registration No.           U   5   1    1       0       3       M       H       2       0       0   7   P   L   C   1   6   7   6   1   1

          State Code                 1   1

          Balance Sheet Date         3   1           0    3               2       0       1       0

II.       CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000)

                                                                                      Public Issue                                                                        Right Issue
                                                                                      N       I       L                                                                   N    I   L


                                                                                      Bonus Issue                                                                       Stock Options
                                                                                      N       I       L                                                                   N    I   L
III.      POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000)
                                                                              Total Liabilities                                                                          Total Assets

                                                              5       7       9       2       0       2                                                  5    7     9     2   0    2
          SOURCES OF FUNDS
                                                                              Paid-up Capital                                                                        Secured Loans

                                                                                      5       0       0                                                                   N    I   L

                                                                  Reserves and Surplus                                                                            UnSecured Loans

                                                              1       2       3       4       2       6                                                                   N    I   L

          APPLICATION OF FUNDS
                                                                            Net Fixed Assets                                                                             Investments
                                                                              2       4       9       9                                                                   N    I   L

                                                                          Net Currect Assets                                                           Miscellaneous Expenditure

                                                              1       1       8       1       0       8                                                                   N    I   L

                                                                      Deferred Tax Asset

                                                                              3       3       1       9

IV.       PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000)
                                                                           Turnover/Income                                                                        Total Expenditure

                                                              6       4       3       4       6       2                                                   3   5     5     5   1    5

                                                                           Profit Before Tax                                                                        Profit After Tax

                                                              2       8       7       9       4       7                                                   2   3     0     0   8    5

                                                          Earnings per Share (in Rs.)                                                                                     Dividend %

                                                      4       6       0       1       .       7       0                                                                   N    I   L

V.        GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS)

          Item Code No. (ITC Code)            N       I   L

          Product Description                 A      S    S       E        T              M       A       N   A   G   E   M   E   N   T




     62     I D F C A N N U A L R E P O R T 09 –10
IDFC finance
limited

B O A R D O F D I R E CTO R S
■   Mr. A. K. T. Chari
    Chairman
■   Mr. Sadashiv Rao
■   Mr. Mahendra N. Shah

A U D I TO R S
■   Deloitte Haskins & Sells
    Chartered Accountants

P R I N C I PA L B A N K E R S
■   HDFC Bank Limited

R E G I ST E R E D O F F I C E
The Capital Court, 2nd Floor,
Olof Palme Marg,
Munirka, New Delhi 110 067.
TEL +91 11 46006100
FAX +91 11 26713359




                                 IDFC FINANCE LIMITED   63
  D I R E CT O R S ’ R E P O R T


TO THE MEMBERS                                                          their willingness to be appointed. You are requested to consider their
Your Directors have pleasure in presenting the Tenth Annual Report      reappointment.
together with the audited accounts for the year ended March 31,
                                                                        FOREIGN EXCHANGE EARNINGS AND EXPENDITURE
2010.
                                                                        There was no income or expenditure in foreign currency during the
FINANCIAL HIGHLIGHTS                                                    period under review.
Total Income of the Company during the year was Rs. 7,585,014/-.
                                                                        PERSONNEL AND OTHER MATTERS
The Income includes Profit on Sale of Current Investments of Rs.
                                                                        Since your Company does not have any employees, the provisions
1,223,148/- and Dividend on Current Investment of Rs.6,331,722/-.
                                                                        of Section 217(2A) of the Companies Act, 1956 read with the
The Company’s operations during the year have resulted in net gain of   Companies (Disclosure of Particulars in the Report of Board of
Rs. 7,112,908/- as against Rs. 15,379,893/- during the previous year.   Directors) Rules, 1988, are not applicable and hence not given.
DIVIDEND                                                                Since the Company does not own any manufacturing facility, the
The Directors do not recommend any dividend for the year ended          disclosure of information on other matters required to be disclosed
March 31, 2010.                                                         in terms of Section 217(1)(e) of the Companies Act, 1956 read with
                                                                        the Companies (Disclosure of Particulars in the Report of Board of
PUBLIC DEPOSITS
                                                                        Directors) Rules, 1998, are not applicable and hence not given.
During the period under review, your Company has not accepted
public deposits under the provisions of Section 58-A of the             DIRECTORS’ RESPONSIBILITY STATEMENT
Companies Act, 1956.                                                    The Directors confirm that:

DIRECTORS                                                               ¬ the applicable accounting standards have been followed in
In terms of the provisions of the Articles of Association of the        preparation of annual accounts and there are no material departures;
Company, Mr. Sadashiv Rao would retire at the ensuing Annual            ¬ they have selected such accounting policies and applied them
General Meeting and being eligible, offer himself for                   consistently and made judgements and estimates that are reasonable
re-appointment.                                                         and prudent, so as to give a true and fair view of the state of affairs of
                                                                        the Company as at March 31, 2010 and the profit of the Company for
AUDIT COMMITTEE
                                                                        the year ended on that date;
The Audit Committee consists of three Directors Mr. A. K. T. Chari,
                                                                        ¬ they have taken proper and sufficient care for the maintenance of
Mr. Sadashiv Rao and Mr. Mahendra N. Shah. There were four
                                                                        adequate accounting records in accordance with the provisions of the
meetings of the Committee held during the year. The functions of
                                                                        Companies Act, 1956, for safeguarding the assets of the Company and
the Committee include reviewing the quarterly and annual financial
                                                                        detecting fraud and other irregularities; and
statements, internal control systems and significant accounting
                                                                        ¬ they have prepared the annual accounts on a going concern basis.
policies of the Company and discussing the audit findings and
recommendations of the internal and statutory auditors of the           ACKNOWLEDGEMENTS
Company.                                                                The Directors also express their gratitude for the unstinted support
                                                                        and guidance received from Infrastructure Development Finance
AUDITORS
                                                                        Company Limited and other group companies.
M/s. Deloitte Haskins & Sells, Ahmedabad will retire as the statutory
auditors of the Company at the ensuing Annual General Meeting.
The Board of Directors, at its meeting held on April 22, 2010, has
                                                                        FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
proposed the reappointment of M/s. Deloitte Haskins & Sells,
Ahmedabad as statutory auditors to audit the financials of the
                                                                        A. K. T. CHARI
Company for the year ending March 31, 2011.
                                                                        Chairman
M/s. Deloitte Haskins & Sells, Ahmedabad have confirmed that their
reappointment, if made, would be in conformity with the provisions of   Mumbai
Sections 224 and 226 of the Companies Act, 1956 as also indicated       April 22 , 2010




 64    I D F C A N N U A L R E P O R T 09 –10
      AU D I TO RS ’ R E PO RT

TO THE MEMBERS OF IDFC FINANCE LIMITED                                   (d) in our opinion, the Balance Sheet, the Profit and Loss Account
1. We have audited the attached Balance Sheet of IDFC FINANCE                and the Cash Flow Statement dealt with by this report are in
LIMITED (“the Company”) as at March 31, 2010, the Profit and                 compliance with the Accounting Standards referred to in Section
Loss Account and the Cash Flow Statement of the Company for                  211(3C) of the Companies Act, 1956;
the year ended on that date, both annexed thereto. These financial       (e) in our opinion and to the best of our information and according
statements are the responsibility of the Company’s Management. Our           to the explanations given to us, the said accounts give the
responsibility is to express an opinion on these financial statements        information required by the Companies Act, 1956 in the manner
based on our audit.                                                          so required and give a true and fair view in conformity with the
2. We conducted our audit in accordance with the auditing standards          accounting principles generally accepted in India:
generally accepted in India. Those Standards require that we plan             (i)   in the case of the Balance Sheet, of the state of affairs of
and perform the audit to obtain reasonable assurance about whether                  the Company as at March 31, 2010;
the financial statements are free of material misstatements. An
                                                                              (ii) in the case of the Profit and Loss Account, of the profit of
audit includes examining, on a test basis, evidence supporting the
                                                                                   the Company for the year ended on that date and
amounts and the disclosures in the financial statements. An audit also
includes assessing the accounting principles used and the significant         (iii) in the case of the Cash Flow Statement, of the cash flows of
estimates made by the Management, as well as evaluating the overall                 the Company for the year ended on that date.
financial statement presentation. We believe that our audit provides a   5. On the basis of the written representations received from the
reasonable basis for our opinion.                                        Directors as on March 31, 2010 taken on record by the Board of
3. As required by the Companies (Auditor’s Report) Order, 2003           Directors, none of the Directors is disqualified as on March 31, 2010
(CARO) issued by the Central Government in terms of Section 227(4A)      from being appointed as a director in terms of Section 274(1)(g) of
of the Companies Act, 1956, we enclose in the Annexure a statement       the Companies Act, 1956.
on the matters specified in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph
3 above, we report as follows:
                                                                         FOR DELOITTE HASKINS & SELLS
(a) we have obtained all the information and explanations which
                                                                         Chartered Accountants
    to the best of our knowledge and belief were necessary for the
                                                                         (Registration No. 117366W)
    purposes of our audit;
(b) in our opinion, proper books of account as required by law           Z. F. BILLIMORIA
    have been kept by the Company so far as it appears from our          Partner
    examination of those books;                                          Membership No. 42791
(c)    the Balance Sheet, the Profit and Loss Account and the Cash
       Flow Statement dealt with by this report are in agreement with    Mumbai
       the books of account;                                             April 22, 2010




                                                                                                             IDFC FINANCE LIMITED              65
      ANNEXURE                                                                                                                    TO THE AUDITORS’ REPORT


(Referred to in paragraph 3 of our report of even date)                                     (b) There were no undisputed amounts payable in respect of
                                                                                                Income-tax and other material statutory dues in arrears
(i)    Having regard to the nature of the Company’s business/
                                                                                                as at March 31, 2010 for a period of more than six months
       activities/result/transactions etc., clauses (i), (ii), (vi), (viii), (x),
                                                                                                from the date they became payable.
       (xi), (xii), (xiii), (xv), (xvi), (xvii), (xviii), (xix) and (xx) of CARO are
       not applicable.                                                                 (vii) Based on our examination of the records and evaluation of the
                                                                                             related internal controls, the Company has maintained proper
(ii) The Company has neither granted nor taken any loans, secured
                                                                                             records of the transactions and contracts in respect of its
     or unsecured, to/from companies, firms or other parties covered
                                                                                             dealing in shares securities, debentures and other investments
     in the Register maintained under Section 301 of the Companies
                                                                                             and timely entries have been made therein. The aforesaid
     Act, 1956.
                                                                                             securities have been held by the Company in its own name.
(iii) In our opinion and according to the information and explanations
                                                                                       (viii) To the best of our knowledge and according to the information
      given to us, there is an adequate internal control system
                                                                                              and explanations given to us, no fraud by and on the Company
      commensurate with the size of the Company and the nature
                                                                                              has been noticed or reported during the year.
      of its business with regard to the sale of services. During the
      course of our audit, we have not observed any major weakness in
      such internal control system.
(iv) To the best of our knowledge and belief and according to
     information and explanation given to us, there were no contracts
                                                                                       FOR DELOITTE HASKINS & SELLS
     or arrangements required to be entered in the register
                                                                                       Chartered Accountants
     maintained in pursuance of Section 301 of the Companies Act,
                                                                                       (Registration No. 117366W)
     1956.
(v) The Company does not have an internal audit system.                                Z. F. BILLIMORIA

(vi) According to the information and explanations given to us in                      Partner
     respect of statutory dues:                                                        Membership No. 42791

       (a) The Company has been regular in depositing undisputed
           dues, including Income-tax and other material statutory                     Mumbai
           dues applicable to it with the appropriate authorities.                     April 22, 2010




  66      I D F C A N N U A L R E P O R T 09 –10
    BALANCE SHEET                                                                                                    AS AT MARCH 31, 2010


                                                                                 RUPEES                    RUPEES                  RUPEES

                                                          SCHEDULE                        AS AT MARCH 31, 2010      AS AT MARCH 31, 2009
 SOURCES OF FUNDS:
 Shareholders’ Funds:
   Share Capital                                                     1                              210,002,000               210,002,000
   Reserves and Surplus                                              2                               65,012,138                57,899,230
                                                                                                    275,014,138               267,901,230
 APPLICATION OF FUNDS :
 Investments                                                         3                              274,561,068               267,256,198
 Curent Assets, Loans and Advances:                                  4
   Cash and Bank Balances                                                    175,832                                                5,818
   Loans and Advances                                                        494,025                                              771,574
                                                                             669,857                                              777,392
 Less: Current Liabilities and Provisions:                           5
   Liabilities                                                               216,787                                              132,360
 Net Current Assets                                                                                       453,070                 645,032
                                                                                                    275,014,138               267,901,230
 Notes to the Accounts                                               8
 Schedules 1 to 8 form an integral part of the Accounts




IN TERMS OF OUR REPORT ATTACHED
FOR DELOITTE HASKINS & SELLS                                    FOR AND ON BEHALF OF THE BOARD
Chartered Accountants


Z. F. B I L L I M O R I A                                       A. K. T. CHARI                 SADASHIV S. RAO
Partner                                                         Chairman                       Director


Mumbai | April 22, 2010

                                                                                                          IDFC FINANCE LIMITED        67
    PROFIT AND LOSS ACCOUNT                                                             FOR THE YEAR ENDED MARCH 31, 2010



                                                                                               RUPEES              RUPEES

                                                                                 APRIL 1, 2009 TO        APRIL 1, 2008 TO
                                                                 SCHEDULE        MARCH 31, 2010          MARCH 31, 2009
 INCOME
 Operating and Other Income                                                 6              7,585,014           17,693,059
                                                                                           7,585,014           17,693,059
 EXPENSES
 Other Expenses                                                             7                 330,974             292,166
                                                                                              330,974             292,166
 PROFIT BEFORE TAXATION                                                                    7,254,040           17,400,893
 Less: Provision for Taxation
   Current Tax                                                                                285,000           2,021,000
   Excess provision for earlier years written back                                           (143,868)                  –
 PROFIT AFTER TAXATION                                                                     7,112,908           15,379,893
 Add: Balance as per last Balance Sheet                                                 46,319,384             34,015,470
 AVAILABLE FOR APPROPRIATION                                                            53,432,292             49,395,363
 Appropriations:
 Special Reserve u/s 45-IC of RBI Act, 1934                                                1,422,581            3,075,979
 Balance Carried Forward                                                                52,009,711             46,319,384
                                                                                        53,432,292             49,395,363
 Basic and Diluted Earnings Per Share                                                            0.34                0.73
 (Face Value Rs. 10) (See Schedule 8 Note 5)
 Notes to the Accounts                                                      8
 Schedules 1 to 8 form an integral part of the Accounts




IN TERMS OF OUR REPORT ATTACHED
FOR DELOITTE HASKINS & SELLS                              FOR AND ON BEHALF OF THE BOARD
Chartered Accountants


Z. F. B I L L I M O R I A                                 A. K. T. CHARI          SADASHIV S. RAO
Partner                                                   Chairman                Director


Mumbai | April 22, 2010

 68       I D F C A N N U A L R E P O R T 09 –10
      C A S H F L OW ST AT E M E N T                                                                      FOR THE YEAR ENDED MARCH 31, 2010



                                                                                                                RUPEES                RUPEES

                                                                                                   APRIL 1, 2009 TO        APRIL 1, 2008 TO
                                                                                                   MARCH 31, 2010          MARCH 31, 2009
 A.     CASH FLOW FROM OPERATING ACTIVITIES
        Profit Before Taxation                                                                               7,254,040            17,400,893
        Adjustments for :
        Profit on Sale of Investments                                                                     (1,223,148)             (5,945,270)
        Operating Profit before Working Capital Changes                                                      6,030,892            11,455,623
        Changes in :
           Current Liabilities                                                                                  84,427            (2,094,394)
        Direct Taxes paid (Net of refund)                                                                      136,417            (3,139,277)
        NET CASH FROM OPERATING ACTIVITIES                                                                   6,251,736             6,221,952
 B.     CASH FLOW FROM INVESTING ACTIVITIES
        Purchase of Investments                                                                         (486,392,284)         (1,862,890,114)
        Sale Proceeds of Investments                                                                     480,310,563           1,856,517,870
        NET CASH USED IN INVESTING ACTIVITIES                                                             (6,081,721)             (6,372,244)
 C.     CASH FLOW FROM FINANCING ACTIVITIES
        NET CASH USED IN FINANCING ACTIVITIES                                                                       –                      –
        Net increase/(decrease) in cash and cash equivalents (A+B+C)                                           170,015             (150,292)
        Cash and cash equivalents as at the beginning of the year (as per Schedule 4)                            5,818               156,110
        Cash and cash equivalents as at the end of the year (as per Schedule 4)                                175,832                 5,818
                                                                                                               170,014             (150,292)




IN TERMS OF OUR REPORT ATTACHED
FOR DELOITTE HASKINS & SELLS                                                FOR AND ON BEHALF OF THE BOARD
Chartered Accountants


Z. F. B I L L I M O R I A                                                   A. K. T. CHARI          SADASHIV S. RAO
Partner                                                                     Chairman                Director


Mumbai | April 22, 2010

                                                                                                               IDFC FINANCE LIMITED       69
  SCHEDULES                                                                            ANNEXED TO AND FORMING PART OF THE ACCOUNTS



SCHEDULE 1 Shareholders’ Funds                                                                        RUPEES                  RUPEES

                                                                                       AS AT MARCH 31, 2010    AS AT MARCH 31, 2009
SHARE CAPITAL
Authorised :
40,000,000 Equity Shares of Rs. 10 each                                                          400,000,000             400,000,000
Issued :
27,000,400 Equity Shares of Rs. 10 each                                                          270,004,000             270,004,000
Subscribed and Paid-up :
21,000,200 Equity Shares of Rs. 10 each                                                          210,002,000             210,002,000
(All the above shares are held by Infrastructure Development Finance
Company Limited, the holding company and its nominees)




SCHEDULE 2 Reserves and Surplus                                               RUPEES                  RUPEES                  RUPEES

                                                                                       AS AT MARCH 31, 2010    AS AT MARCH 31, 2009
SPECIAL RESERVE U/S 45-IC OF RBI ACT, 1934
  Opening Balance                                                         11,579,846                                       8,503,867
  Add: Transfer from Profit and Loss Account                               1,422,581                                       3,075,979
                                                                                                  13,002,427              11,579,846
PROFIT AND LOSS ACCOUNT                                                                           52,009,711              46,319,384
                                                                                                  65,012,138              57,899,230




SCHEDULE 3 Investments                                                                                RUPEES                  RUPEES

                                                                                       AS AT MARCH 31, 2010    AS AT MARCH 31, 2009
I. LONG TERM (NON-TRADE)
                                                      NO. OF SHARES      FACE VALUE
                                                                           (RUPEES)
EQUITY SHARES (FULLY PAID) (UNQUOTED)
SUBSIDIARY COMPANY
IDFC Projects Limited (upto February 03, 2010)               9,049,900           10               90,499,000              90,499,000
II. CURRENT (TRADE)
MUTUAL FUNDS (UNQUOTED)                                  NO. OF UNITS    FACE VALUE
                                                                           (RUPEES)
ICICI Prudential Institutional Liquid Plan -
  Super Institutional - Growth                               6,271.074          100                 812,744                 812,744
IDFC Money Manager Fund - Treasury Plan -
  Super Institutional Plan C - Growth                    5,805,846.782           10               63,249,324             175,944,454
IDFC Fixed Maturity Plan -
  Thirteen Month Series 5 - Growth                      12,000,000.000           10              120,000,000                       –
                                                                                                 184,062,068             176,757,198
GRAND TOTAL (I+II)                                                                               274,561,068             267,256,198




70     I D F C A N N U A L R E P O R T 09 –10
SCHEDULE 4 Current Assets, Loans and Advances                                     RUPEES                   RUPEES

                                                                    AS AT MARCH 31, 2010    AS AT MARCH 31, 2009
A. CURRENT ASSETS
Cash and Bank Balances -
with Scheduled Bank in Current Account                                           175,832                    5,818
                                                                                 175,832                    5,818
B. LOANS AND ADVANCES
Unsecured, considered good
Advance Payment of Income Tax (Net of Provisions)                                494,025                  771,574
                                                                                 494,025                  771,574
                                                                                 669,857                  777,392




SCHEDULE 5 Current Liabilities and Provisions                                     RUPEES                   RUPEES

                                                                    AS AT MARCH 31, 2010    AS AT MARCH 31, 2009
A. LIABILITIES
Sundry Creditors                                                                 196,933                  117,364
(Other than Micro, Small and Medium Enterprises)
Other Liabilities                                                                 19,854                   14,996
                                                                                 216,787                  132,360




SCHEDULE 6 Operating and other Income                     RUPEES                  RUPEES                   RUPEES

                                                                        APRIL 1, 2009 TO         APRIL 1, 2008 TO
                                                                        MARCH 31, 2010           MARCH 31, 2009
OPERATING INCOME
Profit on Sale of Current Investments                   1,223,148                                       5,945,270
Dividend on Current Investments                         6,331,722                                      11,747,789
                                                                                7,554,870              17,693,059
OTHER INCOME
Interest on Income-Tax Refund                                                     30,144                        –
                                                                                7,585,014              17,693,059




SCHEDULE 7 Other Expenses                                                         RUPEES                   RUPEES

                                                                        APRIL 1, 2009 TO        APRIL 1, 2008 TO
                                                                        MARCH 31, 2010          MARCH 31, 2009
Legal and Professional Fees                                                       20,133                   30,394
Auditors’ Remuneration (See Schedule 8 Note 2)                                   309,296                  251,462
Rates and Taxes                                                                    1,400                       –
Interest on delayed payment of Tax deducted at source                                145                       –
Miscellaneous Expenses                                                                 –                   10,310
                                                                                 330,974                  292,166



                                                                                 IDFC FINANCE LIMITED         71
SCHEDULE 8 Notes Forming Part of the Accounts
1 Significant Accounting Policies

A. Basis of Accounting
The Company adopts the accrual concept in the preparation of accounts. The preparation of financial statements requires the Management to
make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of
the financial statements and the reported income and expenses during the reporting period. The Management believes that the estimates used
in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.

B. Revenue Recognition
Interest Income is accounted for on accrual basis.

Dividend income is recognised when the right to receive is established.

C. Investments
The Company is regulated as a Non-Banking Financial Company (NBFC) by the Reserve Bank of India (RBI). Accordingly, Investments are
classified under two categories i.e. Current and Long Term and are valued in accordance with the RBI guidelines and Accounting Standard 13 on
‘Accounting for Investments’ as notified by the Companies (Accounting Standards) Rules, 2006.
¬   ‘Long Term Investments’ are carried at acquisition cost. A provision is made for diminution other than temporary on an individual basis.
¬   ‘Current Investments’ are carried at the lower of cost or fair value on an individual basis.

D. Income Tax
The accounting treatment for income-tax in respect of the Company’s income is based on the Accounting Standard 22 on ‘Accounting for Taxes
on Income’ as notified by the Companies (Accounting Standards) Rules, 2006. The provision made for income-tax in the accounts comprises
both, the current tax and the deferred tax. The deferred tax assets and liabilities for the year arising on account of timing differences are
recognised in the Profit and Loss Account and the cumulative effect thereof is reflected in the Balance Sheet.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax
assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which
such deferred tax assets can be realised.

In situations where the Company has unabsorbed depreciation or carry forward tax losses, deferred tax assets are recognised only if there is
virtual certainty supported by convincing evidence that the same can be realised against future taxable profits.

2 Auditors’ Remuneration :

PARTICULARS                                                                                              CURRENT YEAR               PREVIOUS YEAR
                                                                                                                   RUPEES                       RUPEES

Audit Fees                                                                                                        150,000                      100,000
Tax Audit Fees                                                                                                     30,000                       20,000
Other Matters                                                                                                     100,000                      106,000
Out of pocket expenses                                                                                                456                           –
Service Tax                                                                                                        28,840                       25,462
Total                                                                                                             309,296                      251,462

 3 The Company is engaged in investing activities in India and there are no separate reportable segments as per Accounting Standard 17 on
‘Segment Reporting’ as notified by the Companies (Accounting Standards) Rules, 2006.

 4 As per the Accounting Standard 18 on ‘Related Party Disclosures’ as notified by the Companies (Accounting Standards) Rules, 2006, the
related parties of the Company are as follows:

(a) Relationships:

         I.    HOLDING COMPANY : Infrastructure Development Finance Company Limited

         II.   SUBSIDIARY: IDFC Projects Limited (upto February 03, 2010)




    72         I D F C A N N U A L R E P O R T 09 –10
(b) The nature and volume of transactions carried out with the above related parties in the ordinary course of business are as follows:

NAME OF THE RELATED PARTY             PARTICULARS                                                    CURRENT YEAR                PREVIOUS YEAR
                                                                                                                  RUPEES                   RUPEES

IDFC Projects Limited                 Subscription towards Equity Share Capital                                      Nil              90,000,000

 5 In accordance with the Accounting Standard 20 on ‘Earnings Per Share’ as notified by the Companies (Accounting Standards) Rules, 2006;
the Earnings Per Share is as under:

PARTICULARS                                                                                           CURRENT YEAR               PREVIOUS YEAR
                                                                                                                  RUPEES                   RUPEES

Profit After Tax (Rs.)                                                                                       7,112,908                15,379,893
Weighted average number of equity shares (Nos.)                                                             21,000,200                21,000,200
Basic & Diluted Earnings Per Share (Rs.)                                                                            0.34                     0.73
Nominal Value Per Share (Rs.)                                                                                        10                         10

6 The Company has no amounts due to any micro, small and medium enterprises as defined under Micro Small and Medium Enterprises
Development Act, 2006 as on March 31, 2010.

 7 The following additional information (other than what is already disclosed elsewhere) is disclosed in terms of RBI circular (Ref. No. DNBS
(PD) CC No. 145 /03.02.001 /2009-10 dated July 1, 2009):

Investor group wise classification of all investments (Current and Long Term) in shares and securities (both Quoted and Unquoted):

                                                      CURRENT YEAR                                               PREVIOUS YEAR
                                                            RUPEES                                                   RUPEES

Category                               Market Value/ Breakup                       Book Value   Market Value/ Breakup                 Book Value
                                       Value / Fair Value / NAV             Net of Provision    Value / Fair Value / NAV          Net of Provision
1. Related Parties
  (a) Subsidiaries                                           –                             –                90,499,000                90,499,000
2. Other then
  Related Parties                                 274,832,942                     274,561,068              177,169,577               176,757,198

8 The figures for the previous year have been regrouped / rearranged wherever necessary.




                                                                        FOR AND ON BEHALF OF THE BOARD



                                                                        A. K. T. CHARI                SADASHIV S. RAO
                                                                        Chairman                      Director


Mumbai | April 22, 2010

                                                                                                                 IDFC FINANCE LIMITED           73
      B A L A N C E S H E E T A B ST R A CT                                                                                          AND COMPANY’S GENERAL BUSINESS PROFILE




I.        REGISTRATION DETAILS

          Registration No.           U    4   5       2   0    1     D       L       2           0       0   0   P   L   C   1   0   5   2   9   2

          State Code                 5    5

          Balance Sheet Date         3    1           0   3         2       0        1           0

II.       CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000)

                                                                                Public Issue                                                                             Right Issue
                                                                                N            I       L                                                                   N   I   L


                                                                                Bonus Issue                                                                       Private Placement

                                                                                N            I       L                                                                   N   I   L
III.      POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000)
                                                                         Total Liabilities                                                                              Total Assets

                                                           2    7       5       2        3           1                                                   2    7     5    2   3   1
          SOURCES OF FUNDS
                                                                         Paid-up Capital                                                                     Reserves and Surplus

                                                           2    1       0       0        0           2                                                        6     5    0   1   2

                                                                            Secured Loans                                                                          Unsecured Loans

                                                                                N            I       L                                                                   N   I   L
          APPLICATION OF FUNDS
                                                                     Net Fixed Assets                                                                                   Investments

                                                                                N            I       L                                                   2    7     4    5   6   1

                                                                   Net Current Assets                                                                          Deferred Tax Asset

                                                                                4        5           3                                                                   N   I   L

IV.       PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000)
                                                                    Turnover / Income                                                                             Total Expenditure

                                                                        7       5        8           5                                                                   3   3   1

                                                                     Profit Before Tax                                                                              Profit After Tax

                                                                        7       2        5           4                                                              7    1   1   3

                                                          Earnings per Share (in Rs.)                                                                                   Dividend %

                                                                        0        .       3           4                                                                   N   I   L

V.        GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS)

          Item Code No. (ITC Code)             N      I   L

          Product Description                  U      R   B    A     N                   I       N       F   R   A   S   T   R   U   C   T   U   R   E

                                               F      I   N    A     N       C           I       N       G




     74      I D F C A N N U A L R E P O R T 09 –10
IDFC securities
limited*

B O A R D O F D I R E CTO R S
■   Dr. Rajiv B. Lall
■   Mr. Vikram Limaye
■   Mr. T. S. Bhattacharya
■   Mr. Yuvraj Narayan
■   Mr. L. K. Narayan
■   Mr. Tapasije Mishra
■   Mr. Mahehdra N. Shah

A U D I TO R S
■   Deloitte Haskins & Sells
    Chartered Accountants

P R I N C I PA L B A N K E R S
■   HDFC Bank Limited

R E G I ST E R E D O F F I C E
Naman Chambers, C-32, G-Block,
Bandra-Kurla Complex, Bandra (East),
Mumbai 400 051.
TEL +91 22 66222600
FAX +91 22 66222501




* Formerly known as IDFC - SSKI Securities Limited

                                           I D F C S E C U R I T I E S L I M I T E D ( F O R M E R LY , I D F C - S S K I S E C U R I T I E S L I M I T E D )   75
  D I R E CT O R S ’ R E P O R T


TO THE MEMBERS                                                              infrastructure, consumers and financials sectors as also mid-caps.
Your directors have pleasure in presenting the Seventeenth Annual           While the Company was recognized for the differentiated research,
Report together with the audited accounts for the year ended March          it has also scaled up materially on its client relationships during the
31, 2010.                                                                   year.

FINANCIAL RESULTS                                                           SUBSIDIARY COMPANIES
                                                                   RUPEES   IDFC Securities Ltd. has two direct wholly owned subsidiary
                                                                            companies - IDFC Capital Ltd. (earlier known as IDFC – SSKI Ltd.) and
                                         YEAR ENDED          YEAR ENDED
                                          MARCH 31,           MARCH 31,     IDFC – SSKI Stock Broking Ltd. In addition IDFC Capital Ltd. has a
                                               2010                2009     wholly owned subsidiary – IDFC Capital (Singapore) Pte Ltd.
 Gross Revenue                           1,047,298,141        713,685,450   During the year, IDFC Capital Ltd. has further floated two wholly
 Operating Expenses                        672,218,942        442,741,472   owned subsidiary companies namely, IDFC General Partners Ltd. and
 (including Employee Costs)                                                 IDFC Fund of Funds Ltd.
 Profit before Depreciation,               375,079,199        270,943,978   As required under the provisions of section 212 of the Companies
 Interest and Tax                                                           Act, 1956, a statement of holding company’s interest in the
 Depreciation/Amortisation                       5,750,406      7,761,033   subsidiary companies is attached to this report.

 Finance Charges                             10,440,940        13,726,570   DIVIDEND
 Net Profit before Tax                     358,887,853        249,456,375   Your Directors do not recommend any dividend for the financial year
                                                                            ended March 31, 2010.
 Provision for Taxation
 Current Tax                               115,200,000         79,300,000   SHAREHOLDERS UPDATE
 Deferred Tax                                    1,000,000       300,000    The Company had shifted its Registered Office from 803/804,
                                                                            Tulsiani Chambers, Nariman Point, Mumbai 400 021 to Naman
 Fringe Benefit Tax                                      -      2,640,000
                                                                            Chambers, C-32, G- Block, Bandra- Kurla Complex, Bandra (East),
 Short provision for Income Tax                  6,026,067      2,578,179
                                                                            Mumbai 400 051 with effect from December 25, 2009.
 Net Profit after tax                      236,661,786        164,638,196
                                                                            During the financial year, the Company had changed its name from
                                                                            IDFC – SSKI Securities Limited to IDFC Securities Limited by passing
BUSINESS REVIEW AND FUTURE OUTLOOK
                                                                            special resolution at the Extraordinary General Meeting held on
After a tumultuous Financial Year 2009, the Indian economy has
                                                                            February 16, 2010 and the change of name was effective after
staged a smart V-shaped recovery in the Financial Year 2010,
                                                                            obtaining fresh certificate of incorporation consequent to the name
led by buoyant domestic demand as well as fiscal and monetary
                                                                            change from Registrar of Companies with effect from March 12,
stimulus. The decline in interest rates drove the revival in domestic
                                                                            2010. Infrastructure Development Finance Company Limited (IDFC)
demand as indicated by higher sales of passenger cars, consumer
                                                                            holds 100% of paid up capital of the Company. The name change
durables, housing loan disbursals, etc. Industrial production growth,
                                                                            was done to reflect the parentage of IDFC. The word "Securities"
as measured by the Index of Industrial Production (IIP), reached a
                                                                            indicates important business of the Company.
15-year high in December 2009. Consequently, GDP growth was
set to cross the 7% mark for FY10, notwithstanding the impact               DIRECTORS
of a deficient monsoon. Buoyed by the improved macroeconomic                Mr. T. S. Bhattacharya was appointed as an Additional Director
environment, capital markets have been up by more than 100%                 (Independent) with effect from June 17, 2009 whose appointment
over the year. However, amidst the euphoria, broking business               was approved at the Annual General Meeting held on July 13, 2009.
encountered serious headwinds on many fronts as: (a) investors              Appointment of Mr. L K Narayan as Director was also approved at
remain cautious after the debacle of the previous year and churn has        the said Annual General Meeting. The Board, at its meeting held
been lower, due to which volume growth has not been commensurate            on April 21, 2010, proposed appointment of Mr. Anil Singhvi as an
with growth in the capital market; (b) competition is intensifying          Independent Director subject to approval of exchanges.
and an increasingly fragmented market has hit yields (commission            Dr. Rajiv Lall and Mr. Vikram Limaye are reting by rotation and being
rates), because of which revenue pool has not grown materially; and         eligible, offers themselves for re-appointment at the ensuing Annual
(c) derivatives (F&O) volumes have been subdued as the proprietary          General Meeting.
book and P Note market remains unaddressable.
                                                                            AUDIT COMMITTEE
Despite the odds, performance of the Company was quite impressive.
                                                                            The Audit Committee was re-constituted during the year and the
Our revenues have grown 47% and PAT 44% for FY10. The year
                                                                            same consists of Mr. Vikram Limaye as Chairman, Mr. L K Narayan,
also brought some ‘laurels’ for the Company – as the Company
                                                                            Mr. Yuvraj Narayan and Mr. T. S. Bhattacharya.
was awarded the ‘Best Local Brokerage’ for the last 20 years in
Asiamoney’s ‘Poll of Polls’. Also, three of analysts of the Company         The Audit Committee met four times during the year under the
featured in the league of top 20, ranked for their research on              review.

 76     I D F C A N N U A L R E P O R T 09 –10
AUDITORS                                                                        and prudent, so as to give a true and fair view of the state of affairs of
M/s Deloitte Haskins & Sells, Chartered Accountants, Mumbai will                the Company as at March 31, 2010 and the profit of the Company for
retire and have expressed their willingness to continue as Auditors,            the year ended on that date;
if re-appointed, at the ensuing Annual General Meeting. Since more              ¬ they have taken proper and sufficient care for the maintenance of
than twenty five percent of the subscribed share capital is held by             adequate accounting records in accordance with the provisions of the
Infrastructure Development Finance Company Limited, a Public                    Companies Act, 1956, for safeguarding the assets of the Company and
Financial Institution, in terms of Section 224A of Companies Act,               detecting fraud and other irregularities; and
1956, a Special Resolution would be required at the Annual General              ¬ they have prepared annual accounts on a going concern basis.
Meeting for their re-appointment
                                                                                ACKNOWLEDGEMENTS
FOREIGN EXCHANGE                                                                The Board wishes to thank the clients, custodians, Securities and
The particulars regarding foreign exchange earnings and expenditure             Exchange Board of India, Stock Exchanges, Banks and other statutory
are furnished at Item No. 7 in the Notes to the Accounts.                       and regulatory authorities for their support to your Company. The
                                                                                Board also places on record its appreciation for the sincere efforts of
PERSONNEL AND OTHER MATTERS
                                                                                the staff.
As required by the provisions of Section 217 (2A) of the Companies
Act, 1956, read with the Companies (Particulars of Employees) Rules,            The Board would also like to express its gratitude for the unstinted
1975, as amended, the names and other particulars of employees are              support and guidance received from IDFC, the parent organisation,
set out in Annexure to the Directors’ Report.                                   and also other group companies.

Since the Company does not own any manufacturing facility, the
disclosure of information on other matters required to be disclosed
in terms of Section 217(1)(e) of the Companies Act, 1956 read with
the Companies (Disclosure of Particulars in the report of Board of
                                                                                FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Directors) Rules, 1988, are not applicable and hence not given.

DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors confirm that:
                                                                                RAJIV B. LALL                  TAPASIJE MISHRA
¬ the applicable accounting standards have been followed in the
                                                                                Director                       Director
preparation of the annual accounts and that there are no material
departures;
¬ they have selected such accounting policies and applied them                  Mumbai
consistently and made judgments and estimates that are reasonable               April 21, 2010




                                              I D F C S E C U R I T I E S L I M I T E D ( F O R M E R LY , I D F C - S S K I S E C U R I T I E S L I M I T E D )   77
      AU D I TO RS ’ R E PO RT


TO THE MEMBERS OF IDFC SECURITIES LIMITED                                (d) in our opinion, the Balance Sheet, the Profit and Loss Account
1. We have audited the attached Balance Sheet of IDFC SECURITIES             and the Cash Flow Statement dealt with by this report are in
LIMITED (formerly, IDFC-SSKI SECURITIES LIMITED) (“the Company”)             compliance with the Accounting Standards referred to in Section
as at March 31, 2010, the Profit and Loss Account and the Cash Flow          211(3C) of the Companies Act, 1956;
Statement of the Company for the year ended on that date, both           (e) in our opinion and to the best of our information and according
annexed thereto. These financial statements are the responsibility           to the explanations given to us, the said accounts give the
of the Company’s Management. Our responsibility is to express an             information required by the Companies Act, 1956 in the manner
opinion on these financial statements based on our audit.                    so required and give a true and fair view in conformity with the
2. We conducted our audit in accordance with the auditing standards          accounting principles generally accepted in India:
generally accepted in India. Those Standards require that we plan             (i)   in the case of the Balance Sheet, of the state of affairs of
and perform the audit to obtain reasonable assurance about whether                  the Company as at March 31, 2010;
the financial statements are free of material misstatements. An
                                                                              (ii) in the case of the Profit and Loss Account, of the profit of
audit includes examining, on a test basis, evidence supporting the
                                                                                   the Company for the year ended on that date and
amounts and the disclosures in the financial statements. An audit also
includes assessing the accounting principles used and the significant         (iii) in the case of the Cash Flow Statement, of the cash flows of
estimates made by the Management, as well as evaluating the overall                 the Company for the year ended on that date.
financial statement presentation. We believe that our audit provides a   5. On the basis of the written representations received from the
reasonable basis for our opinion.                                        Directors as on 31st March, 2010 taken on record by the Board of
3. As required by the Companies (Auditor’s Report) Order, 2003           Directors, none of the Directors is disqualified as on 31st March,
(CARO) issued by the Central Government in terms of Section 227(4A)      2010 from being appointed as a director in terms of Section 274(1)(g)
of the Companies Act, 1956, we enclose in the Annexure a statement       of the Companies Act, 1956.
on the matters specified in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in
paragraph 3 above, we report as follows:
                                                                         FOR DELOITTE HASKINS & SELLS
(a) we have obtained all the information and explanations which
                                                                         Chartered Accountants
    to the best of our knowledge and belief were necessary for the
                                                                         (Registration No. 117366W)
    purposes of our audit;
(b) in our opinion, proper books of account as required by law           NALIN M. SHAH
    have been kept by the Company so far as it appears from our          Partner
    examination of those books;                                          Membership No. 15860
(c)    the Balance Sheet, the Profit and Loss Account and the Cash
       Flow Statement dealt with by this report are in agreement with    Mumbai
       the books of account;                                             April 21, 2010




 78      I D F C A N N U A L R E P O R T 09 –10
      ANNEXURE                                                                                                                                TO THE AUDITOR’S REPORT


(Referred to in paragraph 3 of our report of even date)                                (vii) In our opinion, the internal audit functions carried out during
(i) Having regard to the nature of the Company’s business/activities/                  the year by a firm of Chartered Accountants appointed by the
result and transactions, etc. and clauses (ii), (vi), (viii), (x), (xii), (xiii),      Management have been commensurate with the size of the Company
(xiv), (xv), (xvi), (xvii), (xviii), (xix) and (xx) of CARO are not applicable.        and the nature of its business.

(ii) In respect of its fixed assets:                                                   (viii) According to the information and explanations given to us in
                                                                                       respect of statutory dues:
(a) The Company has maintained proper records showing full
    particulars, including quantitative details and situation of the                   (a) The Company has generally been regular in depositing undisputed
    fixed assets.                                                                          dues, including Provident Fund, Income-tax, Service Tax, Cess
                                                                                           and other material statutory dues applicable to it with the
(b) The fixed assets were physically verified during the year by
                                                                                           appropriate authorities.
    the Management in accordance with a regular programme
    of verification which, in our opinion, provides for physical                       (b) There were no undisputed amounts payable in respect of Income-
    verification of all the fixed assets at reasonable intervals.                          tax, Service tax and other material statutory dues in arrears as at
    According to the information and explanation given to us, no                           31st March, 2010 for a period of more than six months from the
    material discrepancies were noticed on such verification.                              date they became payable.

(c)   The fixed assets disposed off during the year, in our opinion,                   (c)   Details of dues of Income-tax which have not been deposited as
      do not constitute a substantial part of the fixed assets of the                        on 31st March, 2010 on account of disputes are given below:
      Company and such disposal has, in our opinion, not affected the                   STATUTE         NATURE FORUM WHERE                    PERIOD TO            AMOUNT
      going concern status of the Company.                                                              OF     DISPUTE IS                     WHICH THE          INVOLVED
                                                                                                        DUES   PENDING                        AMOUNT              (RUPEES)
(iii) The Company has not granted any loans, secured or unsecured,                                                                            RELATES
to companies, firms or other parties listed in the Register maintained                                               Income Tax Appel-        A.Y.                 42,48,070
under Section 301 of the Companies Act, 1956.                                                                        late Tribunal            1997-98
(iv) In respect of loans, secured or unsecured, taken by the Company                                                 Income Tax               A.Y. 1998-99        42,334,898
from companies, firms or other parties covered in the Register                                                       Appellate Tribunal
maintained under Section 301 of the Companies Act, 1956, according                      Income Tax Income            Income Tax               A.Y. 1999-00         3,050,631
to the information and explanations given to us:                                        Act, 1961       Tax          Appellate Tribunal

(a) The Company has taken loans aggregating Rs. 5,819,000,000                                                        High Court               A.Y. 2001-02         6,316,859

    from one party during the year. At the year-end, there                                                           Commissioner of          A.Y. 2007-08         6,451,227

    was no amount outstanding of such loans taken and the                                                            Income Tax

    maximum amount involved at any time during the year was Rs.                                                      (Appeals)

    1,600,000,000.                                                                     (ix) In our opinion and according to the information and explanations
                                                                                       given to us, the Company has not defaulted in the repayment of dues
(b) The rate of interest and other terms and conditions of such loans
                                                                                       to banks and financial institutions.
    are, in our opinion, prima facie not prejudicial to the interests of
    the Company.                                                                       (x) To the best of our knowledge and according to the information
                                                                                       and explanations given to us, no fraud by or on the Company has been
(c)   The payments of principal amounts and interest in respect of
                                                                                       noticed or reported during the year.
      such loans are regular/as per stipulations.
(v) In our opinion and according to the information and explanations                   FOR DELOITTE HASKINS & SELLS
given to us, there is an adequate internal control system                              Chartered Accountants
commensurate with the size of the Company and the nature of its                        (Registration No. 117366W)
business with regard to purchases of fixed assets and the sale of
services. During the course of our audit, we have not observed any                     NALIN M. SHAH
major weakness in such internal control system.                                        Partner
(vi) To the best of our knowledge and belief and according to the                      Membership No. 15860
information and explanations given to us, there were no contracts or
arrangements that needed to be entered in the Register maintained                      Mumbai
under Section 301 of the Companies Act, 1956.                                          April 21, 2010




                                                     I D F C S E C U R I T I E S L I M I T E D ( F O R M E R LY , I D F C - S S K I S E C U R I T I E S L I M I T E D )   79
   BALANCE SHEET                                                                                                      AS AT MARCH 31, 2010


                                                                                 RUPEES                    RUPEES                   RUPEES

                                                          SCHEDULE                        AS AT MARCH 31, 2010       AS AT MARCH 31, 2009
SOURCES OF FUNDS
Shareholders’ Funds
  Share Capital                                                      1                              141,372,000                141,372,000
  Reserves and Surplus                                               2                             1,165,743,145               929,081,359
                                                                                                   1,307,115,145              1,070,453,359
APPLICATION OF FUNDS
Fixed Assets                                                         3
  Gross Block                                                                32,290,308                                         37,768,937
  Less : Depreciation and Amortisation                                       22,097,690                                         23,165,855
                                                                             10,192,618                                         14,603,082
  Add : Capital Work - in - Progress                                           520,000                                             520,000
                                                                                                        10,712,618              15,123,082
Investments                                                          4                             1,102,749,255               593,867,101
Deferred Tax Asset (See Schedule 15, Note 11)                                                            7,100,000               8,100,000
Current Assets, Loans and Advances
  Sundry Debtors                                                     5       46,148,251                                         18,112,216
  Cash and Bank Balances                                             6      396,127,030                                        482,252,348
  Loans and Advances                                                 7      142,526,687                                        148,909,456
                                                                                                    584,801,968                649,274,020
Less : Current Liabilities and Provisions
      Current Liabilities                                            8      392,991,423                                        191,994,071
Provisions                                                           9        5,257,273                                          3,916,773
                                                                                                    398,248,696                195,910,844
Net Current Assets                                                                                  186,553,272                453,363,176
                                                                                                   1,307,115,145              1,070,453,359
Notes to the Accounts                                                15
Schedules 1 to 15 form an integral part of the accounts




IN TERMS OF OUR REPORT ATTACHED
FOR DELOITTE HASKINS & SELLS                                     FOR AND ON BEHALF OF THE BOARD
Chartered Accountants


NALIN M . S H A H                                                RAJIV B. LALL               TAPASIJE MISHRA
Partner                                                          Director                    Director


                                                                 AMOL RANADE
Mumbai | April 21, 2010                                          Company Secretary

 80       I D F C A N N U A L R E P O R T 09 –10
   PROFIT AND LOSS ACCOUNT                                                                                                 FOR THE YEAR ENDED MARCH 31, 2010



                                                                                                RUPPES                           RUPEES                               RUPEES

                                                                                                                  APRIL 1, 2009 TO                  APRIL 1, 2008 TO
                                                                  SCHEDULE                                        MARCH 31, 2010                    MARCH 31, 2009
INCOME
Brokerage                                                                                                                  701,962,708                      547,037,552
Fee Income (Advisory)(See Schedule 15, Note 5)                                                                             279,168,262                        96,474,863
Other Income                                                                   10                                           66,167,171                        70,173,035
                                                                                                                        1,047,298,141                       713,685,450
EXPENDITURE
Interest & Other Charges                                                       11          10,440,940                                                         13,726,570
Staff Expenses                                                                 12         537,798,479                                                       311,731,577
Establishment Expenses                                                         13          25,920,368                                                         34,943,751
Other Expenses                                                                 14         106,700,095                                                         95,002,938
Provision for Doubtful Deposits                                                              1,800,000                                                         1,063,206
Depreciation & Amortisation                                                                  5,750,406                                                         7,761,033
                                                                                                                           688,410,288                      464,229,075
PROFIT BEFORE TAXATION                                                                                                     358,887,853                      249,456,375
Less : Provision for Taxation
Current Tax (See Schedule 15, Note 13)                                                    115,200,000                                                         79,300,000
Add: Deferred Tax (See Schedule 15, Note 11)                                                 1,000,000                                                           300,000
Add: Fringe Benefit Tax                                                                                -                                                       2,640,000
Add: Short provision for Income Tax                                                          6,026,067                                                         2,578,179
                                                                                                                           122,226,067                        84,818,179
PROFIT AFTER TAXATION                                                                                                      236,661,786                      164,638,196
Add : Balance as per last Balance Sheet                                                                                    745,789,782                      581,151,586
AVAILABLE FOR APPROPRIATION                                                                                                982,451,568                      745,789,782
Earning per share (Face Value Rs. 10)                                                                                             16.74                                11.65
(See Schedule 15, Note 10)
Basic and Diluted
Notes to the Accounts                                                          15
Schedules 1 to 15 form an integral part of the Accounts




IN TERMS OF OUR REPORT ATTACHED
FOR DELOITTE HASKINS & SELLS                                                FOR AND ON BEHALF OF THE BOARD
Chartered Accountants


NALIN M . S H A H                                                           RAJIV B. LALL                       TAPASIJE MISHRA
Partner                                                                     Director                            Director


                                                                            AMOL RANADE
Mumbai | April 21, 2010                                                     Company Secretary

                                                 I D F C S E C U R I T I E S L I M I T E D ( F O R M E R LY , I D F C - S S K I S E C U R I T I E S L I M I T E D )      81
   C A S H F L OW ST AT E M E N T                                                                         FOR THE YEAR ENDED MARCH 31, 2010



                                                                                                              RUPEES                  RUPEES

                                                                                                APRIL 1, 2009 TO           APRIL 1, 2008 TO
                                                                                                MARCH 31, 2010             MARCH 31, 2009
CASH FLOW FROM OPERATING ACTIVITIES:
Profit before Tax                                                                        A            358,887,853               249,456,375
Adjustments for
  Depreciation and Amortisation                                                                            5,750,406               7,761,033
  Interest Income                                                                                     (39,875,584)              (51,446,226)
  Provision for Gratuity                                                                                   1,340,500                  (6,986)
  Dividend Income                                                                                     (26,184,716)              (17,521,090)
  Loss on Sale /Discarding of Fixed Assets                                                                 1,435,832                  81,505
                                                                                         B            (57,533,562)              (61,131,764)
OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES                                       C=A+B           301,354,291               188,324,611
Changes in
 Sundry Debtors                                                                                       (28,036,035)                59,734,365
 Loans and Advances                                                                                       22,129,601            (23,913,262)
 Fixed Deposit with Scheduled Banks under Lien                                                             (352,716)            317,296,630
 Current Liabilties                                                                                   200,997,352              (180,749,988)
                                                                                         D            194,738,202               172,367,745
Cash generated from Operations                                                        E=C+D           496,092,493               360,692,356
 Taxes Paid                                                                                          (136,972,899)              (83,421,201)
NET CASH FROM OPERATING ACTIVITIES                                                       F            359,119,594               277,271,155
CASH FLOW FROM INVESTING ACTIVITIES
  Purchase of Fixed assets                                                                                (2,811,623)             (6,698,372)
  Purchase of Investments                                                                            (964,434,605)             (455,552,451)
  Proceeeds from Sale of Investments                                                                  455,552,451               281,208,340
  Proceeds from sale of Fixed Assets                                                                          35,849                 133,385
  Interest received                                                                                       39,875,584              51,446,226
  Dividend received                                                                                       26,184,716              17,521,090
NET CASH USED IN INVESTING ACTIVITIES                                                    G           (445,597,628)             (111,941,782)
CASH FLOW FROM FINANCING ACTIVITIES
  Proceeds from unsecured loans                                                                                     -          1,940,000,000
  Repayments of unsecured loans                                                                                     -         (1,940,000,000)
NET CASH USED IN FINANCING ACTIVITIES :                                                  H                          -                       -
NET INCREASE/(DECREASE) IN CASH EQUIVALENTS                                          I=F+G+H          (86,478,034)              165,329,373
INCREASE /(DECREASE)IN CASH EQUIVALENTS
Cash and Cash Equivalents as at the beginning of the year (see Note below)                            217,702,348                 52,372,975
Cash and Cash Equivalents as at the end of the year (see Note below)                                  131,224,314               217,702,348
                                                                                                      (86,478,034)              165,329,373
Note :
Cash and Cash Equivalents as per Schedule 6                                                           396,127,030               482,252,348
Less: Fixed Deposits Under Lien                                                                       264,902,716               264,550,000
Cash and Cash Equivalents as above                                                                    131,224,314               217,702,348



IN TERMS OF OUR REPORT ATTACHED
FOR DELOITTE HASKINS & SELLS                                             FOR AND ON BEHALF OF THE BOARD
Chartered Accountants


NALIN M . S H A H                                                        RAJIV B. LALL         TAPASIJE MISHRA
Partner                                                                  Director              Director


                                                                         AMOL RANADE
Mumbai | April 21, 2010                                                  Company Secretary

 82       I D F C A N N U A L R E P O R T 09 –10
  SCHEDULES                                                                                                                      ANNEXED TO AND FORMING PART OF THE ACCOUNTS



SCHEDULE 1 Share Capital                                                                                                                                     RUPEES                                   RUPEES

                                                                                                                                  AS AT MARCH 31, 2010                         AS AT MARCH 31, 2009
AUTHORISED:
20,000,000 equity shares of Rs 10 each                                                                                                            200,000,000                                  200,000,000
ISSUED, SUBSCRIBED AND PAID-UP:
14,137,200 equity shares of Rs 10 each fully paid                                                                                                 141,372,000                                  141,372,000
(All the above Equity Shares are held by Infrastructure Development Finance Company Limited,
                                                                                                                                                  141,372,000                                  141,372,000
the holding company and its nominees)(Previous year 11,309,443 Equity Shares)




SCHEDULE 2 Reserves and Surplus                                                                                                                              RUPEES                                   RUPEES

                                                                                                                                  AS AT MARCH 31, 2010                         AS AT MARCH 31, 2009
Securities Premium Account                                                                                                                         142,578,000                                 142,578,000
General Reserve                                                                                                                                         40,713,577                                 40,713,577
Profit and Loss Account                                                                                                                            982,451,568                                 745,789,782
                                                                                                                                               1,165,743,145                                   929,081,359



SCHEDULE 3 Fixed Assets                                                                                                                                                                                RUPEES

DESCRIPTION                                      GROSS BLOCK                                            DEPRECIATION AND AMORTISATION                                               NET BLOCK
                                                                                       As at March




                                                                                                                                                                 As at March




                                                                                                                                                                                     As at March




                                                                                                                                                                                                        As at March
                                                                                                                            Charge for
                                 As at April




                                                                                                          As at April
                                                      Additions




                                                                       Deletions




                                                                                                                                                Deletions
                                                                                       31, 2010




                                                                                                                                                                 31, 2010




                                                                                                                                                                                     31, 2010




                                                                                                                                                                                                        31, 2009
                                                                                                                            the year
                                 1, 2009




                                                                                                          1, 2009


TANGIBLE
Furniture and Fittings      6,334,294                     - 5,949,294               385,000           5,384,124          268,353         5,474,888            177,589             207,411            950,170
Office Equipments           5,972,876          1,602,115 1,586,463                 5,988,528          3,127,096          704,444          708,054            3,123,486           2,865,042          2,845,780
Computer Hardware          17,262,664           687,667           702,495 17,247,836                 11,134,466         2,570,057         591,029           13,113,494           4,134,342          6,128,198
INTANGIBLE
Tenancy Rights              1,083,200                     -                -       1,083,200            10,387           108,320                    -         118,707             964,493           1,072,813
Computer Software           7,115,903           521,841            52,000          7,585,744          3,509,782         2,099,232          44,600            5,564,414           2,021,330          3,606,121
Total                      37,768,937          2,811,623 8,290,252 32,290,308                        23,165,855         5,750,406        6,818,571          22,097,690          10,192,618 14,603,082
Previous Year              31,545,267          6,698,372          474,702 37,768,937                 15,664,634         7,761,033         259,812           23,165,855          14,603,082




                                                        I D F C S E C U R I T I E S L I M I T E D ( F O R M E R LY , I D F C - S S K I S E C U R I T I E S L I M I T E D )                                 83
SCHEDULE 4 Investments (Unquoted)                                                                            RUPEES                   RUPEES

                                                                                              AS AT MARCH 31, 2010     AS AT MARCH 31, 2009
I.    LONG TERM
      Equity Shares (Fully paid)
                                                                NUMBER OF       FACE VALUE
                                                                    SHARES           RUPEES

      Subsidiaries (Trade)
      IDFC Capital Limited (Formerly IDFC -SSKI Limited)            6,035,220            10             123,304,650              123,304,650
      IDFC -SSKI Stock Broking Limited                              1,500,000            10              15,000,000               15,000,000
      Others
      Bombay Stock Exchange Limited                                  130,000              1                  10,000                  10,000
      TOTAL LONG TERM INVESTMENTS                                                                       138,314,650              138,314,650
II    CURRENT (NON-TRADE)
      Mutual Funds Units
                                                                NUMBER OF       FACE VALUE
                                                                      UNITS          RUPEES

      IDFC Money Manager Fund Treasury Plan C Daily Dividend   96,428,996.109            10             964,434,605              455,552,451
      [Net Asset Value Rs.964,434,605; (Previous year
      Rs.455,552,451)]
      TOTAL INVESTMENTS                                                                                1,102,749,255             593,867,101




SCHEDULE 5 Sundry Debtors (Unsecured)                                                RUPEES                  RUPEES                   RUPEES

                                                                                              AS AT MARCH 31, 2010     AS AT MARCH 31, 2009
CONSIDERED GOOD
Over six months                                                                      40,626                                                -
Others (See Schedule 15, Note 4)                                                 46,107,625                                       18,112,216
                                                                                                         46,148,251               18,112,216
CONSIDERED DOUBTFUL
Over six months                                                                                           3,299,896                3,299,896
                                                                                                         49,448,147               21,412,112
Less : Provision for Doubtful Debts                                                                       3,299,896                3,299,896
                                                                                                         46,148,251               18,112,216




SCHEDULE 6 Cash and Bank Balances                                                    RUPEES                  RUPEES                   RUPEES

                                                                                              AS AT MARCH 31, 2010     AS AT MARCH 31, 2009
- Cash                                                                                                       19,662                   16,208
Balance with Scheduled Banks
- in Current Accounts                                                            29,762,504                                       10,988,130
- in Deposit Accounts                                                           101,442,148                                      206,698,010
- in Deposit Accounts (Under Lien)                                              264,902,716                                      264,550,000
                                                                                                        396,107,368              482,236,140
                                                                                                        396,127,030              482,252,348




84       I D F C A N N U A L R E P O R T 09 –10
SCHEDULE 7 Loans and Advances (Unsecured)                                                       RUPEES                           RUPEES                               RUPEES

                                                                                                           AS AT MARCH 31, 2010              AS AT MARCH 31, 2009
CONSIDERED GOOD
Interest accrued on Deposits                                                               21,253,637                                                         20,699,588
Advances recoverable in cash or in kind or for value to be received                          9,914,079                                                         7,007,729
Deposits with Stock Exchanges                                                              30,652,200                                                         40,252,200
Other Deposits                                                                               5,904,920                                                        21,894,920
Advance payment of Income Tax (Net of provision)                                           74,801,851                                                         59,055,019
                                                                                                                          142,526,687                       148,909,456
CONSIDERED DOUBTFUL
Other Deposits                                                                                                               1,800,000                                     –
                                                                                                                          144,326,687                       148,909,456
Less : Provision for Doubtful Deposits                                                                                       1,800,000                                     –
                                                                                                                          142,526,687                       148,909,456



SCHEDULE 8 Current Liabilities                                                                                                   RUPEES                               RUPEES

                                                                                                           AS AT MARCH 31, 2010              AS AT MARCH 31, 2009
Sundry Creditors - Micro and Small Enterprises (See schedule 15, Note 15)                                                              –                               8,704
Sundry Creditors - Others                                                                                                 362,588,700                       159,215,163
Other Liabilities                                                                                                          30,402,723                         32,770,204
                                                                                                                          392,991,423                       191,994,071




SCHEDULE 9 Provisions                                                                                                            RUPEES                               RUPEES

                                                                                                           AS AT MARCH 31, 2010              AS AT MARCH 31, 2009
Provision for Employees Benifit (See schedule 15, Note 6)                                                                    5,257,273                         3,916,773
                                                                                                                             5,257,273                         3,916,773


SCHEDULE 10 Other Income                                                                                                        RUPEES                                RUPEES

                                                                                                                  APRIL 1, 2009 TO                  APRIL 1, 2008 TO
                                                                                                                  MARCH 31, 2010                    MARCH 31, 2009
Interest on Bank Deposits Tax Deducted at source Rs 5,466,336;                                                             39,875,584                         49,348,250
(Previous year Rs 10,458,963)
Interest on Income Tax Refund                                                                                                          -                       2,097,976
Dividend On Current Investments (Non-Trade)                                                                                25,664,716                         17,221,090
Dividend On Long Term Investments (Non-Trade)                                                                                  520,000                           300,000
Gain on Foreign Exchange Fluctuation (Net)                                                                                             -                         967,774
Miscellaneous Income                                                                                                           106,871                           237,945
                                                                                                                           66,167,171                         70,173,035


SCHEDULE 11 Interest and Other Charges                                                                                          RUPEES                                RUPEES

                                                                                                                  APRIL 1, 2009 TO                  APRIL 1, 2008 TO
                                                                                                                  MARCH 31, 2010                    MARCH 31, 2009
Other Interest                                                                                                               3,813,215                         3,716,864
Other Charges                                                                                                                6,627,725                        10,009,706
                                                                                                                           10,440,940                         13,726,570


SCHEDULE 12 Staff Expenses                                                                                                      RUPEES                                RUPEES

                                                                                                                  APRIL 1, 2009 TO                  APRIL 1, 2008 TO
                                                                                                                  MARCH 31, 2010                    MARCH 31, 2009
Salaries, Wages and Bonus                                                                                                 517,782,313                       296,047,102
Contribution to Provident and Other Funds (See schedule 15, Note 6)                                                        13,558,935                         11,886,506
[Including provision for gratuity Rs.19,30,073; (Previous Year Rs.18,26,829)]
Staff Welfare Expenses                                                                                                       6,457,231                         3,797,969
                                                                                                                          537,798,479                       311,731,577



                                                 I D F C S E C U R I T I E S L I M I T E D ( F O R M E R LY , I D F C - S S K I S E C U R I T I E S L I M I T E D )      85
SCHEDULE 13 Establishment Expenses                   RUPEES              RUPEES             RUPEES

                                                               APRIL 1, 2009 TO   APRIL 1, 2008 TO
                                                               MARCH 31, 2010     MARCH 31, 2009
Rent                                                                 17,347,863         25,582,838
Rates & Taxes                                                           657,117                  -
Electricity                                                           3,949,176          4,470,526
Repairs and Maintenance
Building                                            213,070                                140,518
Equipment                                          1,977,503                             2,606,531
Others                                              976,295                                740,201
                                                                      3,166,868          3,487,250
Insurance Charges                                                       799,344          1,403,137
                                                                     25,920,368         34,943,751



SCHEDULE 14 Other Expenses                                               RUPEES             RUPEES

                                                               APRIL 1, 2009 TO   APRIL 1, 2008 TO
                                                               MARCH 31, 2010     MARCH 31, 2009
Travelling and Conveyance                                            29,080,907         21,839,360
Printing and Stationery                                               2,669,697          2,108,874
Postage, Telephone and Fax                                           11,811,090          9,753,455
Advertising and Publicity                                            13,791,431         17,060,868
Membership and Subscription                                          31,150,766         27,489,189
Professional Fees                                                     9,828,562          2,209,492
Loss on Foreign Exchange Fluctuation (Net)                              341,457                 –
Loss on Sale / Discarding of Fixed Assets (Net)                       1,435,832             81,505
Other Operating Expenses                                                800,834          3,209,137
Loss on Sale of Misdeal Stock (Net)                                   2,000,564          5,458,325
Miscellaneous Expenses                                                1,015,051          1,925,733
Directors’ Commission                                                        –           1,084,000
Directors’ Sitting Fees                                                 140,000             20,000
Auditors’ Remuneration (See schedule 15, Note 8)                      2,633,904          2,763,000
                                                                    106,700,095         95,002,938




86       I D F C A N N U A L R E P O R T 09 –10
SCHEDULE 15: Notes Forming Part of the Accounts
BACKGROUND

IDFC Securities Limited (formerly IDFC - SSKI Securities Limited) is a wholly owned subsidiary of Infrastructure Development Finance Company
Limited (“IDFC”).
1 Significant Accounting Policies
A. Accounting convention
These accounts have been prepared in accordance with historical cost convention, applicable Accounting Standards notified by the Companies
(Accounting Standards) Rules, 2006 and relevant provisions of the Companies Act, 1956.
B. Use of Estimates
The Company adopts the accrual concept in the preparation of the accounts. The preparation of financial statements requires the Management
to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date
of the financial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in
preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates. Assets and liabilities are
recorded at historical cost to the Company. These costs are not adjusted to reflect the changing value in the purchasing power of money.
C. Revenue recognition
(a) Income from brokerage activities is recognised on trade date basis and is net of statutory payments.
(b) Interest income is recognised on an accrual basis.
(c) Fees are recognised when reasonable right of recovery is established, the revenue can be reliably measured and there is no uncertainty
regarding recoverability.
(d) Dividend is recognised when the right to receive is established.
D. Fixed assets and Intangible Assets
Fixed assets are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated
depreciation. Intangible Assets comprising of system software are stated at cost of acquisition, including any cost attributable for bringing the
asset to its working condition, less accumulated amortisation. Any technology support cost or annual maintenance cost for such software is
charged annually to the Profit and Loss Account. Consideration paid for transfer of tenancy rights is capitalised as an Intangible Asset.
E. Depreciation
¬   Tangible Assets
Depreciation on Fixed Assets, excluding certain electronic items, is provided on the written down value method, at the rates prescribed by
Schedule XIV of the Companies Act, 1956. Certain electronic items are depreciated over a period of two years on straight line method based on
the Management’s estimate of the useful life of assets. Depreciation on additions during the year is provided on a pro-rata basis. Assets costing
less than Rs 5,000 each are written off in the year of capitalisation.
¬   Intangible Assets
Computer software is amortised over a period of 3 years and Tenancy rights are amortised over a period of 10 years by using straight-line method.
The Company has regular programme of evaluating useful life of its assets.
F. Investments
Investments are classified into long-term investments and current investments. Investments, which are intended to be held for more than one
year, are classified as long-term investments and investments, which are intended to be held for less than one year are classified as current
investments. Long-term investments are accounted at cost and any decline in the carrying value other than temporary in nature is provided for.
Current investments are valued at cost or market/fair value, whichever is lower. In case of investments in units of mutual funds, the net asset
value of units has been considered as the market value.
G. Misdeal stock
Misdeal stock comprises of stock that has devolved on the Company due to erroneous execution of trades on behalf of the institutional clients
in the normal course of business. These securities are valued at lower of cost or market value/realisable value on an individual basis. Any
valuation loss based on the above is debited to the Profit and Loss Account.
H. Employee benefits
DEFINED CONTRIBUTION PLANS
¬ The Company’s contribution to Provident Fund is deposited with Regional Provident Fund Commissioner and is charged to the Profit and Loss
Account every year.
¬ The Company participates in the Holding Company’s Superannuation policy, for future payments of Superannuation and the Company’s
contribution paid / payable during the year is charged to the Profit & Loss Account every year.


                                               I D F C S E C U R I T I E S L I M I T E D ( F O R M E R LY , I D F C - S S K I S E C U R I T I E S L I M I T E D )   87
DEFINED BENEFIT PLAN
¬ The net present value of the Company’s obligation towards Gratuity to employees is funded and actuarially determined as at the Balance Sheet
date based on the Projected Unit Credit Method. Actuarial gains and losses are recognised in the Profit & Loss Account.
OTHER BENEFITS
¬   The employees are required to avail of the leave entitlement during the financial year and are not entitled to any encashment.
I. Income - Tax
The accounting treatment for income-tax in respect of the Company’s income is based on the Accounting Standard 22 on ‘Accounting for Taxes
on Income’ as notified by the Companies (Accounting Standards) Rules, 2006. The provision made for income-tax in the accounts comprises
both, the current tax and the deferred tax. The deferred tax assets and liabilities for the year, arising on account of timing differences, are
recognised in the Profit & Loss Account and the cumulative effect thereof is reflected in the Balance Sheet.
Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax
asset is recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which
such deferred tax assets can be realised. In situations where the Company has unabsorbed depreciation or carried forward losses, deferred tax
assets are recognised only if there is virtual certainty supported by convincing evidence that the same can be realised against future taxable
profits.
J. Contingencies
The Company creates a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources
and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible
obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a
present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
K. Foreign Currency Transactions
Foreign currency transactions are accounted at the exchange rates prevailing on the date of the transaction. Foreign currency monetary
items outstanding as at the Balance Sheet date are reported using the closing rate. Gains and losses resulting from the settlement of such
transactions and translation of monetary assets and liabilities denominated in foreign currencies are recognised in the Profit and Loss Account.
2 Contingent liabilities not provided for in respect of :
         PARTICULARS                                                                                      CURRENT YEAR               PREVIOUS YEAR
                                                                                                                   (RUPEES)                 (RUPEES)

(a)      Claims not acknowledged as debts in respect of :
         Income-tax demands disputed by the Company (net of amounts provided). The matters in                   62,401,685                31,351,510
         dispute are under appeal. The demands have been paid / adjusted and will be received as
         refund if the matters are decided in favour of the Company
(b)      Counter guarantees given by Company to various banks                                                  492,300,000               492,300,000

3 IDFC Capital Limited (formerly, IDFC – SSKI Limited) has given Guarantee in form of its Fixed Deposit lien with HDFC Bank towards
Overdraft facility for Rs. 291,533,838 (previous year Rs. 300,000,000).

4 Sundry Debtors include Rs. 28,101,773 (Previous Year Rs. NIL) receivable from a Subsidiary Company.
 5 The Company has an arrangement with its Wholly Owned Subsidiary, IDFC Capital Limited (formerly IDFC-SSKI Limited) to provide research,
financial advisory and other distribution services on some of the assignments/mandates. In consideration of these services, the Company
receives a share from the Subsidiary Company in the ratio mutually agreed upon. An amount of Rs.254,042,007 (Previous year Rs 62,297,486)
has been shared during the year in respect of the above services and the same has been included under Fee Income (Advisory).

6 Employee Benefits
(i) In accordance with Accounting Standard –AS15 on “Employee Benefits”, notified by the Companies (Accounting Standards) Rules 2006, the
following disclosures have been made:
The Company has recognised the following amounts in the Profit and Loss Account towards contribution to defined contribution plans which are
included under Contribution to Provident and Other Funds:
                                                                                                          CURRENT YEAR               PREVIOUS YEAR
                                                                                                                    Rupees                   Rupees
Provident Fund                                                                                                  10,868,862                10,059,677
Superannuation Fund                                                                                                760,000                         -




    88   I D F C A N N U A L R E P O R T 09 –10
(ii) The details of the Company’s post-retirement benefit plans for gratuity for its employees are given below which is certified by the actuary
and relied upon by the auditors:
                                                                                                                                                                        RUPEES

PARTICULARS                                                                                                              AS AT 31.03.10                  AS AT 31.03.09
CHANGE IN THE BENEFIT OBLIGATIONS:
Liability at the beginning of the year                                                                                           8,745,683                       6,572,745
Current Service cost                                                                                                             5,304,017                       2,350,206
Interest Cost                                                                                                                    1,123,976                         736,143
Actuarial Gain                                                                                                                   4,179,910                         913,411
Liability at the end of the year                                                                                               10,993,766                        8,745,683
FAIR VALUE OF PLAN ASSETS:
Fair Value of Plan Assets at the beginning of the year                                                                           4,828,911                       2,648,986
Expected Return on Plan Assets                                                                                                     520,924                         358,624
Contributions                                                                                                                      589,573                       1,833,815
Actuarial loss on Plan Assets                                                                                                      202,914                              12,514
Fair Value of Plan Assets at the end of the year                                                                                 5,736,494                       4,828,911
Total Actuarial Gain to be recognized                                                                                            3,976,996                         900,897
ACTUAL RETURN ON PLAN ASSETS:
Expected Return on Plan Assets                                                                                                     520,924                         358,624
Actuarial loss on Plan Assets                                                                                                      202,914                              12,514
Actual Return on Plan Assets                                                                                                       318,010                         346,110
AMOUNT RECOGNISED IN THE BALANCE SHEET:
Liability at the end of the year                                                                                               10,993,766                        8,745,683
Fair Value of Plan Assets at the end of the year                                                                                 5,736,494                       4,828,911
Amount recognised in the Balance Sheet under “Provision for Employee Benefits”                                                   5,257,273                       3,916,773
EXPENSES RECOGNISED IN THE PROFIT & LOSS ACCOUNT UNDER STAFF EXPENSES
Current Service cost                                                                                                             5,304,017                       2,350,206
Interest Cost                                                                                                                    1,123,976                         736,143
Expected Return on Plan Assets                                                                                                     520,924                         358,624
Net Actuarial Loss to be recognised                                                                                              3,976,996                         900,897
Expense recognised in the Profit & Loss Account under staff expenses                                                             1,930,073                       1,826,829
RECONCILIATION OF THE LIABILITY RECOGNISED IN THE BALANCE SHEET
Opening Net Liability                                                                                                            3,916,773                       3,923,759
Expense recognised                                                                                                               1,930,073                       1,826,829
Contribution by the Company                                                                                                        589,573                       1,833,815
Amount recognised in the Balance Sheet under “Provision for Employee Benefits”                                                   5,257,273                       3,916,773
Expected Employer’s Contribution next year                                                                                       8,000,000                       3,366,000

PARTICULARS                                                                             AS AT 31.03.10                   AS AT 31.03.09                  AS AT 31.03.08
EXPERIENCE ADJUSTMENTS
Defined Benefit Obligation                                                                     10,993,766                        8,745,683                       6,572,745
Plan Assets                                                                                     5,736,494                        4,828,911                       2,648,986
Deficit / (Surplus)                                                                             5,257,273                        3,916,772                     (3,923,759)
Experience Adjustment on Plan Liabilities                                                       5,986,757                          383,113                                  –
Experience Adjustment on Plan Assets                                                              202,914                           12,514                                  –
PARTICULARS                                                                             AS AT 31.03.10                   AS AT 31.03.09
Investment Pattern                                                                                        %                               %
Insurer Managed Fund                                                                                   100                              100
Principal Assumptions
Discount rate                                                                                          8.10                                8
Return on Plan Assets                                                                                     8                                8
Salary Escalation Rate                                                                                    8                                6
As the Gratuity fund is managed by Life Insurance Company details of investments are not available with the Company.
The estimates of future salary increase, considered in the actuarial valuation takes account of inflation, seniority, promotion and other relevant
factors.




                                                   I D F C S E C U R I T I E S L I M I T E D ( F O R M E R LY , I D F C - S S K I S E C U R I T I E S L I M I T E D )      89
7 Expenditure in foreign currencies :
                                                                                                                                     RUPEES

PARTICULARS                                                                                     CURRENT YEAR              PREVIOUS YEAR
Professional Fees                                                                                        189,461                         –
Others                                                                                                 8,214,002                 9,180,850
Total                                                                                                  8,403,463                 9,180,850
EARNINGS IN FOREIGN CURRENCIES :

                                                                                                                                     RUPEES

PARTICULARS                                                                                     CURRENT YEAR              PREVIOUS YEAR
Advisory Fees                                                                                         25,126,255                34,177,378
Others                                                                                                  106,871                     28,924
Total                                                                                                 25,233,126                34,206,302

8 Auditors’ Remuneration:
                                                                                                                                     RUPEES

PARTICULARS                                                                                     CURRENT YEAR              PREVIOUS YEAR
Audit Fees                                                                                             1,200,000                 1,200,000
Tax Audit Fees                                                                                          400,000                    800,000
Taxation Services                                                                                       200,000                    200,000
Other Services                                                                                          825,000                    563,000
Out of Pocket Expenses                                                                                     8,904                             -
Service tax                                                                                             271,292                    304,427
Total                                                                                                  2,905,196                 3,067,427
Less: Service tax set off claimed                                                                       271,292                    304,427
                                                                                                       2,633,904                 2,763,000

9 Managerial Remuneration:
                                                                                                                                     RUPEES

PARTICULARS                                                                                     CURRENT YEAR              PREVIOUS YEAR
Commission to Non-Executive Director                                                                           -                 1,084,000
Total                                                                                                          -                 1,084,000


Computation of Net Profit in accordance with Section 349 of the Companies Act, 1956 in respect of Commission payable to Non- Executive
Director.                                                                                                                            RUPEES

PARTICULARS                                                                                     CURRENT YEAR              PREVIOUS YEAR
Profit Before Tax                                                                                              -               249,456,375
Add:
 Directors’ Fees and Commission                                                                                -                 1,104,000
 Provision for Doubtful Debts                                                                                  -                 1,063,206
                                                                                                                                 2,167,206
Net Profit as per Section 349 of the Companies Act, 1956                                                       -               251,623,581
Maximum permissible commission to all Non-Executive Directors @ 1%                                             -                 2,516,236
Restricted to                                                                                                  -                 1,084,000

 10 In accordance with the Accounting Standard 20 on ‘Earnings Per Share’ as notified by the Companies (Accounting Standards) Rules, 2006,
the Earnings Per Share has been computed as under:
                                                                                                                                     RUPEES

PARTICULARS                                                                                     CURRENT YEAR              PREVIOUS YEAR
Net Profit attributable to equity shareholders (A)                                                   236,661,786               164,638,196
Number of equity shares issued (B)                                                                    14,137,200                14,137,200
Basic and Diluted Earnings per share (EPS) [A/B]                                                           16.74                     11.65




 90      I D F C A N N U A L R E P O R T 09 –10
11 Deferred Tax:
As per Accounting Standard 22 relating to ‘Accounting for Taxes on Income’ as notified by the Companies (Accounting Standards) Rules, 2006,
the Company has taken debit of Rs. 1,000,000 (Previous Year Debit Rs. 300,000) in the Profit & Loss Account towards deferred tax liability
(net) on account of timing differences. The major components of deferred tax assets arising on account of timing differences are:
                                                                                                                                                                    RUPEES

 PARTICULARS                                                                                                      CURRENT YEAR                     PREVIOUS YEAR
 DEFERRED TAX ASSET
 Depreciation                                                                                                              3,624,132                         5,647,054
 Provisions                                                                                                                3,475,868                         2,452,946
 TOTAL                                                                                                                     7,100,000                         8,100,000
 DEFERRED TAX ASSET                                                                                                        7,100,000                         8,100,000

12 Segment Reporting:
The Company’s business is to provide broking services to its clients in the capital market in India. All other activities of the Company revolve
around the main business. As such, there are no reportable segments as per the Accounting Standard on ‘Segment Reporting’ (AS-17), as
notified by the Companies (Accounting Standards) Rules, 2006.
13 Provision for income tax for the year includes interest of Rs.120,076 (previous year Rs.125,905) under section 234C of Income Tax
Act,1961.
14 Related party disclosures:
As per the Accounting Standard 18 on ‘Related Party Disclosures’ as notified by the Companies (Accounting Standards) Rules, 2006, the related
parties of the Company are as follows:
I.    HOLDING COMPANY:

      Infrastructure Development Finance Company Limited
II.   SUBSIDIARY COMPANIES:

      IDFC Capital Limited (formerly, IDFC – SSKI Limited)
      IDFC – SSKI Stock Broking Limited
III. THERE ARE NO TRANSACTIONS WITH FELLOW SUBSIDIARIES:

The nature and volume of transactions carried out with the above related parties in the ordinary course of business:
                                                                                                                                                                    RUPEES

 NAME OF RELATED PARTY AND              PARTICULARS                                                                 CURRENT YEAR                   PREVIOUS YEAR
 NATURE OF RELATIONSHIP
 (A) HOLDING COMPANY
 Infrastructure Development Finance     Inter Corporate Deposits placed and redeemed                                     5,819,000,000                  1,940,000,000
 Company Limited
                                        Interest paid on Inter Corporate Deposits                                            2,224,889                       1,804,932
                                        Brokerage Received                                                                   5,672,744                       2,076,845
 (B) SUBSIDIARY COMPANY
 IDFC Capital Limited                   Fees income                                                                       254,042,007                       62,297,486
 (formerly, IDFC-SSKI Limited)
                                        Debtors outstanding balance                                                        28,101,773                                   -

15 There is no interest paid/payable during the year by the Company to suppliers covered under the Micro, Small and Medium Enterprises
Development Act, 2006. The above information takes into account only those suppliers who have responded to the enquires made by the
Company for this purpose.

16 Prior year comparatives:
The prior year comparatives have been regrouped, recasted and reclassified wherever necessary to confirm with current year’s presentation.
                                                                          FOR AND ON BEHALF OF THE BOARD


                                                                          RAJIV B. LALL                       TAPASIJE MISHRA
                                                                          Director                            Director


                                                                          AMOL RANADE
Mumbai | April 21, 2010                                                   Company Secretary

                                               I D F C S E C U R I T I E S L I M I T E D ( F O R M E R LY , I D F C - S S K I S E C U R I T I E S L I M I T E D )     91
      B A L A N C E S H E E T A B ST R A CT                                                                                          AND COMPANY’S GENERAL BUSINESS PROFILE




I.        REGISTRATION DETAILS

          Registration No.           U    9   9       9   9       9    M         H       1       9       9   3   P   L   C   0   7   1   8   6   5

          State Code                 1    1

          Balance Sheet Date         3    1           0   3            2         0       1       0

II.       CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000)

                                                                                     Public Issue                                                                            Right Issue
                                                                                     N       I       L                                                                       N       I   L


                                                                                     Bonus Issue                                                                      Private Placement

                                                                                     N       I       L                                                                      N    I       L

III.      POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000)
                                                                               Total Liabilities                                                                            Total Assets
                                                      1    7      0        5         3       6       4                                                   1   7    0     5    3   6       4
          SOURCES OF FUNDS
                                                                               Paid-up Capital                                                                   Reserves and Surplus

                                                           1      4        1         3       7       2                                                   1   1    6     5    7   4       3

                                                                                Secured Loans                                                                          Unsecured Loans
                                                                                     N       I       L                                                                       N       I   L
          APPLICATION OF FUNDS
                                                                        Net Fixed Assets                                                                                    Investments

                                                                  1        0         7       1       3                                                   1   1    0     2    7   4       9

                                                                      Net Current Assets                                                                 Miscelleneous Expenditure

                                                           1      8        6         5       5       3                                                                       N       I   L

                                                           Deferred Tax Asset (Net)

                                                                           7         1       0       0

IV.       PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000)
                                                                      Turnover / Income                                                                               Total Expenditure

                                                      1    0      4        7         2       9       8                                                       6    8     8    4   1       0

                                                                       Profit Before Tax                                                                                Profit After Tax

                                                              3   5        8         8       8       8                                                       2    3     6    6   6       2

                                                          Earnings per Share (in Rs.)                                                                                       Dividend %

                                                                  1        6         .       7       4                                                                       N       I   L

V.        GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS)

          Item Code No. (ITC Code)             N      I   L

          Product Description                  I      N   S       T        I      T      U       T       I   O   N   A   L       B   R   O   K   I   N   G




     92      I D F C A N N U A L R E P O R T 09 –10
    ST AT E M E N T P U R S U A N T T O S E CT I O N 2 1 2                                                                                 OF THE COMPANIES ACT, 1956



NAME OF SUBSIDIARY COMPANY                                           IDFC CAPITAL              IDFC - SSKI       IDFC CAPITAL              IDFC FUND        IDFC GENERAL
                                                                          LIMITED                   STOCK        (SINGAPORE)                OF FUNDS            PARTNERS
                                                                                                 BROKING             PTE. LTD.               LIMITED              LIMITED
                                                                                                  LIMITED
1     Financial year of the Subsidiary Companies ended on           31st March 2010 31st March 2010 31st March 2010 31st March 2010 31st March 2010
2     Equity Shares of Rs.10 each
      a) Number of Shares                                                   6,035,220             1,500,000             6,655,000         6,505,504.18                     10,000
      b) Extent of Holding                                                       100%                  100%                  100%                  100%                    100%
3     Net aggregate amount of Profit/ (Losses) of the
      Subsidiary, so far as they concern members of IDFC
      Securities Limited
      i.   For the Financial Year of the Subsidiary
      a) Dealt with in the accounts of the Holding Company.                         Nil                   Nil                   Nil                   Nil                     Nil
      b) Not dealt with in the accounts of the Holding                   281,187,231                776,662        (110,802,874)            (1,153,369)                       Nil
      Company.
      ii. For the previous financial years of the Subsidiary
      since it became the Holding Company’s Subsidiary.
      a) Dealt with in the accounts of the Holding Company.                         Nil                   Nil                   Nil                   Nil                     Nil
      b) Not dealt with in the accounts of the Holding                   145,444,160                729,645        (110,016,386)                      Nil                     Nil
      Company.




                                                                       FOR AND ON BEHALF OF THE BOARD OF DIRECTORS



                                                                       RAJIV B. LALL                  TAPASIJE MISHRA
                                                                       Director                       Director

Mumbai
April 21, 2010




                                                      I D F C S E C U R I T I E S L I M I T E D ( F O R M E R LY , I D F C - S S K I S E C U R I T I E S L I M I T E D )      93
     IDFC capital
     limited*

     B O A R D O F D I R E CTO R S
     ■   Dr. Rajiv B. Lall
     ■   Mr. Vikram Limaye
     ■   Mr. L. K. Narayan
     ■   Mr. Naishadh Paleja
     ■   Mr. Pathik Gandotra
     ■   Mr. Mahehdra N. Shah

     A U D I TO R S
     ■   Deloitte Haskins & Sells
         Chartered Accountants

     P R I N C I PA L B A N K E R S
     ■   HDFC Bank Limited

     R E G I ST E R E D O F F I C E
     Naman Chambers, C-32, G-Block,
     Bandra-Kurla Complex, Bandra (East),
     Mumbai 400 051.
     TEL +91 22 66222600
     FAX +91 22 66222501




     * Formerly known as IDFC - SSKI Limited

94    I D F C A N N U A L R E P O R T 09 –10
  D I R E CT O R S ’ R E P O R T


TO THE MEMBERS                                                                During the year, IDFC Capital Limited has further floated two wholly
Your directors have pleasure in presenting the Fifteenth Annual               owned subsidiary companies namely, IDFC General Partners Limited
Report together with the audited accounts for the year ended                  and IDFC Fund of Funds Limited.
March 31, 2010.                                                               As required under the provisions of section 212 of the Companies
FINANCIAL RESULTS                                                             Act, 1956, a statement of holding company’s interest in the subsidiary
                                                                              companies is attached to this report.
                                                                   RUPEES

                                    YEAR ENDED           YEAR ENDED           SHAREHOLDERS UPDATE
                                  MARCH 31, 2010       MARCH 31, 2009         The Company had shifted its Registered Office from 803/804,
Gross Revenue                           847,838,496          464,060,849      Tulsiani Chambers, Nariman Point, Mumbai 400 021 to Naman
Operating Expenses                      405,855,482          258,857,291      Chambers, C-32, G- Block, Bandra- Kurla Complex, Bandra (East),
(including Employee Costs)                                                    Mumbai 400 051 with effect from December 25, 2009.
Profit before Depreciation,             441,983,014          205,203,558      During the financial year, the Company had changed its name from
Interest and Tax                                                              IDFC – SSKI Limited to IDFC Capital Limited by passing special
Depreciation/Amortisation                 1,962,346            3,606,992      resolution at the Extraordinary General Meeting held on February
Net Profit before Tax                   440,020,668          201,596,566      16, 2010 and the change of name was effective after obtaining
Provision for Taxation                                                        fresh certificate of incorporation consequent to the name change
Current Tax                             144,700,000           70,000,000      from Registrar of Companies with effect from March 12, 2010. The
Deferred Tax                             14,750,000          (15,100,000)     Company is wholly-owned subsidiary of Infrastructure Development
Fringe Benefit Tax                                 –             920,000      Finance Company Limited (IDFC), the name change was done to reflect
Short provision for Income Tax             (616,563)             332,406      parentage of IDFC. The word "Capital" is being used in the name to
 Profit/ (Loss) after tax               281,187,231          145,444,160      indicate the important business activity of the Company.
FY2010: OVERVIEW                                                              DIVIDEND
FY 2010 fee based revenues increased 65% year on year (aggregating            The Directors do not recommend any dividend for the year ended
to Rs. 85 crore) on the back of a strong rebound across equity capital        March 31, 2010.
markets. The pace of corporate fund raising across debt and equity
                                                                              DIRECTORS
was hectic as the liquidity environment improved.
                                                                              Appointment of Mr. L K Narayan as a Director was approved at the
The firm increased its market shares in each of its products. We              Annual General Meeting held on July 13, 2009.
dominated bulge bracket investment banks and finished the year as
                                                                              Dr. Rajiv Lall and Mr. Vikram Limaye are retiring by rotation and being
the 2nd largest Investment Bank by number of deals (16) and the 3rd
                                                                              eligible, offer themselves for re-appointment at the ensuing Annual
largest Investment Bank by equity capital raised (Rs. 15,067 crore)
                                                                              General Meeting.
(Prime Database) for the private sector. In Debt syndication we raised
over Rs 8,600 crore in 7 transactions and were the 4th largest Lead           AUDIT COMMITTEE
Arranger of Debt in India for 2009 (Bloomberg).                               The Audit Committee was re-constituted during the year and the same
                                                                              consists of Mr. Vikram Limaye, Chairman, Mr. L K Narayan and
OUTLOOK
                                                                              Mr. Mahendra Shah.
The competitive intensity in our industry continues to rise as a number
of well capitalized investment banks enter the domestic market. Fees          The Audit Committee met four times during the year under review.
and margins will be under pressure. Manpower costs have been rising
                                                                              AUDITORS
and competition for talent is intense. The environment for fund raising
                                                                              M/s. Deloitte Haskins & Sells, Chartered Accountants, Mumbai will
is expected to be volatile in FY2011 and determined by macro trends
                                                                              retire as Auditors of the Company at the ensuing Annual General
across global equities.
                                                                              meeting. Your Directors propose their re-appointment as Auditors of
Focus in the current year will be to expand the product portfolio and         the Company for the financial year ending March 31, 2011.
leverage the broader IDFC platform to improve our product offering
                                                                              As required under the provisions of Section 224(1B) of the Companies
towards our clients. Knowledge leadership and improved client
                                                                              Act, 1956 the Company has obtained a written certificate from the
servicing will be critical for ensuring retaining of our market share in
                                                                              Auditors proposed to be re-appointed to the effect that their re-
FY2011.
                                                                              appointment if made will be in conformity with the limits specified in
SUBSIDIARY COMPANIES                                                          the said section.
IDFC Capital Limited has wholly owned subsidiary company - IDFC               The shareholders are requested to re-appoint the auditors and
Capital (Singapore) Pte. Ltd.                                                 authorise the Board to fix their remuneration for the year 2010-11.




                                                                     I D F C C A P I T A L L I M I T E D ( F O R M E R LY , I D F C - S S K I L I M I T E D )   95
FOREIGN EXCHANGE                                                             ¬ they have taken proper and sufficient care for the maintenance of
The particulars regarding foreign exchange earnings and expenditure          adequate accounting records in accordance with the provisions of the
are furnished at Item No.6 in the Notes to the Accounts.                     Companies Act, 1956, for safeguarding the assets of the Company and
                                                                             detecting fraud and other irregularities; and
PERSONNEL AND OTHER MATTERS
As required by the provisions of Section 217 (2A) of the Companies
                                                                             ¬   they have prepared annual accounts on a going concern basis.
Act, 1956, read with the Companies (Particulars of Employees) Rules,         ACKNOWLEDGEMENTS
1975, as amended, names and other particulars of employees are set           The Directors wishes to thank the clients, Banks, Securities Exchange
out in the annexure to the Directors’ Report.                                Board of India and other regulatory and statutory authorities for
Since the Company does not own any manufacturing facility, the               their continued support to your Company. The Directors also express
disclosure of information on other matters required to be disclosed          their gratitude for the unstinted support and guidance received
in terms of Section 217(1)(e) of the Companies Act, 1956 read with           from IDFC, the parent organisation, and also other group companies.
the Companies (Disclosure of Particulars in the report of Board of           The Directors also places on record its appreciation for the sincere
Directors) Rules, 1988, are not applicable and hence not given.              efforts of the staff.

DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors confirm that:
¬ the applicable accounting standards have been followed in the
                                                                             FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
preparation of the annual accounts and that there are no material
departures;
¬ they have selected such accounting policies and applied them               VIKRAM LIMAYE            NAISHADH PALEJA
consistently and made judgments and estimates that are reasonable            Director                 Director
and prudent, so as to give a true and fair view of the state of affairs of
the Company as at March 31, 2010 and the profit of the Company for           Mumbai
the year ended on that date;                                                 April 21, 2010




    96   I D F C A N N U A L R E P O R T 09 –10
  AU D I TO RS ’ R E PO RT


TO THE MEMBERS OF IDFC CAPITAL LIMITED                                     (d) in our opinion, the Balance Sheet, the Profit and Loss Account
1. We have audited the attached Balance Sheet of IDFC CAPITAL                  and the Cash Flow Statement dealt with by this report are in
LIMITED (formerly, IDFC – SSKI Limited) (“the Company”) as at March            compliance with the Accounting Standards referred to in Section
31, 2010, the Profit and Loss Account and the Cash Flow Statement              211(3C) of the Companies Act, 1956;
of the Company for the year ended on that date, both annexed               (e) in our opinion and to the best of our information and according
thereto. These financial statements are the responsibility of the              to the explanations given to us, the said accounts give the
Company’s Management. Our responsibility is to express an opinion on           information required by the Companies Act, 1956 in the manner
these financial statements based on our audit.                                 so required and give a true and fair view in conformity with the
2. We conducted our audit in accordance with the auditing standards            accounting principles generally accepted in India:
generally accepted in India. Those Standards require that we plan                (i)   in the case of the Balance Sheet, of the state of affairs of
and perform the audit to obtain reasonable assurance about whether                     the Company as at March 31, 2010;
the financial statements are free of material misstatements. An
                                                                                 (ii) in the case of the Profit and Loss Account, of the profit of
audit includes examining, on a test basis, evidence supporting the
                                                                                      the Company for the year ended on that date and
amounts and the disclosures in the financial statements. An audit also
includes assessing the accounting principles used and the significant            (iii) in the case of the Cash Flow Statement, of the cash flows of
estimates made by the Management, as well as evaluating the overall                    the Company for the year ended on that date.
financial statement presentation. We believe that our audit provides a     5. On the basis of the written representations received from the
reasonable basis for our opinion.                                          Directors as on 31st March, 2010 taken on record by the Board of
3. As required by the Companies (Auditor’s Report) Order, 2003             Directors, none of the Directors is disqualified as on 31st March,
(CARO) issued by the Central Government in terms of Section 227(4A)        2010 from being appointed as a director in terms of Section 274(1)(g)
of the Companies Act, 1956, we enclose in the Annexure a statement         of the Companies Act, 1956.
on the matters specified in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in
paragraph 3 above, we report as follows:
                                                                           FOR DELOITTE HASKINS & SELLS
(a) we have obtained all the information and explanations which
                                                                           Chartered Accountants
    to the best of our knowledge and belief were necessary for the
                                                                           (Registration No. 117366W)
    purposes of our audit;
(b) in our opinion, proper books of account as required by law             NALIN M. SHAH
    have been kept by the Company so far as it appears from our            Partner
    examination of those books;                                            Membership No. 15860
(c)   the Balance Sheet, the Profit and Loss Account and the Cash
      Flow Statement dealt with by this report are in agreement with       Mumbai
      the books of account;                                                April 21, 2010




                                                                  I D F C C A P I T A L L I M I T E D ( F O R M E R LY , I D F C - S S K I L I M I T E D )   97
      ANNEXURE                                                                                                                     TO THE AUDITOR’S REPORT




(Referred to in paragraph 3 of our report of even date)                                (vii) According to the information and explanations given to us in
(i) Having regard to the nature of the Company’s business/activities/                  respect of statutory dues:
result and transactions, etc., clauses (ii), (vi), (viii), (x), (xi), (xii), (xiii),   (a) The Company has generally been regular in depositing undisputed
(xiv), (xv), (xvi), (xvii), (xviii), (xix) and (xx) of CARO are not applicable.            dues, including Provident Fund, Income-tax, Service Tax, Cess
(ii) In respect of its fixed assets:                                                       and other material statutory dues applicable to it with the
                                                                                           appropriate authorities.
(a) The Company has maintained proper records showing full
    particulars, including quantitative details and situation of the                   (b) There were no undisputed amounts payable in respect of Income-
    fixed assets.                                                                          tax, Service tax and other material statutory dues in arrears as
                                                                                           at 31st March, 2010 for a period of more than six months from
(b) The fixed assets were physically verified during the year by
                                                                                           the date they became payable.
    the Management in accordance with a regular programme
    of verification which, in our opinion, provides for physical                       (c)   Details of dues of Income-tax which have not been deposited as
    verification of all the fixed assets at reasonable intervals.                            on 31st March, 2010 on account of disputes are given below:
    According to the information and explanation given to us, no                        STATUTE         NATURE       FORUM         PERIOD TO        AMOUNT
    material discrepancies were noticed on such verification.                                           OF DUES      WHERE         WHICH THE             IN-
                                                                                                                     DISPUTE IS    AMOUNT            VOLVED
(c)   The fixed assets disposed off during the year, in our opinion,                                                 PENDING       RELATES         (RUPEES)
      do not constitute a substantial part of the fixed assets of the
                                                                                        Income Tax      Income Tax   Income Tax    A.Y. 2002-03       188,316
      Company and such disposal has, in our opinion, not affected the
                                                                                        Act, 1961                    Appellate
      going concern status of the Company.
                                                                                                                     Tribunal
(iii) The Company has neither granted nor taken any loans, secured
or unsecured, to/from companies, firms or other parties listed in the                  (viii) To the best of our knowledge and according to the information
Register maintained under Section 301 of the Companies Act, 1956.                      and explanations given to us, no fraud by or on the Company has been
                                                                                       noticed or reported during the year.
(iv) In our opinion and according to the information and explanations
given to us, there is an adequate internal control system
commensurate with the size of the Company and the nature of its
business with regard to purchases of fixed assets and the sale of
services. During the course of our audit, we have not observed any
                                                                                       FOR DELOITTE HASKINS & SELLS
major weakness in such internal control system.
                                                                                       Chartered Accountants
(v) To the best of our knowledge and belief and according to the
                                                                                       (Registration No. 117366W)
information and explanations given to us, there were no contracts or
arrangements that needed to be entered in the Register maintained                      NALIN M. SHAH
under Section 301 of the Companies Act, 1956.                                          Partner
(vi) In our opinion, the internal audit functions carried out during                   Membership No. 15860
the year by a firm of Chartered Accountants appointed by the
Management have been commensurate with the size of the Company                         Mumbai
and the nature of its business.                                                        April 21, 2010




 98      I D F C A N N U A L R E P O R T 09 –10
   BALANCE SHEET                                                                                                                       AS AT MARCH 31, 2010


                                                                                       RUPEES                            RUPEES                               RUPEES

                                                   SCHEDULE                                         AS AT MARCH 31, 2010              AS AT MARCH 31, 2009
SOURCES OF FUNDS
Shareholders’ Funds
  Capital                                                     1                                                     60,352,200                        60,352,200
  Reserves and Surplus                                        2                                                    777,321,619                      496,134,388
                                                                                                                   837,673,819                      556,486,588
APPLICATION OF FUNDS
Fixed Assets                                                  3
  Gross Block                                                                      9,473,959                                                          13,796,060
  Less : Depreciation and Amortisation                                             6,000,733                                                           9,211,334
                                                                                                                     3,473,226                         4,584,726
Investments                                                   4                                                    587,797,242                      284,541,668
Deferred Tax Asset (See Schedule 14 Note 9)                                                                          3,750,000                        18,500,000
Current Assets, Loans and Advances
  Sundry Debtors                                              5                 202,913,006                                                           41,188,184
  Cash and Bank Balances                                      6                 325,959,039                                                         307,803,319
  Loans and Advances                                          7                   10,812,449                                                          40,734,805
                                                                                                                   539,684,494                      389,726,308
Less : Current Liabilities and Provisions
Current Liabilities                                           8                 289,277,128                                                         139,043,228
Provisions                                                    9                    7,754,015                                                           1,822,886
                                                                                                                   297,031,143                      140,866,114
Net Current Assets                                                                                                 242,653,351                      248,860,194
                                                                                                                   837,673,819                      556,486,588
Notes to the Accounts                                         14
Schedules 1 to 14 form an integral part of the Accounts




IN TERMS OF OUR REPORT ATTACHED
FOR DELOITTEE HASKINS & SELLS                                 FOR AND ON BEHALF OF THE BOARD
Chartered Accountants



NALIN M . S H A H                                             VIKRAM LIMAYE                             NAISHADH PALEJA
Partner                                                       Director                                  Director


                                                              NARENDRA GANGAN
Mumbai | April 21, 2010                                       Company Secretary

                                                                   I D F C C A P I T A L L I M I T E D ( F O R M E R LY , I D F C - S S K I L I M I T E D )      99
   PROFIT AND LOSS ACCOUNT                                                                                      FOR THE YEAR ENDED MARCH 31, 2010



                                                                                           RUPEES                   RUPEES                 RUPEES

                                                                                                     APRIL 1, 2009 TO            APRIL 1, 2008 TO
                                                                  SCHEDULE                           MARCH 31, 2010              MARCH 31, 2009
INCOME
Investment Banking Fees (See Schedule 14 Note 4)                                                               813,957,873            427,008,350
Other Income                                                                 10                                 33,880,623             37,052,499
                                                                                                               847,838,496            464,060,849
EXPENDITURE
Staff Expenses                                                               11       351,201,800                                     190,177,424
Establishment Expenses                                                       12        16,242,202                                      19,705,208
Other Expenses                                                               13        38,064,111                                      31,627,673
Provision for Doubtful Debts                                                             347,369                                       17,346,986
Depreciation and Amortisation                                                           1,962,346                                       3,606,992
                                                                                                               407,817,828            262,464,283
PROFIT BEFORE TAXATION                                                                                         440,020,668            201,596,566
Less : Provision for Taxation
      Current Tax                                                                     144,700,000                                      70,000,000
      Add/(Less): Deferred Tax (See Schedule 14 Note 9)                                14,750,000                                     (15,100,000)
      Add: Fringe Benefit Tax                                                                  –                                          920,000
      Add/(Less): Short / (Excess) provision for Income Tax                             (616,563)                                         332,406
                                                                                                               158,833,437             56,152,406
PROFIT AFTER TAXATION                                                                                          281,187,231            145,444,160
Add : Balance as per last Balance Sheet                                                                        395,034,388            249,590,228
AVAILABLE FOR APPROPRIATION                                                                                    676,221,619            395,034,388
APPROPRIATIONS:                                                                                                         –                       –
                                                                                                               676,221,619            395,034,388
Earnings per share (Face Value Rs. 10) (See Schedule 14 Note 8)
  Basic and Diluted                                                                                                  46.59                  24.10
Notes to the Accounts                                                        14
Schedules 1 to 14 form an integral part of the Accounts




IN TERMS OF OUR REPORT ATTACHED
FOR DELOITTEE HASKINS & SELLS                                     FOR AND ON BEHALF OF THE BOARD
Chartered Accountants



NALIN M . S H A H                                                 VIKRAM LIMAYE                     NAISHADH PALEJA
Partner                                                           Director                          Director


                                                                  NARENDRA GANGAN
Mumbai | April 21, 2010                                           Company Secretary

100       I D F C A N N U A L R E P O R T 09 –10
   C A S H F L OW ST AT E M E N T                                                                                       FOR THE YEAR ENDED MARCH 31, 2010




                                                                                                                             RUPEES                               RUPEES

                                                                                                                CURRENT YEAR                     PREVIOUS YEAR
CASH FLOW FROM OPERATING ACTIVITIES:
PROFIT BEFORE TAX                                                          A                                           440,020,668                      201,596,566
Adjustments for
Depreciation and Amortisation                                                                                            1,962,346                         3,606,992
Interest Income                                                                                                        (28,397,383)                     (28,318,774)
Provision for Gratuity                                                                                                   1,325,414                           428,921
Dividend Income                                                                                                         (5,483,240)                       (8,347,143)
Loss on Sale /Discarding of Fixed Assets                                                                                 1,197,363                                 5,369
                                                                           B                                           (29,395,500)                     (32,624,635)
OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES                            C=A+B                                       410,625,168                      168,971,931
Change in :
 Sundry Debtors                                                                                                      (161,724,822)                        63,051,943
 Loans and Advances                                                                                                      7,522,352                        (8,346,004)
 Fixed Deposit with Scheduled Banks under Lien                                                                           8,466,162                           791,237
 Current Liabilties                                                                                                    150,233,900                      (90,571,384)
                                                                           D                                             4,497,592                      (35,074,208)
Cash generated from Operations                                             E=C+D                                       415,122,760                      133,897,723
 Taxes Paid                                                                                                          (117,077,718)                      (96,908,748)
NET CASH FROM OPERATING ACTIVITIES                                         F                                           298,045,042                        36,988,975
CASH FLOW FROM INVESTING ACTIVITIES
 Purchase of Fixed assets                                                                                               (2,048,207)                         (895,360)
 Proceeds from Sale of Fixed Assets                                                                                                 -                             44,818
 Purchase of Investments - subsidiary companies                                                                      (406,772,336)                     (263,956,608)
 Proceeeds from Sale of Investments - others                                                                           103,516,760                      152,787,061
 Interest received                                                                                                      28,397,383                        28,318,774
 Dividend received                                                                                                       5,483,240                         8,347,143
NET CASH USED IN INVESTING ACTIVITIES                                      G                                         (271,423,160)                      (75,354,172)
NET (DECREASE) / INCREASE IN CASH EQUIVALENTS                              I=F+G                                        26,621,882                      (38,365,197)
INCREASE /(DECREASE) IN CASH AND EQUIVALENTS
Cash and Cash Equivalents as at the beginning of the year                                                                7,803,319                        46,168,516
(see Note below)
Cash and Cash Equivalents as at the end of the year (see Note below)                                                    34,425,201                         7,803,319
                                                                                                                        26,621,882                      (38,365,197)
Note :
Cash and Cash Equivalents as per Schedule 6                                                                            325,959,039                      307,803,319
Less: Fixed Deposits Under Lien                                                                                        291,533,838                      300,000,000
Cash and Cash Equivalents as above                                                                                      34,425,201                         7,803,319




IN TERMS OF OUR REPORT ATTACHED
FOR DELOITTEE HASKINS & SELLS                                   FOR AND ON BEHALF OF THE BOARD
Chartered Accountants



NALIN M . S H A H                                               VIKRAM LIMAYE                               NAISHADH PALEJA
Partner                                                         Director                                    Director


                                                                NARENDRA GANGAN
Mumbai | April 21, 2010                                         Company Secretary

                                                                       I D F C C A P I T A L L I M I T E D ( F O R M E R LY , I D F C - S S K I L I M I T E D )     101
  SCHEDULES                                                                                                                                                         ANNEXED TO AND FORMING PART OF THE ACCOUNTS




SCHEDULE 1 Capital                                                                                                                                                                                RUPEES                                                        RUPEES

                                                                                                                                                                     AS AT MARCH 31, 2010                                     AS AT MARCH 31, 2009
AUTHORISED:
7,000,000 equity shares of Rs.10 each                                                                                                                                                  70,000,000                                                          70,000,000
                                                                                                                                                                                       70,000,000                                                          70,000,000
ISSUED, SUBSCRIBED AND PAID-UP:
6,035,220 equity shares of Rs.10 each, fully paid-up                                                                                                                                   60,352,200                                                          60,352,200
[All of the above Equity Shares are held by the holding company and its nominees IDFC Securities
Limited (Formerly, IDFC - SSKI Securities Ltd.) The Utimate Holding Company is Infrastructure
Development Finance Company Limited]
                                                                                                                                                                                       60,352,200                                                          60,352,200




SCHEDULE 2 Reserves and Surplus                                                                                                                                                                   RUPEES                                                        RUPEES

                                                                                                                                                                    AS AT MARCH 31, 2010                                      AS AT MARCH 31, 2009
Securities Premium Account                                                                                                                                                           101,100,000                                                         101,100,000
Profit and Loss Account                                                                                                                                                              676,221,619                                                         395,034,388
                                                                                                                                                                                     777,321,619                                                         496,134,388




SCHEDULE 3 Fixed Assets                                                                                                                                                                                                                                         RUPEES

DESCRIPTION                                               GROSS BLOCK                                                       DEPRECIATION AND AMORTISATION                                                                               NET BLOCK
                                        April 1, 2009




                                                                                                                                    April 1, 2009



                                                                                                                                                       Charge for
                                                                                                      March 31,




                                                                                                                                                                                                           March 31,




                                                                                                                                                                                                                                        March 31,




                                                                                                                                                                                                                                                                    March 31,
                                                               Additions




                                                                                  Deletions




                                                                                                                                                                                      Deletions
                                                                                                                                                                    the year
                                                                                                                  2010




                                                                                                                                                                                                                       2010




                                                                                                                                                                                                                                                    2010




                                                                                                                                                                                                                                                                                2009
                                As at




                                                                                              As at




                                                                                                                            As at




                                                                                                                                                                                                   As at




                                                                                                                                                                                                                                As at




                                                                                                                                                                                                                                                            As at
TANGIBLE
  Furniture & Fixtures      5,321,621                             –        5,321,621                               –     4,156,245                   406,012                   4,562,257                                –                            –      1,165,376
  Office Equipments         3,975,435                    214,730            961,337           3,228,828                  2,304,766                   458,994                    531,416           2,232,344                      996,484                    1,670,669
  Computer Hardware         4,404,728                   1,215,822            87,350           5,533,200                  2,721,911                   901,523                     79,274           3,544,160                    1,989,040                    1,682,817
INTANGIBLE
  Computer Software            94,276                    617,655                     –         711,931                     28,412                    195,817                             –          224,229                      487,702                       65,864
Total                     13,796,060                    2,048,207          6,370,308          9,473,959                  9,211,334                  1,962,346                  5,172,947          6,000,733                    3,473,226                    4,584,726
Previous Year             12,976,960                     895,360             76,260 13,796,060                           5,630,415                  3,606,992                    26,073           9,211,334                    4,584,726




102     I D F C A N N U A L R E P O R T 09 –10
SCHEDULE 4 Investments (Unquoted)                                                                                              RUPEES                               RUPEES

                                                                                                          AS AT MARCH 31, 2010              AS AT MARCH 31, 2009
I.     LONG TERM
       EQUITY SHARES (FULLY PAID)
                                                                      NUMBER OF                FACE
                                                                        SHARES                VALUE
       SUBSIDIARIES (TRADE)
       IDFC Capital (Singapore) Pte Ltd.                                6,655,000                 SD1                   216,718,695                       114,364,385
       (3,045,000 Shares purchased during the year)
       IDFC Fund of Funds Limited                                     6,505,504.18              USD 1                   303,648,301                                     –
       IDFC General Partners Limited                                       10,000           USD 1.65                         769,725                                    –
       OTHERS
       Epsilon Advisors Private Limited                                 1,250,000              INR 10                     15,135,000                       15,135,000
       SSIPL Retail Private Limited                                       121,840              INR 10                     20,585,060                       20,585,060
                                                                                                                        556,856,781                       150,084,445


II.    CURRENT (NON-TRADE)
       MUTUAL FUNDS UNITS
                                                                      NUMBER OF                FACE
                                                                          UNITS               VALUE
                                                                                               RUPEES

       IDFC Money Manager Fund Treasury Plan C Daily                  4,606,855.15                  10                    46,075,461                      149,592,223
       Dividend [Net Asset Value Rs.46,075,461; (Previous
       Year Rs.149,592,223)]
       TOTAL INVESTMENTS                                                                                                602,932,242                       299,676,668
       Less : Provision for Diminution in value of Investments                                                          (15,135,000)                      (15,135,000)
                                                                                                                        587,797,242                       284,541,668


SCHEDULE 5 Sundry Debtors (Unsecured)                                                          RUPEES                          RUPEES                               RUPEES

                                                                                                          AS AT MARCH 31, 2010              AS AT MARCH 31, 2009
CONSIDERED GOOD
Over six months                                                                                67,277                                                        8,276,301
Others                                                                                  202,845,729                                                        32,911,883
                                                                                                                        202,913,006                        41,188,184
CONSIDERED DOUBTFUL
Over six months                                                                                                            4,789,045                       17,346,986
                                                                                                                        207,702,051                        58,535,170
Less : Provision for Doubtful Debts                                                                                        4,789,045                       17,346,986
                                                                                                                        202,913,006                        41,188,184


SCHEDULE 6 Cash and Bank Balances                                                              RUPEES                          RUPEES                               RUPEES

                                                                                                          AS AT MARCH 31, 2010              AS AT MARCH 31, 2009
Cash                                                                                                                           46,365                           13,932
BALANCE WITH SCHEDULED BANKS
- in Current Accounts                                                                     34,378,836                                                         7,789,387
- in Deposit Accounts (See Schedule 14 Note 3)                                          291,533,838                                                       300,000,000
                                                                                                                        325,912,674                       307,789,387
                                                                                                                        325,959,039                       307,803,319



SCHEDULE 7 Loans and Advances (Unsecured considered good)                                                                      RUPEES                               RUPEES

                                                                                                          AS AT MARCH 31, 2010              AS AT MARCH 31, 2009
Interest accrued on Deposits                                                                                               7,178,496                        12,461,354
Advance payment of Income Tax (Net of provision)                                                                                     –                      22,400,004
Advances recoverable in cash or in kind or for value to be received                                                        3,382,953                         1,873,447
Other Deposits                                                                                                               251,000                         4,000,000
                                                                                                                          10,812,449                        40,734,805


                                                                         I D F C C A P I T A L L I M I T E D ( F O R M E R LY , I D F C - S S K I L I M I T E D )     103
SCHEDULE 8 Current Liabilities                                                                                RUPEES                  RUPEES

                                                                                                AS AT MARCH 31, 2010    AS AT MARCH 31, 2009
Sundry Creditors - Other than Micro and Small Enterprises (See Schedule 14 Note 12)                      252,713,173             128,212,431
Other Liabilities                                                                                          36,563,955              10,830,797
                                                                                                         289,277,128             139,043,228


SCHEDULE 9 Provisions                                                                                         RUPEES                  RUPEES

                                                                                                AS AT MARCH 31, 2010    AS AT MARCH 31, 2009
Provision for Income Tax (Net of Advance Tax)                                                               4,605,715                      –
Provision for Employee Benefits (See Schedule 14 Note 5)                                                    3,148,300               1,822,886
                                                                                                            7,754,015               1,822,886


SCHEDULE 10 Other Income                                                                                      RUPEES                  RUPEES

                                                                                                    APRIL 1, 2009 TO        APRIL 1, 2008 TO
                                                                                                    MARCH 31, 2010          MARCH 31, 2009
Dividend On Current Investments (Non-Trade)                                                                 5,483,240               8,347,143
Gain On Foreign Exchange Fluctuation (Net)                                                                         –                  11,768
Miscellaneous Income                                                                                               –                 374,814
Interest on Bank Deposits [Tax Deducted at source Rs. 32,02,620                                            28,397,383              28,318,774
(Previous Year Rs. 6,418,070)]
                                                                                                           33,880,623              37,052,499


SCHEDULE 11 Staff Expenses                                                                                    RUPEES                  RUPEES

                                                                                                    APRIL 1, 2009 TO        APRIL 1, 2008 TO
                                                                                                    MARCH 31, 2010          MARCH 31, 2009
Salaries, Wages and Bonus                                                                                340,422,024             181,911,635
Contribution to Provident and Other Funds (See Schedule 14 Note 5)                                          9,448,173               7,126,489
[Including Provision for Gratuity Rs.2,180,724; (Previous Year Rs.1,333,821)]
Staff Welfare Expenses                                                                                      1,331,603               1,139,300
                                                                                                         351,201,800             190,177,424


SCHEDULE 12 Establishment Expenses                                                     RUPEES                 RUPEES                  RUPEES

                                                                                                    APRIL 1, 2009 TO        APRIL 1, 2008 TO
                                                                                                    MARCH 31, 2010          MARCH 31, 2009
Rent                                                                                                       13,648,800              17,978,400
Rates & Taxes                                                                                                353,870                    2,432
Electricity                                                                                                 1,108,701               1,024,767
Repairs and Maintenance
  Building                                                                              3,365                                         39,888
  Equipments                                                                          799,384                                        623,179
  Others                                                                              249,412               1,052,161                 25,698
Insurance Charges                                                                                             78,670                  10,844
                                                                                                           16,242,202              19,705,208


SCHEDULE 13 Other Expenses                                                                                    RUPEES                  RUPEES

                                                                                                    APRIL 1, 2009 TO        APRIL 1, 2008 TO
                                                                                                    MARCH 31, 2010          MARCH 31, 2009
Travelling and Conveyance                                                                                  17,410,259              13,892,695
Postage, Telephone and Telex                                                                                2,105,443               1,638,880
Advertising and Publicity                                                                                    853,818                 339,339
Professional Fees                                                                                           7,746,798               9,824,954
Loss on Foreign Exchange Fluctuation(Net)                                                                       7,098                       -
Loss on Sale/Discarding of Fixed Assets (Net)                                                               1,197,363                   5,369
Bank Charges                                                                                                  84,458                    2,444
Miscellaneous Expenses                                                                                      5,032,063               2,927,435
Auditors’ Remuneration (See Schedule 14 Note 7)                                                             2,375,000               2,746,269
Bad Debts                                                                                                   1,251,811                250,288
                                                                                                           38,064,111              31,627,673


104    I D F C A N N U A L R E P O R T 09 –10
SCHEDULE 14: Notes Forming Part of the accounts
Background

IDFC Capital Limited (formerly, IDFC – SSKI Limited) is a wholly-owned subsidiary of IDFC Securities Limited (formerly, IDFC - SSKI Securities
Limited). Infrastructure Development Finance Company Limited (“IDFC”) is the ultimate holding Company.
The Company is a Category I Merchant Banker registered with the Securities and Exchange Board of India (SEBI).
1 Significant Accounting Policies

A. Accounting convention
These accounts have been prepared in accordance with historical cost convention, applicable Accounting Standards notified by the Companies
(Accounting Standards) Rules, 2006 and relevant provisions of the Companies Act, 1956.
B. Use of Estimates
The Company adopts the accrual concept in the preparation of the accounts. The preparation of financial statements requires the Management
to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date
of the financial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in
preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.
C. Inflation
Assets and liabilities are recorded at historical cost to the Company. These costs are not adjusted to reflect the changing value in the
purchasing power of money.
D. Revenue recognition
(a) Income from fee-based activities is recognised on the basis of terms of contracts with the clients and when reasonable right of recovery is
established and is accounted net of service tax.
(b) Interest income is recognised on an accrual basis.
(c) Dividend is recognised when the right to receive is established.
E. Fixed assets and Intangible assets
Fixed assets are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated
depreciation. Intangible Assets comprising of system software are stated at cost of acquisition, including any cost attributable for bringing the
asset to its working condition, less accumulated amortisation. Any technology support cost or annual maintenance cost for such software is
charged annually to the Profit and Loss Account.
F. Depreciation
¬   Tangible Assets
Depreciation on Fixed Assets, excluding certain electronic items, is provided on the written down value method, at the rates prescribed by
Schedule XIV of the Companies Act, 1956. Certain electronic items are depreciated over a period of two years on straight line method based on
the Management’s estimate of the useful life of assets. Depreciation on additions during the year is provided on a pro-rata basis. Assets costing
less than Rs. 5,000 each are written off in the year of capitalisation.
¬   Intangible Assets
Computer software is amortised over a period of 3 years by using straight-line method.
The Company has regular programme of evaluating useful life of its assets.
G. Investments
Investments are classified into long-term investments and current investments. Investments, which are intended to be held for more than one
year, are classified as long-term investments and investments, which are intended to be held for less than one year are classified as current
investments. Long-term investments are accounted at cost and any decline in the carrying value other than temporary in nature is provided for.
Current investments are valued at cost or market/fair value, whichever is lower. In case of investments in units of mutual funds, the net asset
value of units has been considered as the market value.
H. Employee benefits –
DEFINED CONTRIBUTION PLANS

¬ The Company’s contribution to Provident Fund is deposited with Regional Provident Fund Commissioner and is charged to the Profit and Loss
Account every year.



                                                                   I D F C C A P I T A L L I M I T E D ( F O R M E R LY , I D F C - S S K I L I M I T E D )   105
¬ The Company participates in the Ultimate Holding Company’s Superannuation policy, for future payments of Superannuation and the Company’s
contribution paid/payable during the year is charged to the Profit and Loss Account every year.

DEFINED BENEFIT PLAN

¬ The net present value of the Company’s obligation towards Gratuity to employees is funded and actuarially determined as at the Balance Sheet
date based on the Projected Unit Credit Method. Actuarial gains and losses are recognised in the Profit and Loss Account.

OTHER BENEFITS

¬   The employees are required to avail of the leave entitlement during the financial year and are not entitled to any encashment.
I. Income - Tax
The accounting treatment for income-tax in respect of the Company’s income is based on the Accounting Standard 22 on ‘Accounting for Taxes
on Income’ as notified by the Companies (Accounting Standards) Rules, 2006. The provision made for income-tax in the accounts comprises
both, the current tax and the deferred tax. The deferred tax assets and liabilities for the year, arising on account of timing differences, are
recognised in the Profit and Loss Account and the cumulative effect thereof is reflected in the Balance Sheet.
Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax
asset is recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which
such deferred tax assets can be realised. In situations where the Company has unabsorbed depreciation or carried forward losses, deferred tax
assets are recognised only if there is virtual certainty supported by convincing evidence that the same can be realised against future taxable
profits.
J. Contingencies
The Company creates a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources
and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible
obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a
present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
K. Foreign Currency Transactions
Foreign currency transactions are accounted at the exchange rates prevailing on the date of the transaction. Foreign currency monetary
items outstanding as at the Balance Sheet date are reported using the closing rate. Gains and losses resulting from the settlement of such
transactions and translation of monetary assets and liabilities denominated in foreign currencies are recognised in the Profit and Loss Account.
2 Contingent liabilities not provided for in respect of :
        PARTICULARS                                                                                     CURRENT YEAR                 PREVIOUS YEAR
                                                                                                                  RUPEES                     RUPEES

(a)     Claims not acknowledged as debts in respect of :
        Income-tax demands disputed by the Company (net of amounts provided). The matters in                     188,316                   9,167,008
        dispute are under appeal. The demands have been paid/adjusted and will be received as
        refund if the matters are decided in favour of the Company.

 3 Balances in Banks in Fixed Deposits include Rs. 291,533,838 (Previous Year Rs. 300,000,000) which are pledged with HDFC Bank Ltd.
for securing short term overdraft facilities to be availed by the Holding Company, IDFC Securities Limited (formerly, IDFC – SSKI Securities
Limited) for settlement of institutional trades and margin.
4 (a) The Company has an arrangement with the holding company, IDFC Securities Limited (formerly, IDFC – SSKI Securities Limited) to avail
of research, financial advisory and other distribution services on some of the assignment/mandates. In consideration of these services, the
Company shares the success fees received from the clients in the ratio mutually agreed upon. An amount of Rs.254,042,007 (Previous year
Rs. 62,297,486) has been shared during the year in respect of the above services with the Holding Company.
(b) The Company also has an arrangement with the Ultimate Holding Company, Infrastructure Development Finance Company Limited (IDFC
Limited), for its Debt Syndication business on some of the assignments/mandates. In consideration of these services, the Company receives
a share from IDFC Limited in the ratio mutually agreed upon. An amount of Rs.112,439,500 (Previous Year Rs. 91,938,719) has been shared
during the year in respect of the above services.
5 Employee Benefits –
In accordance with the Accounting Standard –AS15 on “Employee Benefits”, notified by the Companies (Accounting Standards) Rules, 2006, the
following disclosures have been made:
(i) The Company has recognised the following amounts in the Profit and Loss Account towards contribution to defined contribution plans which
are included under Contribution to Provident and Other Funds:



106      I D F C A N N U A L R E P O R T 09 –10
                                                                                                             CURRENT YEAR                     PREVIOUS YEAR
                                                                                                                          RUPEES                               RUPEES

Provident Fund                                                                                                        6,704,949                         5,792,668
Superannuation Fund                                                                                                     562,500                                      -

(ii) The details of the Company’s post-retirement benefit plans for gratuity for its employees are given below, which is certified by the actuary
and relied upon by the auditors:
                                                                                                                                                                RUPEES

PARTICULARS                                                                                         AS AT MARCH 31, 2010              AS AT MARCH 31, 2009
CHANGE IN THE BENEFIT OBLIGATIONS:
Liability at the beginning of the year                                                                                3,773,094                         2,303,090
Current Service cost                                                                                                  3,460,520                         1,251,371
Interest Cost                                                                                                           578,689                           293,243
Actuarial Gain                                                                                                        1,709,402                                74,610
Liability at the end of the year                                                                                      6,102,901                         3,773,094
FAIR VALUE OF PLAN ASSETS:
Fair Value of Plan Assets at the beginning of the year                                                                1,950,208                           909,125
Expected Return on Plan Assets                                                                                          237,575                           145,122
Contributions                                                                                                           855,310                           904,900
Actuarial Loss on Plan Assets                                                                                             88,492                                8,939
Fair Value of Plan Assets at the end of the year                                                                      2,954,601                         1,950,208
Total Actuarial Gain to be recognised                                                                                 1,620,910                                65,671
ACTUAL RETURN ON PLAN ASSETS:
Expected Return on Plan Assets                                                                                          237,575                           145,122
Actuarial Loss on Plan Assets                                                                                             88,492                                8,939
Actual Return on Plan Assets                                                                                            149,083                           136,183
AMOUNT RECOGNISED IN THE BALANCE SHEET:
Liability at the end of the year                                                                                      6,102,901                         3,773,094
Fair Value of Plan Assets at the end of the year                                                                      2,954,601                         1,950,208
Amount recognised in the Balance Sheet under “Provision for Employee Benefits”                                        3,148,300                         1,822,886
EXPENSES RECOGNISED IN THE PROFIT AND LOSS ACCOUNT UNDER STAFF EXPENSES
Current Service cost                                                                                                  3,460,520                         1,251,371
Interest Cost                                                                                                           578,689                           293,243
Expected Return on Plan Assets                                                                                          237,575                           145,122
Net Actuarial Gain to be recognised                                                                                   1,620,910                                65,671
Expense recognised in the Profit and Loss Account under staff expenses                                                2,180,724                         1,333,821
RECONCILIATION OF THE LIABILITY RECOGNISED IN THE BALANCE SHEET
Opening Net Liability                                                                                                 1,822,886                         1,393,965
Expense recognised                                                                                                    2,180,724                         1,333,821
Contributions                                                                                                           855,310                           904,900
Amount recognised in the Balance Sheet under “Provision for Employee Benefits”                                        3,148,300                         1,822,886
Expected Employer’s Contribution next year                                                                            5,000,000                         2,039,000
EXPERIENCE ADJUSTMENTS
Defined Benefit Obligation                                                                                            6,102,901                         3,773,094
Plan Assets                                                                                                           2,954,601                         1,950,208
Deficit                                                                                                               3,148,300                         1,822,886
Experience Adjustment on Plan Liabilities                                                                            (2,751,189)                         (162,937)
Experience Adjustment on Plan Assets                                                                                    (88,492)                               (8,939)

INVESTMENT PATTERN                                                                                                             %                                   %
Insurer Managed Fund                                                                                                         100                                  100
PRINCIPAL ASSUMPTIONS
Discount rate                                                                                                                8.10                                   8
Return on Plan Assets                                                                                                           8                                   8
Salary Escalation Rate                                                                                                          8                                   6

As the Gratuity fund is managed by life insurance company details of investments are not available with the Company.
The estimates of future salary increase, considered in the actuarial valuation takes account of inflation, seniority, promotion and other relevant
factors.

                                                                    I D F C C A P I T A L L I M I T E D ( F O R M E R LY , I D F C - S S K I L I M I T E D )      107
6 Expenditure in foreign currencies:
                                                                                                                                       RUPEES


 PARTICULARS                                                                                     CURRENT YEAR              PREVIOUS YEAR
 Travelling Expenses                                                                                      782,990                     93,246
 Total                                                                                                    782,990                     93,246

Earnings in foreign currencies:
                                                                                                                                       RUPEES


 PARTICULARS                                                                                     CURRENT YEAR              PREVIOUS YEAR
 Investment Banking Fees                                                                                         -                 5,000,000
 Total                                                                                                           -                 5,000,000

7 Auditors’ Remuneration:
                                                                                                                                       RUPEES


 PARTICULARS                                                                                     CURRENT YEAR              PREVIOUS YEAR
 Audit Fees                                                                                             1,200,000                  1,200,000
 Tax Audit Fees                                                                                           400,000                    800,000
 Taxation Services                                                                                        200,000                    200,000
 Other Services                                                                                           575,000                    545,000
 Out of Pocket Expenses                                                                                          -                     1,269
 Service tax                                                                                              244,625                    302,359
 Total                                                                                                  2,619,625                  3,048,628
 Less: Service tax set off claimed                                                                        244,625                    302,359
                                                                                                        2,375,000                  2,746,269

 8 In accordance with the Accounting Standard 20 on ‘Earnings Per Share’ as notified by the Companies (Accounting Standards) Rules, 2006,
the Earnings Per Share has been computed as under:
                                                                                                                                       RUPEES


 PARTICULARS                                                                                     CURRENT YEAR              PREVIOUS YEAR
 Net Profit attributable to equity shareholders (A)                                                   281,187,231                145,444,160
 Number of equity shares issued (B)                                                                     6,035,220                  6,035,220
 Basic and Diluted Earnings per share (EPS) [A/B]                                                           46.59                      24.10

9 Deferred Tax:
As per Accounting Standard 22 relating to ‘Accounting for Taxes on Income’ as notified by the Companies (Accounting Standards) Rules, 2006,
the Company has taken debit of Rs. 14,750,000 (Previous Year Credit of Rs. 15,100,000) in the Profit & Loss Account towards deferred tax
liability (net) on account of timing differences. The major components of deferred tax assets arising on account of timing differences are:
                                                                                                                                       RUPEES


 PARTICULARS                                                                                     CURRENT YEAR              PREVIOUS YEAR
 DEFERRED TAX ASSET
 Depreciation                                                                                           1,071,083                    751,834
 Provisions                                                                                             2,678,917                 17,748,166
 Total                                                                                                  3,750,000                 18,500,000
 DEFERRED TAX ASSET                                                                                     3,750,000                 18,500,000

10 Segmental Reporting:
The Company is mainly engaged in Merchant Banking business in India, which is considered as the only reportable segment as per Accounting
Standard –AS 17 “Segment Reporting” as notified by the Companies (Accounting Standards) Rules, 2006.
11 Related party disclosures:
As per the Accounting Standard 18 on ‘Related Party Disclosures’ as notified by the Companies (Accounting Standards) Rules, 2006, the related
parties of the Company are as follows:
I.    ULTIMATE HOLDING COMPANY:

      Infrastructure Development Finance Company Limited
II.   HOLDING COMPANY:

      IDFC Securities Limited (formerly, IDFC – SSKI Securities Limited)

 108     I D F C A N N U A L R E P O R T 09 –10
III. SUBSIDIARY COMPANIES:

    IDFC Capital Singapore Pte. Limited
    IDFC General Partners Limited (with effect from 30th November, 2009)
    IDFC Fund of Funds Limited (with effect from 28th October, 2009)
IV. THERE ARE NO TRANSACTIONS WITH FELLOW SUBSIDIARIES.

    The nature and volume of transactions carried out with the above related parties in the ordinary course of business:

                                                                                                                                                               RUPEES


NAME OF RELATED PARTY AND                                         PARTICULARS                                  CURRENT YEAR                   PREVIOUS YEAR
NATURE OF RELATIONSHIP
(A) HOLDING COMPANY
IDFC Securities Limited (formerly, IDFC – SSKI Securities Limited) Fees Paid                                         254,042,007                       62,297,486
                                                                  Creditors and Others Payable                         25,291,596                                  -
(B) ULTIMATE HOLDING COMPANY
Infrastructure Development Finance Company Limited                Sharing of Fees                                    112,439,500                       91,938,719
                                                                  Other Fees                                                       -                      138,000
                                                                  Debtors and Others                                               -                   14,881,797
                                                                  Receivable

12 There is no interest paid/payable during the year by the Company to suppliers covered under the Micro, Small and Medium Enterprises
Development Act, 2006. The above information takes into account only those suppliers who have responded to the enquires made by the
Company for this purpose.

13 Prior year comparatives:
The prior year comparatives have been regrouped, recasted and reclassified wherever necessary to confirm with current year’s presentation.




                                                              FOR AND ON BEHALF OF THE BOARD




                                                              VIKRAM LIMAYE                              NAISHADH PALEJA
                                                              Director                                   Director


                                                              NARENDRA GANGAN
Mumbai | April 21, 2010                                       Company Secretary

                                                                    I D F C C A P I T A L L I M I T E D ( F O R M E R LY , I D F C - S S K I L I M I T E D )    109
      B A L A N C E S H E E T A B ST R A CT                                                                                    AND COMPANY’S GENERAL BUSINESS PROFILE




I.      REGISTRATION DETAILS

        Registration No.           U    6   7       1   9    0    M        H       1       9       9   5   P   L   C   0   9   2   2   2   1

        State Code                 1    1

        Balance Sheet Date         3    1           0   3         2       0        1       0

II.     CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000)

                                                                              Public Issue                                                                         Right Issue
                                                                              N        I       L                                                                   N   I   L


                                                                              Bonus Issue                                                                   Private Placement

                                                                              N        I       L                                                                   N   I   L

III.    POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000)
                                                                      Total Liabilities                                                                           Total Assets

                                                    1    1    3       4       7        0   5                                                   1   1    3     4    7   0   5
        SOURCES OF FUNDS
                                                                      Paid-up Capital                                                                  Reserves and Surplus

                                                              6       0       3        5       2                                                   7    7     7    3   2   2

                                                                          Secured Loans                                                                      Unsecured Loans

                                                                              N        I       L                                                                   N   I   L

        APPLICATION OF FUNDS
                                                                   Net Fixed Assets                                                                               Investments

                                                                      3       4        7       3                                                   5    8     7    7   9   7

                                                                 Net Current Assets                                                             Miscelleneous Expenditure

                                                         2    4       2       6        5       4                                                                   N   I   L

                                                         Deferred Tax Asset (Net)

                                                                      3       7        5       0

IV.     PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000)
                                                                  Turnover / Income                                                                         Total Expenditure

                                                         8    4       7       8        3       8                                                   4    0     7    8   1   8

                                                                   Profit Before Tax                                                                          Profit After Tax

                                                         4    4       0       0        2       1                                                   2    8     1    1   8   7

                                                        Earnings per Share (in Rs.)                                                                               Dividend %

                                                             4     6           .       5       9                                                                   N   I   L

V.      GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS)

        Item Code No. (ITC Code)             N      I   L

        Product Description                 M       E   R    C     H       A       N       T           B   A   N   K   I   N   G




 110       I D F C A N N U A L R E P O R T 09 –10
    ST AT E M E N T P U R S U A N T T O S E CT I O N 2 1 2                                                                         OF THE COMPANIES ACT, 1956




NAME OF SUBSIDIARY COMPANY                                                  IDFC CAPITAL                        IDFC FUND OF                      IDFC GENERAL
                                                                    (SINGAPORE) PTE. LTD.                      FUNDS LIMITED                  PARTNERS LIMITED
1      Financial year of the Subsidiary Companies ended on                    31st March 2010                   31st March 2010                     31st March 2010
2      Equity Shares of Rs.10 each
            a) Number of Shares                                                     6,655,000                        6,505,504.18                                  10,000
            b) Extent of Holding                                                         100%                                100%                                  100%
3      Net aggregate amount of Profit/ (Losses) of the
       Subsidiary, so far as they concern members of IDFC
       Securities Limited
       i.     For the Financial Year of the Subsidiary
       a) Dealt with in the accounts of the Holding Company.                                Nil                                 Nil                                   Nil
       b) Not dealt with in the accounts of the Holding                         (110,802,874)                          (1,153,369)                                    Nil
       Company.
       ii.    For the previous financial years of the Subsidiary
       since it became the Holding Company’s Subsidiary.
       a) Dealt with in the accounts of the Holding Company.                                Nil                                 Nil                                   Nil
       b) Not dealt with in the accounts of the Holding                         (110,016,386)                                   Nil                                   Nil
       Company.




                                                                   FOR AND ON BEHALF OF THE BOARD




                                                                   VIKRAM LIMAYE               NAISHADH PALEJA
                                                                   Director                    Director

Mumbai | April 21, 2010

                                                                        I D F C C A P I T A L L I M I T E D ( F O R M E R LY , I D F C - S S K I L I M I T E D )     111
      IDFC - SSKI stock
      broking limited

      B O A R D O F D I R E CTO R S
      ■   Mr. Tapasije Mishra
      ■   Mr. Naishadh Paleja
      ■   Mr. Pathik Gandotra
      ■   Mr. Mahehdra N. Shah

      A U D I TO R S
      ■   Deloitte Haskins & Sells
          Chartered Accountants

      P R I N C I PA L B A N K E R S
      ■   HDFC Bank Limited

      R E G I ST E R E D O F F I C E
      Naman Chambers, C-32, G-Block,
      Bandra-Kurla Complex, Bandra (East),
      Mumbai 400 051.
      TEL +91 22 66222600
      FAX +91 22 66222501




112       I D F C A N N U A L R E P O R T 09 –10
  D I R E CT O R S ’ R E P O R T


TO THE MEMBERS                                                           Companies (Disclosure of Particulars in the Report of Board of
Your directors have pleasure in presenting the Eighteenth Annual         Directors) Rules, 1988, are not applicable and hence not given.
Report together with the audited accounts for the year ended March       Since the Company also does not own any manufacturing facility, the
31, 2010.                                                                disclosure of information on other matters required to be disclosed
FINANCIAL RESULTS                                                        in terms of Section 217(1)(e) of the Companies Act, 1956 read with
                                                                         the Companies (Disclosure of Particulars in the Report of Board of
                                                                RUPEES
                                                                         Directors) Rules, 1988, are not applicable and hence not given.
                                  YEAR ENDED          YEAR ENDED
                                MARCH 31, 2010      MARCH 31, 2009       DIRECTORS’ RESPONSIBILITY STATEMENT
Gross Revenue                           1,432,017           1,438,413    The Directors confirm that:
Operating Expenses                        305,355             328,768    ¬ the applicable accounting standards have been followed in
Net Profit before Tax                   1,126,662           1,109,645    preparation of annual accounts and there are no material departures;
Provision for Taxation
                                                                         ¬ they have selected such accounting policies and applied them
Current Tax                               350,000             380,000
                                                                         consistently and made judgments and estimates that are reasonable
Net Profit/(Loss) after tax               776,662             729,645
                                                                         and prudent, so as to give a true and fair view of the state of affairs of
OPERATIONS                                                               the Company as at March 31, 2010 and the profit of the Company for
The Company earned gross revenue of Rs.14.32 Lac. The Company            the year ended on that date;
has earned a Net profit before tax of Rs 11.27 Lac for the financial     ¬ they have taken proper and sufficient care for the maintenance of
year ended March 31, 2010.                                               adequate accounting records in accordance with the provisions of the
                                                                         Companies Act, 1956, for safeguarding the assets of the Company and
DIVIDEND
                                                                         detecting fraud and other irregularities; and
The Directors do not recommend any dividend for the year ended
March 31, 2010.                                                          ¬   they have prepared the annual accounts on a going concern basis.

DIRECTORS                                                                COMPLIANCE CERTIFICATE
Mr. Tapasije Mishra and Mr Mahendra N. Shah are retiring by rotation     Pursuant to the provisions of Section 383A(1) of the Companies Act,
and being eligible, offer themselves for re-appointment at the           1956 a certificate from M/s S. S. Rauthan & Associates, Company
ensuing Annual General Meeting.                                          Secretaries, certifying that the Company has complied with all
                                                                         applicable provisions of the Companies Act, 1956, is attached
The Board recommends their re-appointment as Directors of the
                                                                         herewith.
Company.
                                                                         SHAREHOLDERS UPDATE
AUDITORS
                                                                         The Company had shifted its Registered Office from 803/804,
M/s. Deloitte Haskins & Sells, Chartered Accountants, Mumbai will
                                                                         Tulsiani Chambers, Nariman Point, Mumbai 400 021 to Naman
retire as Auditors of the Company at the ensuing Annual General
                                                                         Chambers, C-32, G- Block, Bandra- Kurla Complex, Bandra (East),
meeting. Your Directors propose their re-appointment as Auditors of
                                                                         Mumbai 400 051 with effect from December 25, 2009.
the Company for the financial year ending March 31, 2011.
As required under the provisions of Section 224(1B) of the               ACKNOWLEDGEMENTS
Companies Act, 1956 the Company has obtained a written certificate       The Directors thank the Company’s Bankers and local Authorities for
from the Auditors proposed to be re-appointed to the effect that         their continued support to the Company.
their re-appointment if made will be in conformity with the limits       The Directors also express their gratitude for the unstinted support
specified in the said section.                                           and guidance received from Infrastructure Development Finance
The shareholders are requested to re-appoint the auditors and            Company Limited and other group companies.
authorise the Board to fix their remuneration for the year 2010-11.
                                                                         FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
FOREIGN EXCHANGE
There was no income or expenditure in foreign currency during the        TAPASIJE MISHRA           MAHENDRA N. SHAH
year under review.                                                       Director                  Director
PERSONNEL AND OTHER MATTERS
Since your Company does not have any employee, the provisions            Mumbai
of Section 217(2A) of the Companies Act, 1956 read with the              April 21, 2010




                                                                                           I D F C - S S K I ST O C K B R O K I N G L I M I T E D   113
  C O M P L I A N C E C E R T I F I C AT E

To The Members of IDFC - SSKI STOCK BROKING LIMITED                        12. The Company has not issued any duplicate certificates during the
MUMBAI.                                                                    financial year.
CIN.                                 AUTHORISED                PAID UP     13. During the financial year;
                                        CAPITAL                CAPITAL
                                                                           a.   There was no allotment/ transfer/ transmission of securities.
U65990MH1992PLC069824              Rs.2,00,00,000/-     Rs.1,50,00,000/-
                                                                           b.   The Company has not deposited any amount in a separate bank
We have examined the registers, records, books and papers of                    account as no dividend was declared.
IDFC – SSKI STOCK BROKING LIMITED (the Company) as required
                                                                           c.   The Company has not posted warrants to any member of the
to be maintained under the Companies Act, 1956, (the Act) and
                                                                                Company as no dividend was declared.
the rules made thereunder and also the provisions contained in the
Memorandum of Association and Articles of Association of the               d.   There was no amounts in unpaid dividend account, application
Company for the financial year ended 31st March, 2010 (financial                money due for refund, matured deposits, matured debentures
year). In our opinion, and to the best of our information and according         and the interest accrued which have remained unclaimed or
to the examinations carried out by us and explanations furnished to us          unpaid for a period of seven years be transferred to Investor
by the Company, its officers and agents, we certify that in respect of          Education and Protection Fund.
the aforesaid financial year:                                              e.   The Company has duly complied with the requirements of Section
1. The Company has kept and maintained all registers as stated in               217 of the Act.
Annexure `A’ to this certificate, as per the provisions of the Act and     14. The Board of Directors of the Company is duly constituted. There
the rules made there under and all entries therein have been duly          was no appointment of additional directors, alternate directors and
recorded.                                                                  directors to fill casual vacancy during the financial year.
2. The Company has duly filed the forms and returns as stated in           15. The Company has not appointed any Managing Director/ Whole
Annexure `B’ to this certificate, with the Registrar of Companies,         Time Director/ Manager during the financial year.
Regional Director, Central Government, Company Law Board or other          16. The Company has not appointed any sole selling agents during the
authorities within the time prescribed under the Act and the rules         financial year.
made there under.
                                                                           17. The Company was not required to obtain any approvals of
3. The Company, being a Public Limited Company has the minimum             the Central Government, Company Law Board, Regional Director,
prescribed paid-up capital.                                                Registrar of Companies and/or such authorities prescribed under the
4. The Board of Directors duly met four times respectively on 27th         various provisions of the Act.
April 2009, 14th July 2009, 14th October 2009 and 21st January             18. The Directors have disclosed their interest in other firms/
2010 in respect of which meetings proper notices were given and the        companies to the Board of Directors pursuant to the provisions of the
proceedings were properly recorded and signed including the circular       Act and the rules made thereunder.
resolutions passed in the Minutes Book maintained for the purpose.
                                                                           19. The Company has not issued any shares, debentures or other
5. The Company was not required to close its Register of Members           securities during the financial year.
and/or Transfer Register during the financial year.
                                                                           20. The Company has not bought back any shares during the financial
6. The Annual General Meeting for the financial year ended on 31st         year.
March 2009 was held on 13th July, 2009 after giving due notice to the
                                                                           21. There was no redemption of preference shares or debentures
members of the Company and the resolutions passed thereat were
                                                                           during the financial year.
duly recorded in Minutes Book maintained for the purpose.
                                                                           22. There were no transactions necessitating the Company to keep
7. Extra Ordinary General Meeting was held on August 12, 2009 for
                                                                           in abeyance the rights to dividend, rights shares and bonus shares
Alteration of Articles.
                                                                           pending registration of transfer of shares.
8. The Company has not advanced any loan to its Directors or
                                                                           23. The Company has not invited/ accepted any deposits including any
persons or firms or companies referred to under Section 295 of the
                                                                           unsecured loans falling within the purview of Section 58A during the
Act.
                                                                           financial year.
9. The Company has not entered into any contracts falling within the
                                                                           24. The Company has not made any borrowings during the financial
purview of Section 297 of the Act.
                                                                           year.
10. During the financial year under review the Company was not
                                                                           25. The Company has not made loans and investments, or given
required to make any entries in the register maintained under Section
                                                                           guarantees or provided securities to other bodies corporate during
301 of the Act.
                                                                           the year.
11. As there were no instances falling within the purview of Section 314
                                                                           26. The Company has not altered the provisions of the Memorandum
of the Act, the Company has not obtained any approvals from the Board
                                                                           of Association with respect to situation of the Company’s registered
of Directors, members or Central Government, as the case may be.
                                                                           office from one state to another during the year under scrutiny.

114    I D F C A N N U A L R E P O R T 09 –10
27. The Company has not altered the provisions of the Memorandum         33. The Company has not deducted any contribution towards
of Association with respect to the objects of the Company during the     Provident Fund during the financial year in terms of Section 418 of
year under review.                                                       the Companies Act, 1956.
28. The Company has not altered the provisions of the Memorandum
of Association with respect to name of the Company during the year
under scrutiny.
29. The Company has not altered the provisions of the Memorandum         FOR S. S. RAUTHAN & ASSOCIATES
of Association with respect to share capital of the company during the   Company Secretaries
year under scrutiny.
30. The Company has altered its Articles of Association during the
                                                                         SURJAN SINGH RAUTHAN
financial year 2009-10.
                                                                         (Proprietor)
31. There was no prosecutions initiated against or show cause notices    C.P. No.3233
received by the Company, during the financial year, for offences under
the Act.
32. The Company has not received any money as security from its          Mumbai
employees during the financial year.                                     April 21, 2010




Annexure – A                                                             4. Form No.23 filed for Alteration of Articles during the financial
                                                                         year.
Registers as maintained by the Company
                                                                         5. Form No. 32 filed for Cessation of Mr. Mahendra N Shah as an
1. Register of members under Section 150 and Index of Members
                                                                         additional Director of the Company u/s 260 of the Companies Act,
under Section 151.
                                                                         1956 at the Annual General Meeting held on 10/07/2008 and Form
2. Register of Transfers.                                                No. 32 filed for Appointment of Mr. Mahendra N Shah as a Director of
                                                                         the Company u/s 257 of the Companies Act, 1956 w.e.f. 10/07/2008
3. Register of particulars of contracts in which directors are
interested under Section 301.                                            6. Form No. 23AA filed for maintaining the Books of Account of
                                                                         Company at a place other than Registered Office of the Company.
4. Register of directors, managing director, manager and secretary
under Section 303.                                                       7. Form No. 18 file for shifting of Registered Office from 803/804
                                                                         Tulsiani Chambers, Nariman point, Mumbai -400 021 to Naman
5. Register of director’s shareholding under Section 307
                                                                         Chambers, C-32, G–Block, Bandra- Kurla Complex, Bandra (East) – 400
Annexure – B                                                             051 w.e.f. 25/12/2009.

Forms and Returns as filed by the Company with Registrar of
Companies, Regional Director, Central Government or other
                                                                         FOR S. S. RAUTHAN & ASSOCIATES
authorities during the financial year ended 31st March 2010.
                                                                         Company Secretaries
1. Form No. 20B alongwith Annual Return filed for the year ended
31/03/2009.                                                              SURJAN SINGH RAUTHAN
                                                                         (Proprietor)
2. Form No. 23AC & 23ACA alongwith Balance Sheet and Profit &
                                                                         C.P. No.3233
Loss Account filed for year ended 31/03/2009.

3. Form No. 66 alongwith Compliance Certificate for the year ended       Mumbai
31/03/2009 filed u/s. 383A (1).                                          April 21, 2010




                                                                                           I D F C - S S K I ST O C K B R O K I N G L I M I T E D   115
      AU D I TO RS ’ R E PO RT


To The Members of IDFC - SSKI Stock Broking Limited                      (d) in our opinion, the Balance Sheet, the Profit and Loss Account
1. We have audited the attached Balance Sheet of IDFC - SSKI                 and the Cash Flow Statement dealt with by this report are in
STOCK BROKING LIMITED (“the Company”) as at March 31, 2010, the              compliance with the Accounting Standards referred to in Section
Profit and Loss Account and the Cash Flow Statement of the Company           211(3C) of the Companies Act, 1956;
for the year ended on that date, both annexed thereto. These financial   (e) in our opinion and to the best of our information and according
statements are the responsibility of the Company’s Management. Our           to the explanations given to us, the said accounts give the
responsibility is to express an opinion on these financial statements        information required by the Companies Act, 1956 in the manner
based on our audit.                                                          so required and give a true and fair view in conformity with the
2. We conducted our audit in accordance with the auditing standards          accounting principles generally accepted in India:
generally accepted in India. Those Standards require that we plan            (i)     in the case of the Balance Sheet, of the state of affairs of
and perform the audit to obtain reasonable assurance about whether                   the Company as at March 31, 2010;
the financial statements are free of material misstatements. An
                                                                             (ii)    in the case of the Profit and Loss Account, of the profit of
audit includes examining, on a test basis, evidence supporting the
                                                                                     the Company for the year ended on that date and
amounts and the disclosures in the financial statements. An audit also
includes assessing the accounting principles used and the significant        (iii)   in the case of the Cash Flow Statement, of the cash flows of
estimates made by the Management, as well as evaluating the overall                  the Company for the year ended on that date.
financial statement presentation. We believe that our audit provides a   5. On the basis of the written representations received from the
reasonable basis for our opinion.                                        Directors as on 31st March, 2010 taken on record by the Board of
3. As required by the Companies (Auditor’s Report) Order, 2003           Directors, none of the Directors is disqualified as on 31st March,
(CARO) issued by the Central Government in terms of Section 227(4A)      2010 from being appointed as a director in terms of Section 274(1)(g)
of the Companies Act, 1956, we enclose in the Annexure a statement       of the Companies Act, 1956.
on the matters specified in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in
paragraph 3 above, we report as follows:                                 FOR DELOITTE HASKINS & SELLS
(a) we have obtained all the information and explanations which          Chartered Accountants
    to the best of our knowledge and belief were necessary for the       (Registration No. 117366W)
    purposes of our audit;
(b) in our opinion, proper books of account as required by law           NALIN M. SHAH
    have been kept by the Company so far as it appears from our          Partner
    examination of those books;                                          Membership No. 15860

(c)    the Balance Sheet, the Profit and Loss Account and the Cash
       Flow Statement dealt with by this report are in agreement with    Mumbai
       the books of account;                                             April 21, 2010




116      I D F C A N N U A L R E P O R T 09 –10
      ANNEXURE                                                                                                                     TO THE AUDITOR’S REPORT



(Referred to in paragraph 3 of our report of even date)                             (v) Based on our examination of the records and evaluation of the
(i) Having regard to the nature of the Company’s business/activities/               related internal controls, the Company has maintained proper records
result and transactions, etc., clauses (i), (ii), (iv), (vi), (v), (viii), (x),     of the transactions and contracts in respect of its dealing in mutual
(xi), (xii), (xiii), (xv), (xvi), (xvii), (xviii), (xix) and (xx) of CARO are not   funds and timely entries have been made therein. The aforesaid
applicable.                                                                         securities have been held by the Company in its own name.

(ii) The Company has neither granted nor taken any loans, secured or                (vi) To the best of our knowledge and according to the information
unsecured, to/from companies, firms or other parties listed in the                  and explanations given to us, no fraud by or on the Company has been
Register maintained under Section 301 of the Companies Act, 1956.                   noticed or reported during the year.

(iii) The Company does not have an internal audit system.
(iv) According to the information and explanations given to us in
respect of statutory dues:
(a) The Company has generally been regular in depositing undisputed                 FOR DELOITTE HASKINS & SELLS
    dues, including Income-tax and other material statutory dues                    Chartered Accountants
    applicable to it with the appropriate authorities.                              (Registration No. 117366W)
(b) There were no undisputed amounts payable in respect of Income-
    tax and other material statutory dues in arrears as at 31st March,              NALIN M. SHAH

    2010 for a period of more than six months from the date they                    Partner

    became payable.                                                                 Membership No. 15860

(c)   There were no disputed Income Tax, Service Tax and any other
      material statutory dues which were not deposited as on 31st                   Mumbai

      March, 2010.                                                                  April 21, 2010




                                                                                                     I D F C - S S K I ST O C K B R O K I N G L I M I T E D   117
   BALANCE SHEET                                                                                                       AS AT MARCH 31, 2010


                                                                                RUPEES                       RUPEES                  RUPEES

                                                   SCHEDULE                               AS AT MARCH 31, 2010        AS AT MARCH 31, 2009
SOURCES OF FUNDS
Shareholders’ Funds
  Capital                                                     1           15,000,000                                             15,000,000
  Reserves and Surplus                                        2               1,780,201                                           1,003,539
                                                                                                      16,780,201                 16,003,539
                                                                                                      16,780,201                 16,003,539
APPLICATION OF FUNDS
Investments                                                   3                                        6,820,300                    906,453
Current Assets, Loans and Advances
  Cash and Bank Balances                                      4           10,076,369                                             14,731,496
  Loans and Advances                                          5                266,584                                              589,675
                                                                                                      10,342,953                 15,321,171
Less : Current Liabilities and Provisions
      Current Liabilities                                     6                126,845                                              116,665
      Provision for Income Tax (Net of Advance Tax)                            256,207                                              107,420
                                                                                                            383,052                 224,085
Net Current Assets                                                                                     9,959,901                 15,097,086
                                                                                                      16,780,201                 16,003,539
Notes to the Accounts                                         10
Schedules 1 to 10 form an integral part of the Accounts




IN TERMS OF OUR REPORT ATTACHED
FOR DELOITTE HASKINS & SELLS                                       FOR AND ON BEHALF OF THE BOARD
Chartered Accountants


NALIN M . S H A H                                                  MAHENDRA N. SHAH              TAPASIJE MISHRA
Partner                                                            Director                      Director


Mumbai | April 21, 2010

118       I D F C A N N U A L R E P O R T 09 –10
   PROFIT AND LOSS ACCOUNT                                                                                FOR THE YEAR ENDED MARCH 31, 2010



                                                                                                             RUPEES                                RUPEES

                                                                                              APRIL 01, 2009 TO                 APRIL 01, 2008 TO
                                                                        SCHEDULE               MARCH 31, 2010                    MARCH 31, 2009
INCOME
Operating Income                                                                   7                      1,432,017                         1,411,270
Other Income                                                                       8                               –                               27,143
                                                                                                          1,432,017                         1,438,413
EXPENDITURE
Establishment & Other Expenses                                                     9                        305,355                           328,768
                                                                                                            305,355                           328,768
PROFIT BEFORE TAXATION                                                                                    1,126,662                         1,109,645
Less : Provision for Taxation
Current Tax                                                                                                 350,000                           380,000
PROFIT AFTER TAXATION                                                                                       776,662                           729,645
Add : Balance as per last Balance Sheet                                                                   1,003,539                           273,894
Balance Carried forward                                                                                   1,780,201                         1,003,539
Earnings per share (Face Value Rs. 10) ( See Schedule 10 Note II.1 )                                            0.52                                 0.49
Basic and Diluted
Notes to the Accounts                                                              10
Schedules 1 to 10 form an integral part of the Accounts




IN TERMS OF OUR REPORT ATTACHED
FOR DELOITTE HASKINS & SELLS                                           FOR AND ON BEHALF OF THE BOARD
Chartered Accountants


NALIN M . S H A H                                                      MAHENDRA N. SHAH           TAPASIJE MISHRA
Partner                                                                Director                   Director


Mumbai | April 21, 2010

                                                                                          I D F C - S S K I ST O C K B R O K I N G L I M I T E D     119
     C A S H F L OW ST AT E M E N T                                                                      FOR THE YEAR ENDED MARCH 31, 2010



                                                                                                              RUPEES                RUPEES

                                                                                             FOR THE YEAR ENDED        FOR THE YEAR ENDED
                                                                                                  MARCH 31, 2010            MARCH 31, 2009
A.     CASH FLOW FROM OPERATING ACTIVITIES
       Profit before Taxation                                                                            1,126,662                1,109,645
       OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES                                                   1,126,662                1,109,645
       Changes in :
          Current Assets, Loans & Advances                                                                 323,091                (428,898)
          Current Liabilities                                                                                 10,180               (28,168)
                                                                                                           333,271                (457,066)
                                                                                                         1,459,933                 652,579
       Direct Taxes paid                                                                                 (201,213)                (315,089)
       NET CASH FROM OPERATING ACTIVITIES                                                                1,258,720                 337,490
B.     CASH FLOW FROM INVESTING ACTIVITIES
       Purchase of Investments                                                                         (5,913,846)                (906,453)
       NET CASH USED IN INVESTING ACTIVITIES                                                           (5,913,846)                (906,453)
       Net Decrease in Cash and Cash Equivalents (A+B)                                                 (4,655,127)                (568,963)
       Cash and Cash Equivalents as at the beginning of the year as per Schedule 4                     14,731,496                15,300,459
       Cash and Cash Equivalents as at the end of the year as per Schedule 4                           10,076,369                14,731,496
                                                                                                       (4,655,127)                (568,963)




IN TERMS OF OUR REPORT ATTACHED
FOR DELOITTE HASKINS & SELLS                                              FOR AND ON BEHALF OF THE BOARD
Chartered Accountants


NALIN M . S H A H                                                         MAHENDRA N. SHAH         TAPASIJE MISHRA
Partner                                                                   Director                 Director


Mumbai | April 21, 2010

120       I D F C A N N U A L R E P O R T 09 –10
     SCHEDULES                                                                            ANNEXED TO AND FORMING PART OF THE ACCOUNTS



SCHEDULE 1 Capital                                                                                          RUPEES                                RUPEES

                                                                                        AS AT MARCH 31, 2010              AS AT MARCH 31, 2009
AUTHORISED:
2,000,000 equity shares of Rs. 10 each                                                                 20,000,000                         20,000,000
                                                                                                       20,000,000                         20,000,000
ISSUED, SUBSCRIBED AND PAID-UP:
1,500,000 equity shares of Rs. 10 each fully paid                                                      15,000,000                         15,000,000
All the above shares are held by IDFC Securities Limited
(Formerly known as IDFC - SSKI Securities Limited).
The ultimate holding company is Infrastructure Development
Finance Company Limited.
                                                                                                       15,000,000                         15,000,000



SCHEDULE 2 Reserves and Surplus                                                                             RUPEES                                RUPEES

                                                                                        AS AT MARCH 31, 2010              AS AT MARCH 31, 2009
Profit and Loss Account                                                                                  1,780,201                         1,003,539
                                                                                                         1,780,201                         1,003,539



SCHEDULE 3 Investments (Non-Trade Unquoted)                                                                 RUPEES                                RUPEES

                                                                                        AS AT MARCH 31, 2010              AS AT MARCH 31, 2009


I.   CURRENT
MUTUAL FUNDS
                                                             NUMBER OF    FACE VALUE
                                                                 UNITS         RUPEES

IDFC Money Manager Fund Treasury Plan A Daily Dividend        677295.67           10                     6,820,300                           906,453
[Net Asset Value Rs.6,820,300 (Previous Year Rs.906,453)]
                                                                                                         6,820,300                           906,453



SCHEDULE 4 Cash and Bank Balances                                             RUPEES                        RUPEES                                RUPEES

                                                                                        AS AT MARCH 31, 2010              AS AT MARCH 31, 2009
- Cash                                                                                                        6,275                                7,335
BALANCE WITH SCHEDULED BANKS
- in Current Account                                                         170,094                                                              24,161
- in Deposit Account                                                        9,900,000                                                     14,700,000
                                                                                                       10,070,094                         14,724,161
                                                                                                       10,076,369                         14,731,496



SCHEDULE 5 Loans and Advances (Unsecured)                                                                   RUPEES                                RUPEES

                                                                                        AS AT MARCH 31, 2010              AS AT MARCH 31, 2009
Interest accrued on Deposits                                                                               266,584                           589,675
                                                                                                           266,584                           589,675




                                                                                         I D F C - S S K I ST O C K B R O K I N G L I M I T E D     121
SCHEDULE 6 Current Liabilities                                            RUPEES                  RUPEES

                                                            AS AT MARCH 31, 2010    AS AT MARCH 31, 2009
Sundry Creditors – Other than Micro and Small Enterprises                110,300                  97,803
  (See Schedule 10 Note II.5)
Other Liabilities                                                         16,545                  18,862
                                                                         126,845                 116,665




SCHEDULE 7 Operating Income                                               RUPEES                  RUPEES

                                                                APRIL 1, 2009 TO        APRIL 1, 2008 TO
                                                                MARCH 31, 2010          MARCH 31, 2009
Interest on Deposits (Tax Deducted at Source Rs.143,883                 1,318,170               1,404,817
  Previous Year Rs.290,214/-)
Dividend On Current Investment ( Non-Trade )                             113,253                   6,453
Profit on Sale of Investments                                                594                        -
                                                                        1,432,017               1,411,270




SCHEDULE 8 Other Income                                                   RUPEES                  RUPEES

                                                                APRIL 1, 2009 TO        APRIL 1, 2008 TO
                                                                MARCH 31, 2010          MARCH 31, 2009
Miscellaneous Income                                                            -                 25,277
Interest on Income Tax Refund                                                   -                  1,866
                                                                                -                 27,143




SCHEDULE 9 Establishment & Other Expenses                                 RUPEES                  RUPEES

                                                                APRIL 1, 2009 TO        APRIL 1, 2008 TO
                                                                MARCH 31, 2010          MARCH 31, 2009
Rates and Taxes                                                            2,000                     140
Professional Fees                                                         18,545                  43,355
Filling Fees                                                               9,000                       –
Miscellaneous Expenses                                                        60                   6,433
Auditors’ Remuneration ( See Schedule 10 Note II.2 )                     275,750                 278,840
                                                                         305,355                 328,768




122    I D F C A N N U A L R E P O R T 09 –10
SCHEDULE: 10 Notes to the Accounts
Background
The Company is a wholly-owned subsidiary of IDFC Securities Limited (Formerly known as IDFC-SSKI Securities Limited). Infrastructure
Development Finance Company Limited (“IDFC”) is the ultimate holding company.
I Significant Accounting Policies
I.1 Accounting convention
The accompanying financial statements are prepared under the historical cost convention on an accrual basis of accounting and comply with
the accounting standards as notified by the Companies (Accounting Standards) Rules, 2006 and in accordance with the generally accepted
accounting principles (‘GAAP’) and the provisions of the Companies Act, 1956 as adopted consistently by the Company.

I.2 Use of Estimates
The Company adopts the accrual concept in the preparation of the accounts. The preparation of financial statements requires the Management
to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date
of the financial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in
preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.

I.3 Investments
Investments are classified into long-term investments and current investments. Investments, which are intended to be held for more than one
year, are classified as long-term investments and investments which are intended to be held for less than one year are classified as current
investments. Long-term investments are accounted at cost and any decline in the carrying value other than temporary in nature is provided for.
Current investments are valued at cost or market/fair value, whichever is lower. In case of investments in units of mutual funds, the net asset
value of units has been considered as the market value.

I.4 Revenue recognition
I.4.1 Interest income is recognised on an accrual basis.
I.4.2 Dividend is recognised when the right to receive is established.

I.5 Taxation
The accounting treatment for income-tax in respect of the Company’s income is based on the Accounting Standard 22 on ‘Accounting for Taxes
on Income’ as notified by the Companies (Accounting Standards) Rules, 2006. The provision made for income-tax in the accounts comprises
both, the current tax and the deferred tax. The deferred tax assets and liabilities for the year, arising on account of timing differences, are
recognised in the Profit and Loss Account and the cumulative effect thereof is reflected in the Balance Sheet.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax
assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which
such deferred tax assets can be realised.
II Notes to Accounts
II.1 Basic & Diluted Earnings Per Share:
                                                                                                                                                      RUPEES

PARTICULARS                                                                                          CURRENT YEAR                    PREVIOUS YEAR
Net Profit attributable to equity shareholders (A)                                                             776,662                           729,645
Number of equity shares issued (B)                                                                           1,500,000                         1,500,000
Basic and Diluted Earnings per share (EPS) [A/B]                                                                    0.52                               0.49

II.2 Auditors’ remuneration:
                                                                                                                                                      RUPEES

PARTICULARS                                                                                          CURRENT YEAR                    PREVIOUS YEAR
Audit Fees                                                                                                     100,000                           100,000
Other Services                                                                                                 150,000                           150,000
Service Tax                                                                                                      25,750                           28,840
Total                                                                                                          275,750                           278,840




                                                                                             I D F C - S S K I ST O C K B R O K I N G L I M I T E D    123
II.3 Related party disclosures
Related party disclosures, as required by Accounting Standard –AS18 “Related Parties Disclosures” as notified by the Companies (Accounting
Standards) Rules, 2006.

I.    HOLDING COMPANY:

      IDFC Securities Limited (Formerly Known as IDFC-SSKI Securities Limited)

II.   ULTIMATE HOLDING COMPANY:

      Infrastructure Development Finance Company Limited
II.4 Since the Company is engaged only in investing activities, there are no separate reportable segments as per Accounting Standard 17 on
‘Segment Reporting’ as notified by the Companies (Accounting Standards) Rules, 2006.
II.5 There is no interest paid/payable during the year by the Company to suppliers covered under the Micro, Small and Medium Enterprises
Development Act, 2006. The above information takes into account only those suppliers who have responded to the enquires made by the
Company for this purpose.

II.6 Prior year comparatives
The prior year comparatives have been regrouped, recasted and reclassified wherever necessary to ensure conformity with current year’s
presentation.




                                                                   FOR AND ON BEHALF OF THE BOARD



                                                                   MAHENDRA N. SHAH              TAPASIJE MISHRA
                                                                   Director                      Director


Mumbai | April 21, 2010

 124     I D F C A N N U A L R E P O R T 09 –10
      B A L A N C E S H E E T A B ST R A CT                                                                                   AND COMPANY’S GENERAL BUSINESS PROFILE




I.      REGISTRATION DETAILS

        Registration No.           U   6   5   9   9    0    M         H       1       9       9   2   P   L   C   0     6    9    8    2    4

        State Code                 5   5

        Balance Sheet Date         3   1       0   3         2         0       1       0

II.     CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000)

                                                                           Public Issue                                                                                   Right Issue
                                                                           N       I       L                                                                              N     I    L


                                                                           Bonus Issue                                                                             Private Placement

                                                                           N       I       L                                                                              N     I    L

III.    POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000)
                                                                     Total Liabilities                                                                                   Total Assets

                                                         1       7         1       6       3                                                                   1     7    1     6    3
        SOURCES OF FUNDS
                                                                     Paid-up Capital                                                                         Reserves and Surplus

                                                         1       5         0       0       0                                                                         1    7     8    0

                                                                      Secured Loans                                                                                 Unsecured Loans
                                                                           N       I       L                                                                              N     I    L
        APPLICATION OF FUNDS
                                                              Net Fixed Assets                                                                                           Investments

                                                                           N       I       L                                                                         6    8     2    0

                                                            Net Current Assets                                                                        Miscelleneous Expenditure

                                                                 9         9       6       0                                                                              N     I    L

                                                            Deferred Tax Asset

                                                                           N       I       L

IV.     PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000)
                                                             Turnover / Income                                                                                     Total Expenditure

                                                                 1         4       3       2                                                                              3     0    5

                                                              Profit Before Tax                                                                                      Profit After Tax

                                                                 1         1       2       7                                                                              7     7    7

                                                   Earnings per Share (in Rs.)                                                                                           Dividend %

                                                                 0         .       5       2                                                                              N     I    L
V.      GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS)

        Item Code No. (ITC Code)           N   I   L

        Product Description                T   R   A    D        I      N      G               I   N       S   E   C     U    R    I   T    I    E    S




                                                                                                                       I D F C - S S K I ST O C K B R O K I N G L I M I T E D       125
      IDFC capital
      company limited

      B O A R D O F D I R E CTO R S
      ■   Mr. A. K. T. Chari
          Chairman
      ■   Mr. Sadashiv Rao
      ■   Mr. Mahendra N. Shah

      A U D I TO R S
      ■   Deloitte Haskins & Sells
          Chartered Accountants

      P R I N C I PA L B A N K E R S
      ■   HDFC Bank Limited

      R E G I ST E R E D O F F I C E
      Naman Chambers, C-32, G-Block,
      Bandra-Kurla Complex, Bandra (East),
      Mumbai 400051.
      TEL +91 22 42222000
      FAX +91 22 26540354




126    I D F C A N N U A L R E P O R T 09 –10
  D I R E CT O R S ’ R E P O R T


TO THE MEMBERS                                                             FOREIGN EXCHANGE EARNINGS AND EXPENDITURE
Your directors have pleasure in presenting the Third Annual Report         There was no income or expenditure in foreign currency during the
together with the audited accounts for the year ended March 31,            period under review.
2010.
                                                                           PERSONNEL AND OTHER MATTERS
PRINCIPAL ACTIVITIES                                                       Since your Company does not have any employees, the provisions
Your Company’s principal activity is to act as a capital and investment    of Section 217(2A) of the Companies Act, 1956 read with the
company.                                                                   Companies (Disclosure of Particulars in the Report of Board of
                                                                           Directors) Rules, 1988, are not applicable and hence not given.
FINANCIAL RESULTS
Your Company is yet to commence full fledged operations. During the        Since the Company does not own any manufacturing facility, the
year under review, the Company has incurred a loss of Rs.144,275/-.        disclosure of information on other matters required to be disclosed
                                                                           in terms of Section 217(1)(e) of the Companies Act, 1956 read with
DIVIDEND                                                                   the Companies (Disclosure of Particulars in the Report of Board of
The Directors do not recommend any dividend for the year ended             Directors) Rules, 1998, are not applicable and hence not given.
March 31, 2010.
                                                                           DIRECTORS’ RESPONSIBILITY STATEMENT
PUBLIC DEPOSITS                                                            The Directors confirm that:
During the period under review, your Company has not accepted
                                                                           ¬ the applicable accounting standards have been followed in
public deposits under the provisions of Section 58-A of the
                                                                           preparation of annual accounts and there are no material departures;
Companies Act, 1956.
                                                                           ¬ they have selected such accounting policies and applied them
DIRECTORS                                                                  consistently and made judgments and estimates that are reasonable
During the year, Dr. Rajiv B. Lall resigned from the Directorship of the   and prudent, so as to give a true and fair view of the state of affairs of
Company with effect from October 12, 2009. The Board wishes to             the Company as at March 31, 2010 and the loss of the Company for the
place on record its sincere appreciation for his valuable and guidance     year ended on that date;
contribution to the Company.
                                                                           ¬ they have taken proper and sufficient care for the maintenance of
In accordance with the provisions of the Articles of Association of        adequate accounting records in accordance with the provisions of the
the Company and Companies Act, 1956, Mr. Sadashiv Rao would                Companies Act, 1956, for safeguarding the assets of the Company and
retire at the ensuing Annual General Meeting and being eligible,           detecting fraud and other irregularities; and
offers himself for re-appointment.
                                                                           ¬   they have prepared the annual accounts on a going concern basis.
AUDITORS
                                                                           ACKNOWLEDGEMENTS
M/s. Deloitte Haskins & Sells, Ahmedabad will retire as the statutory
                                                                           The Directors also express their gratitude for the unstinted support
auditors of the Company at the ensuing Annual General Meeting.
                                                                           and guidance received from Infrastructure Development Finance
The Board of Directors, at its meeting held on April 22, 2010, has
                                                                           Company Limited and other group companies.
proposed the re-appointment of M/s. Deloitte Haskins & Sells,
Ahmedabad as statutory auditors to audit the financials of the
                                                                           FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Company for the year ending March 31, 2011.

M/s. Deloitte Haskins & Sells, Ahmedabad have confirmed that               A. K. T. CHARI
their re-appointment, if made, would be in conformity with the             Chairman
provisions of Sections 224 and 226 of the Companies Act, 1956 as
also indicated their willingness to be appointed. You are requested to     Mumbai
consider their re-appointment.                                             April 22, 2010




                                                                                                  I D FC CA P I TA L CO M PA N Y L I M I T E D   127
      AU D I TO RS ’ R E PO RT

To The Members of IDFC Capital Company Limited                           (d) in our opinion, the Balance Sheet, the Profit and Loss Account
1. We have audited the attached Balance Sheet of IDFC CAPITAL                and the Cash Flow Statement dealt with by this report are in
COMPANY LIMITED (“the Company”) as at March 31, 2010, the Profit             compliance with the Accounting Standards referred to in Section
and Loss Account and the Cash Flow Statement of the Company for              211(3C) of the Companies Act, 1956;
the year ended on that date, both annexed thereto. These financial       (e) in our opinion and to the best of our information and according
statements are the responsibility of the Company’s Management. Our           to the explanations given to us, the said accounts give the
responsibility is to express an opinion on these financial statements        information required by the Companies Act, 1956 in the manner
based on our audit.                                                          so required and give a true and fair view in conformity with the
2. We conducted our audit in accordance with the auditing standards          accounting principles generally accepted in India:
generally accepted in India. Those Standards require that we plan             (i)   in the case of the Balance Sheet, of the state of affairs of
and perform the audit to obtain reasonable assurance about whether                  the Company as at March 31, 2010;
the financial statements are free of material misstatements. An
                                                                              (ii) in the case of the Profit and Loss Account, of the loss of the
audit includes examining, on a test basis, evidence supporting the
                                                                                   Company for the year ended on that date and
amounts and the disclosures in the financial statements. An audit also
includes assessing the accounting principles used and the significant         (iii) in the case of the Cash Flow Statement, of the cash flows of
estimates made by the Management, as well as evaluating the overall                 the Company for the year ended on that date.
financial statement presentation. We believe that our audit provides a   6. On the basis of the written representations received from the
reasonable basis for our opinion.                                        Directors as on 31st March, 2010 taken on record by the Board of
3. As required by the Companies (Auditor’s Report) Order, 2003           Directors, none of the Directors is disqualified as on 31st March,
(CARO) issued by the Central Government in terms of Section 227(4A)      2010 from being appointed as a director in terms of Section 274(1)(g)
of the Companies Act, 1956, we enclose in the Annexure a statement       of the Companies Act, 1956.
on the matters specified in paragraphs 4 and 5 of the said Order.
4. Without qualifying our opinion, we invite attention to the Note
No. 6 of Schedule 4 regarding the preparation of accounts on a going
concern basis.
5. Further to our comments in the Annexure referred to in paragraph
                                                                         FOR DELOITTE HASKINS & SELLS
3 above, we report as follows:
                                                                         Chartered Accountants
(a) we have obtained all the information and explanations which          (Registration No.117365W)
    to the best of our knowledge and belief were necessary for the
    purposes of our audit;
                                                                         Z. F. BILLIMORIA
(b) in our opinion, proper books of account as required by law
    have been kept by the Company so far as it appears from our          Partner

    examination of those books;                                          (Membership No. 42791)

(c)    the Balance Sheet, the Profit and Loss Account and the Cash
       Flow Statement dealt with by this report are in agreement with    Mumbai
       the books of account;                                             April 22, 2010




128      I D F C A N N U A L R E P O R T 09 –10
   ANNEXURE                                                                                                                          TO THE AUDITOR’S REPORT


(Referred to in paragraph 3 of our report of even date)                                (b) There were no undisputed amounts payable in respect of Income-
(i) Having regard to the nature of the Company’s business/                                 tax and other material statutory dues in arrears as at 31st March,
activities/result/transactions etc., clauses (i), (ii), (iii), (vi), (vii), (viii),        2010 for a period of more than six months from the date they
(x), (xi), (xii), (xiii),(xiv), (xv), (xvi), (xvii), (xviii), (xix) and (xx) of CARO       became payable.
are not applicable.                                                                    (v) To the best of our knowledge and according to the information and
(ii) The Company has neither granted nor taken any loans, secured or                   explanations given to us, no fraud by and on the Company has been
unsecured, to/from companies, firms or other parties covered in the                    noticed or reported during the year.
Register maintained under Section 301 of the Companies Act, 1956.
(iii) To the best of our knowledge and belief and according to                         FOR DELOITTE HASKINS & SELLS
information and explanation given to us, there were no contracts or                    Chartered Accountants
arrangements required to be entered in the register maintained in                      (Registration No.117365W)
pursuance of section 301 of the Companies Act, 1956.
(iv) According to the information and explanations given to us in                      Z. F. BILLIMORIA

respect of statutory dues:                                                             Partner
                                                                                       (Membership No. 42791)
(a) The Company has been regular in depositing undisputed
    dues, including Income-tax and other material statutory dues
                                                                                       Mumbai
    applicable to it with the appropriate authorities.
                                                                                       April 22, 2010




                                                                                                               I D FC CA P I TA L CO M PA N Y L I M I T E D   129
    BALANCE SHEET                                                                                                  AS AT MARCH 31, 2010


                                                                             RUPEES                     RUPEES                   RUPEES

                                                          SCHEDULE                    AS AT MARCH 31, 2010        AS AT MARCH 31, 2009
 SOURCES OF FUNDS
 Shareholders’ Funds
   Share Capital                                                     1                                 500,000                  500,000
                                                                                                       500,000                  500,000
 APPLICATION OF FUNDS
 Current Assets, Loans and Advances
   Bank Balance                                                      2      184,241                                             328,516
 Less:Current Liabilities                                            3      891,060                                             891,060
 Net Current Liabilities                                                                              (706,819)                (562,544)
 Profit and Loss Account                                                                          1,206,819                   1,062,544
                                                                                                       500,000                  500,000
 Notes to the Accounts.                                              4
 Schedules 1 to 4 form an integral part of the Accounts




IN TERMS OF OUR REPORT ATTACHED
FOR DELOITTE HASKINS & SELLS                                     FOR AND ON BEHALF OF THE BOARD
Chartered Accountants


Z. F. B I L L I M O R I A                                        SADASHIV S. RAO           MAHENDRA N. SHAH
Partner                                                          Director                  Director


Mumbai | April 22, 2010

130       I D F C A N N U A L R E P O R T 09 –10
    PROFIT AND LOSS ACCOUNT                                                                FOR THE YEAR ENDED MARCH 31, 2010



                                                                                                RUPEES                          RUPEES

                                                                                   APRIL 1, 2009 TO             APRIL 1, 2008 TO
                                                                  SCHEDULE         MARCH 31, 2010               MARCH 31, 2009
 EXPENDITURE
 Professional Fees                                                                               5,000                          19,798
 Rates and Taxes                                                                                 1,400                                -
 Auditors’ Remuneration
   Audit Fees                                                                                   50,000                          50,000
   Other Matters                                                                                75,000                          75,000
   Company Law Matters                                                                               –                          10,000
   Service Tax                                                                                  12,875                          15,656
 Loss for the year                                                                             144,275                     170,454
 Balance Loss Brought Forward                                                               1,062,544                      892,090
 Balance Loss Carried to Balance Sheet                                                      1,206,819                     1,062,544
 Basic and Diluted Earnings Per Share (Face value Rs.10)                                         (2.89)                          (3.41)
 (See Schedule 4 Note 4)
 Notes to the Accounts                                                       4
 Schedules 1 to 4 form an integral part of the Accounts




IN TERMS OF OUR REPORT ATTACHED
FOR DELOITTE HASKINS & SELLS                               FOR AND ON BEHALF OF THE BOARD
Chartered Accountants


Z. F. B I L L I M O R I A                                  SADASHIV S. RAO          MAHENDRA N. SHAH
Partner                                                    Director                 Director


Mumbai | April 22, 2010

                                                                                 I D FC CA P I TA L CO M PA N Y L I M I T E D     131
      C A S H F L OW ST AT E M E N T                                                                      FOR THE YEAR ENDED MARCH 31, 2010




                                                                                                                 RUPEES              RUPEES

                                                                                                   APRIL 1, 2009 TO        APRIL 1, 2008 TO
                                                                                                   MARCH 31, 2010          MARCH 31, 2009
 A.     CASH FLOW FROM OPERATING ACTIVITIES
        Loss before tax                                                                                        (144,275)           (170,454)
        Adjustments for :
        Changes in :
           Current Liabilities                                                                                        –              (1,030)
        NET CASH USED IN OPERATING ACTIVITIES                                           (A)                    (144,275)           (171,484)
 B.     CASH FLOW FROM INVESTING ACTIVITIES
        NET CASH FROM INVESTING ACTIVITIES                                              (B)                           –                   –
 C.     CASH FLOW FROM FINANCING ACTIVITIES
        NET CASH FROM FINANCING ACTIVITIES                                              (C)                           –                   –
        Net decrease in cash and cash equivalents (A+B+C)                                                      (144,275)           (171,484)
        Cash and cash equivalents as at the beginning of the year (as per Schedule 2)                           328,516             500,000
        Cash and cash equivalents as at the end of the year (as per Schedule 2)                                 184,241             328,516
                                                                                                               (144,275)           (171,484)




IN TERMS OF OUR REPORT ATTACHED
FOR DELOITTE HASKINS & SELLS                                                FOR AND ON BEHALF OF THE BOARD
Chartered Accountants


Z. F. B I L L I M O R I A                                                   SADASHIV S. RAO         MAHENDRA N. SHAH
Partner                                                                     Director                Director


Mumbai | April 22, 2010

132       I D F C A N N U A L R E P O R T 09 –10
  SCHEDULES                                                                             ANNEXED TO AND FORMING PART OF THE ACCOUNTS




SCHEDULE 1 Share Capital                                                                                 RUPEES                           RUPEES

                                                                                        AS AT MARCH 31, 2010        AS AT MARCH 31, 2009
AUTHORISED:
10,000,000 Equity shares of Rs.10 each                                                              100,000,000                  100,000,000
ISSUED, SUBSCRIBED & PAID UP
50,000 Equity shares of Rs.10 each, fully paid-up                                                       500,000                      500,000
(All the above shares are held by Infrastructure Development Finance Company Limited,
the holding company and its nominees)
                                                                                                        500,000                      500,000




SCHEDULE 2 Bank Balance                                                                                  RUPEES                           RUPEES

                                                                                        AS AT MARCH 31, 2010        AS AT MARCH 31, 2009
Balance with Scheduled Bank in Current Account                                                          184,241                      328,516
                                                                                                        184,241                      328,516



SCHEDULE 3 Current Liabilities                                                                           RUPEES                           RUPEES

                                                                                        AS AT MARCH 31, 2010        AS AT MARCH 31, 2009
Sundry Creditors - Other than Micro and Small Enterprises                                               885,545                      884,812
(See Schedule 4 Note 5)
Other Liabilities                                                                                          5,515                           6,248
                                                                                                        891,060                      891,060




                                                                                           I D FC CA P I TA L CO M PA N Y L I M I T E D     133
SCHEDULE 4 Notes Forming Part of the Accounts

1 Significant Accounting Policies
A. Basis of Preparation
The Company adopts the accrual concept in the preparation of accounts. The preparation of financial statements requires the Management to
make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of
the financial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in
preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.

B. Income Tax
The accounting treatment for income-tax in respect of the Company’s income is based on the Accounting Standard 22 on ‘Accounting for Taxes
on Income’ as notified by the Companies (Accounting Standards) Rules, 2006. The provision made for income-tax in the accounts comprises
both, the current tax and the deferred tax. The deferred tax assets and liabilities for the year, arising on account of timing differences, are
recognised in the Profit and Loss Account and the cumulative effect thereof is reflected in the Balance Sheet.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax
assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which
such deferred tax assets can be realised.

In situations where the Company has unabsorbed depreciation or carry forward tax losses, deferred tax assets are recognised only if there is
virtual certainty supported by convincing evidence that the same can be realised against future taxable profits.

 2 The Company is yet to commence its commercial operations. Accordingly, there are no separate reportable segments as per Accounting
Standard 17 on ‘Segment Reporting’ as notified by the Companies (Accounting Standards) Rules, 2006.

 3 As per the Accounting Standard 18 on ‘Related Party Disclosures’ as notified by the Companies (Accounting Standards) Rules, 2006, the
related parties of the Company are as follows:

(a) Relationship:

    Holding Company: Infrastructure Development Finance Company Limited

(b) The nature and volume of transactions carried out with the above related party in the ordinary course of business are as follows:

NAME OF THE RELATED PARTY                                                        PARTICULARS            CURRENT YEAR            PREVIOUS YEAR
                                                                                                                 (RUPEES)                 (RUPEES)

Infrastructure Development Finance Company Limited                               Amount Payable                  835,910                 835,910

 4 In accordance with the Accounting Standard 20 on ‘Earnings Per Share’ as notified by the Companies (Accounting Standards) Rules, 2006;
the Earnings Per Share is as under:

PARTICULARS                                                                                            CURRENT YEAR             PREVIOUS YEAR
Loss After Tax (Rs.)                                                                                           (144,275)                (170,454)
Weighted average number of equity shares (Nos.)                                                                  50,000                    50,000
Basic and Diluted Earnings Per Share (Rs.)                                                                        (2.89)                    (3.41)
Nominal Value Per Share (Rs.)                                                                                     10.00                     10.00

5 The Company has no amounts due to any micro, small and medium enterprises as defined under Micro Small and Medium Enterprises
Development Act, 2006 as on March 31, 2010.

 6 The accounts of the Company have been prepared on a going concern basis. The Company continues to be a going concern in view of the
commitment and financial support from its holding company, Infrastructure Development Finance Company Limited, regarding the amounts due
to it and other liabilities as and when they fall due for payment

7 The figures for the previous year have been regrouped / rearranged wherever necessary.


                                                                     FOR AND ON BEHALF OF THE BOARD



                                                                     SADASHIV S. RAO                MAHENDRA N. SHAH
                                                                     Director                       Director


Mumbai | April 22, 2010

134    I D F C A N N U A L R E P O R T 09 –10
      B A L A N C E S H E E T A B ST R A CT                                                                                   AND COMPANY’S GENERAL BUSINESS PROFILE




I.      REGISTRATION DETAILS

        Registration No.           U   6   5   9   9     3    M        H       2       0        0   7   P   L   C   1   7     5   3   3    5

        State Code                 1   1

        Balance Sheet Date         3   1       0   3          2       0        1       0

II.     CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000)

                                                                          Public Issue                                                                              Right Issue
                                                                          N        I       L                                                                        N      I    L


                                                                          Bonus Issue                                                                        Private Placement

                                                                          N        I       L                                                                        N      I    L

III.    POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000)
                                                                  Total Liabilities                                                                                Total Assets

                                                                          1        8       4                                                                        1      8    4
        SOURCES OF FUNDS
                                                                  Paid-up Capital                                                                         Reserves and Surplus

                                                                          5        0       0                                                                        N      I    L

                                                                      Secured Loans                                                                           Unsecured Loans
                                                                          N        I       L                                                                        N      I    L
        APPLICATION OF FUNDS
                                                               Net Fixed Assets                                                                                   Investments

                                                                          N        I       L                                                                        N      I    L

                                                             Net Current Assets                                                                             Deferred Tax Asset

                                                                          (7       0       7)                                                                       N      I    L

                                                       Profit and Loss Account

                                                                  1       2        0       7

IV.     PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000)
                                                             Turnover / Income                                                                               Total Expenditure

                                                                          N        I       L                                                                        1      4    4

                                                              Profit Before Tax                                                                                Profit After Tax

                                                                          (1       4       4)                                                                       (1     4    4)

                                                   Earnings per Share (in Rs.)                                                                                     Dividend %

                                                               (2          .       8       9)                                                                       N      I    L

V.      GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS)

        Item Code No. (ITC Code)           N   I   L

        Product Description                I   N   V     E     S       T       M       E        N   T       C   O   M   P     A   N   Y




                                                                                                                            I D FC CA P I TA L CO M PA N Y L I M I T E D       135
      IDFC ppp
      trusteeship
      company limited

      B O A R D O F D I R E CTO R S
      ■   Mr. Anil Baijal
          Chairman
      ■   Mr. Cherian Thomas
      ■   Mr. Mahendra N. Shah



      A U D I TO R S
      ■   Deloitte Haskins & Sells
          Chartered Accountants



      P R I N C I PA L B A N K E R S
      ■   HDFC Bank Limited

      R E G I ST E R E D O F F I C E
      Naman Chambers, C-32, G-Block,
      Bandra-Kurla Complex, Bandra (East),
      Mumbai 400051.
      TEL +91 22 42222000
      FAX +91 22 26540354




136       I D F C A N N U A L R E P O R T 09 –10
  D I R E CT O R S ’ R E P O R T


TO THE MEMBERS                                                          Sections 224 and 226 of the Companies Act, 1956 as also indicated
Your directors have pleasure in presenting the Third Annual Report      their willingness to be appointed. You are requested to consider their
together with the audited accounts for the year ended March 31,         reappointment.
2010.
                                                                        FOREIGN EXCHANGE EARNINGS AND EXPENDITURE
PRINCIPAL ACTIVITIES                                                    There was no income or expenditure in foreign currency during the
Your Company’s principal activity is to act as trustee in general and   period under review.
particular for investment fund, debt fund, mutual fund, venture
                                                                        PERSONNEL AND OTHER MATTERS
capital fund or any other pool or portfolio of securities and to
                                                                        Since your Company does not have any employees, the provisions
set up, constitute, promote, settle and executive trusts and/or
                                                                        of Section 217(2A) of the Companies Act, 1956 read with the
companies or other entities and to act as, or, exercise powers of
                                                                        Companies (Disclosure of Particulars in the Report of Board of
trustees, executers, administrators, receivers, managers, treasurers,
                                                                        Directors) rules, 1988, are not applicable and hence not given.
attorneys, nominees and agent to the debenture holders.
                                                                        Since the Company does not own any manufacturing facility, the
During the year, your Company has been appointed as a Trustee
                                                                        disclosure of information on other matters required to be disclosed
to PPP Capacity Building Trust. This trust would be set up under
                                                                        in terms of Section 217(1)(e) of the Companies Act, 1956 read with
IDFC Foundation, a division proposed to be set up by Infrastructure
                                                                        the Companies (Disclosure of Particulars in the Report of Board of
Development Finance Company Limited, which shall undertake
                                                                        Directors) Rules, 1998, are not applicable and hence not given.
initiatives on the matters of research/advisory on policy, PPP
advisory & capacity building and CSR.                                   DIRECTORS’ RESPONSIBILITY STATEMENT
                                                                        The Directors confirm that:
FINANCIAL RESULTS
Your Company is yet to commence full fledged operations. During the
                                                                        ¬ the applicable accounting standards have been followed in
year under review, the Company has incurred a loss of Rs.135,234/-.     preparation of annual accounts and there are no material departures;
                                                                        ¬ they have selected such accounting policies and applied them
DIVIDEND
                                                                        consistently and made judgments and estimates that are reasonable
Your Directors do not recommend any dividend for the period ended
                                                                        and prudent, so as to give a true and fair view of the state of affairs of
March 31, 2010.
                                                                        the Company as at March 31, 2010 and the loss of the Company for the
PUBLIC DEPOSITS                                                         year ended on that date;
During the period under review, your Company has not accepted           ¬ they have taken proper and sufficient care for the maintenance of
public deposits under Section 58-A of the Companies Act, 1956.          adequate accounting records in accordance with the provisions of the
DIRECTORS                                                               Companies Act, 1956, for safeguarding the assets of the Company and
In terms of the provisions of the Articles of Association of            detecting fraud and other irregularities; and
the Company, Mr. Cherian Thomas would retire at the ensuing             ¬   they have prepared the annual accounts on a going concern basis.
Annual General Meeting and being eligible, offers himself for re-
                                                                        ACKNOWLEDGEMENTS
appointment.
                                                                        The Directors also express their gratitude for the unstinted support
AUDITORS                                                                and guidance received from Infrastructure Development Finance
M/s. Deloitte Haskins & Sells, Ahmedabad will retire as the statutory   Company Limited and other group companies.
auditors of the Company at the ensuing Annual General Meeting.
The Board of Directors, at its meeting held on April 22, 2010, has      FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
proposed the reappointment of M/s. Deloitte Haskins & Sells,
Ahmedabad as statutory auditors for the financial year ending           ANIL BAIJAL
March 31, 2011.                                                         Chairman

M/s. Deloitte Haskins & Sells, Ahmedabad have confirmed that their      Mumbai
reappointment, if made, would be in conformity with the provisions of   April 22, 2010




                                                                                   I D F C P P P T R U ST E E S H I P C O M P A N Y L I M I T E D   137
      AU D I TO RS ’ R E PO RT


To The Members of IDFC PPP TRUSTEESHIP COMPANY                          (d) in our opinion, the Balance Sheet, the Profit and Loss Account
LIMITED                                                                     and the Cash Flow Statement dealt with by this report are
1. We have audited the attached Balance Sheet of IDFC PPP                   in compliance with the Accounting Standards referred to in
TRUSTEESHIP COMPANY LIMITED (“the Company”) as at March 31,                 Section 211(3C) of the Companies Act, 1956;
2010, the Profit and Loss Account and the Cash Flow Statement of        (e) in our opinion and to the best of our information and according
the Company for the year ended on that date, both annexed thereto.          to the explanations given to us, the said accounts give the
These financial statements are the responsibility of the Company’s          information required by the Companies Act, 1956 in the manner
Management. Our responsibility is to express an opinion on these            so required and give a true and fair view in conformity with the
financial statements based on our audit.                                    accounting principles generally accepted in India:
2. We conducted our audit in accordance with the auditing                   (i)     in the case of the Balance Sheet, of the state of affairs of
standards generally accepted in India. Those Standards require that                 the Company as at March 31, 2010;
we plan and perform the audit to obtain reasonable assurance about
                                                                            (ii)    in the case of the Profit and Loss Account, of the loss of the
whether the financial statements are free of material misstatements.
                                                                                    Company for the year ended on that date and
An audit includes examining, on a test basis, evidence supporting
the amounts and the disclosures in the financial statements. An             (iii)   in the case of the Cash Flow Statement, of the cash flows of
audit also includes assessing the accounting principles used and the                the Company for the year ended on that date.
significant estimates made by the Management, as well as evaluating     5. On the basis of the written representations received from the
the overall financial statement presentation. We believe that our       Directors as on 31st March, 2010 taken on record by the Board of
audit provides a reasonable basis for our opinion.                      Directors, none of the Directors is disqualified as on 31st March,
3. As required by the Companies (Auditor’s Report) Order, 2003          2010 from being appointed as a director in terms of
(CARO) issued by the Central Government in terms of Section             Section 274(1)(g) of the Companies Act, 1956.
227(4A) of the Companies Act, 1956, we enclose in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the said
Order.
4. Further to our comments in the Annexure referred to in
paragraph 3 above, we report as follows:
                                                                        FOR DELOITTE HASKINS & SELLS
(a) we have obtained all the information and explanations which
                                                                        Chartered Accountants
    to the best of our knowledge and belief were necessary for the
                                                                        (Registration No.117365W)
    purposes of our audit;
(b) in our opinion, proper books of account as required by law          Z. F. BILLIMORIA
    have been kept by the Company so far as it appears from our         Partner
    examination of those books;                                         (Membership No. 42791)
(c)    the Balance Sheet, the Profit and Loss Account and the Cash
       Flow Statement dealt with by this report are in agreement with   Mumbai
       the books of account;                                            April 22, 2010




138      I D F C A N N U A L R E P O R T 09 –10
   ANNEXURE                                                                                                                             TO THE AUDITOR’S REPORT




(Referred to in paragraph 3 of our report of even date)                                (a) The Company has been regular in depositing undisputed
(i) Having regard to the nature of the Company’s business/                                 dues, including Income-tax and other material statutory dues
activities/result/transactions etc., clauses (i), (ii), (vi), (vii), (viii), (x),          applicable to it with the appropriate authorities.
(xi), (xii), (xiii), (xiv), (xv), (xvi), (xvii), (xviii), (xix) and (xx) of CARO are   (b) There were no undisputed amounts payable in respect of
not applicable.                                                                            Income-tax and other material statutory dues in arrears as at
(ii) The Company has neither granted nor taken any loans, secured or                       31st March, 2010 for a period of more than six months from the
unsecured, to/from companies, firms or other parties covered                               date they became payable.
in the Register maintained under Section 301 of the Companies Act,                     (vi) To the best of our knowledge and according to the information
1956.                                                                                  and explanations given to us, no fraud by and on the Company has
(iii) In our opinion and according to the information and explanations                 been noticed or reported during the year.
given to us, there is an adequate internal control system
commensurate with the size of the Company and the nature of its
                                                                                       FOR DELOITTE HASKINS & SELLS
business with regard to the sale of services. During the course of
                                                                                       Chartered Accountants
our audit, we have not observed any major weakness in such internal
                                                                                       (Registration No.117365W)
control system.
(iv) To The best of our knowledge and belief and according to                          Z. F. BILLIMORIA
information and explanation given to us, there were no contracts or                    Partner
arrangements required to be entered in the register maintained in                      (Membership No. 42791)
pursuance of section 301 of the Companies Act, 1956.
(v) According to the information and explanations given to us in                       Mumbai
respect of statutory dues:                                                             April 22, 2010




                                                                                                 I D F C P P P T R U ST E E S H I P C O M P A N Y L I M I T E D   139
    BALANCE SHEET                                                                                                    AS AT MARCH 31, 2010


                                                                                 RUPEES                    RUPEES                  RUPEES

                                                          SCHEDULE                        AS AT MARCH 31, 2010      AS AT MARCH 31, 2009
 SOURCES OF FUNDS
 Shareholders’ Funds
   Share Capital                                                     1                                    500,000                 500,000
                                                                                                          500,000                 500,000
 APPLICATION OF FUNDS
 Current Assets, Loans and Advances
 Bank Balance                                                        2          136,844                                           272,078
 Less:Current Liabilities                                            3           55,150                                            55,150
 Net Current Assets                                                                                        81,694                 216,928
 Profit and Loss Account                                                                                  418,306                 283,072
                                                                                                          500,000                 500,000
 Notes to the Accounts.                                              4
 Schedules 1 to 4 form an integral part of the Accounts




IN TERMS OF OUR REPORT ATTACHED
FOR DELOITTE HASKINS & SELLS                                         FOR AND ON BEHALF OF THE BOARD
Chartered Accountants


Z. F. B I L L I M O R I A                                            CHERIAN THOMAS            MAHENDRA N. SHAH
Partner                                                              Director                  Director


Mumbai | April 22, 2010


140       I D F C A N N U A L R E P O R T 09 –10
    PROFIT AND LOSS ACCOUNT                                                                       FOR THE YEAR ENDED MARCH 31, 2010



                                                                                                       RUPEES                             RUPEES

                                                                                         APRIL 1, 2009 TO                APRIL 1, 2008 TO
                                                                  SCHEDULE               MARCH 31, 2010                  MARCH 31, 2009
 INCOME
 Trusteeship Fees                                                                                       9,041                                   -
 Total                                                                                                  9,041                                   -
 EXPENDITURE
 Professional Fees                                                                                      5,000                             18,582
 Rates and Taxes                                                                                        1,400                                   -
 Auditors’ Remuneration
   Audit Fees                                                                                         50,000                              50,000
   Other Matters                                                                                      75,000                              75,000
   Company Law Matters                                                                                       -                            10,000
   Service Tax                                                                                        12,875                              15,656
                                                                                                     144,275                         169,238
 Loss for the year                                                                                   135,234                         169,238
 Balance Loss Brought Forward                                                                        283,072                         113,834
 Balance Loss Carried to Balance Sheet                                                               418,306                         283,072
 Basic and Diluted Earnings Per Share (Face value Rs.10)                                                (2.70)                             (3.38)
 (See Schedule 4 Note 4)
 Notes to the Accounts.                                                      4
 Schedules 1 to 4 form an integral part of the Accounts




IN TERMS OF OUR REPORT ATTACHED
FOR DELOITTE HASKINS & SELLS                               FOR AND ON BEHALF OF THE BOARD
Chartered Accountants


Z. F. B I L L I M O R I A                                  CHERIAN THOMAS                 MAHENDRA N. SHAH
Partner                                                    Director                       Director


Mumbai | April 22, 2010


                                                                         I D F C P P P T R U ST E E S H I P C O M P A N Y L I M I T E D      141
      C A S H F L OW ST AT E M E N T                                                                      FOR THE YEAR ENDED MARCH 31, 2010




                                                                                                                 RUPEES              RUPEES

                                                                                                   APRIL 1, 2009 TO        APRIL 1, 2008 TO
                                                                                                   MARCH 31, 2010          MARCH 31, 2009
 A.     CASH FLOW FROM OPERATING ACTIVITIES
        Loss before tax                                                                                        (135,234)           (169,238)
        Adjustments for :
        Changes in :
        Current Liabilities                                                                                            -            (58,684)


        NET CASH USED IN OPERATING ACTIVITIES                                           (A)                    (135,234)           (227,922)
 B.     CASH FLOW FROM INVESTING ACTIVITIES
        NET CASH FROM INVESTING ACTIVITIES                                              (B)                            -                   -
 C.     CASH FLOW FROM FINANCING ACTIVITIES
        NET CASH FROM FINANCING ACTIVITIES                                              (C)                            -                   -
        Net decrease in cash and cash equivalents (A+B+C)                                                      (135,234)           (227,922)
        Cash and cash equivalents as at the beginning of the year (as per Schedule 2)                           272,078             500,000
        Cash and cash equivalents as at the end of the year (as per Schedule 2)                                 136,844             272,078
                                                                                                               (135,234)           (227,922)




IN TERMS OF OUR REPORT ATTACHED
FOR DELOITTE HASKINS & SELLS                                                FOR AND ON BEHALF OF THE BOARD
Chartered Accountants


Z. F. B I L L I M O R I A                                                   CHERIAN THOMAS          MAHENDRA N. SHAH
Partner                                                                     Director                Director


Mumbai | April 22, 2010

142       I D F C A N N U A L R E P O R T 09 –10
  SCHEDULES                                                                                     ANNEXED TO AND FORMING PART OF THE ACCOUNTS




SCHEDULE 1 Share Capital                                                                                             RUPEES                             RUPEES

                                                                                                AS AT MARCH 31, 2010            AS AT MARCH 31, 2009
AUTHORISED:
100,000 Equity shares of Rs.10 each                                                                              1,000,000                        1,000,000
ISSUED, SUBSCRIBED & PAID UP
50,000 Equity shares of Rs.10 each, fully paid-up                                                                  500,000                         500,000
(All the above shares are held by Infrastructure Development Finance Company Limited, the
holding company and its nominees)
                                                                                                                   500,000                         500,000




SCHEDULE 2 Bank Balance                                                                                              RUPEES                             RUPEES

                                                                                                AS AT MARCH 31, 2010            AS AT MARCH 31, 2009
Balance with Scheduled Bank in Current Account                                                                     136,844                         272,078
                                                                                                                   136,844                         272,078




SCHEDULE 3 Current Liabilities                                                                                       RUPEES                             RUPEES

                                                                                                AS AT MARCH 31, 2010            AS AT MARCH 31, 2009
Sundry Creditors - Other than Micro and Small Enterprises                                                            49,635                             48,902
  (See Schedule 4 Note 5)
Other Liabilities                                                                                                     5,515                              6,248
                                                                                                                     55,150                             55,150




                                                                                       I D F C P P P T R U ST E E S H I P C O M P A N Y L I M I T E D     143
SCHEDULE 4 Notes Forming Part of the Accounts
1 SIGNIFICANT ACCOUNTING POLICIES
A. Basis of Preparation
The Company adopts the accrual concept in the preparation of accounts. The preparation of financial statements requires the Management to
make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of
the financial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in
preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.
B. Revenue Recognition
Trusteeship fees are accounted for on accrual basis.
C. Income Tax
The accounting treatment for income-tax in respect of the Company’s income is based on the Accounting Standard 22 on ‘Accounting for Taxes
on Income’ as notified by the Companies (Accounting Standards) Rules, 2006. The provision made for income-tax in the accounts comprises
both, the current tax and the deferred tax. The deferred tax assets and liabilities for the year, arising on account of timing differences, are
recognised in the Profit and Loss Account and the cumulative effect thereof is reflected in the Balance Sheet.
Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax
assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which
such deferred tax assets can be realised.
In situations where the Company has unabsorbed depreciation or carry forward tax losses, deferred tax assets are recognised only if there is
virtual certainty supported by convincing evidence that the same can be realised against future taxable profits.
2 The Company is engaged in the business of providing trusteeship services in India. As such there is no separate reportable segment as per
Accounting Standard 17 on ‘Segment Reporting’ as notified by the Companies (Accounting Standards) Rules, 2006.
 3 As per the Accounting Standard 18 on ‘Related Party Disclosures’ as notified by the Companies (Accounting Standards) Rules, 2006, the
related parties of the Company are as follows:
(a) Relationship:
     Holding Company: Infrastructure Development Finance Company Limited
     Enterprise Controlled by the Holding Company: India PPP Capacity Building Trust
(b) The nature and volume of transactions carried out with the above related party in the ordinary course of business are as follows:

 NAME OF THE RELATED PARTY                                                      PARTICULARS           CURRENT YEAR              PREVIOUS YEAR
                                                                                                                (RUPEES)                  (RUPEES)

 India PPP Capacity Building Trust                                              Trusteeship Fees                  9,041                       Nil

 4 In accordance with the Accounting Standard 20 on ‘Earnings Per Share’ as notified by the Companies (Accounting Standards) Rules, 2006;
the Earnings Per Share is as under:

 PARTICULARS                                                                                          CURRENT YEAR              PREVIOUS YEAR
 Loss After Tax (Rs.)                                                                                          (135,234)                (169,238)
 Weighted average number of equity shares (Nos.)                                                                 50,000                    50,000
 Basic and Diluted Earnings Per Share (Rs.)                                                                       (2.70)                    (3.38)
 Nominal Value Per Share (Rs.)                                                                                    10.00                     10.00

5 The Company has no amounts due to any micro, small and medium enterprises as defined under Micro Small and Medium Enterprises
Development Act, 2006 as on March 31, 2010.
6 The figures for the previous year have been regrouped / rearranged wherever necessary.


IN TERMS OF OUR REPORT ATTACHED
FOR DELOITTE HASKINS & SELLS                                         FOR AND ON BEHALF OF THE BOARD
Chartered Accountants


Z. F. B I L L I M O R I A                                            CHERIAN THOMAS                 MAHENDRA N. SHAH
Partner                                                              Director                       Director


Mumbai | April 22, 2010

144       I D F C A N N U A L R E P O R T 09 –10
      B A L A N C E S H E E T A B ST R A CT                                                                                   AND COMPANY’S GENERAL BUSINESS PROFILE




I.      REGISTRATION DETAILS

        Registration No.           U   6   7   1   9    0     M     H        2       0        0   7   P   L    C    1   7    4    8    6   7

        State Code                 1   1

        Balance Sheet Date         3   1       0   3          2     0        1       0

II.     CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000)

                                                                        Public Issue                                                                                   Right Issue

                                                                        N        I       L                                                                             N       I    L

                                                                        Bonus Issue                                                                            Private Placement

                                                                        N        I       L                                                                             N       I    L

III.    POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000)
                                                                  Total Liabilities                                                                                    Total Assets

                                                                        1        3       7                                                                             1       3    7
        SOURCES OF FUNDS
                                                                  Paid-up Capital                                                                           Reserves and Surplus

                                                                        5        0       0                                                                             N       I    L

                                                                    Secured Loans                                                                                Unsecured Loans
                                                                        N        I       L                                                                             N       I    L
        APPLICATION OF FUNDS
                                                               Net Fixed Assets                                                                                       Investments

                                                                        N        I       L                                                                             N       I    L

                                                             Net Current Assets                                                                                Deferred Tax Asset

                                                                                 8       2                                                                             N       I    L

                                                       Profit and Loss Account

                                                                        4        1       8

IV.     PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000)
                                                             Turnover / Income                                                                                  Total Expenditure

                                                                                         9                                                                              1      4    4

                                                              Profit Before Tax                                                                                   Profit After Tax
                                                                        (1       3       5)                                                                            (1      3    5)

                                                   Earnings per Share (in Rs.)                                                                                         Dividend %

                                                               (2       .        7       0)                                                                            N       I    L

V.      GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS)

        Item Code No. (ITC Code)           N   I   L

        Product Description                T   R   U     S     T     E       E                S   E   R   V    I    C    E    S




                                                                                                              I D F C P P P T R U ST E E S H I P C O M P A N Y L I M I T E D       145
      IDFC projects
      limited

      B O A R D O F D I R E CTO R S
      ■   Dr. Rajiv B. Lall
          Chairman
      ■   Mr. Vikram Limaye
      ■   Mr. A. K. T. Chari
      ■   Mr. Sadashiv Rao
      ■   Mr. Mahendra N. Shah

      A U D I TO R S
      ■   Deloitte Haskins & Sells
          Chartered Accountants

      P R I N C I PA L B A N K E R S
      ■   HDFC Bank Limited

      R E G I ST E R E D O F F I C E
      Naman Chambers, C-32, G-Block,
      Bandra-Kurla Complex, Bandra(East),
      Mumbai 400051.
      TEL +91 22 42222000
      FAX +91 22 26540354




146       I D F C A N N U A L R E P O R T 09 –10
  D I R E CT O R S ’ R E P O R T



TO THE MEMBERS                                                            AUDIT COMMITTEE
Your Directors have pleasure in presenting the Third Annual Report        The Audit Committee consists of three Directors Mr. Vikram Limaye,
together with the audited accounts for the year ended                     Mr. Sadashiv Rao and Mr. Mahendra N Shah. The functions of the
March 31, 2010.                                                           Committee include reviewing the half yearly and annual financial
                                                                          statements, internal control systems and significant accounting
PRINCIPAL ACTIVITIES
                                                                          policies of the Company and discussing the audit findings and
Your Company’s principal activity is to design, develop, engineer,
                                                                          recommendations of the internal and statutory auditors of the
finance, construct, operate and maintain infrastructure projects.
                                                                          Company.
OPERATIONAL REVIEW
                                                                          AUDITORS
Your Company has continued to focus on projects in power sector
                                                                          M/s. Deloitte Haskins & Sells, will retire as the statutory
and road sector. A team of professionals has also been put in place to
                                                                          auditors of the Company at the ensuing Annual General Meeting.
pursue projects in these sectors.
                                                                          The Board of Directors, at its meeting held on April 19, 2010 for the
Your Company acquired 51% stake in Dheeru Powergen Private                financial year ending March 31, 2010 has proposed the
Limited (DPPL). DPPL is in the process of setting up a 1050 MW coal-      re-appointment of M/s. Deloitte Haskins & Sells, as statutory
fired thermal power plant at District Korba, State of Chhattisgarh,       auditors to audit the financials of the Company for the year ending
India (the “Project”). The Project has made substantial progress          March 31, 2011.
during the year. It has received coal linkage for the entire capacity.
                                                                          M/s. Deloitte Haskins & Sells, have confirmed that their
The environment clearance from Ministry of Environment and Forests
                                                                          re-appointment, if made, would be in conformity with the provisions
has been obtained. The water requirement for the Project has been
                                                                          of Sections 224 and 226 of the Companies Act, 1956 as also
tied up. Land for the Project is in advanced stages of acquisition. The
                                                                          indicated their willingness to be appointed. You are requested to
Project has received open access and the Bulk Power Transmission
                                                                          consider their appointment.
Agreement has been signed with Power Grid Corporation of India
Limited. The International Competitive Bidding process for BTG has        FOREIGN EXCHANGE EARNINGS AND EXPENDITURE
begun and bids are expected in April 2010.                                There was no income or expenditure in foreign currency during the
Your Company submitted pre-qualification application for 17               period under review.
National Highway Authority of India (NHAI) road projects. It has          PERSONNEL AND OTHER MATTERS
been shortlisted to the RFP stage in 7 projects and expects to be         As required by the provisions of Section 217(2A) of the Companies
short listed for the remaining projects. Your Company has forged          Act, 1956, read with the Companies (Particulars of Employees) Rules,
partnerships with PLUS Expressways Malaysia, Punj Lloyd Limited           1975, as amended, names and other particulars of the employees are
and Simplex Infrastructures Limited. Your Company also submitted          set out in the annexure to the Directors’ Report.
the financial bid for one project but did not win the same.
                                                                          Since the Company does not own any manufacturing facility, the
Your Company submitted the Concept Paper on the Peninsular                disclosure of information on other matters required to be
Region Industrial Development (PRIDe) Corridor (the erstwhile             disclosed in terms of Section 217(1)(e) of the Companies Act, 1956
Chennai-Bengaluru-Mumbai Industrial Corridor) to the Department           read with the Companies (Disclosure of Particulars in the Report of
of Industrial Policy & Promotion.                                         Board of Directors) Rules, 1998, are not applicable and hence not
FINANCIAL RESULTS                                                         given.
During the period under review, the Company has incurred a loss of        DIRECTORS’ RESPONSIBILITY STATEMENT
Rs. 8.38 Crore.                                                           The Directors confirm that:
DIVIDEND                                                                  ¬ the applicable accounting standards have been followed in
The Directors do not recommend any dividend for the year ended            preparation of annual accounts and there are no material departures;
March 31, 2010.                                                           ¬ they have selected such accounting policies and applied them
PUBLIC DEPOSITS                                                           consistently and made judgments and estimates that are reasonable
During the year under review, your Company has not accepted public        and prudent, so as to give a true and fair view of the state of affairs of
deposits under the provisions of section 58-A of the Companies Act,       the Company as at March 31, 2010 and the loss of the Company for the
1956.                                                                     year ended on that date;
                                                                          ¬ they have taken proper and sufficient care for the maintenance of
DIRECTORS
                                                                          adequate accounting records in accordance with the provisions of the
In accordance with the provisions of the Articles of Association and
                                                                          Companies Act, 1956, for safeguarding the assets of the Company and
Companies Act, 1956, Dr. Rajiv B. Lall and Mr. Vikram Limaye would
                                                                          detecting fraud and other irregularities; and
retire at the ensuing Annual General Meeting and being eligible,
offers themselves for re-appointment.                                     ¬   they have prepared the annual accounts on a going concern basis.


                                                                                                             I D F C P R O J E CT S L I M I T E D   147
SUBSIDIARY COMPANY
Dheeru Powergen Private Limited is the Subsidiary Company of IDFC
Projects Limited which is a stand-alone infrastructure developer.
Statement pursuant to Section 212 of the Companies Act, 1956,
relating to of Dheeru Powergen Private Limited, is attached hereto.

ACKNOWLEDGEMENTS
The Board also express their gratitude for the unstinted support
and guidance received from Infrastructure Development Finance
Company Limited and other group companies, NHAI and Gujarat
Government.
The Board would also like to express their sincere thanks and
appreciation to all employees for their commendable teamwork,
exemplary professionalism and enthusiastic contribution during the
year.


FOR AND ON BEHALF OF THE BOARD OF DIRECTORS



RAJIV B . L A L L
Chairman



Mumbai
April 19, 2010




148     I D F C A N N U A L R E P O R T 09 –10
      AU D I TO RS ’ R E PO RT

TO THE MEMBERS OF IDFC PROJECTS LIMITED                                 (d) in our opinion, the Balance Sheet, the Profit and Loss Account
1. We have audited the attached Balance Sheet of IDFC PROJECTS              and the Cash Flow Statement dealt with by this report are
LIMITED (“the Company”) as at March 31, 2010, the Profit and                in compliance with the Accounting Standards referred to in
Loss Account and the Cash Flow Statement of the Company for                 Section 211(3C) of the Companies Act, 1956;
the year ended on that date, both annexed thereto. These financial      (e) in our opinion and to the best of our information and according
statements are the responsibility of the Company’s Management. Our          to the explanations given to us, the said accounts give the
responsibility is to express an opinion on these financial statements       information required by the Companies Act, 1956 in the manner
based on our audit.                                                         so required and give a true and fair view in conformity with the
2. We conducted our audit in accordance with the auditing                   accounting principles generally accepted in India:
standards generally accepted in India. Those Standards require that          (i)   in the case of the Balance Sheet, of the state of affairs of
we plan and perform the audit to obtain reasonable assurance about                 the Company as at March 31, 2010;
whether the financial statements are free of material misstatements.
                                                                             (ii) in the case of the Profit and Loss Account, of the loss of the
An audit includes examining, on a test basis, evidence supporting
                                                                                  Company for the year ended on that date and
the amounts and the disclosures in the financial statements. An
audit also includes assessing the accounting principles used and the         (iii) in the case of the Cash Flow Statement, of the cash flows of
significant estimates made by the Management, as well as evaluating                the Company for the year ended on that date.
the overall financial statement presentation. We believe that our       5. On the basis of the written representations received from the
audit provides a reasonable basis for our opinion.                      Directors as on 31st March, 2010 taken on record by the Board of
3. As required by the Companies (Auditor’s Report) Order, 2003          Directors, none of the Directors is disqualified as on 31st March,
(CARO) issued by the Central Government in terms of Section             2010 from being appointed as a director in terms of Section 274(1)
227(4A) of the Companies Act, 1956, we enclose in the Annexure a        (g) of the Companies Act, 1956.
statement on the matters specified in paragraphs 4 and 5 of the said
Order.
4. Further to our comments in the Annexure referred to in
paragraph 3 above, we report as follows:
                                                                        FOR DELOITTE HASKINS & SELLS
(a) we have obtained all the information and explanations which
                                                                        Chartered Accountants
    to the best of our knowledge and belief were necessary for the
                                                                        (Registration No. 117366W)
    purposes of our audit;
(b) in our opinion, proper books of account as required by law          NALIN M. SHAH
    have been kept by the Company so far as it appears from our         Partner
    examination of those books;                                         Membership No. 15860
(c)    the Balance Sheet, the Profit and Loss Account and the Cash
       Flow Statement dealt with by this report are in agreement with   Mumbai
       the books of account;                                            April 19, 2010




                                                                                                           I D F C P R O J E CT S L I M I T E D   149
   ANNEXURE                                                                                                                  TO THE AUDITOR’S REPORT



(Referred to in paragraph 3 of our report of even date)                          (viii) In our opinion, the internal audit functions carried out during
(i) Having regard to the nature of the Company’s business/                              the year by a firm appointed by the Management have been
     activities/result/transactions etc., clauses (i)(c), (ii), (viii), (x),            commensurate with the size of the Company and the nature of
     (xi), (xii), (xiii), (xiv), (xvi), (xvii), (xix) and (xx) of CARO are not          its business.
     applicable.                                                                 (ix) According to the information and explanations given to us in
(ii) In respect of its fixed assets:                                             respect of statutory dues:

      (a) The Company has maintained proper records showing full                      (a) The Company has been regular in depositing undisputed
          particulars, including quantitative details and situation of                    dues, including Provident Fund, Income Tax, Service Tax,
          the fixed assets.                                                               Cess and other material statutory dues applicable to it with
                                                                                          the appropriate authorities.
      (b) The fixed assets were physically verified during the year by
          the Management in accordance with a regular programme                       (b) There were no undisputed amounts payable on account of
          of verification which, in our opinion, provides for physical                    the above dues outstanding as at 31st March, 2010 for a
          verification of all the fixed assets at reasonable intervals.                   period of more than six months from the date they became
          According to the information and explanation given to us,                       payable.
          no material discrepancies were noticed on such verification.                (c)   There were no disputed Income Tax, Service Tax and any
(iii) In respect of loans, secured or unsecured, granted by the                             other material statutory dues which were not deposited as
       Company to companies, firms or other parties covered in                              on 31st March, 2010.
       the Register under Section 301 of the Companies Act, 1956,                (x) In our opinion and according to the information and explanations
       according to the information and explanations given to us:                     given to us, the terms and conditions of the guarantees given by
      (a) The Company has granted loan aggregating Rs. 30,000,000                     the Company for loans taken by others from banks and financial
          to 1 party during the year. At the year-end, there was no                   institutions are not prima facie prejudicial to the interests of
          outstanding balance of this loan and the maximum amount                     the Company.
          involved during the year was Rs. 30,000,000 (1 party).                 (xi) According to the information and explanations given to us,
      (b) The rate of interest and other terms and conditions of such                  the Company has made preferential allotment of shares to a
          loans are, in our opinion, prima facie not prejudicial to the                party covered in the Register maintained under Section 301
          interests of the Company.                                                    of the Companies Act, 1956 at a price which is prima facie not
                                                                                       prejudicial to the interests of the Company.
      (c)     The receipts of principal amounts and interest have been
              regular/as per stipulation.                                        (xii) To the best of our knowledge and according to the information
                                                                                        and explanations given to us, no fraud by or on the Company has
(iv) The Company has not taken any loans, secured or unsecured,
                                                                                        been noticed or reported during the year.
      from companies, firms or other parties listed in the Register
      maintained under Section 301 of the Companies Act, 1956.
(v) In our opinion and according to the information and explanations
     given to us, there is an adequate internal control system
     commensurate with the size of the Company and the nature of
     its business with regard to purchases of fixed assets and the
                                                                                 FOR DELOITTE HASKINS & SELLS
     sale of services. During the course of our audit, we have not
                                                                                 Chartered Accountants
     observed any major weakness in such internal control system.
                                                                                 (Registration No. 117366W)
(vi) To the best of our knowledge and belief and according to
      the information and explanations given to us, there were no
      contracts or arrangements that needed to be entered in the                 NALIN M. SHAH

      Register maintained under Section 301 of the Companies Act,                Partner

      1956.                                                                      Membership No. 15860

(vii) According to the information and explanations given to us, the
      Company has not accepted any deposit from the public during                Mumbai
      the year.                                                                  April 19, 2010




150         I D F C A N N U A L R E P O R T 09 –10
   BALANCE SHEET                                                                                                          AS AT MARCH 31, 2010


                                                                                RUPEES                       RUPEES                              RUPEES

                                                          SCHEDULE                        AS AT MARCH 31, 2010          AS AT MARCH 31, 2009
SOURCES OF FUNDS
Shareholders’ Funds
  Share Capital                                                      1                                  340,500,000                      90,500,000
                                                                                                        340,500,000                      90,500,000
APPLICATION OF FUNDS
Fixed Assets                                                         2
  Gross Block                                                                                             1,266,448                         555,215
  Less: Accumulated Depreciation                                                                           451,248                          128,850
  Net Block                                                                                                815,200                          426,365
Investments                                                          3                                  279,999,200                                   -
Current Assets, Loans and Advances
  Sundry Debtors                                                     4        9,501,803                                                   1,762,533
  Cash and Bank Balance                                              5        3,036,092                                                   1,020,650
  Loans and Advances                                                 6      27,054,101                                                    4,892,513
                                                                                                         39,591,996                       7,675,696
Less: Current Liabilities and Provisions                             7
     Current Liabilities                                                   156,522,334                                                   10,954,186
     Provisions                                                               2,482,309                                                   1,948,053
                                                                                                        159,004,643                      12,902,239
Net Current Liabilities                                                                             (119,412,647)                        (5,226,543)
Profit and Loss Account                                                                                 179,098,247                      95,300,178
                                                                                                        340,500,000                      90,500,000
Notes forming part of the Accounts                                   12
Schedules 1 to 12 form an integral part of the Accounts




IN TERMS OF OUR REPORT ATTACHED
FOR DELOITTE HASKINS & SELLS                              FOR AND ON BEHALF OF THE BOARD
Chartered Accountants


NALIN M . S H A H                                         RAJIV B. LALL                      VIKRAM LIMAYE
Partner                                                   Chairman                           Director

                                                          V. NARAYANAN
Mumbai | April 19, 2010                                   Company Secretary & Manager

                                                                                                          I D F C P R O J E CT S L I M I T E D     151
    PROFIT AND LOSS ACCOUNT                                                                           FOR THE YEAR ENDED MARCH 31, 2010



                                                                                                          RUPEES                 RUPEES

                                                                                           APRIL 1, 2009 TO            APRIL 1, 2008 TO
                                                                          SCHEDULE         MARCH 31, 2010              MARCH 31, 2009
INCOME
Operating Income                                                                     8                10,465,733              3,952,039
                                                                                                      10,465,733              3,952,039
EXPENDITURE
Staff Expenses                                                                       9                73,886,403             52,844,508
Establishment Expenses                                                               10                1,358,286              3,421,857
Other Expenses                                                                       11               18,696,715             28,471,758
Provision for Doubtful Advances                                                                                 -             6,392,114
Depreciation & Amortisation                                                                             322,398                 128,850
                                                                                                      94,263,802             91,259,087
LOSS BEFORE TAX                                                                                       83,798,069             87,307,048
Provision for Tax
-   Fringe Benefit Tax                                                                                          -               800,000
LOSS AFTER TAX                                                                                        83,798,069             88,107,048
Balance Brought Forward                                                                               95,300,178              7,193,130
LOSS CARRIED TO BALANCE SHEET                                                                        179,098,247             95,300,178
Basic and Diluted Earnings Per Share (Face value Rs.10)                                                    (6.63)                (20.35)
(See Schedule 12 Note 8)
Notes forming part of the Accounts                                                   12
Schedules 1 to 12 form an integral part of the Accounts




IN TERMS OF OUR REPORT ATTACHED
FOR DELOITTE HASKINS & SELLS                              FOR AND ON BEHALF OF THE BOARD
Chartered Accountants


NALIN M . S H A H                                         RAJIV B. LALL                   VIKRAM LIMAYE
Partner                                                   Chairman                        Director

                                                          V. NARAYANAN
Mumbai | April 19, 2010                                   Company Secretary & Manager

152       I D F C A N N U A L R E P O R T 09 –10
     C A S H F L OW ST AT E M E N T                                                                            FOR THE YEAR ENDED MARCH 31, 2010




                                                                                                                   RUPEES                               RUPEES

                                                                                                 FOR THE YEAR ENDED             FOR THE YEAR ENDED
                                                                                                      MARCH 31, 2010                 MARCH 31, 2009
A.     CASH FLOW FROM OPERATING ACTIVITIES
       Loss before taxation                                                                                   (83,798,069)                    (87,307,048)
       Adjustments for :
          Depreciation                                                                                            322,398                          128,850
          Provision for Employee Benefits                                                                         534,256                        1,948,053
          Provision for Doubtful Advances                                                                                 –                      6,392,114
          Dividend Received                                                                                               –                       (892,039)
          Loss on Sale of Investments                                                                                     –                              4,641
       Operating loss before Working Capital Changes                                                          (82,941,415)                    (79,725,429)
       Changes in :
          Current Assets , Loans and Advances                                                                 (29,530,992)                    (12,985,795)
          Current Liabilities                                                                                 145,568,148                        3,761,056
       Cash generated from Operations                                                                          33,095,742                     (88,950,168)
          Direct Taxes Paid                                                                                     (369,866)                         (861,365)
       NET CASH FROM / (USED IN) OPERATING ACTIVITIES                                      (A)                 32,725,875                     (89,811,533)
B.     CASH FLOW FROM INVESTING ACTIVITIES
       Purchase of Fixed Assets                                                                                 (711,233)                         (555,215)
       Dividend Received                                                                                                  –                        892,039
       Purchase of Investments                                                                            (279,999,200)                       (61,892,039)
       Sale Proceeds of Investments                                                                                       –                     61,887,398
       NET CASH FROM / (USED IN) INVESTING ACTIVITIES                                      (B)           (280,710,433)                             332,183
C.     CASH FLOW FROM FINANCING ACTIVITIES
       Proceeds from Issue of Share Capital                                                                   250,000,000                       90,000,000
       NET CASH FROM FINANCING ACTIVITIES                                                  (C)                250,000,000                       90,000,000
       Net increase in cash and cash equivalents (A+B+C)                                                        2,015,442                          520,650
       Cash and cash equivalents as at the beginning of the year (as per Schedule 5)                            1,020,650                          500,000
       Cash and cash equivalents as at the end of the year (as per Schedule 5)                                  3,036,092                        1,020,650
                                                                                                                2,015,442                          520,650




IN TERMS OF OUR REPORT ATTACHED
FOR DELOITTE HASKINS & SELLS                                      FOR AND ON BEHALF OF THE BOARD
Chartered Accountants


NALIN M . S H A H                                                 RAJIV B. LALL                    VIKRAM LIMAYE
Partner                                                           Chairman                         Director

                                                                  V. NARAYANAN
Mumbai | April 19, 2010                                           Company Secretary & Manager

                                                                                                                 I D F C P R O J E CT S L I M I T E D     153
    SCHEDULES                                                                                                                                                    ANNEXED TO AND FORMING PART OF THE ACCOUNTS




SCHEDULE 1 Share Capital                                                                                                                                                               RUPEES                                                        RUPEES

                                                                                                                                                           AS AT MARCH 31, 2010                               AS AT MARCH 31, 2009
AUTHORISED:
100,000,000 Equity Shares of Rs.10/- each                                                                                                                                1,000,000,000                                              1,000,000,000
ISSUED, SUBSCRIBED AND PAID UP
34,050,000 (Previous Year 90,500,00) Equity Shares of Rs.10/- each, fully paid-up                                                                                         340,500,000                                                             90,500,000
[Of the above, 25,000,100 (Previous Year 100) Equity Shares
are held by Infrastructure Development Finance Company Limited (IDFC),
the holding company with effect from February 04, 2010
and 9,049,900 (Previous Year 9,049,900) Equity Shares are held by
IDFC Finance Limited, a wholly owned Subsidiary of IDFC
which was the holding company up to February 03, 2010]
                                                                                                                                                                          340,500,000                                                             90,500,000



SCHEDULE 2 Fixed Assets                                                                                                                                                                                                                               RUPEES

DESCRIPTION                                             GROSS BLOCK                                               DEPRECIATION AND AMORTISATION                                                                          NET BLOCK


                                                                                                March 31, 2010




                                                                                                                                                                                                   March 31, 2010




                                                                                                                                                                                                                                 March 31, 2010




                                                                                                                                                                                                                                                               March 31, 2009
                                                                                                                                                Charge for the
                                        April 1, 2009




                                                                                                                           April 1, 2009
                                                             Additions




                                                                         Deletions




                                                                                                                                                                           Deletions
                                As at




                                                                                        As at




                                                                                                                   As at




                                                                                                                                                                                           As at




                                                                                                                                                                                                                         As at




                                                                                                                                                                                                                                                       As at
                                                                                                                                                                 year
TANGIBLE
Furniture and Fittings         46,798                     6,375             –          53,173                      8,238                       13,354                         –           21,592                        31,581                        38,560
Office Equipment              444,709                   157,657             –         602,366                    103,533                     170,780                          –          274,313                       328,053                      341,176
Computers                      63,708                    87,248             –         150,956                     17,079                       44,124                         –           61,203                        89,753                        46,629
INTANGIBLE
Computer Software                           –           459,953             –         459,953                                  –               94,140                         –           94,140                       365,813                                     –
Total                         555,215                   711,233             –        1,266,448                   128,850                     322,398                          –          451,248                       815,200                      426,365
Previous Year                               –           555,215             –         555,215                                  –             128,850                          –          128,850                       426,365                                     –




SCHEDULE 3 Investments                                                                                                                                                                 RUPEES                                                         RUPEES

                                                                                                                                                                 AS AT MARCH 31, 2010                               AS AT MARCH 31, 2009
LONG TERM (TRADE)
A     EQUITY SHARES (FULLY PAID)
      UNQUOTED                                                                       NUMBER OF                     FACE VALUE
                                                                                       SHARES                                              RUPEES

      SUBSIDARIES
      Dheeru Powergen Private Limited                                                             5,100                                       10                              90,642,300                                                                              –
B     REDEEMABLE PREFERENCE SHARES
      (FULLY PAID-UNQUOTED)
      SUBSIDARIES
      Dheeru Powergen Private Limited                                                       78,516                                           100                                  7,851,600                                                                           –
C     BONDS (FULLY PAID-UNQUOTED)
      SUBSIDARIES
      0.00% Dheeru Powergen Private Limited (Convertible)                               1,815,053                                            100                           181,505,300                                                                                –
                                                                                                                                                                           279,999,200                                                                                –




154     I D F C A N N U A L R E P O R T 09 –10
SCHEDULE 4 Sundry Debtors                                                  RUPEES                              RUPEES

                                                            AS AT MARCH 31, 2010       AS AT MARCH 31, 2009
(See Schedule 12 Note 2)
(Unsecured, considered good)
Over six months                                                         3,475,321                                  –
Others                                                                  6,026,482                       1,762,533
                                                                        9,501,803                       1,762,533



SCHEDULE 5 Cash and Bank Balance                                           RUPEES                              RUPEES

                                                            AS AT MARCH 31, 2010       AS AT MARCH 31, 2009
Cash                                                                       15,126                                  –
Balance with Scheduled Bank in Current Accounts                         3,020,966                       1,020,650
                                                                        3,036,092                       1,020,650



SCHEDULE 6 Loans and Advances (Unsecured)                                  RUPEES                              RUPEES

                                                            AS AT MARCH 31, 2010       AS AT MARCH 31, 2009
CONSIDERED GOOD
Advances Recoverable in Cash or in Kind or for
Value to be Received                                                   26,622,070                       4,831,148
Advance Payment of Tax                                                   376,231                                6,365
Advance Payment of Fringe Benefit Tax (Net of Provisions)                  55,000                              55,000
Advance against Investments                                                   800                                  –
CONSIDERED DOUBTFUL
Advance Recoverable in Cash or in Kind or for
Value to be Received                                                    6,392,114                       6,392,114
                                                                       33,446,215                      11,284,627
Less: Provision for Doubtful Advances                                   6,392,114                       6,392,114
                                                                       27,054,101                       4,892,513



SCHEDULE 7 Current Liabilities and Provisions                              RUPEES                              RUPEES

                                                            AS AT MARCH 31, 2010       AS AT MARCH 31, 2009
CURRENT LIABILITIES
Sundry Creditors - Other than Micro and Small Enterprises             154,910,553                       9,185,304
(See Schedule 12 Note 12)
Other Liabilities                                                       1,611,781                       1,768,882
                                                                      156,522,334                      10,954,186
PROVISIONS
Provision for Employee Benefits                                         2,482,309                       1,948,053
(See Schedule 12 Note 9(II))
                                                                        2,482,309                       1,948,053




                                                                        I D F C P R O J E CT S L I M I T E D     155
SCHEDULE 8 Operating Income                                                       RUPEES             RUPEES

                                                                        APRIL 1, 2009 TO   APRIL 1, 2008 TO
                                                                        MARCH 31, 2010     MARCH 31, 2009
Fees                                                                           9,120,051          3,060,000
Dividend on Current Investments (non-trade)                                           –             892,039
Interest on loan                                                               1,345,682                 –
(Tax Deducted at Source Rs. 134,569; Previous Year Nil)                       10,465,733          3,952,039



SCHEDULE 9 Staff Expenses                                                         RUPEES             RUPEES

                                                                        APRIL 1, 2009 TO   APRIL 1, 2008 TO
                                                                        MARCH 31, 2010     MARCH 31, 2009
Salaries                                                                      69,780,474         47,643,346
Contribution to Provident and Other Funds (See Schedule 12 Note 9(I))          2,363,978          4,349,413
Staff Training and Welfare Expenses                                            1,741,951            851,749
                                                                              73,886,403         52,844,508




SCHEDULE 10 Establishment Expenses                                                RUPEES             RUPEES

                                                                        APRIL 1, 2009 TO   APRIL 1, 2008 TO
                                                                        MARCH 31, 2010     MARCH 31, 2009
Rent                                                                             878,507          2,729,751
Rates & Taxes                                                                      3,800             85,558
Electricity Expenses                                                              85,530            494,504
Repairs and Maintenance - Others                                                 390,449            112,044
                                                                               1,358,286          3,421,857




SCHEDULE 11 Other Expenses                                                        RUPEES             RUPEES

                                                                        APRIL 1, 2009 TO   APRIL 1, 2008 TO
                                                                        MARCH 31, 2010     MARCH 31, 2009
Travelling and Conveyance                                                      4,717,944         10,211,340
Postage, Telephone and Fax                                                       699,393            948,452
Printing and Stationery                                                          192,256            361,843
Professional Fees                                                              5,399,349         13,921,937
Tender Charges                                                                 1,252,300            815,000
Membership and Subscriptions                                                     295,506            178,468
Loss on Sale of Current Investments                                                   –               4,641
Office Maintenance                                                               134,326            667,752
Advertisement & Publicity                                                          8,000            131,318
Books & Periodicals                                                                9,070            114,977
Business Development Expenses                                                    223,913            316,624
Miscellaneous Expenses                                                           595,609            299,966
Guarantee Commission                                                           4,013,227                 –
Loss on Foreign Exchange Fluctuation                                              39,312                 –
Auditors’ Remuneration (See Schedule 12 Note 4)                                1,116,510            499,440
                                                                              18,696,715         28,471,758




156    I D F C A N N U A L R E P O R T 09 –10
SCHEDULE 12 Notes Forming Part of the Accounts

1 Significant Accounting Policies
A. Account Convention
These accounts have been prepared in accordance with historical cost convention, applicable Accounting Standards notified by the Companies
(Accounting Standards) Rules, 2006, relevant provisions of the Companies Act, 1956.
B. System of Accounting
The Company adopts the accrual concept in the preparation of accounts. The preparation of financial statements requires the Management to
make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of
the financial statements and the reported income and expenses during the reporting period. The Management believes that the estimates used
in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.
C. Inflation
Assets and liabilities are recorded at historical cost to the Company. These costs are not adjusted to reflect the changing value in the
purchasing power of money.
D. Fixed Assets
Fixed assets are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated
depreciation.
E. Intangible Assets
Intangible Assets Comprising of system software are stated at cost of acquisition, including any cost attributable for bringing the asset to
its working condition, less accumulated amortisation. Any technology support cost or annual maintenance cost for such software is charged
annually to the Profit and Loss Account.
F. Depreciation & Amortisation
¬   Tangible Assets
    Depreciation on Fixed Assets, excluding certain electronic items, is provided on the written down value method, at the rates prescribed by
    Schedule XIV of the Companies Act, 1956. Certain electronic items are depreciated over a period of two years on straight line method based
    on the Management’s estimate of the useful life of assets. Depreciation on additions during the year is provided on a pro-rata basis. Assets
    costing less than Rs. 5,000 each are written off in the year of capitalisation.
¬   Intangible Assets
    Intangible Assets consisting of computers software are being amortised over a period of three years on straight line method.
G. Operating Leases
Leases of assets under which all the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases.
Payments made under operating leases are charged to the Profit and Loss Account, on a straight line basis, over the lease term.
H. Investments
Investments are classified into long-term investments and current investments. Investments, which are intended to be held for more than one
year, are classified as long-term investments and investments, which are intended to be held for less than one year, are classified as current
investments. Long-term investments are accounted at cost and any decline in the carrying value other than temporary in nature is provided for.
Current investments are valued at cost or market/fair value, whichever is lower. In case of investments in units of mutual funds, the net asset
value of units has been considered as the market value.
I. Revenue Recognition
a) Fees are recognised when reasonable right of recovery is established, the revenue can be reliably measured and there is no uncertainty
   regarding recoverability.
b) Dividend is recognised when the right to receive is established.
c) Interest Income is recognised on accrual basis.
J. Foreign Currency Transactions
Foreign currency transactions are accounted at the exchange rates prevailing on the date of the transaction.
K. Provisions and Contingencies
The Company creates a provision when there is a present obligation as a result of past event that probably requires an outflow of resources
and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible
obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a
present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

                                                                                                              I D F C P R O J E CT S L I M I T E D   157
L. Income-Tax
The accounting treatment for income-tax in respect of the Company’s income is based on the Accounting Standard 22 on ‘Accounting for Taxes
on Income’ as notified by the Companies (Accounting Standards) Rules, 2006. The provision made for income-tax in the accounts comprises
both, the current tax and the deferred tax. The deferred tax assets and liabilities for the year, arising on account of timing differences, are
recognised in the Profit and Loss Account and the cumulative effect thereof is reflected in the Balance Sheet.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax
assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which
such deferred tax assets can be realised.

In situations where the Company has unabsorbed depreciation or carry forward tax losses, deferred tax assets are recognised only if there is
virtual certainty supported by convincing evidence that the same can be realised against future taxable profits.

M. Employee Benefits:
DEFINED CONTRIBUTION PLAN
¬ The Company’s contribution to Provident Fund is deposited with the prescribed authorities and is charged to the Profit and Loss Account.
¬ The Company participates in the holding company’s superannuation policy and the Company’s contribution paid / payable during the year is
charged to the Profit and Loss Account.
DEFINED BENEFIT PLAN
¬ The net present value of the Company’s obligation towards Gratuity to employees is unfunded and actuarially determined as at the Balance Sheet
date based on the projected unit credit method. Actuarial gains and losses are recognised in the Profit and Loss Account.
OTHER LONG TERM EMPLOYEE BENEFIT
¬ Liability for compensated absences in respect of sick leave which is of a long term nature is actuarially determined as at the Balance Sheet date
based on the projected unit credit method.

 2 Sundry Debtors include Rs. 9,119,778; (Previous Year Rs. Nil) and Loans and Advances include Rs.14,812,404; (Previous Year Rs.Nil) due
from a private company in which Directors are interested as directors.

3 Contingent Liabilities not provided for in respect of :
PARTICULARS                                                                                            CURRENT YEAR               PREVIOUS YEAR
                                                                                                                 RUPEES                      RUPEES

(a) Capital Commitments (Net of advance)                                                                  1,224,000,000                               –
(b) Guarantees Issued
      As a part of project assistance, the Company has provided the following guarantees:
      Financial Guarantees                                                                                 432,525,600                                –

4 Auditors’ Remuneration
                                                                                                      CURRENT YEAR                PREVIOUS YEAR
                                                                                                                 RUPEES                      RUPEES

Audit Fees                                                                                                     400,000                      300,000
Tax Audit Fees                                                                                                 250,000                                –
Other Matters                                                                                                  465,000                      140,000
Company Law Matters                                                                                                   –                      10,000
Out of pocket expenses                                                                                            1,510                               –
Service Tax                                                                                                      58,355                      49,440
                                                                                                              1,174,865                     499,440
Less: Service tax set off claimed                                                                                58,355                               –
                                                                                                              1,116,510                     499,440

5 The primary mandate of the Company is to conceive, develop, execute and manage infrastructure projects in India. All other activities revolve
around the main business. The Company does not have any geographical segments. As such, there are no separate reportable segments as per
Accounting Standard 17 on ‘Segment Reporting’ as notified by the Companies (Accounting Standards) Rules, 2006.




158      I D F C A N N U A L R E P O R T 09 –10
 6 As per the Accounting Standard 18 on ‘Related Party Disclosures’ as notified by the Companies (Accounting Standards) Rules, 2006, the
related parties of the Company are as follows:
(a) Relationships:
    I.     HOLDING COMPANY:

           Infrastructure Development Finance Company Limited
           (With effect from February 4, 2010)
           IDFC Finance Limited (up to February 3, 2010)
    II.    FELLOW SUBSIDIARY (WITH WHOM THERE ARE TRANSACTIONS):

           IDFC Finance Limited (With effect from February 4, 2010)
    III.   SUBSIDIARY COMPANY :

           Dheeru Powergen Private limited (with effect from February 5, 2010)
    IV.    KEY MANAGEMENT PERSONNEL:

           Mr. V. Narayanan – Manager

(b) The nature and volume of transactions carried out with the above related parties in the ordinary course of business are as follows:

NAME OF THE RELATED PARTY                         PARTICULARS                                       CURRENT YEAR                  PREVIOUS YEAR
                                                                                                             (RUPEES)                         (RUPEES)

Infrastructure Development Finance                Advances taken and repaid                                          –                     20,000,000
Company Limited                                   Subscription towards Equity Share Capital              250,000,000                                    –
                                                  Sundry Creditors – Balance Outstanding                 116,538,500                        1,503,615
                                                  Bank Guarantee Commission charges                        4,103,677                                    –

IDFC Finance Limited                              Subscription towards Equity Share Capital                          –                     90,000,000

Dheeru Powergen Private Limited                   Loan Given and Repaid                                   30,000,000                                    –
                                                  Subscription towards Equity Share Capital               90,642,300                                    –
                                                  Subscription towards Preference Share Capital            7,851,600                                    –
                                                  Bonds application money                                         800                                   –
                                                  Subscription towards Bonds                             181,505,300                                    –
                                                  Sundry Debtors – Balance Outstanding                     9,119,778                                    –
                                                  Bank Guarantee commission charged                        6,730,368                                    –
                                                  Upfront Fees charged                                     2,029,480                                    –
                                                  Interest charged                                         1,345,682                                    –
                                                  Advances Recoverable - Balance outstanding              14,812,404                                    –

Mr. V. Narayanan                                  Remuneration                                                       –                                  –

7 Personnel expenses amounting to Rs. Nil (Previous Year Rs.24,587,615) include reimbursement of cost of employees of Infrastructure
Development Finance Company Limited, the holding Company, on deputation to the Company.

8 Earnings Per Share:
In accordance with the Accounting Standard 20 on “Earnings Per Share” as notified under the Companies (Accounting Standards) Rules, 2006
the Earning Per Share has been computed as under:

PARTICULARS                                                                                         CURRENT YEAR                  PREVIOUS YEAR
(a) Loss after taxation (Rs.)                                                                            (83,798,069)                    (88,107,048)
(b) Weighted average number of equity shares                                                              12,639,041                        4,329,452
(c) Earnings Per Share (Rs.) (a)/(b) (Basic and Diluted)                                                        (6.63)                             (20.35)

 9 In accordance with Accounting Standard 15 on “Employee Benefits” as notified by the Companies (Accounting Standards) Rules, 2006 the
following disclosures have been made:

I. The Company has recognised the following amounts in the Profit and Loss Account towards contribution to defined contribution plans which
are included under Contribution to Provident and Other Funds:

                                                                                                    CURRENT YEAR                  PREVIOUS YEAR
                                                                                                              RUPEES                               RUPEES

Provident Fund                                                                                             1,408,644                        1,665,793
Superannuation Fund                                                                                          955,334                        1,314,094


                                                                                                            I D F C P R O J E CT S L I M I T E D      159
II. The details of the Company’s unfunded employee benefit plans for gratuity for its employees are given below which is as certified by the
actuary and relied upon by the auditors:
                                                                                                          CURRENT YEAR                PREVIOUS YEAR
                                                                                                                     RUPEES                       RUPEES

CHANGE IN THE DEFINED BENEFIT OBLIGATIONS:
Liability at the beginning of the year                                                                            1,369,526                             –
Current Service Cost                                                                                                990,846                    1,369,526
Interest Cost                                                                                                       158,636                             –
Benefits Paid                                                                                                     (238,724)                             –
Actuarial Gain                                                                                                    (484,976)                             –
Liability at the end of the year                                                                                  1,795,308                    1,369,526
AMOUNT RECOGNISED IN THE BALANCE SHEET:
Liability at the end of the year                                                                                  1,795,308                    1,369,526
Amount recognised in the Balance Sheet under “Provision for Employee Benefits”                                    1,795,308                    1,369,526
EXPENSE RECOGNISED IN THE PROFIT AND LOSS ACCOUNT:
Current Service Cost                                                                                                990,846                    1,369,526
Interest Cost                                                                                                       158,636                             –
Net Actuarial Gain to be recognised                                                                               (484,976)                             –
Expense recognised in the Profit and Loss Account under staff expenses                                              664,506                    1,369,526
RECONCILIATION OF THE LIABILITY RECOGNISED IN THE BALANCE SHEET:
Opening Net Liability                                                                                             1,369,526                             –
Expense recognised                                                                                                  664,506                    1,369,526
Contribution by the Company                                                                                       (238,724)                             –
Amount recognised in the Balance Sheet under “Provision for Employee Benefits”                                    1,795,308                    1,369,526
EXPECTED EMPLOYER’S CONTRIBUTION NEXT YEAR                                                                          700,126                      754,850
EXPERIENCE ADJUSTMENTS:
Defined Benefit Obligation                                                                                        1,795,308                    1,369,526
PRINCIPAL ASSUMPTIONS:                                                                                                    %                            %
Discount Rate                                                                                                          8.10                          8.00
Salary Escalation Rate (p.a.)                                                                                          8.00                          7.00
The estimate of future salary increase, considered in the actuarial valuation takes account of inflation, seniority, promotion and other relevant factors.
10 In accordance with the Accounting Standard 19 on ‘Leases’ as notified by the Companies (Accounting Standards) Rules, 2006, the following
disclosure in respect of Operating Leases is made:
The Company has taken vehicles for certain employees under Operating Leases, which expire between August 2009 to October 2012 (Previous
Year August 2008 to October 2012). The committed lease rentals in the future are:
PARTICULARS                                                                                               CURRENT YEAR                PREVIOUS YEAR
                                                                                                                     RUPEES                       RUPEES

Not later than one year                                                                                             875,004                      516,352
Later than one year and not later than five years                                                                 1,227,894                    2,102,898

11 Expenditure incurred in foreign currency:
PARTICULARS                                                                                               CURRENT YEAR                PREVIOUS YEAR
                                                                                                                     RUPEES                       RUPEES

Foreign Travel                                                                                                      330,674                    1,046,836

12 No interest has been paid / payable by the Company during the year to the “suppliers” covered under the Micro, Small and Medium
Enterprises Development Act, 2006. The above information takes into account only those suppliers who have responded to inquires made by the
Company for this purpose.
13 The figures for the previous year have been regrouped / rearranged wherever necessary.

                                                                FOR AND ON BEHALF OF THE BOARD


                                                                RAJIV B. LALL                          VIKRAM LIMAYE
                                                                Chairman                               Director


                                                                V. NARAYANAN
Mumbai | April 19, 2010                                         Company Secretary & Manager

160     I D F C A N N U A L R E P O R T 09 –10
      B A L A N C E S H E E T A B ST R A CT                                                                                           AND COMPANY’S GENERAL BUSINESS PROFILE




I.      REGISTRATION DETAILS

        Registration No.           U   4   5   2   0        3        M       H           2       0        0   7   P   L   C   1   7   6   6   4     0

        State Code                 1   1

        Balance Sheet Date         3   1       0   3                 2       0           1       0

II.     CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000)

                                                                                 Public Issue                                                                                        Right Issue
                                                                                 N           I       L                                                                               N    I        L


                                                                                 Bonus Issue                                                                                 Private Placement

                                                                                 N           I       L                                                                               N    I        L

III.    POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000)
                                                                         Total Liabilities                                                                                          Total Assets

                                                       3        2        0       4           0       6                                                             3     2     0     4    0        6
        SOURCES OF FUNDS
                                                                         Paid-up Capital                                                                                Reserves and Surplus

                                                       3        4        0       5           0       0                                                                               N    I        L

                                                                             Secured Loans                                                                                    Unsecured Loans

                                                                                 N           I       L                                                                               N    I        L
        APPLICATION OF FUNDS
                                                                      Net Fixed Assets                                                                                              Investments

                                                                                 8           1       5                                                             2     7     9     9    9        9

                                                                 Net Current Assets                                                                                       Deferred Tax Asset

                                                       (1       1        9       4           1       2)                                                                              N    I        L

                                                        Profit and Loss Account

                                                       1        7        9       0           9       8

IV.     PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000)
                                                                     Turnover / Income                                                                                       Total Expenditure

                                                                1        0       4           6       6                                                                   9     4     2    6        4

                                                                      Profit Before Tax                                                                                        Profit After Tax

                                                                (8       3       7           9       8)                                                                  (8    3     7    9        8)

                                                   Earnings per Share (in Rs.)                                                                                                      Dividend %

                                                                      (6             .       6       3)                                                                              N    I        L

V.      GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS)

        Item Code No. (ITC Code)           N   I   L

        Product Description                I   N   F        R         A       S          T       R        U   C   T   U   R   E       D   E   V      E    L    O    P     M     E     N       T

                                           A   N   D                  F          I       N       A        N   C   I   N   G




                                                                                                                                                  I D F C P R O J E CT S L I M I T E D            161
    ST AT E M E N T P U R S U A N T T O S E CT I O N 2 1 2                                                               OF THE COMPANIES ACT, 1956




NAME OF SUBSIDIARY COMPANY                                                                                                      DHEERU POWERGEN
                                                                                                                                  PRIVATE LIMITED
1      Financial year of the Subsidiary Companies ended on                                                                           31st March 2010
2      Equity Shares of Rs.10 each
            a) Number of Shares                                                                                                                5100
            b) Extent of Holding                                                                                                               51%
3      The Net aggregate of profits of the Subsidiary Company so far as these concern members of IDFC Projects Limited
       i.     For the Financial Year of the Subsidiary
       a) Dealt with in the accounts of the Holding Company                                                                                      Nil
       b) Not dealt with in the accounts of the Holding Company                                                                                  Nil
       ii. For the previous financial years of the Subsidiary since it became the Holding Company’s Subsidiary
       a) Dealt with in the accounts of the Holding Company                                                                                      Nil
       b) Not dealt with in the accounts of the Holding Company                                                                                  Nil




                                                                  FOR AND ON BEHALF OF THE BOARD OF DIRECTORS



                                                                  RAJIV B. LALL            VIKRAM LIMAYE
                                                                  Chairman                 Director


Mumbai | April 19, 2010

162         I D F C A N N U A L R E P O R T 09 –10
IDFC asset
management
company limited

B O A R D O F D I R E CTO R S
■   Dr. Rajiv B. Lall
    Chairman
■   Mr. Pradip Madhavji
■   Mrs. Bakul Patel

A U D I TO R S
■   M. P. Chitale & Co
    Chartered Accountants

P R I N C I PA L B A N K E R S
■   HDFC Bank Limited
    Standard Chartered Bank

R E G I ST E R E D O F F I C E
One India Bulls Centre,
841 Jupiter Mills Compound,
Senapati Bapat Marg,
Elphinstone Road (West),
Mumbai 400 013.
TEL +91 22 66289999
FAX +91 22 24215051/52/53




                                 I D FC ASSS E T M A N AG E M E N T CO M PA N Y L I M I T E D   163
  D I R E CT O R S ’ R E P O R T


TO THE MEMBERS                                                               Close ended schemes launched during the period under review:
We are pleased to present the Tenth Annual Report to the Members,           In addition to the above open ended schemes, Six Close-Ended
along with the audited Profit and Loss Account for the period ended         income Schemes in the form of Fixed Maturity Plans (FMP’s) were
March 31, 2010 and the Balance Sheet as at March 31, 2010.                  launched. These comprised of IDFC Fixed Maturity Plan – Thirteen
FINANCIAL RESULTS                                                           Months Series I, IDFC Fixed Maturity Plan –Fifteen Months Series 3,
                                                                            IDFC Fixed Maturity Plan – Seventeen Months Series 1, IDFC FMP-
                                                                   RUPEES
                                                                            Half Yearly Series 9 and IDFC Fixed Maturity Plan – Fourteen Months
PARTICULARS                         YEAR ENDED            YEAR ENDED        Series 1. These Fixed Maturity Plans collected approximately Rs
                                  MARCH 31, 2010        MARCH 31, 2009
                                                                            1027.85 crores.
Gross Income                           1,069,714,808         683,074,465
Profit before Interest,                   60,238,451         111,125,086    AWARDS & RECOGNITION
Depreciation & Tax                                                          IDFC Premier Equity Fund – Plan A has been ranked as a Seven Star
Depreciation                              27,826,751          11,711,459    Fund by ICRA in the category of ‘Open Ended Equity Diversified -
Profit before Tax                         32,411,700          99,413,627    Defensive’ schemes for its 3 years performance till December 31,
Provision for Tax                          9,000,000          38,500,000    2009. The rank is an outcome of an objective and comparative analysis
Deferred Tax Liability                    (4,519,346)         (3,775,654)   against various parameters, including: risk adjusted return, fund size,
Fringe Benefit Tax                                 –           4,600,000    company concentration and liquidity. The ranking methodology did not
Profit after Tax                          27,931,046          60,089,281    take into account entry and exit loads imposed by the Fund. There were
Balance brought forward                  282,863,881        222,774, 600    81 schemes considered in ‘Open Ended Equity Diversified - Defensive’
from previous year                                                          category for the ranking exercise. The rank is neither a certificate of
Amount available for                     310,794,927         282,863,881    statutory compliance nor any guarantee on the future performance of
Appropriation                                                               IDFC Premier Equity Fund – Plan A.
Balance carried to                       310,794,927         282,863,881    IDFC Government Securities Fund – ST – Plan A has been ranked
Balance Sheet                                                               as a Five Star Fund by ICRA in the category of ‘Open Ended Gilt’
                                                                            schemes for its 1 year performance till December 31, 2009. The
OPERATIONS OF IDFC MUTUAL FUND
                                                                            rank is an outcome of an objective and comparative analysis against
The Company is the Investment Manager of the schemes of IDFC
                                                                            various parameters, including: risk adjusted return, fund size and
Mutual Fund (IDFC MF). The Assets under Management of IDFC
                                                                            average maturity. The ranking methodology did not take into account
Mutual Fund were Rs. 19,979 Crore (including AUM of Fund of Funds
                                                                            entry and exit loads imposed by the Fund. There were 30 schemes
Schemes) as on March 31, 2010.
                                                                            considered in ‘Open Ended Gilt’ category for the ranking exercise.
NEW SCHEMES LAUNCH                                                          The rank is neither a certificate of statutory compliance nor any
 Open ended schemes launched during the period under review:               guarantee on the future performance of IDFC Government Securities
IDFC Asset Allocation Fund of Fund, an open ended Fund of Funds             Fund – ST – Plan A.
Scheme was launched on January 04, 2010. The investment objective           IDFC Premier Equity Fund ranked as Best Fund over Past 3 Years
of the scheme is to generate capital appreciation through investment        period ending Dec. 31, 2009, India Equity by Lipper, a global ranking
in different mutual fund schemes primarily local funds based on a           agency for mutual funds in Lipper Fund Awards, India, 2010.
defined asset allocation model. It has 3 plans – Aggressive Plan,           Business Standard, a leading newspaper in India voted IDFC Mutual
Conservative Plan and Moderate Plan. The Aggressive Plan collected          Fund as the “Equity Fund Managers of the Year” for the year 2009.
a total of Rs. 613,484,254.26 during the New Fund Offer. The
                                                                            Business World, a leading business magazine in India voted Kenneth
Conservative Plan collected a total of Rs 301,262,457.31during
                                                                            Andrade (Head – Investments) as the “Smartest Fund Manager of the
the New Fund Offer. The Moderate Plan collected a total of Rs.
                                                                            Year” for the year 2009.
404,381,577.08 during the New Fund Offer.
                                                                            IDFC Premier Equity Fund rated as the “Best Mid-cap and Small-cap
IDFC Monthly Income Plan Fund of Fund, an open ended Fund of Fund
                                                                            Fund” over Past 3 Years period ending Dec. 31, 2009 by Business
scheme was launched on January 11, 2010. This scheme collected a
                                                                            World, a leading business magazine in India
total of Rs. 2,113,409,943.68 during the New Fund Offer. The primary
objective of the Scheme is to generate regular returns through              IDFC AMC rated as the “Best Performing Fund House” by the
investment primarily in debt oriented Mutual Fund schemes (such as          Economic Times (ET) Quarterly Mutual Fund Tracker for Q1 and Q2 of
Income and Liquid funds). The secondary objective of the Scheme is to       FY 09-10.
generate long-term capital appreciation by investing a portion of the       IDFC Imperial Equity Fund and IDFC Dynamic Bond Fund ranked in the
Scheme’s assets in equity oriented MF schemes. Monthly Income is not        “Platinum Category” which is the highest ranking given to schemes in
assumed and the same is subject to availability of distributable surplus.   Q1 and Q2 2009.




164     I D F C A N N U A L R E P O R T 09 –10
NEW BUSINESSES                                                           SHARE CAPITAL
 Portfolio Management Services:                                         No further equity or preference share capital was issued by the
During the year under review, the Company acquired 100% of the           company during the year.
equity share capital of IDFC Investment Advisors Limited (IDFC IA)       FIXED DEPOSITS
from Infrastructure Development Finance Company Limited (IDFC).          The Company has not accepted any Fixed Deposits from the public.
IDFC IA is a Portfolio Manager, registered with the Securities and
Exchange Board of India (SEBI) to carry out Portfolio Management         PARTICULARS OF EMPLOYEES
Services pursuant to SEBI (Portfolio Managers) Regulations, 1993.        As required under the provisions of Section 217 (2A) of the
                                                                         Companies Act, 1956, read with the Companies (Particulars of
   Pension Fund Management
                                                                         Employees) Rules, 1975, as amended, the names and other particulars
During the year under review, the Company acquired 50.00001%             of employees is annexed to this Report.
of the equity share capital of IDFC Pension Fund Management
Company Limited (IDFC PFM). IDFC PFM is one of the six pension           STATUTORY DISCLOSURE OF PARTICULARS
fund managers selected by the Pension Fund Regulatory and                The requirements of disclosure, in terms of Section 217 (1)(e) of the
Development Authority (PFRDA) to manage the New Pension System           Companies Act, 1956, read with Companies (Disclosure of particulars
(NPS) launched by the Government of India for all citizens of India      in the report of Board of Directors) Rules, pertaining to steps taken
other than government employees covered under NPS. IDFC PFM was          regarding conservation of energy & technology absorption, do not
incorporated on March 31, 2009 and the Pension Fund Regulatory &         apply to the Company.
Development Authority issued the Certificate of Commencement of          There were no foreign exchange earnings by the Company during the
Business on May 01, 2009. Tier I and Tier II schemes are managed by      period under review.
IDFC PFM.                                                                The details of expenditure in foreign currency are given in note 8 of
DIVIDEND                                                                 Schedule 16.
Due to inadequacy of profits, the Board of Directors do not              DIRECTORS RESPONSIBILITY STATEMENT
recommend the declaration of dividend.                                   Based on the representation made by the management, the directors,
DIRECTORS                                                                pursuant to the provisions of Section 217 (2AA) the Directors wish to
In accordance with the provisions of the Companies Act, 1956 and         state:
the Company’s Articles of Association, Mr. Pradip Madhavji retires by    1. that in the preparation of the annual accounts, the applicable
rotation and is eligible for re-appointment.                             accounting standards have been followed along with proper
Mr. R. H. Patil resigned from the directorship of the Company with       explanation relating to material departures;
effect from April 12, 2010. The Board wishes to place on record its      2. that they have selected such accounting policies and applied them
sincere appreciation for his guidence and valuable contribution to the   consistently and made judgements and estimates that are reasonable
Company.                                                                 and prudent so as to give a true and fair view of the state of affairs of
                                                                         the company at the end of the financial year and of the profit or loss
AUDITORS
                                                                         of the company for that period;
M/s M. P. Chitale and Co., Chartered Accountants and Statutory
Auditors of the Company would be retiring at the conclusion of           3. that they have taken proper and sufficient care for the
the forthcoming Annual General Meeting and are eligible for re-          maintenance of adequate accounting records in accordance with the
appointment. The auditors have confirmed their eligibility and           provisions of this Act, for safeguarding the assets of the Company
willingness to accept the office if re-appointed. The Members are        and for preventing and detecting fraud and other irregularities; and
requested to consider their re-appointment, at a remuneration to         4. that they have prepared the annual accounts on a going concern basis.
be decided by the Board of Directors, for the financial year ending
                                                                         ACKNOWLEDGEMENT
March 31, 2011 as set out in the Notice convening the Annual General
                                                                         The Board places on record its gratitude to the Government of
Meeting.
                                                                         India, Securities & Exchange Board of India, Reserve Bank of India,
AUDIT COMMITTEE                                                          Association of Mutual Funds of India, other regulatory authorities
The Audit Committee consists of three members, Mr. Pradip Madhavji,      and institutions, investors in the Mutual Fund schemes and to the
Chairman, Dr. R.H. Patil and Mrs. Bakul Patel. The Committee met four    Members for their continued guidance and support and expresses
times during the year under review. The functions of the Committee       its sincere appreciation to all the employees for their commendable
includes reviewing the financial statements, internal control systems    teamwork and enthusiastic contribution during the year.
and significant accounting policies of the Company and discussing the
audit findings and recommendatintons of the internal and statutory
                                                                         FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
auditors of the Company.

CONVERSION INTO PUBLIC COMPANY                                           RAJIV B. LALL
The Company has been converted into a Public Company. The                Chairman
Registrar of Companies, Maharashtra has issued a Fresh Certificate
of Incorporation consequent upon change of name on conversion to         Mumbai
Public Limited Company dated June 5, 2009.                               April 20, 2010

                                                                              I D FC ASSS E T M A N AG E M E N T CO M PA N Y L I M I T E D   165
      AU D I TO RS ’ R E PO RT


To The Members of IDFC Asset Management Company Limited                  (d) In our opinion, the Balance Sheet, Profit and Loss Account and
We have audited the attached Balance Sheet of IDFC Asset                     Cash Flow Statement dealt with by this report comply with the
Management Company Limited as at March 31, 2010 and also the                 accounting standards referred to in Section 211 (3C) of the
Profit and Loss Account and the Cash Flow Statement for the year             Companies Act, 1956 to the extent applicable;
ended on that date annexed thereto. These financial statements are       (e) On the basis of written representation received by the Company
the responsibility of the Company’s management. Our responsibility           from the directors, we report that none of the directors is
is to express an opinion on these financial statements based on our          disqualified as on March 31, 2010 from being appointed as a
audit.                                                                       director in terms of clause (g) of sub section (1) of section 274 of
We conducted our audit in accordance with auditing standards                 the Companies Act, 1956;
generally accepted in India. Those standards require that we plan        (f)   In our opinion and to the best of our information and according
and perform the audit to obtain reasonable assurance about whether             to the explanations given to us, the accounts read with notes
the financial statements are free of material misstatement. An                 thereon give the information required by the Companies Act,
audit includes examining, on a test basis, evidence supporting the             1956, in the manner so required and give a true and fair view in
amounts and disclosures in the financial statements. An audit also             conformity with the accounting principles generally accepted in
includes assessing the accounting principles used and significant              India:
estimates made by management, as well as evaluating the overall
                                                                               (i)   in so far as it relates to the Balance Sheet, of the state of
financial statement presentation. We believe that our audit provides a
                                                                                     affairs of the Company as at March 31, 2010,
reasonable basis for our opinion.
                                                                               (ii) in so far as it relates to the Profit and Loss Account, of the
(1) As required by the Companies Auditors Report Order (CARO)
                                                                                    profit of the Company for the year ended on that date, and
2003, issued by the Central Government of India in terms of Section
227 (4A) of the Companies Act, 1956, we enclose as Annexure, a                 (iii) in so far as it relates to the Cash Flow Statement of the
statement on the matters specified in paragraphs 4 and 5 of the said                 Company for the year ended on that date.
Order.
(2) Further to our comments in the Annexure referred to in
paragraph (1) above, we state that:                                      FOR M. P. CHITALE & CO.
(a) We have obtained all the information and explanations which          Chartered Accountants
    to the best of our knowledge and belief were necessary for the
    purpose of our audit;                                                VIDYA BARJE

(b) In our opinion, proper books of account as required by law           Partner

    have been kept by the Company, so far as appears from our            M. No. 104994

    examination of those books;                                          Firm Registration No. 101851W

(c)    The Balance Sheet, Profit and Loss Account and Cash Flow
       Statement dealt with in this report are in agreement with the     Mumbai
       books of account;                                                 April 21, 2010




166      I D F C A N N U A L R E P O R T 09 –10
      ANNEXURE                                                                                                       TO THE AUDITOR’S REPORT



                                                                         dues outstanding as at March 31, 2010 for a period of more than six
Annexure referred to in paragraph 1 of the report of even date
                                                                         months from the date they became payable.
of the Auditors to the members of IDFC Asset Management
Company Limited                                                          (x) The Company does not have accumulated losses at the end of the
                                                                         financial year and it has not incurred any cash losses in the financial
(i)   (a) The Company has maintained proper records, showing full
                                                                         year ended on that date or in the immediately preceding financial year.
          particulars including quantitative details and situation of
          Fixed Assets.                                                  (xi) In our opinion and according to the information and explanations
                                                                         given to us, during the year, the Company has not taken any loan
      (b) The fixed assets were physically verified during the year
                                                                         and no amounts were due towards principal or interest to financial
          by the Management in accordance with a program of
                                                                         institution, bank or debenture holders during the year.
          verification, which in our opinion provides for the physical
          verification of all the fixed assets at reasonable intervals   (xii) According to the information and explanations given to us, the
          and discrepancies observed during the verification have        Company has not granted loans and advances on the basis of security
          been properly dealt with in the books of account.              by way of pledge of shares, debentures and other securities.

      (c)   The Company has not disposed of substantial part of fixed    (xiii) According to the information and explanations given to us, the
            assets during the year.                                      Company is not dealing or trading in shares, securities, debentures
                                                                         and other securities.
(ii) The Company has not granted any loans to Companies, firms or
other parties covered in the register maintained under section 301 of    (xiv) According to the information and explanations given to us, the
the Companies Act, 1956.                                                 Company has not given any guarantee for loans taken by others from
                                                                         bank or financial institutions.
(iii) The Company has not taken any loans from Companies, firms or
other parties covered in the register maintained under section 301 of    (xv) According to the information and explanations given to us, the
the Companies Act, 1956.                                                 Company has not taken any term loan.

(iv) In our opinion and according to the information and explanations    (xvi) According to the information and explanations given to us, during
given to us, there are adequate internal control procedures              the year, the Company has not raised any funds.
commensurate with the size of the Company and the nature of its          (xvii) The Company has not made any preferential allotment of shares
business for purchase of fixed assets and for the services rendered.     to parties and companies covered in the Register maintained under
(v) In our opinion and according to the information and explanations     section 301 of the Act.
given to us, there are no transactions that need to be entered into a    (xviii) According to the information and explanations given to us, the
register in pursuance of section 301 of the Companies Act, 1956.         Company has not issued any debentures up to 31st March 2010.
(vi) In our opinion and according to the information and explanations    (xix) The Company has not raised money from public issue.
given to us, the Company has not accepted any deposits from the          (xx) According to the information and explanations given to us, no
public.                                                                  fraud on or by the Company has been noticed or reported during the
(vii) Company has an internal audit system commensurate with its size    year.
and nature of business.                                                  (xxi) Considering the nature of the business and the services rendered
(viii) Central Government has not prescribed maintenance of cost         by the Company, clauses (ii) and (xiii) under Clause 4 of the CARO are
records under Section 209 (1) (d) of the Companies Act, 1956.            not applicable.
(ix) According to the information and explanations given to us and the
records of the Company examined by us, in our opinion, the Company       FOR M. P. CHITALE & CO.
is regular in depositing undisputed statutory dues including Provident   Chartered Accountants
Fund, Investor Education and Protection Fund, Employees’ State
Insurance, Income-tax, Sales-tax, Wealth tax, Service Tax, Customs       VIDYA BARJE
duty, Excise duty, cess and any other statutory dues as applicable       Partner
with the appropriate authorities. According to the information and       M. No. 104994
explanations given to us, there were no undisputed amounts payable       Firm Registration No. 101851W
in respect of Provident Fund, Investor Education and Protection
Fund, Employees’ State Insurance, Income-tax, Sales-tax, Wealth tax,     Mumbai
Service Tax, Customs duty, Excise duty, cess and any other statutory     April 21, 2010




                                                                              I D FC ASSS E T M A N AG E M E N T CO M PA N Y L I M I T E D   167
   BALANCE SHEET                                                                                                            AS AT MARCH 31, 2010


                                                                                     RUPEES                       RUPEES                  RUPEES

                                                   SCHEDULE                                    AS AT MARCH 31, 2010        AS AT MARCH 31, 2009
SOURCES OF FUNDS
Shareholders’ Funds
Share Capital                                                 1               224,025,020                                            224,025,020
Reserves and Surplus                                          2               339,144,927                                            311,213,881
                                                                                                             563,169,947             535,238,901
Total                                                                                                        563,169,947             535,238,901
APPLICATION OF FUNDS
Fixed Assets                                                  3
Gross Block                                                                   143,886,697                                             85,746,190
Less: Depreciation & Amortisation                                                 56,248,738                                          40,533,211
                                                                                                              87,637,959              45,212,979
Add: Capital Work-in-Progress                                                                                  3,511,753               3,288,684
                                                                                                              91,149,712              48,501,663
Investments                                                   4                                              659,483,882             333,735,017
Deferred Tax Asset                                                                                             6,977,000               2,457,654
Current Assets, Loans and Advances
   Interest accrued on Fixed Deposit                                                 77,376                                                1,050
   Sundry Debtors                                             5                   17,599,296                                          11,495,650
   Cash and Bank Balances                                     6                   26,536,713                                           6,595,056
   Loans and Advances                                         7               253,112,279                                            245,084,918
                                                                                                             297,325,664             263,176,674
Less: Current Liabilities and Provisions
   Current Liabilities                                        8               488,047,611                                            109,150,063
   Provisions                                                 9                    3,718,700                                           3,482,044
                                                                                                             491,766,311             112,632,107
Net Current Assets                                                                                       (194,440,647)               150,544,567
Total                                                                                                        563,169,947             535,238,901
Notes to the Accounts                                         16
Schedules 1 to 16 form an integral part of the Accounts




IN TERMS OF OUR REPORT OF EVEN DATE
FOR M.P. CHITALE & CO.                                        FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Chartered Accountants

VIDYA V . B A R J E                                           BAKUL PATEL                         PRADIP MADHAVJI
Partner                                                       Director                            Director

                                                              UTTARA DEKA
Mumbai | April 20, 2010                                       Company Secretary

168       I D F C A N N U A L R E P O R T 09 –10
   PROFIT AND LOSS ACCOUNT                                                                                 FOR THE YEAR ENDED MARCH 31, 2010



                                                                                                               RUPEES                        RUPEES

                                                                                                 APRIL 1, 2009 TO         JANUARY 1, 2008 TO
                                                                        SCHEDULE                 MARCH 31, 2010              MARCH 31, 2009
INCOME
Operating and Other Income                                                           10               1,058,850,803                 683,074,465
EXPENDITURE
Interest & Other Charges                                                             11                     1,174,816                  6,172,183
Staff Expenses                                                                       12                   427,457,377               213,639,474
Establishment Expenses                                                               13                   123,942,231                93,000,677
Other Expenses                                                                       14                   456,901,933               251,245,347
Provisions and Contingencies                                                         15                            –                   7,891,698
Depreciation & Amortisation                                                                                27,826,751                11,711,459
                                                                                                      1,037,303,108                 583,660,838
PROFIT BEFORE TAXATION                                                                                     21,547,695                99,413,627
Less : Provision for Taxation
      Current Tax                                                                                           9,000,000                38,500,000
      Less: Deferred Tax                                                                                    4,519,346                  3,775,654
      Add: Fringe Benefit Tax                                                                                      –                   4,600,000
                                                                                                            4,480,654                39,324,346
PROFIT AFTER TAXATION                                                                                      17,067,041                60,089,281
Add : Prior Period Income                                                                                  10,864,005                            –
Add : Balance as per last Balance Sheet                                                                   282,863,881               222,774,600
AVAILABLE FOR APPROPRIATION                                                                               310,794,927               282,863,881
Appropriations                                                                                                     –                             –
BALANCE CARRIED FORWARD                                                                                   310,794,927               282,863,881
Earnings per share (Face Value Rs. 10) (Basic)                                                                  10.70                         23.02
Notes to the Accounts                                                                16
Schedules 1 to 16 form an integral part of the Accounts




IN TERMS OF OUR REPORT OF EVEN DATE
FOR M.P. CHITALE & CO.                                    FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Chartered Accountants

VIDYA V . B A R J E                                       BAKUL PATEL                          PRADIP MADHAVJI
Partner                                                   Director                             Director

                                                          UTTARA DEKA
Mumbai | April 20, 2010                                   Company Secretary

                                                                              I D FC ASSS E T M A N AG E M E N T CO M PA N Y L I M I T E D     169
   C A S H F L OW ST AT E M E N T                                                                                  FOR THE YEAR ENDED MARCH 31, 2010




                                                                                            RUPEES                     RUPEES                    RUPEES

                                                                                                        APRIL 1, 2009 TO          JANUARY 1, 2008 TO
                                                                                                        MARCH 31, 2010               MARCH 31, 2009
A. CASH FLOW FROM OPERATING ACTIVITIES
      Profit/(Loss) Before Taxation                                                                                21,547,695                99,413,627
      Adjustments for
      Add: Depreciation & Amortisation                                                                             27,826,751                11,710,317
      Add: Provision for Retirement Benefits                                                                          236,656                 3,482,044
      Add: Provision for diminution in value of Investments                                                        (7,891,698)                7,891,698
      Add: Lease Escalation Charge                                                                                  9,033,517                 3,145,507
      Add: Fixed Assets Writte Off                                                                                  5,583,593                          -
      Add: Prior Period Income                                                                                     10,864,005                          -
      Operating Profit before Working Capital Changes                                                              67,200,519               125,643,193
      (Increase)/Decrease
      -   Current Assets, Loan & Advances                                               69,112,739                                          (95,985,985)
      -   Debtors                                                                       (6,103,646)                                          36,609,224
                                                                                        63,009,093                                          (59,376,761)
      Increase/(Decrease) in Current Liabilities
      - Expenses/Tax Payable                                                                                      369,864,030               (72,016,817)
                                                                                                                  432,873,123              (131,393,578)
      Direct taxes Paid                                                                                           (86,216,424)              (81,725,097)
      NET CASH FROM/(USED IN) OPERATING ACTIVITIES (A)                                                            413,857,218               (87,475,482)
B. CASH FLOW FROM INVESTING ACTIVITIES
      Investment in Subsidiaries                                                                             (160,000,010)                             -
      Fixed Deposit under lien                                                                                               -               (1,050,000)
      Purchase of Fixed Asset including Capital Work-in-Progress (Net of deletions)                               (76,058,393)              (45,100,969)
      NET CASH USED IN INVESTING ACTIVITIES (B)                                                              (236,058,403)                  (46,150,969)
C. CASH FLOW FROM FINANCING ACTIVITIES
      Dividend Paid (including Dividend Tax)                                                                                 -              (34,734,353)
      NET CASH USED IN FINANCING ACTIVITIES (C)                                                                              -              (34,734,353)
      NET INFLOW/(OUTFLOW) DURING THE PERIOD (A)+(B)+(C)                                                          177,798,815              (168,360,804)
      Cash and cash equivalents as at the beginning of the period as per Note below                               347,171,770               515,532,574
      Cash and cash equivalents as at the end of the period as per Note below                                     524,970,585               347,171,770
                                                                                                             (177,798,815)                  168,360,804
      Note to Cash Flow Statement :
      CASH & CASH EQUIVALENTS                                                                         END OF THE PERIOD          BEGINNING OF THE PERIOD
      Cash and Bank Balance as per Schedule 6                                                                      26,536,713                 6,595,056
      Less: Fixed Deposit under Lien                                                                                1,050,000                 1,050,000
      Add: Investment at cost as per Schedule 4                                                                   499,483,872               341,626,714
                                                                                                                  524,970,585               347,171,770




IN TERMS OF OUR REPORT OF EVEN DATE
FOR M.P. CHITALE & CO.                                              FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Chartered Accountants

VIDYA V . B A R J E                                                 BAKUL PATEL                        PRADIP MADHAVJI
Partner                                                             Director                           Director

                                                                    UTTARA DEKA
Mumbai | April 20, 2010                                             Company Secretary

170       I D F C A N N U A L R E P O R T 09 –10
  SCHEDULES                                                                                                                                                  ANNEXED TO AND FORMING PART OF THE ACCOUNTS




SCHEDULE 1 Share Capital                                                                                                                                                                    RUPEES                                                        RUPEES

                                                                                                                                                            AS AT MARCH 31, 2010                                    AS AT MARCH 31, 2009
AUTHORISED:
4,000,000 Equity shares of Rs. 10/- each                                                                                                                                         40,000,000                                                          40,000,000
21,000,000 15% Non participating, non convertible ,
cumulative redeemable Preference shares of Rs. 10/- each                                                                                                                        210,000,000                                                     210,000,000
ISSUED, SUBSCRIBED AND PAID-UP:
2,610,002 Equity shares of Rs. 10/- each                                                                                                                                         26,100,020                                                          26,100,020
(Note: All the above equity shares are fully paid shares and are held
by Infrastructure Development Finance Company Ltd., the holding company)
19,792,500 15% Non participating, non convertible,                                                                                                                              197,925,000                                                     197,925,000
cumulative redeemable Preference shares of Rs. 10/- each
Redeemable on 2nd January, 2020.
(Note: All the above preference shares are fully paid shares and are held
by Infrastructure Development Finance Company Ltd., the holding company)
                                                                                                                                                                                224,025,020                                                     224,025,020



SCHEDULE 2 Reserves and Surplus                                                                                                                                                             RUPEES                                                        RUPEES

                                                                                                                                                            AS AT MARCH 31, 2010                                    AS AT MARCH 31, 2009
General Reserve                                                                                                                                                                   28,350,000                                                         28,350,000
Profit and Loss Account                                                                                                                                                         310,794,927                                                         282,863,881
                                                                                                                                                                                339,144,927                                                         311,213,881



SCHEDULE 3 Fixed Assets                                                                                                                                                                                                                                   RUPEES

DESCRIPTION                                               GROSS BLOCK                                                          DEPRECIATION & AMORTISATION                                                                       NET BLOCK
                                        April 1, 2009




                                                                                                                                      April 1, 2009
                                                                                                       March 31,




                                                                                                                                                                                                     March 31,




                                                                                                                                                                                                                                 March 31,




                                                                                                                                                                                                                                                              March 31,
                                                               Additions




                                                                                                                                                             Additions
                                                                                  Deletions




                                                                                                                                                                                Deletions
                                As at




                                                                                                                   2010




                                                                                                                                                                                                                 2010




                                                                                                                                                                                                                                             2010




                                                                                                                                                                                                                                                                          2009
                                                                                               As at




                                                                                                                              As at




                                                                                                                                                                                             As at




                                                                                                                                                                                                                         As at




                                                                                                                                                                                                                                                      As at
TANGIBLE
Computer Hardware          36,033,926                    6,761,943          7,407,147         35,388,722                  24,696,190                   6,540,190          6,854,028         24,382,352                  11,006,370                   11,337,736
Furnitures and Fixtures     2,772,799                   11,273,723           672,201          13,374,321                   1,098,744                   2,694,689           531,664           3,261,769                  10,112,552                     1,674,055
Office Equipments          20,122,169                    8,624,201          4,166,017         24,580,353                   5,278,480                   3,404,258          2,583,432          6,099,306                  18,481,047                   14,843,689
INTANGIBLE
Computer Software          11,762,779                   11,100,095                    -       22,862,874                   7,736,922                   4,188,627                   –        11,925,549                  10,937,325                     4,025,857
LEASEHOLD                  15,054,517                   38,075,362          5,449,452         47,680,427                   1,722,875                  10,998,988          2,142,101         10,579,762                  37,100,665                   13,331,642
IMPROVEMENT
Total                      85,746,190                   75,835,324         17,694,817 143,886,697                         40,533,211                  27,826,752         12,111,225         56,248,738                  87,637,959                   45,212,979
Previous Period            43,933,905                   41,837,275            24,990          85,746,190                  28,822,894                  11,711,459             1,142          40,533,211                  45,212,979




                                                                                                                                I D FC ASSS E T M A N AG E M E N T CO M PA N Y L I M I T E D                                                                        171
SCHEDULE 4 Investments                                                                                     RUPEES                  RUPEES

                                                                                            AS AT MARCH 31, 2010    AS AT MARCH 31, 2009
I.      LONG TERM
        A.      Equity Shares (Fully paid, Unquoted)              Number of    Face Value
                                                                     Shares       Rupees
                Subsidiaries
                IDFC Investment Advisors Limited                  10,000,000          10              100,000,000                       -
                IDFC Pension Fund Management Company Limited       6,000,001          10               60,000,010                       -
        TOTAL LONG TERM INVESTMENTS (A)                                                               160,000,010                       -
II.     CURRENT
        A.      Mutual Funds (Unquoted)                           Number of    Face Value
                                                                       Units      Rupees
                IDFC-SSIF-ST - Plan C-Monthly Dividend                     -            -                       -              53,542,195
                IDFC Money Manager Fund- Treasury Plan
                C-Daily Dividend                                           -            -                       -             113,084,519
                IDFC SSIF IP - Plan B Dividend                             -            -                       -             100,000,000
                IDFC Money Manager Fund- Treasury Plan B-
                Daily Dividend                                    49,940,896          10              499,483,872              75,000,000


        TOTAL CURRENT INVESTMENTS (A)                                                                 499,483,872             341,626,714
        GRAND TOTAL (I + II)                                                                          659,483,882             341,626,714
        Less : Provision for Diminution in Value of Investments                                                 -               7,891,697
                                                                                                      659,483,882             333,735,017
        Aggregate amount of Unquoted Investments
             Cost                                                                                     659,483,882             341,626,714
             Market Value                                                                             659,483,882             333,735,017




SCHEDULE 5 Sundry Debtors (Unsecured, Considered Good)                                                     RUPEES                  RUPEES

                                                                                            AS AT MARCH 31, 2010    AS AT MARCH 31, 2009
Debtors                                                                                                17,599,296              11,495,650
                                                                                                       17,599,296              11,495,650



SCHEDULE 6 Cash and Bank Balances                                                                          RUPEES                  RUPEES

                                                                                            AS AT MARCH 31, 2010    AS AT MARCH 31, 2009
Cash (including Cheques on hand)                                                                         894,805                 120,669
Balances with Scheduled Banks
     - in Current Accounts                                                                             24,591,908               5,424,387
     - in Deposit Accounts                                                                              1,050,000               1,050,000
                                                                                                       25,641,908               6,474,387
                                                                                                       26,536,713               6,595,056




SCHEDULE 7 Loans and Advances (Unsecured, Considered Good)                                                 RUPEES                  RUPEES

                                                                                            AS AT MARCH 31, 2010    AS AT MARCH 31, 2009
Advances recoverable in cash or in kind
or for value to be received                                                                            15,419,835              55,590,838
Advances to IDFC Group Companies (Refer Note 13)
- Advances to Subsidiaries                                                                               974,799                3,354,790
- Others                                                                                                        -                568,360
Other Deposits                                                                                         87,337,735             113,407,444
Advance payment of Income Tax (Net of provision)                                                      149,379,910              72,163,486
                                                                                                      253,112,279             245,084,918




172       I D F C A N N U A L R E P O R T 09 –10
SCHEDULE 8 Current Liabilities                                                                     RUPEES                          RUPEES

                                                                                 AS AT MARCH 31, 2010        AS AT MARCH 31, 2009
Sundry Creditors - Other than Micro, Small and Medium Enterprises                             481,086,884                 107,818,062
Other Liabilities                                                                               6,960,727                    1,332,001
                                                                                              488,047,611                 109,150,063



SCHEDULE 9 Provisions                                                                              RUPEES                          RUPEES

                                                                                 AS AT MARCH 31, 2010        AS AT MARCH 31, 2009
Provision for Retirement Benefits                                                               3,718,700                    3,482,044
                                                                                                3,718,700                    3,482,044


SCHEDULE 10 Operating and Other Income                                                             RUPEES                          RUPEES

                                                                                       APRIL 1, 2009 TO         JANUARY 1, 2008 TO
                                                                                       MARCH 31, 2010              MARCH 31, 2009
Operating Income
  Management Fees                                                                           1,042,167,512                 637,045,996
                                                                                            1,042,167,512                 637,045,996
Other Income
  Dividend on Investments                                                                      11,772,561                  32,759,053
  Profit/(Loss) on sale of Investments                                                         (5,524,366)                   9,086,534
  Provision for Diminution in Value of Investment written back                                  7,891,698                               -
  Interest on Income Tax Refund                                                                 2,265,473                               -
  Miscellaneous Income                                                                            277,925                    4,182,882
                                                                                               16,683,291                  46,028,469
                                                                                            1,058,850,803                 683,074,465



SCHEDULE 11 Interest & Other Charges                                                               RUPEES                          RUPEES

                                                                                       APRIL 1, 2009 TO         JANUARY 1, 2008 TO
                                                                                       MARCH 31, 2010              MARCH 31, 2009
On Security Deposit                                                                                17,742                    4,510,375
Other Charges                                                                                   1,157,074                    1,661,808
                                                                                                1,174,816                    6,172,183



SCHEDULE 12 Staff Expenses                                                                         RUPEES                          RUPEES

                                                                                       APRIL 1, 2009 TO         JANUARY 1, 2008 TO
                                                                                       MARCH 31, 2010              MARCH 31, 2009
Salaries                                                                                      409,144,508                 203,664,247
Contribution to Provident and Other Funds                                                       7,453,856                    5,243,889
Staff Welfare Expenses                                                                         10,859,013                    4,731,338
                                                                                              427,457,377                 213,639,474




                                                                    I D FC ASSS E T M A N AG E M E N T CO M PA N Y L I M I T E D     173
SCHEDULE 13 Establishment Expenses                           RUPEES                RUPEES

                                                   APRIL 1, 2009 TO   JANUARY 1, 2008 TO
                                                   MARCH 31, 2010        MARCH 31, 2009
Rent                                                     89,922,321            66,237,187
Rates & Taxes                                             4,672,010                     -
Electricity                                              10,159,701                     -
Repairs and Maintenance
  Buildings                                                 795,555             3,461,473
  Equipments                                                730,576             1,735,367
  Others                                                 15,792,807            20,364,192
                                                         17,318,938            25,561,032
Insurance Charges                                         1,869,261             1,202,458
                                                        123,942,231            93,000,677


SCHEDULE 14 Other Expenses                                   RUPEES                RUPEES

                                                   APRIL 1, 2009 TO   JANUARY 1, 2008 TO
                                                   MARCH 31, 2010        MARCH 31, 2009
Travelling and Conveyance                                22,982,042            12,823,539
Printing and Stationery                                  12,523,043            11,011,590
Postage, Telephone and Fax                               16,169,485            18,090,039
Advertising and Publicity (Refer Note 5)                 61,024,742            30,005,041
Brokerage expenses                                      106,591,967            46,454,033
Scheme Issue Expenses (Refer Note 4)                    125,566,732            45,743,329
Operational Costs (Refer Note 6)                         22,940,387             8,025,046
Professional Fees                                        62,438,737            59,842,620
Directors’ Fees                                             210,000              320,000
Internet Expenses                                        11,096,058            10,407,555
Filing Fees                                               3,111,328                     -
Fixed Assets Write Off                                    5,575,293                     -
Miscellaneous Expenses                                    5,742,299             7,670,445
Auditors’ Remuneration (Refer Note 3)                       929,820              852,110
                                                        456,901,933           251,245,347


SCHEDULE 15 Provisions and Contingencies                     RUPEES                RUPEES

                                                   APRIL 1, 2009 TO   JANUARY 1, 2008 TO
                                                   MARCH 31, 2010        MARCH 31, 2009
Provision for Diminution in Value of Investments                  -             7,891,698
                                                                  -             7,891,698




174    I D F C A N N U A L R E P O R T 09 –10
SCHEDULE 16 Notes Forming part of the Accounts
1 Significant Accounting Policies
A. System of Accounting
The Company adopts the accrual concept in the preparation of the accounts.

The preparation of financial statements as per this policy requires the Management to make estimates and assumptions considered in the
reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income
and expenses during the reporting period. Management believes that the estimates used in preparation of the financial statements are prudent
and reasonable. Future results could differ from these estimates.

B. Inflation
Assets and liabilities are recorded at historical cost to the Company. These costs are not adjusted to reflect the changing value in the
purchasing power of money.

C. Investments
Long Term Investments’ are carried at acquisition cost. A provision is made for diminution, other than temporary, on an individual basis.

Current Investments’ are carried at the lower of cost or fair value on an individual basis.

D. Fixed Assets
Fixed assets are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated
depreciation.

Leasehold Improvements are shown at historical cost less accumulated amortisation.

E. Intangible Assets
Intangible Assets comprising of system software and licenses purchased, are stated at cost of acquisition, including any cost attributable for
bringing the asset to its working condition, less accumulated depreciation.

Any expenses on such software for support and maintenance payable annually are charged to revenue account.

F. Depreciation & Amortisation
¬   DEPRECIATION ON FIXED ASSETS
Depreciation is charged at the rates prescribed in Schedule XIV of the Companies Act, 1956 as per WDV Method. Any asset costing Rs.5,000/-
or less is written off in the year of its purchase.

Depreciation on additions during the year is provided on a pro-rata basis.
¬   DEPRECIATION ON INTANGIBLE ASSETS
Intangible assets consisting of computer software are depreciated at 33.33% per annum on SLM basis.
¬   AMORTISATION OF LEASEHOLD IMPROVEMENTS
Leasehold Improvements are amortised over the balance period of extended lease term or five years whichever is earlier.

G. Foreign Currency Transactions
The transactions in Foreign exchange are accounted at exchange rate prevailing on the date of transactions. Any exchange gains or losses
arising from the settlement of such transactions are recognised in the Profit and Loss Account. Receivables/Payables in foreign currency at the
year end are translated at the year end exchange rate.

H. Operating Leases
Leases of assets under which all the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases.
Rental charges over the term of such leases, after taking in to account the escalation clause, are charged to the Profit and Loss Account on a
straight line basis over the extended lease term.

I. Retirement Benefits
¬ The net present value of the Company’s obligation towards Gratuity to employees is actuarially determined as at the Balance Sheet date and
actuarial gains and losses are recognised in the Profit and Loss Account.
¬ The Company has taken a superannuation policy, for future payment of superannuation and the Company’s contribution paid/payable during the
year is charged to Profit and Loss Account.
¬ The Company’s contribution to Provident Fund is deposited with Regional Provident Fund Commissioner and is charged to Profit and Loss
Account every year.



                                                                                  I D FC ASSS E T M A N AG E M E N T CO M PA N Y L I M I T E D   175
J. Income-Tax
The accounting treatment for income-tax in respect of the Company’s income is based on the Accounting Standard 22 on ‘Accounting for Taxes
on Income’ issued by the Institute of Chartered Accountants of India. The provision made for income-tax in the accounts comprises both, the
current tax and deferred tax. The deferred tax assets and liabilities for the year, arising on account of timing differences, are recognised in the
Profit and Loss Account and the cumulative effect thereof is reflected in the Balance Sheet.

K. Revenue Recognition
Revenue is recognised when no significant uncertainty as regards to its measurement and collection exists.

L. Provisions
A provision is recognised when the Company has a present obligation as a result of past event; it is probable that an outflow of resources will be
required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are
determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date
and adjusted to reflect the current best estimates.

2 Managerial Remuneration:
                                                                                                     APRIL 1, 2009 TO        JANUARY 1, 2008 TO
                                                                                                     MARCH 31, 2010            OCTOBER 20, 2008
                                                                                                                 RUPEES                      RUPEES

(i)     Salary                                                                                                1,633,600                  25,418,307
(ii)    Contribution to Provident and Other Funds                                                                81,600                    387,809
(iii)   Perquisites                                                                                              56,568                    523,339
                                                                                                              1,771,768                  26,329,455

3 Auditors’ Remuneration :
                                                                                                     APRIL 1, 2009 TO        JANUARY 1, 2008 TO
                                                                                                     MARCH 31, 2010             MARCH 31, 2009
                                                                                                                 RUPEES                      RUPEES

Audit Fees                                                                                                     450,000                      450,000
Tax Audit Fees                                                                                                 200,000                      300,000
Other Services                                                                                                 265,000                       95,370
Out of Pocket Expenses                                                                                           14,820                       6,740
                                                                                                               929,820                      852,110

4 Scheme Issue Expenses are the expenses incurred by the Company towards launching schemes and plans of the Mutual Fund during the year.
5 Advertising and Publicity Expenses includes cost of advertising, publicity, marketing of various schemes of IDFC Mutual Fund.
6 Operational Costs include interest charged by bank to the Mutual Fund on account of temporary borrowings or overdrafts and payments
made to investors of Mutual Fund on account of delay in payment of redemption proceeds which are borne by the Company.

7 Service Tax Credit of Rs. 2,219,857/- (Previous Year – Rs. 7,028,650/-), would be claimed against future Service Tax Liability.
8 Expenditure in foreign currencies:

                                                                                                     APRIL 1, 2009 TO        JANUARY 1, 2008 TO
                                                                                                     MARCH 31, 2010             MARCH 31, 2009
                                                                                                                 RUPEES                      RUPEES

Advertising Media                                                                                                51,694                           –
Filing Fees                                                                                                    678,984                            –
Foreign Travel                                                                                                 170,260                      113,724
Hotel Accommodation                                                                                              20,418                     255,848
Staff Training Expenses                                                                                        145,286                            –
Staff welfare                                                                                                         –                      43,761
Road shows & Events                                                                                                   –                      91,745
Telephone- Cellular                                                                                                   –                      10,377

9 Earnings in foreign currencies: NIL (Previous Year Nil)
 10 The Company is planning to expand its operations for which it anticipates significant working capital requirements. With the aim to
conserve cash resources, the Company has not proposed any dividend for the period April 1, 2009 to March 31, 2010 on 15% cumulative
redeemable preference shares allotted during 1999-00 amounting to Rs. 29,688,750/-. The consent letter for waiver of dividend has been
received from IDFC Limited, sole shareholder of the preference shares.

176      I D F C A N N U A L R E P O R T 09 –10
11 As per Accounting Standard 15 on ‘Employee Benefits’ as notified by the Companies (Accounting Standards) Rules, 2006, the following
disclosures are made as required :

i. The Company has recognised the following amounts in the Profit and Loss Account towards defined contribution plans which are included in
Personnel Costs for the period 1st April, 2009 to 31st March, 2010:

PARTICULARS                                                                                           CURRENT PERIOD             PREVIOUS PERIOD
                                                                                                                   RUPEES                         RUPEES

Provident Fund                                                                                                  7,453,856                   5,243,889
Superannuation                                                                                                   519,131                    1,481,326

ii. The details of the Company’s post – retirement benefit plans for gratuity for its employees are given below which is certified by the actuary
and relied upon by the auditors:

PARTICULARS                                                                                           CURRENT PERIOD             PREVIOUS PERIOD
                                                                                                                  RUPEES                          RUPEES

CHANGE IN THE DEFINED BENEFIT OBLIGATIONS:
Liability at the beginning of the year                                                                         2,000,718                               -
Current Service Cost                                                                                           2,143,480                    2,000,718
Interest Cost                                                                                                    275,309                               -
Benefits Paid                                                                                                           -                              -
Actuarial Loss                                                                                                  (700,807)                              -
Liability as at the end of the year                                                                            3,718,700                    2,000,718
FAIR VALUE OF PLAN ASSETS :
Fair Value of Plan Assets at the beginning of the year                                                                  -                              -
Expected Return on Plan Assets                                                                                          -                              -
Contributions                                                                                                           -                              -
Benefits Paid                                                                                                           -                              -
Actuarial Loss on Plan Assets                                                                                           -                              -
Fair Value of Plan Assets at the end of the year                                                                        -                              -
Total Actuarial Loss to be recognised                                                                                   -                              -
ACTUAL RETURN ON PLAN ASSETS :
Expected Return on Plan Assets                                                                                          -                              -
Actuarial Loss on Plan Assets                                                                                           -                              -
Actuarial Return on Plan Assets                                                                                         -                              -
AMOUNT RECOGNISED IN THE BALANCE SHEET :
Liability at the end of the year                                                                               3,718,700                    2,000,718
Fair Value of Plan Assets at the end of the year                                                                        -                              -
Amount recognised in the Balance Sheet under “Provision for Retirement Benefits”                               3,718,700                    2,000,718
EXPENSE RECOGNISED IN THE PROFIT AND LOSS ACCOUNT :
Current Service Cost                                                                                           2,143,480                    2,000,718
Interest Cost                                                                                                    275,309                               -
Expected Return on Plan Assets                                                                                          -                              -
Net Actuarial Loss to be recognised                                                                             (700,807)                              -
Expense recognised in the Profit and Loss Account under Personnel Costs                                        1,717,982                    2,000,718
RECONCILIATION OF THE LIABILITY RECOGNISED IN THE BALANCE SHEET :
Opening Net Liability                                                                                          2,000,718                               -
Expense recognised                                                                                             1,717,982                    2,000,718
Contribution by the Company                                                                                             -                              -
Amount recognised in the Balance Sheet under “Provision for Retirement Benefit”                                3,718,700                    2,000,718

PRINCIPAL ASSUMPTIONS :                                                                            CURRENT PERIOD %           PREVIOUS PERIOD %
Discount Rate                                                                                                      8.10%                          6.65 %
Expected Rate of Return on Assets                                                                                       -                              -
Salary Escalation Rate                                                                                             8.00%                          7.00 %




                                                                                   I D FC ASSS E T M A N AG E M E N T CO M PA N Y L I M I T E D     177
 12 The Company is an Asset Management Company to IDFC Mutual Fund business. During the year ended 31st March, 2010, the Company
was engaged in only one business segment and as such there are no separate reportable segments, as required by Accounting Standard 17 on
‘Segment Reporting’ issued by the Institute of Chartered Accountants of India.

13 As per the Accounting Standard 18 on ‘Related Party Disclosures’ issued by the Institute of Chartered Accountants of India, the related
parties of the Company are as follows:

I.      HOLDING COMPANY:

        Infrastructure Development Finance Company Limited

II.     SUBSIDIARIES:

        IDFC Investment Advisors Limited
        IDFC Pension Fund Management Company Limited

III. FELLOW SUBSIDIARIES:

        IDFC AMC Trustee Company Limited
        IDFC Private Equity Company Limited

IV. KEY MANAGEMENT PERSONNEL:

        Mr. Naval Bir Kumar – President & CEO
        Mrs. Jyothi Krishnan – Compliance Officer & Manager

The nature and volume of transactions carried out with the above related parties in the ordinary course of business are as follows:
 NAME OF RELATED PARTY AND                          PARTICULARS                                         CURRENT PERIOD       PREVIOUS PERIOD
 NATURE OF RELATIONSHIP
 I.       HOLDING COMPANY
          Infrastructure Development Finance        Advances taken and repaid (Net of advances given)           921,424               14,486,458
          Company Limited
                                                    Purchase of Shares of IDFC Investment Advisors            80,000,000                       -
                                                    Limited
                                                    Purchase of Fixed Assets                                           -               2,759,128
                                                    Transfer of Fixed Assets                                           -                439,795
                                                    Deputation Charges paid                                            -               5,430,657
                                                    Advances given                                                     -                256,999
                                                    Advances Recoverable – Balance outstanding                         -                528,359
 II.      SUBSIDIARIES
          IDFC Investment Advisors Limited          Advances Given and recovered                               4,222,728                       -
                                                    Purchase of Shares                                        20,000,000                       -
                                                    Advances Recoverable – Balance outstanding                         -               2,407,975
          IDFC Pension Fund Management              Advances Given and recovered                               2,469,162                       -
          Company Limited
                                                    Purchase of Shares                                        60,000,010                       -
                                                    Advances Recoverable – Balance outstanding                  974,799                 946,815
 III.     FELLOW SUBSIDIARIES
          IDFC AMC Trustee Company Limited          Advances given and recovered                                152,032                 351,217
                                                    Advances Recoverable – Balance outstanding                         -                 40,000
          IDFC Private Equity Company Limited       Transfer of Fixed Asset                                            -                 55,250
 IV       KEY MANAGEMENT PERSONNEL:
          Mr. Naval Bir Kumar                       Remuneration paid                                         11,354,555              29,576,536
                                                    Reimbursement of Business Expenses                          761,843                 670,912
                                                    Rent paid                                                   250,000                 375,000
                                                    Security Deposit paid                                              -              30,000,000
                                                    Payment to relatives                                        720,444                3,262,881
          Mrs. Jyothi Krishnan                      Remuneration paid                                          1,771,768                       -




 178       I D F C A N N U A L R E P O R T 09 –10
14 In accordance with the Accounting Standard 19 on ‘Leases’ issued by the Institute of Chartered Accountants of India, the following
disclosure in respect of Operating Leases is made:
¬ The Company has taken a copier machine under irrevocable rental agreement (expiring on 31st May, 2011) from En Em Business Solutions. The
committed rentals in the future are :

PARTICULARS                                                                                                                               RUPEES
Not later than one year                                                                                                                       49,000/-
Later than one year and not later than five years                                                                                                    -
¬ The Company has taken vehicles for three employees under Cancellable Operating Leases from LeasePlan India Limited, which expire between
October 2012 to December 2013. Staff Expenses include rental expenses of Rs.1,368,949 (Previous Year Rs. 488,489) paid to LeasePlan India
Limited.
¬ The Company has entered in to Lease agreements for Office Premises and Residential Premises as per detailed below :

SR. NO. LOCATION                  NAME OF THE LESSOR                        ESCALATION CLAUSE
          OFFICE PREMISES
1         Ahmedabad               Pranav Multitech Pvt. Ltd.                Increase by 15% after every 3 Years. Total Lease 9 Years.
2         Amritsar                Ajit Singh                                Increase by 8% after every 1 Year. Total Lease 3 Years.
3         Bangalore               S. M. Kamal Pasha                         Increase by 10% after every 3 Years. Total Lease 9 Years.
4         Baroda                  West Coast Contractors Pvt Ltd            Increase by 15% after 3 Years. Total Lease 9 Years.
5         Bhopal                  D. G. Enterprise                          No Escalation.
6         Bhubaneshwar            Manisha Surekha                           Increase by 15% after 3 Years. Total Lease 6 Years.
7         Chandigarh              Rahul Mahajan - 25%                       Increase by 7.5% after 1 Year. Total Lease 6 Years.
                                  Praveen Mahajan - 25%
                                  Sandeep Mahajan - 25%
                                  Sahil Mahajan - 12.5%
                                  Siddharth Mahajan - 12.5%
8         Chennai                 Maalavika Hotels Private Limited          Increase by 15% after every 3 Years. Total Lease 9 Years. Lease
                                                                            terminated w.e.f April 5, 2010.
9         Cochin                  Fathima Zackeria                          Increase by 15% after 3 Years. Total Lease 6 Years.
10        Coimbatore              R. Malaiyappan,                           Increase by 22.5% after every 3 Years. Total Lease 9 Years.
                                  R. Rajarathnam &
                                  R. Balashanmugam
11        Dehradun                EBD Business Centre                       Increase by 10% after 11 Months. Total Lease 22 Months.
12        Goa                     Suzette Indresh Advani                    No Escalation.
13        Guwahati                Aakash Jhunjhunwala                       Increase by 15% after 3 Years. Total Lease 6 Years.
                                  Bimla Devi Jhunjhunwala
                                  Srinarayan Jhunjhunwala
14        Hyderabad               Anand Yemul – 50%                         Increase by 5.5% after every 1 Year. Total Lease 7 Years.
                                  Sai Suman Yemul – 50%
15        Indore                  Priya Baj                                 Increase by 15% after 3 Years. Total Lease 9 Years.
16        Jaipur                  Surjit Kaur – 50%                         Increase by 15% after every 3 Years. Total Lease 9 Years.
                                  Gurpreet Singh – 50%
17        Jallandar               Surjit Singh Arora                        Increase by 10% after 1 Year. Total Lease 3 Years.
18        Jamshedpur              Corporate Inn                             Increase by 15% after 3 Years. Total Lease 9 Years.
19        Kanpur                  Deep Management & Eco Consultants         Increase by 15% after every 3 Years. Total Lease 9 Years.
                                  P. Ltd. – 50%
                                  Rachit Prakash – 25%
                                  Tripti Srivastava – 25%
20        Kolkata                 Oswal Holdings                            Increase by 15% after every 3 Years. Total Lease 14 Years.
21        Lucknow                 Sahej Promoters Pvt. Ltd.                 Increase by 15% after 3 Years. Total Lease 6 Years.
22        Ludhiana                Manjit Kaur Deol - 29.25%                 Increase by 20% after 3 Years. Total Lease 6 Years.
                                  Mohinder Singh Deol - 27.75%
                                  Surjit Kaur Sekhon - 17.50%
                                  Jatinder Pal Singh Sekhon - 11.50%
                                  Gauravjit Singh Deol - 5%
                                  Gurbir Singh Deol - 5%
                                  Gurdial Singh Sekhon - 4%



                                                                             I D FC ASSS E T M A N AG E M E N T CO M PA N Y L I M I T E D         179
SR. NO. LOCATION                   NAME OF THE LESSOR                               ESCALATION CLAUSE
          OFFICE PREMISES
23        Mangalore                Raj Business Centre                              No Escalation.
24        Mumbai-Eplhinstone IndiaBulls Properties Pvt. Ltd.                        Increase by 15% after 3 Years. Total Lease 5 Years.
25        Mumbai-Churchgate        Ashu Engineers & Plastics Pvt. Ltd.              Increase by 15% after 3 Years. Total Lease 5 Years.
26        Nagpur                   Fortune Business Centre                          No Escalation.
27        Nasik                    Madan’s Services                                 No Escalation.
28        New Delhi                Deepa Kiran Kaur & Others                        Increase by 15% after every 3 Years. Total Lease 9 Years.
29        Patna                    Sushma Khemka                                    Increase by 15% after 3 Years. Total Lease 6 Years.
30        Pune                     Prashant Kumar Kapse                             Increase by 20% after 5 Years. Total Lease 10 Years.
31        Raipur                   Amritpal Kaur                                    Increase by 5% after 1 Year. Total Lease 6 Years.
32        Rajkot                   Anil Dhulia (HUF) - 50%                          Increase by 15% after 1 Year. Total Lease 6 Years.
                                   Usha Dhulia - 50%
33        Surat                    Kirti Kumar K. Shroff – 50%                      Increase by 15% after 3 Years. Total Lease 5 Years.
                                   Pratik Kirtikumar Shroff – 25%
                                   Samir K. Shroff – 25%
34        Varanasi                 Satya Narain Agrawal                             No Escalation.
35        Vishakhapatnam           Vastav Consultancy Services                      No Escalation.
          RESIDENTIAL PREMISES
1         Delhi                    Rishi Gupta                                      No Escalation.
2         Mumbai                   C.K. Mirchandani                                 No Escalation.
3         Mumbai                   Nilima A. Kamani                                 No Escalation.
4         Mumbai                   Ram Swaroop Sodhani                              No Escalation.
5         Mumbai                   Sumit Banerjee                                   No Escalation.
6         Mumbai                   Sapna Rajgarhia & Satish Rajgarhia               No Escalation.

15 In compliance with the Accounting Standard 22 relating to ‘Accounting for Taxes on Income’ issued by the Institute of Chartered
Accountants of India, the Company has taken credit in the Profit and Loss Account towards deferred tax asset (net) on account of timing
differences. The major components of deferred tax assets and liabilities arising on account of timing differences are:

                                                       APRIL 1, 2009 TO       JANUARY 1, 2008 TO            APRIL 1, 2009 TO         JANUARY 1, 2008 TO
                                                       MARCH 31, 2010            MARCH 31, 2009             MARCH 31, 2010              MARCH 31, 2009
                                                                 RUPEES                     RUPEES                       RUPEES                    RUPEES

                                                                         Assets                                             Liabilities
(a)   Depreciation                                             1,573,000                             -                           -               1,973,936
(b)   Provisions                                               1,264,000                 3,362,432                               -                       -
(c)   Others                                                   4,140,000                 1,069,158                               -                       -
                                                               6,977,000                 4,431,590                               -               1,973,936
      Net Deferred Tax Asset/(Liability)                       6,977,000                 2,457,654

16 The earning per share in accordance with the Accounting Standard 20 on ‘Earning Per Share’ issued by the Institute of Chartered
Accountants of India is as under:

PARTICULARS                                                                                               APRIL 1, 2009 TO           JANUARY 1, 2008 TO
                                                                                                          MARCH 31, 2010                MARCH 31, 2009
Profit/(Loss) after Tax and prior period items (Rs.)                                                              27,931,045                    60,089,281
Less: Proposed dividend on Preference Shares(Rs.)                                                                            -                           -
Less: Tax on dividend on Preference Shares (Rs.)                                                                             -                           -
Profit attributable to Equity shareholders (Rs.)                                                                  27,931,045                    60,089,281
No. of Shares                                                                                                       2,610,002                    2,610,002
Earnings per share in (Rs.)                                                                                             10.70                       23.02




180    I D F C A N N U A L R E P O R T 09 –10
17 Details of Movement in Provisions, in terms of Accounting Standard 29 issued by the Institute of Chartered Accountants of India, is as
under:

NATURE OF PROVISION                                                        OPENING              PROVISIONS         PROVISIONS         CLOSING BAL-
                                                                      BALANCE AS ON            MADE DURING         REVERSED /           ANCE AS ON
                                                                         01/04/2009               THE YEAR           ADJUSTED           31/03/2010
                                                                                 RUPEES               RUPEES                RUPEES                RUPEES

Provision for Diminution in Value of Investments                              7,891,698                    –           7,891,698                      –
Provision for Income Tax                                                   276,925,601             9,000,000                    –        285,925,601
Provision for Deferred Tax (Asset)/ Liability                                (2,457,654)          (7,201,734)          2,682,388          (6,977,000)
Provision for Fringe Benefit Tax                                             12,072,000                    –                    –         12,072,000

 18 Estimated amount of contracts remaining to be executed on capital account and not provided for Rs.2,763,000/-
(Previous Year 23,743,564/-)

19 Contingent liabilities not provided for in respect of :

                                                                                                       APRIL 1, 2009 TO         JANUARY 1, 2008 TO
                                                                                                       MARCH 31, 2010              MARCH 31, 2009
                                                                                                                  RUPEES                          RUPEES

(a)    Claims not acknowledged as debts in respect of
       Income-tax demand, disputed by the Company in respect of A.Y. 2005-06. The matters in
       dispute are under appeal. Amount of Rs. 1,500,000 has been paid against the demand.                      3,037,298                   3,037,298
(b)    Bank guarantees issued on behalf of the Company                                                          1,000,000                   1,000,000

20 No interest has been paid/payable by the Company during the year to the “suppliers” covered under the Micro, Small and Medium
Enterprises Development Act, 2006. The above information is based on the records available with the Company.

21 Previous year’s figures have been regrouped wherever necessary. Since the current period is for 12 months from April 1, 2009 to
March 31, 2010, the figures for current period are not comparable with previous period viz., 15 months from January 1, 2008 to March 31, 2009.




IN TERMS OF OUR REPORT OF EVEN DATE
FOR M.P. CHITALE & CO.                                         FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Chartered Accountants

VIDYA V . B A R J E                                            BAKUL PATEL                           PRADIP MADHAVJI
Partner                                                        Director                              Director

                                                               UTTARA DEKA
Mumbai | April 20, 2010                                        Company Secretary

                                                                                   I D FC ASSS E T M A N AG E M E N T CO M PA N Y L I M I T E D     181
      B A L A N C E S H E E T A B ST R A CT                                                                                           AND COMPANY’S GENERAL BUSINESS PROFILE




I.      REGISTRATION DETAILS

        Registration No.           U    6   5       9   9        3       M       H       1       9        9   9   P   T   C   1   2   3   1   9   1

        State Code                 1    1

        Balance Sheet Date         3    1           0   3                2       0       1       0

II.     CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000)

                                                                                     Public Issue                                                                         Right Issue
                                                                                     N       I       L                                                                    N   I   L


                                                                                     Bonus Issue                                                                   Private Placement

                                                                                     N       I       L                                                                    N   I   L

III.    POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000)
                                                                             Total Liabilities                                                                           Total Assets

                                                    1       0        5       4       9       3       6                                                1   0    5     4    9   3   6
        SOURCES OF FUNDS
                                                                             Paid-up Capital                                                                  Reserves and Surplus

                                                            2        2       4       0       2       5                                                    3    3     9    1   4   5

                                                                                 Secured Loans                                                                      Unsecured Loans
                                                                                     N       I       L                                                                    N   I   L
        APPLICATION OF FUNDS
                                                                          Net Fixed Assets                                                                               Investments

                                                                     9       1       1       5       0                                                    6    5     9    4   8   4

                                                                     Net Current Assets                                                                         Deferred Tax Asset

                                                            (1       9       4       4       4       1)                                                              6    9   7   7

IV.     PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000)
                                                                         Turnover / Income                                                                         Total Expenditure

                                                    1       0        6       9       7       1       5                                                1   0    3     7    3   0   3

                                                                          Profit Before Tax                                                                          Profit After Tax

                                                                     3       2       4       1       2                                                         2     7    9   3   1

                                                        Earnings per Share (in Rs.)                                                                                      Dividend %

                                                                 1        0          .       7       0                                                                    N   I   L

V.      GENERIC NAMES OF PRINCIPAL SERVICES OF THE COMPANY (AS PER MONETARY TERMS)

        Item Code No. (ITC Code)             N      I   L

        Product Description                  A      S   S        E        T              M       A        N   A   G   E   M   E   N   T




 182       I D F C A N N U A L R E P O R T 09 –10
  ST AT E M E N T P U R S U A N T T O S E CT I O N 2 1 2                                                                   OF THE COMPANIES ACT, 1956




NAME OF SUBSIDIARY COMPANIES                                                                 IDFC INVESTMENT                  IDFC PENSION FUND
                                                                                            ADVISORS LIMITED         MANAGEMENT COMPANY LIMITED
                                                                                                           RUPEES                                     RUPEES

The financial year of the Subsidiary Companies ended on                                           March 31, 2010                          March 31, 2010
Number of shares in the Subsidiary Companies held by IDFC Asset Management                   10,000,000 shares of                     6,000,001 shares of
Company Limited at the above date.                                                                     Rs. 10 each                             Rs. 10 each
Holding Company’s interest in percentage                                                                 100.00%                                  50.01%
The net aggregate of profits of the Subsidiary Companies so far as these concern the
members of IDFC Asset Management Company Limited.
(i) dealt with in the accounts of IDFC Asset Management Company Limited amounted to:
  (a) for subsidiaries’ financial year ended on March 31, 2010                                                   -                                         -
  (b) for previous financial years of the subsidiaries since these became subsidiaries of                        -                                         -
     IDFC Asset Management Company Limited
(ii) not dealt with in the accounts of IDFC Asset Management Company Limited
amounted to:
  (a) for subsidiaries’ financial year ended on March 31, 2010                                         69,469,803                               (638,164)
  (b) for previous financial years of the subsidiaries since these became subsidiaries of                        -                                         -
     IDFC Asset Management Company Limited.




                                                                  FOR AND ON BEHALF OF THE BOARD OF DIRECTORS



                                                                  BAKUL PATEL               PRADIP MADHAVJI
                                                                  Director                  Director


Mumbai | April 20, 2010

                                                                                       I D FC ASSS E T M A N AG E M E N T CO M PA N Y L I M I T E D     183
       IDFC amc trustee
       company limited

       B O A R D O F D I R E CTO R S
       ■   Mr. Vikram Limaye
           Chairman
       ■   Mr. Jamsheed Kanga
       ■   Mr. D. M. Sukthankar
       ■   Mr. U. Sundararajan

       A U D I TO R S
       ■   M. P. Chitale & Co
           Chartered Accountants

       P R I N C I PA L B A N K E R S
       ■   Standard Chartered Bank

       R E G I ST E R E D O F F I C E
       One India Bulls Centre,
       841 Jupiter Mills Compound,
       Senapati Bapat Marg,
       Elphinstone Road (West),
       Mumbai 400 013.
       TEL +91 22 66289999
       FAX +91 22 24215051/52/53




184   I D F C A N N U A L R E P O R T 09 –10
  D I R E CT O R S ’ R E P O R T


TO THE MEMBERS                                                            AWARDS & RECOGNITION
We are pleased to present the Tenth Annual Report to the Members,         IDFC Premier Equity Fund – Plan A has been ranked as a Seven Star
along with the Audited Profit and Loss Account for the year ended         Fund by ICRA in the category of ‘Open Ended Equity Diversified
March 31, 2010 and the Balance Sheet as at March 31, 2010.                - Defensive’ schemes for its 3 years performance till December
                                                                          31, 2009. The rank is an outcome of an objective and comparative
FINANCIAL RESULTS
                                                                          analysis against various parameters, including: risk adjusted
                                                                 RUPEES
                                                                          return, fund size, company concentration and liquidity. The ranking
                                  YEAR ENDED           YEAR ENDED         methodology did not take into account entry and exit loads imposed
                                MARCH 31, 2010       MARCH 31, 2009       by the Fund. There were 81 schemes considered in ‘Open Ended
Gross Income                              500,000              625,000    Equity Diversified - Defensive’ category for the ranking exercise.
Profit before Tax                         218,647              324,232    The rank is neither a certificate of statutory compliance nor any
Provision for Tax                          68,000              115,000    guarantee on the future performance of IDFC Premier Equity
Profit after Tax                          150,647              209,232    Fund – Plan A.
OPERATIONS OF IDFC MUTUAL FUND                                            IDFC Government Securities Fund – ST – Plan A has been ranked
The Company is the Trustee to the schemes of IDFC Mutual Fund             as a Five Star Fund by ICRA in the category of ‘Open Ended Gilt’
(IDFC MF). The Assets under Management of IDFC Mutual Fund were           schemes for its 1 year performance till December 31, 2009. The
Rs. 19,979 Crores (including AUM of Fund of Funds Schemes) as on          rank is an outcome of an objective and comparative analysis against
March 31, 2010:                                                           various parameters, including: risk adjusted return, fund size and
                                                                          average maturity. The ranking methodology did not take into account
NEW SCHEMES LAUNCH                                                        entry and exit loads imposed by the Fund. There were 30 schemes
 Open ended schemes launched during the period under review:
                                                                          considered in ‘Open Ended Gilt’ category for the ranking exercise.
IDFC Asset Allocation Fund of Fund, an open ended Fund of Funds           The rank is neither a certificate of statutory compliance nor any
Scheme was launched on January 04, 2010. The investment objective         guarantee on the future performance of IDFC Government Securities
of the scheme is to generate capital appreciation through investment      Fund – ST – Plan A.
in different mutual fund schemes primarily local funds based on a
                                                                          IDFC Premier Equity Fund ranked as Best Fund over Past 3 Years
defined asset allocation model. It has 3 plans – Aggressive Plan,
                                                                          period ending Dec. 31, 2009, India Equity by Lipper, a global ranking
Conservative Plan and Moderate Plan. The Aggressive Plan collected
                                                                          agency for mutual funds in Lipper Fund Awards, India, 2010.
a total of Rs. 613,484,254.26 during the New Fund Offer. The
                                                                          Business Standard, a leading newspaper in India voted IDFC Mutual
Conservative Plan collected a total of Rs 301,262,457.31during
                                                                          Fund as the “Equity Fund Managers of the Year” for the year 2009.
the New Fund Offer. The Moderate Plan collected a total of Rs.
404,381,577.08 during the New Fund Offer.                                 Business World, a leading business magazine in India voted Kenneth
                                                                          Andrade (Head – Investments) as the “Smartest Fund Manager of the
IDFC Monthly Income Plan Fund of Fund, an open ended Fund of Fund
                                                                          Year” for the year 2009.
scheme was launched on January 11, 2010. This scheme collected a
total of Rs. 2,113,409,943.68 during the New Fund Offer. The primary      IDFC Premier Equity Fund rated as the “Best Mid-cap and Small-cap
objective of the Scheme is to generate regular returns through            Fund” over Past 3 Years period ending Dec. 31, 2009 by Business
investment primarily in debt oriented Mutual Fund schemes (such as        World, a leading business magazine in India
Income and Liquid funds). The secondary objective of the Scheme is        IDFC AMC rated as the “Best Performing Fund House” by the
to generate long-term capital appreciation by investing a portion of      Economic Times (ET) Quarterly Mutual Fund Tracker for Q1 and Q2 of
the Scheme’s assets in equity oriented MF schemes. Monthly Income         FY 09-10.
is not assumed and the same is subject to availability of distributable
                                                                          IDFC Imperial Equity Fund and IDFC Dynamic Bond Fund ranked in the
surplus.
                                                                          “Platinum Category” which is the highest ranking given to schemes in
 Close ended schemes launched during the period under review:            Q1 and Q2 2009.
In addition to the above open ended schemes, Six Close-Ended income
                                                                          DIVIDEND
Schemes in the form of Fixed Maturity Plans (FMP’s) were launched.
                                                                          The Board of Directors of the Company do not recommend the
These comprised of IDFC Fixed Maturity Plan – Thirteen Months
                                                                          payment of dividend for the current year.
Series I, IDFC Fixed Maturity Plan –Fifteen Months Series 3, IDFC
Fixed Maturity Plan – Seventeen Months Series 1, IDFC FMP-Half            DIRECTORS
Yearly Series 9 and IDFC Fixed Maturity Plan – Fourteen Months            In accordance with the provisions of the Companies Act, 1956 and
Series 1. These Fixed Maturity Plans collected approximately Rs           the Company’s Articles of Association, Mr. U Sundararajan retires by
1027.85 crores.                                                           rotation and is eligible for re-appointment.




                                                                                         I D F C A M C T R U ST E E C O M P A N Y L I M I T E D   185
AUDITORS                                                                There was no foreign exchange earning or outgo during the period
M/s M. P. Chitale and Co., Chartered Accountants and Statutory          under review.
Auditors of the Company would be retiring at the conclusion of          The Board of Directors of the Company met seven times during the
the forthcoming Annual General Meeting and are eligible for re-         year and four meetings of the Audit Committee were convened during
appointment. The auditors have confirmed their eligibility and          the year.
willingness to accept the office if re-appointed. The Members are
requested to consider their re-appointment, at a remuneration to        DIRECTORS RESPONSIBILITY STATEMENT
be decided by the Board of Directors, for the financial year ending     Based on the representation made by the management, the Directors,
March 31, 2011 as set out in the Notice convening the Annual General    pursuant to the provisions of Section 217 (2AA) wish to state:
Meeting.                                                                1. that in the preparation of the annual accounts, the applicable
                                                                        accounting standards have been followed along with proper
AUDIT COMMITTEE
                                                                        explanation relating to material departures;
The Audit Committee consists of two members, Mr. Jamsheed Kanga,
Chairman and Mr. Vikram Limaye. The Committee met four times            2. that they have selected such accounting policies and applied them
during the year under review. The functions of the Committee includes   consistently and made judgments and estimates that are reasonable
reviewing the financial statements, internal control systems and        and prudent so as to give a true and fair view of the state of affairs of
significant accounting policies of the Company and discussing the       the company at the end of the financial year and of the profit or loss
audit findings and recommendatintons of the internal and statutory      of the company for that period;
auditors of the Company.                                                3. that they have taken proper and sufficient care for the
                                                                        maintenance of adequate accounting records in accordance with the
CONVERSION INTO PUBLIC COMPANY
                                                                        provisions of this Act, for safeguarding the assets of the Company
The Company has been converted into a Public Company. The
                                                                        and for preventing and detecting fraud and other irregularities; and
Registrar of Companies, Maharashtra has issued a Fresh Certificate
of Incorporation consequent upon change of name on conversion to        4. that they have prepared the annual accounts on a going concern
Public Limited Company dated June 23, 2009.                             basis.

CAPITAL                                                                 ACKNOWLEDGEMENT
No further equity share capital was issued by the company during the    The Board places on record its gratitude to the Government of India,
year.                                                                   Securities and Exchange Board of India, Reserve Bank of India,
                                                                        Association of Mutual Funds in India, other regulatory authorities and
FIXED DEPOSITS                                                          institutions, the investors of IDFC Mutual Fund and to the Members
The company has not accepted any Fixed Deposits from the public.        for their continued guidance and support during the year.
PARTICULARS OF EMPLOYEES
Since your Company does not have any employee, the provisions
of Section 217 (2A) of the Companies Act, 1956 read with the
                                                                        FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Companies (Particulars of Employees) Rules, 1975, are not applicable
and hence not given.

STATUTORY DISCLOSURE OF PARTICULARS                                     VIKRAM LIMAYE
The requirements of disclosure, in terms of Section 217 (1)(e)          Chairman
of the Companies Act, 1956 pertaining to steps taken regarding
conservation of energy and technology absorption do not apply to the    Mumbai
Company.                                                                April 20, 2010




186    I D F C A N N U A L R E P O R T 09 –10
      AU D I TO RS ’ R E PO RT

To The Members of IDFC AMC Trustee Company Limited                       (d) In our opinion, the Balance Sheet, Profit & Loss Account and
We have audited the attached Balance Sheet of IDFC AMC Trustee               Cash Flow Statement dealt with by this report comply with the
Company Limited as at March 31, 2010 and also the Profit and Loss            accounting standards referred to in Section 211 (3C) of the
Account and the Cash Flow Statement for the year ended on that date          Companies Act, 1956 to the extent applicable.
annexed thereto. These financial statements are the responsibility       (e) On the basis of written representation received by the Company
of the Company’s management. Our responsibility is to express an             from the directors, we report that none of the directors is
opinion on these financial statements based on our audit.                    disqualified as on 31st March 2010 from being appointed as a
We conducted our audit in accordance with auditing standards                 director in terms of clause (g) of sub section (1) of section 274 of
generally accepted in India. Those standards require that we plan            the Companies Act, 1956.
and perform the audit to obtain reasonable assurance about whether       (f)   In our opinion and to the best of our information and according
the financial statements are free of material misstatement. An                 to the explanations given to us, the accounts read with notes
audit includes examining, on a test basis, evidence supporting the             thereon give the information required by the Companies Act,
amounts and disclosures in the financial statements. An audit also             1956, in the manner so required and give a true and fair view in
includes assessing the accounting principles used and significant              conformity with the accounting principles generally accepted in
estimates made by management, as well as evaluating the overall                India:
financial statement presentation. We believe that our audit provides a         (i)   in so far as it relates to the Balance Sheet, of the state of
reasonable basis for our opinion.                                                    affairs of the Company as at March 31, 2010,
(1) As required by the Companies Auditors Report Order (CARO)                  (ii) in so far as it relates to the Profit and Loss Account, of the
2003, issued by the Central Government of India in terms of Section                 profit of the Company for the year ended on that date and
227 (4A) of the Companies Act, 1956, we enclose as Annexure, a
                                                                               (iii) in so far as it relates to the Cash Flow Statement of the
statement on the matters specified in paragraphs 4 and 5 of the said
                                                                                     Company for the year ended on that date.
Order.
(2) We state that:
                                                                         FOR M. P. CHITALE & CO.
(a) We have obtained all the information and explanations which
                                                                         Chartered Accountants
    to the best of our knowledge and belief were necessary for the
    purpose of our audit;                                                VIDYA BARJE
(b) In our opinion, proper books of account as required by law           Partner
    have been kept by the Company, so far as appears from our            M. No. 104994
    examination of those books;                                          Firm Registration No. 101851W
(c)    The Balance Sheet, Profit and Loss Account and Cash Flow
       Statement dealt with in this report are in agreement with the     Mumbai
       books of account;                                                 April 21, 2010




                                                                                           I D F C A M C T R U ST E E C O M P A N Y L I M I T E D   187
   ANNEXURE                                                                                                           TO THE AUDITOR’S REPORT



Annexure referred to in paragraph 1 of the report of even date            (xi) In our opinion and according to the information and explanations
of the Auditors to the members of IDFC AMC Trustee Company                given to us, during the period, the Company has not taken any loan
Limited                                                                   and no amounts were due towards principal or interest to financial
                                                                          institution, bank or debenture holders during the period.
(i) The Company has no fixed assets.
                                                                          (xii) According to the information and explanations given to us, the
(ii) The Company has not granted any loans to Companies, firms or
                                                                          Company has not granted loans and advances on the basis of security
other parties covered in the register maintained under section 301 of
                                                                          by way of pledge of shares, debentures and other securities.
the Companies Act, 1956.
                                                                          (xiii) According to the information and explanations given to us, the
(iii) The Company has not taken any loans from Companies, firms or
                                                                          Company is not dealing or trading in shares, securities, debentures
other parties covered in the register maintained under section 301 of
                                                                          and other securities.
the Companies Act, 1956.
                                                                          (xiv) According to the information and explanations given to us, the
(iv) In our opinion and according to the information and explanations
                                                                          Company has not given any guarantee for loans taken by others from
given to us, there are adequate internal control procedures
                                                                          bank or financial institutions.
commensurate with the size of the Company and the nature of its
business for purchase of fixed assets and for the services rendered.      (xv) According to the information and explanations given to us, the
                                                                          Company has not taken any term loan.
(v) In our opinion and according to the information and explanations
given to us, there are no transactions that need to be entered into a     (xvi) According to the information and explanations given to us, during
register in pursuance of section 301 of the Companies Act, 1956.          the year, the Company has not raised any funds.

(vi) In our opinion and according to the information and explanations     (xvii) The Company has not made any preferential allotment of shares
given to us, the Company has not accepted any deposits from the           to parties and Companies covered in the Register maintained under
public.                                                                   section 301 of the Act.

(vii) The Company’s paid-up capital and reserves does not exceed Rs.      (xviii) According to the information and explanations given to us, the
50 lakhs and the turnover of the Company does not exceed five crores      Company has not issued any debentures up to 31st March 2010.
rupees for a period of immediately preceding three consecutive            (xix) The Company has not raised money from public issue.
financial years and hence, the Company is not required to have a          (xx) According to the information and explanations given to us, no
formal Internal Audit System.                                             fraud on or by the Company has been noticed or reported during the
(viii) Central Government has not prescribed maintenance of cost          period.
records under Section 209 (1) (d) of the Companies Act, 1956.             (xxi) Considering the nature of the business and the services rendered
(ix) According to the information and explanations given to us and the    by the Company, clauses (ii) and (xiii) under Clause 4 of the CARO are
records of the Company examined by us, in our opinion, the Company        not applicable.
is regular in depositing undisputed statutory dues including Provident
Fund, Investor Education and Protection Fund, Employees’ State
Insurance, Income-tax, Sales-tax, Wealth tax, Service Tax, Customs
duty, Excise duty, cess and any other statutory dues as applicable
                                                                          FOR M. P. CHITALE & CO.
with the appropriate authorities. According to the information and
                                                                          Chartered Accountants
explanations given to us, there were no undisputed amounts payable
in respect of Provident Fund, Investor Education and Protection
Fund, Employees’ State Insurance, Income-tax, Sales-tax, Wealth tax,      VIDYA BARJE
Service Tax, Customs duty, Excise duty, cess and any other statutory      Partner
dues outstanding as at March 31, 2010 for a period of more than six       M. No. 104994
months from the date they became payable.                                 Firm Registration No. 101851W

(x) The Company does not have accumulated losses at the end of the
financial year and it has not incurred any cash losses in the financial   Mumbai
year ended on that date or in the immediately preceding financial year.   April 21, 2010




188    I D F C A N N U A L R E P O R T 09 –10
   BALANCE SHEET                                                                                                               AS AT MARCH 31, 2010


                                                                                  RUPEES                          RUPEES                            RUPEES

                                                    SCHEDULE                                  AS AT MARCH 31, 2010           AS AT MARCH 31, 2009
SOURCES OF FUNDS
Shareholders’ Funds
 Capital                                                       1                 500,000                                                       500,000
 Reserves and Surplus                                          2                 522,230                                                       371,583
                                                                                                              1,022,230                        871,583
Total                                                                                                         1,022,230                        871,583
APPLICATION OF FUNDS
Current Assets, Loans and Advances                             3
 Sundry Debtors                                                                  551,500                                                       496,628
 Cash and Bank Balances                                                          550,201                                                       426,442
 Loans and Advances                                                              306,616                                                       310,162
                                                                              1,408,317                                                       1,233,232
Less: Current Liabilities & Provisions                         4                 386,087                                                       361,649
 Net Current Assets                                                                                           1,022,230                        871,583
Total                                                                                                         1,022,230                        871,583
Notes to the Accounts                                          6
Schedules 1 to 6 form an integral part of the Accounts




IN TERMS OF OUR REPORT OF EVEN DATE
FOR M.P. CHITALE & CO.                                         FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Chartered Accountants



VIDYA V . B A R J E                                            U. SUNDARARAJAN                  JAMSHEED KANGA
Partner                                                        Director                         Director


Mumbai | April 20, 2010

                                                                                           I D F C A M C T R U ST E E C O M P A N Y L I M I T E D     189
   PROFIT AND LOSS ACCOUNT                                                                     FOR THE YEAR ENDED MARCH 31, 2010



                                                                                                  RUPEES                  RUPEES

                                                                                       APRIL 1, 2009 TO      JANUARY 1, 2008 TO
                                                                     SCHEDULE          MARCH 31, 2010           MARCH 31, 2009
INCOME
Trusteeship Fees                                                                                 500,000                 625,000
EXPENDITURE
Operating Expenses                                                              5                281,353                 300,768
PROFIT BEFORE TAX                                                                                218,647                 324,232
Less: Provision for tax                                                                           68,000                 115,000
PROFIT AFTER TAX                                                                                 150,647                 209,232
Add: Balance as per last Balance Sheet                                                           371,583                 162,351
BALANCE CARRIED FORWARD                                                                          522,230                 371,583
Earnings per Share (Face Value Rs. 10) (Basic)                                                      3.01                    4.18
Notes to the Accounts                                                           6
Schedules 1 to 6 form an integral part of the Accounts




IN TERMS OF OUR REPORT OF EVEN DATE
FOR M.P. CHITALE & CO.                                   FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Chartered Accountants



VIDYA V . B A R J E                                      U. SUNDARARAJAN            JAMSHEED KANGA
Partner                                                  Director                   Director


Mumbai | April 20, 2010

190       I D F C A N N U A L R E P O R T 09 –10
   C A S H F L OW ST AT E M E N T                                                                             FOR THE YEAR ENDED MARCH 31, 2010




                                                                                      RUPEES                       RUPEES                            RUPEES

PARTICULARS                                                                                          APRIL 1, 2009 TO           JANUARY 1, 2008 TO
                                                                                                     MARCH 31, 2010                MARCH 31, 2009
A. CASH FLOW FROM OPERATING ACTIVITIES
     Profit Before Tax                                                                                           218,647                        324,232
     Changes in :
       Current Assets & Loans and Advances                                           (23,171)                                                  (173,752)
       Current Liabilities                                                           (43,562)                                                   (61,273)
                                                                                                                 151,914                             89,207
     Direct Taxes Paid                                                                                           (28,155)                      (120,340)
     NET CASH FLOW FROM/(USED IN) OPERATING ACTIVITIES (A)                                                       123,759                        (31,133)
B. CASH FLOW FROM FINANCING ACTIVITIES
     NET CASH FROM FINANCING ACTIVITIES                                                                                  -                                -
     Increase in Share Capital (B)                                                                                       -                      400,000
     NET CHANGE IN CASH & CASH EQUIVALENTS (A)+(B)                                                               123,759                        368,867
     Cash & Cash Equivalents as at the beginning of the period (As per Schedule 3)                               426,442                             57,575
     Cash & Cash Equivalents as at the end of the period (As per Schedule 3)                                     550,201                        426,442
                                                                                                                (123,759)                      (368,867)




IN TERMS OF OUR REPORT OF EVEN DATE
FOR M.P. CHITALE & CO.                                            FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Chartered Accountants



VIDYA V . B A R J E                                               U. SUNDARARAJAN                JAMSHEED KANGA
Partner                                                           Director                       Director


Mumbai | April 20, 2010

                                                                                            I D F C A M C T R U ST E E C O M P A N Y L I M I T E D     191
  SCHEDULES                                                       ANNEXED TO AND FORMING PART OF THE ACCOUNTS




SCHEDULE 1 Share Capital                                                       RUPEES                  RUPEES

                                                                 AS AT MARCH 31, 2010    AS AT MARCH 31, 2009
AUTHORISED
50,000 Equity shares of Rs. 10/- each                                         500,000                 500,000
ISSUED, SUBSCRIBED & PAID-UP
50,000 Equity shares of Rs. 10/- each
(All the above shares are held by Infrastructure Development
Finance Company Limited, the Holding Company and its nominees)                500,000                 500,000
                                                                              500,000                 500,000




SCHEDULE 2 Reserves and Surplus                                                RUPEES                  RUPEES

                                                                 AS AT MARCH 31, 2010    AS AT MARCH 31, 2009
Profit and Loss Account                                                       522,230                 371,583
                                                                              522,230                 371,583




SCHEDULE 3 Current Assets, Loans and Advances                                  RUPEES                  RUPEES

                                                                 AS AT MARCH 31, 2010    AS AT MARCH 31, 2009
CURRENT ASSETS
  Sundry Debtors (Considered Good)
      Trusteeship Fees Receivable
      Over Six Months                                                         275,752                 249,076
      Others                                                                  275,748                 247,552
                                                                              551,500                 496,628
CASH AND BANK BALANCES
      Balances with Scheduled Banks - in Current Accounts                     550,201                 426,442
                                                                             1,101,701                923,070
LOANS AND ADVANCES
  Advance Income Tax and TDS                                                  287,579                 259,424
  Others                                                                       19,037                  50,738
                                                                              306,616                 310,162




SCHEDULE 4 Current Liabilities and Provisions                                  RUPEES                  RUPEES

                                                                 AS AT MARCH 31, 2010    AS AT MARCH 31, 2009
Sundry Creditors
Funds received from IDFC towards corpus                                        30,000                  30,000
Others                                                                         68,087                 111,649
Provision for taxation                                                        288,000                 220,000
                                                                              386,087                 361,649




192      I D F C A N N U A L R E P O R T 09 –10
SCHEDULE 5 Operating expenses                               RUPEES                          RUPEES

                                               APRIL 1, 2009 TO            JANUARY 1, 2008 TO
                                               MARCH 31, 2010                 MARCH 31, 2009
Sitting Fees                                               180,000                         240,000
Bank Charges                                                      6                               10
Miscellaneous Expenses                                            –                              638
Professional and Consultancy charges                        48,499                          26,797
Stamp Duty and Registration Fees                              2,300                             3,000
Printing and Stationery                                           –                             3,175
Audit Fees                                                  29,224                          20,618
Advertising                                                       –                             6,530
Car hire                                                    21,324                                 –
                                                           281,353                         300,768




                                       I D F C A M C T R U ST E E C O M P A N Y L I M I T E D    193
SCHEDULE: 6 Notes Forming Part of the Accounts
1 Significant Accounting Policies:
A. Method of Accounting
The accounts are prepared under the historical cost convention and on the going concern basis, with revenues recognised and expenses
accounted on their accrual.

B. Revenue Recognition
Revenue is recognised when no significant uncertainty as to measurability and collectibility exists.

2 Earnings and expenditure in foreign currency: Nil
3 Contingent Liabilities not provided for:         Nil

 4 As on the Balance sheet date there was no amount exceeding Rs.1 Lac, due to any small-scale Industrial undertaking, outstanding for more
than 30 days.

5 The earning per share, in terms of Accounting Standard 20 issued by the Institute of Chartered Accountants of India, is as under:

 PARTICULARS                                                                                        CURRENT PERIOD            PREVIOUS PERIOD
                                                                                                                RUPEES                     RUPEES

 Profit after tax                                                                                              150,647                    209,232
 Profit attributable to Equity shareholders                                                                    150,647                    209,232
 No. of Shares                                                                                                  50,000                     50,000
 Earnings per share                                                                                               3.01                        4.18

6 Deferred tax asset/liability does not arise since there is no difference in accounting profit and tax profit on account of timing differences.
7 The Company is engaged in the business of providing trusteeship services. As such there is no separate reportable primary business segment or
geographical segment as required by Accounting Standard 17 on “Segment Reporting” issued by the Institute of Chartered Accountants of India.

8 As per the Accounting Standard 18 on “Related Party Disclosures” issued by the Institute of Chartered Accountants of India, the related
parties of the Company are as follows:
I.    HOLDING COMPANY:

      Infrastructure Development Finance Company Limited
II.   FELLOW SUBSIDIARY:

      IDFC Asset Management Company Limited

The nature and volume of transactions carried out with the above related parties in the ordinary course of business are as follows:
 NAME OF RELATED PARTY &                            PARTICULARS                                     CURRENT PERIOD            PREVIOUS PERIOD
 NATURE OF RELATIONSHIP
                                                                                                                RUPEES                     RUPEES

 Fellow Subsidiary
 IDFC Asset Management Company Limited              Advances taken and Repaid                                  152,032                    351,217
                                                    Advances payable-Balance                                         -                     40,000

9 Details of Movement in Provisions, in terms of Accounting Standard 29 issued by the Institute of Chartered Accountants of India, is as under:

 NATURE OF PROVISION                                       OPENING               PROVISIONS                  PROVISIONS      CLOSING BALANCE
                                                      BALANCE AS ON             MADE DURING                  REVERSED /                 AS ON
                                                         01/04/2009                THE YEAR                    ADJUSTED            31/03/2010
 Provision for Income Tax                                       220,000                  68,000                          -               288,000

10 Previous period’s figures have been regrouped wherever necessary. Since the current period is for 12 months from April 01, 2009 to March
31, 2010, the figures for current period are not comparable with previous period viz., 15 months from January 01, 2008 to March 31, 2009.



FOR M.P. CHITALE & CO.                                       FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Chartered Accountants

VIDYA V . B A R J E                                          U. SUNDARARAJAN                      JAMSHEED KANGA
Partner                                                      Director                             Director

Mumbai | April 20, 2010

 194      I D F C A N N U A L R E P O R T 09 –10
      B A L A N C E S H E E T A B ST R A CT                                                                                AND COMPANY’S GENERAL BUSINESS PROFILE




I.      REGISTRATION DETAILS

        Registration No.           U   6   9   9   9   0     M        H       1       9       9   9   P   T   C   1    2   3    1    9   0

        State Code                 1   1

        Balance Sheet Date         3   1       0   3         2       0        1       0

II.     CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. ‘000)

                                                                         Public Issue                                                                               Right Issue
                                                                         N        I       L                                                                         N      I    L


                                                                         Bonus Issue                                                                        Private Placement

                                                                         N        I       L                                                                         N      I    L

III.    POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. ‘000)
                                                                 Total Liabilities                                                                                 Total Assets
                                                                 1       4        0       8                                                                    1    4      0    8
        SOURCES OF FUNDS
                                                                 Paid-up Capital                                                                         Reserves and Surplus

                                                                         5        0       0                                                                         5      2    2

                                                                     Secured Loans                                                                           Unsecured Loans
                                                                         N        I       L                                                                         N      I    L
        APPLICATION OF FUNDS
                                                              Net Fixed Assets                                                                                     Investments

                                                                         N        I       L                                                                         N      I    L

                                                            Net Current Assets                                                                             Deferred Tax Asset

                                                                 1       0        2       2                                                                         N      I    L

IV.     PERFORMANCE OF THE COMPANY (AMOUNT IN RS. ‘000)
                                                            Turnover / Income                                                                               Total Expenditure

                                                                         5        0       0                                                                         2      8    1

                                                             Profit Before Tax                                                                                 Profit After Tax

                                                                         2        1       9                                                                         1      5    1

                                                   Earnings per Share (in R