Notes to Accounts of Capital First Ltd.

Mar 31, 2018

1. CORPORATE INFORMATION

Capital First Limited (the ‘Company’ or ‘CFL’) is a public limited company domiciled in India and incorporated on October 18, 2005 under the provisions of the Companies Act, 1956. The Company has received a Certificate of Registration from the Reserve Bank of India (‘RBI’) on April 10, 2006 to commence / carry on the business of Non-Banking Financial Institution (‘NBFC’) without accepting public deposits.

1.1 During the current year, the Board of Directors of the Company at its meeting held on January 13, 2018, has approved a composite scheme of amalgamation, in terms of Sections 230-232 of Companies Act, 2013, of the Company, Capital First Home Finance Limited and Capital First Securities Limited (together the “Amalgamating Companies”) with IDFC Bank Limited (“Amalgamated Company”). The Competition Commission of India has, at its meeting held on March 07, 2018, considered the proposed combination and approved the same under sub-section (1) of Section 31 of the Competition Act, 2002. The National Housing Bank, vide its letter dated February 19, 2018, has intimated their no objection to the aforesaid amalgamation subject to compliance with the applicable provisions of relevant Acts, Rules, Regulations, etc. in the matter. BSE Limited (“BSE”) has, vide its letter dated March 14, 2018, given its prior approval for the aforesaid amalgamation with respect to the Amalgamated Company’s trading membership in the Currency Derivative Segment of BSE. National Stock Exchange of India Limited (“NSE”) has, vide its letter dated March 26, 2018, given its prior approval for the aforesaid amalgamation with respect to the Amalgamated Company’s trading membership in the Currency Derivative Segment of NSE. The said scheme remains subject to the receipt of approval from the Reserve Bank of India and other statutory and regulatory approvals, including the approvals of the relevant stock exchanges, Securities & Exchange Board of India, the National Company Law Tribunal, and the respective shareholders and creditors of the Amalgamating Companies and the Amalgamated Company.

2. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The financial statements have been prepared to comply in all material respects with the Accounting Standards (‘AS’) notified under section 133 of the Companies Act, 2013 (the ‘Act’) read together with paragraph 7 of the Companies (Accounts) Rules, 2014 and other accounting principles generally accepted in India (IGAAP) and as per the guidelines issued by Reserve Bank of India (‘RBI’) as applicable to a Non-Banking Financial (Non-deposit accepting or holding) Companies (‘NBFC Regulation’). The financial statements have been prepared on an accrual basis and under the historical cost convention. The notified Accounting Standards (AS) are followed by the Company insofar as they are not inconsistent with the NBFC Regulation.

a. Terms / Rights attached to equity shares:

The Company has only one class of equity shares having a par value of Rs.10 per share. Each holder of equity shares is entitled to one vote per share. The dividend, if any is proposed by the Board of Directors and is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

Note:

(i) As per Section 45-IC of Reserve Bank of India Act, 1934 every non-banking financial company shall create a reserve fund and transfer therein a sum not less than twenty per cent of its net profit every year as disclosed in the Statement of profit and loss and before any dividend is declared. No appropriation of any sum from the reserve fund shall be made by the non-banking financial company except for the purpose as may be specified by the Reserve Bank of India from time to time and every such appropriation shall be reported to the Reserve Bank of India within twenty-one days from the date of such withdrawal. The said amount has been transferred at the end of the Financial Year.

(ii) The Board of Directors, at its meeting held on May 10, 2017 recommended a dividend of Rs.2.60/- per Equity Share. The dividend had been declared in the Annual General Meeting held on July 4, 2017 and has been paid on and after July 06, 2017.

a. Security details for secured redeemable non-convertible debentures

1 Debentures of Rs.74,000.00 lakhs (Previous Year: Rs.94,000.00 lakhs) are secured by first pari-passu charge on the fixed asset owned by the Company and first exclusive charge on the standard receivables of retail and corporate loan assets and other current assets of the Company.

2 Debentures of Rs.749,320.00 lakhs (Previous Year: 298,220.00 lakhs) are secured by first pari-passu charge on the fixed asset owned by the Company and first pari-passu charge by way of hypothecation, over standard present and future receivables.

3 The total asset cover required thereof has been maintained as per the terms and conditions stated in the respective Debenture Trust Deeds.

c. Security details for secured term loans

1. Term loans of Rs.514,936.50 lakhs (Previous year: Rs.487,939.86 lakhs) is secured by way of first pari passu charge on receivables of retail, wholesale credit and current assets of the Company.

2. Term loans of Rs.118,666.66 lakhs (Previous Year: Rs.111,500.00 lakhs) is secured by way of first exclusive charge on receivables of the Company.

Interest rate range from 8.60% p.a to 11.00% p.a as at March 31, 2018

These debentures have a ‘Call Option’ which may be exercised by the Company only after the instrument has run for a period of ten years from the date of allotment. Further, call option shall be exercised by the Company only with the prior approval of Reserve Bank of India (RBI) and as per RBI guidelines. It also have a coupon rate step-up option of 100 bps, which shall be exercised only once during the whole life of the instrument, in conjunction with the Call Option, after the lapse of 10 years from the date of allotment of issue. The coupon rate will be higher by 100 bps for subsequent years if Call Option is not exercised by the Company. The claim of the investors shall be pari passu among themselves and with other subordinated indebtedness of the Company, superior to the claims of investors in equity shares and subordinate to the claims of all other unsecured creditors and depositors of the Company, as regards repayment of principal and interest by the Issuer.

f. Details of unsecured term loans from others:

The Company had raised Rs.3,642.00 Lakhs at the rate of 8.50% (Previous Year Rs.3,455.00 lakhs at the rate of 8.50%) by way of Term Loan from Others, which is repayable on March 31, 2019 (Previous Year March 31, 2019) i.e. 2 year from the date of its disbursement. By mutual consent, same can also be repaid prior to its scheduled repayment date without the levy of any prepayment penalty or charges.

Disclosure under Micro, Small and Medium Enterprises Development Act, 2006

Based on and to the extent of the information received by the company from the suppliers during the year regarding their status under the Micro,Small and Medium Enterprises Development Act, 2006 (MSMED Act) and relied upon by the auditors, there are no amounts due to MSME as at March 31, 2018.

*Book value of Non-convertible debentures is taken as market value since market quotes are not available in the absence of trades.

**In earlier years, the Board of Directors decided to discontinue broking business carried on through its subsidiary Capital First Securities Limited (CFSL). At the time of discontinuance of broking business of CFSL, the Company was carrying impairtment provision of Rs.5,841.73 lakhs. Thereafter CFSL started other business activity which has resulted in consistent income and profitability.The management believes that the provision for diminution needs to be reversed to the extent of CFSL’s net worth. Accordingly Rs.2,936.75 lakhs has been reversed. However, this has no impact on the consolidated financial statements of the Company.

Note (ii)

In earlier years, the Board of Directors decided to discontinue broking business carried on through its subsidiary Capital First Securities Limited (CFSL). At the time of discontinuance of broking business of CFSL, the Company was carrying impairtment provision of Rs.5,841.73 lakhs. Thereafter CFSL started other business activity which has resulted in consistent income and profitability.The management believes that the provision for diminution needs to be reversed to the extent of CFSL’s net worth. Accordingly Rs.2,936.75 lakhs has been reversed. However, this has no impact on the consolidated financial statements of the Company.

3. Post-Employment Benefit Plans

Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn) for each completed year of service. Gratuity expense has been included in ‘Contribution to provident fund and other funds’ under Personnel expenses.

The following table summaries the components of net benefit expense recognized in the statement of profit and loss and amounts recognized in the balance sheet for the respective plans.

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

Since the Company has not funded its gratuity liability there are no returns on the planned assets and hence the details related to changes in fair value of assets have not been given.

ESOS 2007

No further options were granted during the year under this scheme. Options under this scheme will vest after the expiry of 3 years from the date of grant. All the options are exercisable within 5 years from the date of vesting or 10 years from the date of grant, whichever is later.

ESOS 2008

No further options were granted during the year under this scheme. All the options are exercisable within 5 years from the date of vesting or 10 years from the date of grant, whichever is later.

ESOS 2009

No further options were granted during the year under this scheme. All the options in respect of earlier grant are exercisable within 5 years from the date of vesting or 10 years from the date of grant, whichever is later.

ESOS 2011

No further options were granted during the year under this scheme. All the options are exercisable within 5 years from the date of vesting or 10 years from the date of grant, whichever is later.

ESOS 2012

No further options were granted during the year under this scheme. All the options are exercisable within 5 years from the date of vesting or 10 years from the date of grant, whichever is later.

ESOS 2014

No further options were granted during the year under this scheme. All the options are exercisable on completion of 5 years from the effective grant date (i.e April 2, 2014) but prior to expiry of 10 years from the effective grant date.

ESOS 2016

No further options were granted during the year under this scheme. The options will vest in graded proportion of 20% each year after expiry of 1,2,3,4 and 5 years respectively. All the options are exercisable on completion of 5 years from the date of grant or 6 months from the date of vesting whichever is later.

ESOS 2017

The Nomination and Remuneration Committee of the Board of Directors through Circular Resolution dated July 13, 2017 has granted options in respect of 910,000 equity shares at an exercise price of Rs.709.75 to eligible employees, Circular Resolution dated September 14, 2017 has granted options in respect of 950,000 equity shares at an exercise price of Rs.799.85 to eligible employees, Circular Resolution dated December 6, 2017, has granted options in respect of 10,000 equity shares at an exercise price of Rs.695.55 to eligible employees. The options will vest in graded proportion of 20% each year after expiry of 1,2,3,4 and 5 years for stock options granted on July 13, 2017, December 6, 2017 and for stock options granted on September 14, 2017, Options will vest completely after one year from the date of grant. All the options are exercisable within a period of 5 years from the date of grant or 6 months from the date of vesting of respective options, whichever is later.

ESOS 2017-CMD

The Nomination and Remuneration Committee of the Board of Directors at its meeting held on December 18, 2017, has granted options in respect of 15,00,000 equity shares to Chairman and Managing Director at an exercise price of Rs.799.85. All the options granted under this scheme (viz.100% of Options) shall vest after five years from Effective Date of Grant and shall be capable of being Exercised within a period of 1 (One) years from the Date of Vesting of Options.

The fair value of the stock options granted during the year have been calculated using Black Scholes Options Pricing Model and the significant assumptions made in this regard are as follows:

4. Segment Reporting

Since the Company has only one reportable business segment “loans given” as primary segment and it operates in a single geographical segment within India, no disclosure is required to be given as per Accounting Standard - 17 ‘Segmental Reporting’ as notified under Section 133 of the Companies Act, 2013 (‘the Act’) read together with paragraph 7 of the Companies (Accounts) Rules, 2014.

Geographical Segments:

The Company operates solely in one Geographic segment namely “Within India” and hence no separate information for Geographic segment wise disclosure is required.

5. Operating Leases

The Company’s significant leasing arrangements are in respect of operating leases are for premises (residential and office) which are renewable on mutual consent at agreed terms. Certain agreements provide for cancellation by either party or certain agreements contains clause for escalation and renewal of agreements. The non-cancellable operating lease agreements are ranging for a period 36 to 60 months. There are no sub leases.

6. Pursuant to circular no RBI/2017-18/129- DBR.No.BP.BC.100/21.04.048/2017-18 dated February 7, 2018 issued by the Reserve Bank of India (RBI) which permits regulated entities to defer the down grade of an account of micro, small and medium enterprise under the Micro,Small and Medium Enterprises (MSED) Act, 2006, that was standard as on January 31, 2018, the Company has not opted for 180 days relaxation entended by RBI for recognition of loan as Non-Performing Assets (‘NPA’).

7. The Company’s pending litigations comprise of claims against the Company primarily by the customers and proceedings pending with Tax authorities. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed the contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a material adverse effect on its financial results at March 31, 2018. Refer note 30 for details on contingent liabilities.

8. The Company has a process whereby periodically all long term contracts (including derivative contracts) are assessed for material foreseeable losses. At the year end, the Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

9. The Board of Directors have recommended dividend of Rs.2.80 per share (28%) on each equity share having face value of ‘10/each. The proposed equity dividend and dividend distribution tax thereon are not accounted as liabilities in fiscal 2017-18 in accordance with revised AS-4 “Contingencies and events occuring after balance sheet date”.

10 During previous year, the Board of Directors vide Circular Resolution dated December 14, 2016 had allotted 4,780,000 equity shares of the Company of Rs.10/- each, at the premium of ‘702.70 per equity shares on preferential basis amounting to Rs.34,067.06 lakhs. The aforesaid allotment was subject to lock-in requirements as per the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended from time to time, with regard to said Preferential Issue.

11. Additional information as per guidelines issued by the Reserve Bank of India is respect of Non-Banking Financial (Non-deposit accepting or holding) Systemically Important (NBFC-ND-SI) is given in Annexure 2.

12. The disclosures regarding details of specified bank notes (SBN) held and transacted during 8 November 2016 to 30 December 2016 has not been made since the requirement does not pertain to financial year ended 31 March 2018. Corresponding amounts as appearing in the audited Standalone financial statements for the year ended 31 March 2017 have been disclosed:

In the ordinary course of business, Company’s collection agencies had collected cash and customers had directly deposited cash amounting to Rs.3,802.61 lakhs as part of the loan repayments in the collection bank account of the Company during the period from November 9, 2016 to December 30, 2016. The denomination wise details of such cash had been confirmed by the Company’s bankers.

13. Previous year’s amounts have been audited by predecessor auditors.

14. Figures for previous year have been regrouped/ rearranged wherever necessary, to conform to current year’s classification.

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Mar 31, 2017

b. Terms / Rights attached to Equity Shares:

The Company has only one class of equity shares having a par value of '' 10 per share. Each holder of equity shares is entitled to one vote per share. The dividend, if any is proposed by the Board of Directors and is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

h. Share Application Money Pending Allotment

Share application money pending allotment represents money received from employees pursuant to exercise of stock options '' Nil (Previous Year : Rs, 14.96 lakhs) The shares were allotted on April 12, 2016.

* Amount disclosed under the head ‘Other current liabilities'' (Refer Note No. 10)

a. Security details for Secured Redeemable Non-Convertible Debentures

1. Debentures of Rs, 94,000.00 lakhs (Previous Year: Rs, 151,000.00 lakhs) are secured by first pari-passu charge on the fixed asset owned by the Company and first exclusive charge on the standard receivables of retail and corporate loan assets and other current assets of the Company.

2. Debentures of Rs, 298,220.00 lakhs (Previous Year: Rs, 35,000.00 lakhs) are secured by first pari-passu charge on the fixed asset owned by the Company and first pari-passu charge by way of hypothecation, over standard present and future receivables.

3. All secured debentures are secured by first pari-passu charge on the fixed asset owned by the Company and first pari-passu/exclusive charge by way of hypothecation, over standard present and future receivables. The total asset cover required thereof has been maintained as per the terms and conditions stated in the respective Debenture Trust Deeds.

c. Security details for Secured Term loans

1. Term loans of Rs, NIL (Previous Year: Rs, 2,000.00 lakhs) is secured by way of first exclusive charge on receivables of priority sector lending of the Company.

2. Term loans of Rs,487,939.86 lakhs (Previous year: Rs, 647,222.12 lakhs) is secured by way of first pari passu charge on receivables of retail, wholesale credit and current assets of the Company.

3. Term loans of Rs, 111,500.00 lakhs (Previous Year: Rs, 47,250.00 lakhs) is secured by way of first exclusive charge on receivables of the Company.

These Debentures have a ‘Call Option'' which may be exercised by the Company only after the instrument has run for a year of ten years from the date of allotment. Further, call option shall be exercised by the Company only with the prior approval of Reserve Bank of India (RBI) and as per RBI guidelines. It also have a coupon rate step-up option of 100 bps, which shall be exercised only once during the whole life of the instrument, in conjunction with the Call Option, after the lapse of 10 years from the date of allotment of issue. The coupon rate will be higher by 100 bps for subsequent years if Call Option is not exercised by the Company. The claim of the investors shall be pari passu among themselves and with other subordinated indebtedness of the Company, superior to the claims of investors in equity shares and subordinate to the claims of all other unsecured creditors and depositors of the Company, as regards repayment of principal and interest by the Issuer.

* Additional Information:

1. Cash credit (including Working Capital Demand Loan) of Rs, 155,725.21 lakhs (Previous Year: Rs, 104,092.01 lakhs) is secured by way of first pari passu charge on receivables of retail, wholesale credit and current assets of the Company.

2. Cash Credit of Rs, 10,052.53 lakhs (Previous Year: Rs, 39,535.22 lakhs) is secured by way of first exclusive charge on receivables of the Company.

** Details of Unsecured Inter Corporate Deposits from related parties

During the year, the Company has raised Rs,NIL at the rate of NIL (Previous Year: Rs, 3,244.00 lakhs at the rate of 9.75%) by way of Inter Corporate deposits, which is repayable on NIL (Previous Year: February 23, 2017).

3. Post-Employment Benefit Plans

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn) for each completed year of service. Gratuity expense has been included in ‘Contribution to provident fund and other funds'' under employee benefit expenses.

The following table summarizes the components of net benefit expense recognized in the statement of profit and loss and amounts recognized in the balance sheet for the respective plans.

ESOS 2009

No further options were granted during the year under this scheme. The options will vest in graded proportion of 20% each year after the expiry of 1, 2, 3,4 and 5 year respectively. All the options in respect of earlier grant are exercisable within 5 years from the date of vesting or 10 years from the date of grant, whichever is later.

ESOS 2011

No further options were granted during the year under this scheme. The options will vest in graded proportion of 20% each year after the expiry of 1, 2, 3, 4 and 5 year respectively. All the options are exercisable within 5 years from the date of vesting or 10 years from the date of grant, whichever is later.

ESOS 2012

No further options were granted during the year under this scheme. The options will vest in graded proportion of 20% each year after the expiry of 1, 2, 3, 4 and 5 year respectively. All the options under this grant are exercisable within 5 years from the date of vesting or 10 years from the date of grant, whichever is later.

ESOS 2014

No further options were granted during the year under this scheme. The options will vest in graded proportion of 25% each year after the expiry of 1, 2, 3 and 4 years respectively. All the options are exercisable on completion of 5 years from the effective grant date (i.e April 2, 2014) but prior to expiry of 10 years from the effective grant date.

ESOS 2016

The Nomination and Remuneration Committee of the Board of Directors through Circular Resolution dated July 19, 2016 and December 6, 2016 respectively, has granted options in respect of 890,000 shares and 30,000 equity shares to eligible employees at an exercise price of '' 620.00 and Rs, 531.85 respectively. The options will vest in graded proportion of 20% each year after expiry of 1,2,3,4 and 5 years respectively. All the options are exercisable on completion of 5 years from the date of grant or 6 months from the date of vesting whichever is later.

Note:

Employee stock compensation cost includes Rs, 30.86 lakhs (Previous Year: Rs, 78.37 lakhs) pertaining to incremental fair value pursuant to modification of exercise year done in earlier years.

4. Segment Reporting

Since the Company has only one reportable business segment “loans given” as primary segment and it operates in a single geographical segment within India, no disclosure is required to be given as per Accounting Standard - 17 ‘Segmental Reporting'' as notified under Section 133 of the Companies Act, 2013 (‘the Act'') read together with Rule 7 of the Companies (Accounts) Rules, 2014 and Companies (Accounting Standards) Amendment Rules, 2016.

Geographical Segments:

The Company operates solely in one Geographic segment namely “Within India” and hence no separate information for Geographic segment wise disclosure is required.

5. Related Party Disclosures

Names of related parties where control exists irrespective of whether transactions have occurred or not:

Relationship Name of the Party

Holding Company Cloverdell Investment Ltd.

Subsidiaries Capital First Home Finance Limited

Capital First Securities Limited Step Subsidiary Capital First Commodities Limited

Names of other related parties :

Relationship Name of the Party

Fellow subsidiaries Dayside Investment Ltd.

Key Management Personnel Mr. V. Vaidyanathan - Chairman and Managing Director

Mr. Apul Nayyar - Executive Director (W.e.f. April 4, 2016)

Mr. Nihal Desai - Executive Director (W.e.f. April 4, 2016) Enterprises significantly influenced by key management JV & Associates LLP

personnel

Refer Annexure 1 and 1A for the transactions with related parties

6. Operating Leases

The Company''s significant leasing arrangements are in respect of operating leases are for premises which are renewable on mutual consent at agreed terms. Certain agreements provide for cancellation by either party or certain agreements contains clause for escalation and renewal of agreements. The non-cancellable operating lease agreements are ranging for a period 36 to 60 months. There are no sub-leases.

The aggregate lease rentals payable are charged to the Statement of Profit and Loss.

7. During the year, the Board of Directors vide Circular Resolution dated December 14, 2016 had allotted 4,780,000 equity shares of the Company of '' 10/- each, at the premium of ''702.70 per equity shares on preferential basis amounting to Rs, 34,067.06 lakhs. The said funds have been utilized as on March 31, 2017. The aforesaid allotment is subject to lock-in requirements as per the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended from time to time, with regard to said Preferential Issue.

8. Pursuant to circular no. DBR.No.BP.BC.37/21.04.048/2016-17 dated November 21, 2016 and DBR.No.BP.BC.49/21.04.048/ 2016-17 dated December 28, 2016 issued by the Reserve Bank of India (RBI) which permits Regulated Entities to defer the down grade of an account that was standard as on November 1, 2016, the Company has not opted for 90 days'' relaxation extended by RBI for recognition of loan as Non-Performing Assets (‘NPA'').

9. The Company''s pending litigations comprise of claims against the Company primarily by the customers and proceedings pending with Tax authorities. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed the contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a material adverse effect on its financial results at March 31, 2017. Refer note 29 for details on contingent liabilities.

10. The Company has a process whereby periodically all long-term contracts (including derivative contracts) are assessed for material foreseeable losses. At the year end, the Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

11. The details of Specified Bank Notes (SBN) held and transacted during the period 08/11/2016 to 30/12/2016 as provided in the table below:

In the Ordinary course of business Company''s collection agencies have collected cash and customers have directly deposited cash amounting to Rs, 3,802.61 Lakhs as part of the loans repayments in the collection bank accounts of the Company during the period from November 09, 2016 to December 30, 2016. The denomination wise details of such cash has been confirmed by the Company''s bankers.

12.The Board of Directors have recommended dividend of '' 2.60 per share (26%) on each equity share having face value of '' 10/- each. The proposed equity dividend and dividend distribution tax thereon are not accounted as liabilities in fiscal 201617 in accordance with revised AS-4 “Contingencies and events occurring after balance sheet date.”

13. Additional information as per guidelines issued by the Reserve Bank of India is respect of Non-Banking Financial (Non-deposit accepting or holding) Systemically Important (NBFC-ND-SI) is given in Annexure 2.

14. Figures for previous year have been regrouped/rearranged wherever necessary, to conform to current year''s classification.

C. Derivatives

The Company has no transactions/exposure in derivative during the current and previous year.

The Company has no unheeded foreign currency exposure as on March 31, 2017 (Previous Year: '' Nil)

D. Disclosures relating to Securitization

i) The Company has not entered into Securitization transactions during the current and previous year.

ii) Details of financial assets sold to Securitization/Reconstruction Company for Asset Reconstruction:

The Company has not sold any financial assets to Securitization/Reconstruction Company for Asset Reconstruction in the current and previous year.

iv) a) Details of non-performing financial assets purchased

The Company has not purchased any non-performing financial asset during the current and previous year. b) Details of non-performing financial assets sold

G. Miscellaneous

i) Registration obtained from other financial sector regulators

RBI registration no. N-13.01827

Company Identification no. (CIN) : L29120MH2005PLC156795

Insurance Regulatory and Development Authority CA0087 w.e.f. April 1, 2016

(Old License No. HDF 5017698 & FGG5 017698)

ii) Disclosure of Penalties imposed by RBI and other regulators

Penalties or fines pursuant to a contractual obligation are not considered as penalties or fines. Expenditure incurred for any purpose which is an offence or which is prohibited by law is restricted to items where the disclosed purpose of such payment is, to the assessor’s knowledge, an offence or prohibited by law.

iii) Related Party Transactions

Refer note no. 33 for transactions with related party transactions

iv) Ratings assigned by credit rating agencies and migration of ratings during the year Particulars Previous year

(a) Commercial Paper CARE : A1

(b) Debentures

- Perpetual Debentures CARE : AA & Brickworks : AA

- Subordinated Debt CARE : AA & Brickworks : AAA

- Other Debentures CARE : AA & Brickworks : AAA

(c) Other Bank Loan facilities CARE : AA

v) Remuneration of Directors (Non-executive) Rs, in Lakhs

- Sitting fees 24.40

- Commission 100.00

Notes:

1. As defined in paragraph 2(1)(xii) of the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998.

2. Provisioning norms shall be applicable as prescribed in the Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007.

3. All Accounting Standards and Guidance Notes issued by ICAI are applicable including for valuation of investments and other assets as also assets acquired in satisfaction of debts. However, market value in respect of quoted investments and break up/ fair value/ NAV in respect of unquoted invetsments should be disclosed irrespective of whether they are classified as long-term or current in category (4) above.

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Mar 31, 2015

1. CORPORATE INFORMATION

Capital First Limited (the ''Company'' or ''CFL'') is a public Company domiciled in India and incorporated on October 18, 2005 under the provisions of the Companies Act, 1956. The Company has received a Certificate of Registration from the Reserve Bank of India (''RBI'') on April 10, 2006 to commence/carry on the business of Non-Banking Financial Institution (''NBFC'') without accepting public deposits.

2. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The financial statements have been prepared to comply in all material respects with the Accounting Standards (''AS'') notified under Section 133 of the Companies Act, 2013 (the ''Act'') read together with paragraph 7 of the Companies (Accounts) Rules, 2014 and other accounting principles generally accepted in India (IGAAP) and as per the guidelines issued by Reserve Bank of India (''RBI'') as applicable to a Non-Banking Financial (Non-deposit accepting or holding) Companies (''NBFC Regulation''). The financial statements have been prepared on an accrual basis and under the historical cost convention. The notified Accounting Standards (AS) are followed by the Company in so far as they are not inconsistent with the NBFC Regulation.

The accounting policies adopted in the preparation of financial statements are consistent with those of the previous year, except changes as explained below.

b. Terms/Rights attached to Equity Shares:

The Company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. The dividend, if any is proposed by the Board of Directors and is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

3. Long-Term Borrowings (Contd.)

a. Security details for Secured Term loans

1 Term loans of Rs. 3,999.99 lakhs (Previous Year: Rs. 5,999.73 lakhs) is secured by way of first exclusive charge on receivables of priority sector lending of the Company.

2 Term loans of Rs. 505,622.58 lakhs (Previous year: Rs. 510,392.06 lakhs) is secured by way of first pari passu charge on receivables of retail, wholesale credit and current assets of the Company.

3 Term loans of Rs. 43,744.14 lakhs (Previous Year: Rs. 38,249.56 lakhs) is secured by way of first exclusive charge on receivables of the Company.

These Debentures have a ''Call Option'' which may be exercised by the Company only after the instrument has run for a period of ten years from the date of allotment. Further, call option shall be exercised by the Company only with the prior approval of Reserve Bank of India (RBI) and as per RBI guidelines. It also have a coupon rate step-up option of 100 bps, which shall be exercised only once during the whole life of the instrument, in conjunction with the Call Option, after the lapse of 10 years from the date of allotment of issue. The coupon rate will be higher by 100 bps for subsequent years if Call Option is not exercised by the Company. The claim of the investors shall be pari passu among themselves and with other subordinated indebtedness of the Company, superior to the claims of investors in equity shares and subordinate to the claims of all other unsecured creditors and depositors of the Company, as regards repayment of principal and interest by the Issuer.

* Additional Information:

1. Cash credit (including Working Capital Demand Loan) of Rs. 96,597.32 lakhs (Previous Year: Rs. 106,743.33 lakhs) is secured by way of first pari passu charge on receivables of retail, wholesale credit and current assets of the Company.

2. Cash Credit of Rs. 39,687.47 lakhs (Previous Year: Rs. 39,901.31 lakhs) is secured by way of first exclusive charge on receivables of the Company.

** Details of Unsecured Inter Corporate Deposits from related parties

During the year, the Company has raised Rs. 2,764.00 lakhs at the rate of 10.25% (Previous Year Rs. 2,727.50 lakhs) at the rate of 10.25%) by way of Inter Corporate deposits, which is repayable on February 23, 2016 i.e. 1 year from the date of its disbursement. By mutual consent, same can also be repaid prior to its scheduled repayment date without the levy of any prepayment penalty or charges.

4. Contingent Liabilities

a. Contingent Liabilities not provided for in respect of:

Rs. in Lakhs Particulars As at As at March 31, March 31, 2015 2014

Corporate guarantee given by Company to banks 902.90 900.00

Income-tax matters under dispute* 303.53 142.99

* Future cash outflows are determinable only on receipt of judgements/decisions pending with various forums/authorities.

5. Post-employment Benefit Plans

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn) for each completed year of service. Gratuity expense has been included in ''Contribution to provident fund and other funds'' under Personnel expenses.

The following table summaries the components of net benefit expense recognized in the statement of profit and loss and amounts recognized in the balance sheet for the respective plans.

No further options were granted during the year under this scheme. Options under this scheme will vest after the expiry of 3 years from the date of grant. All the options are exercisable within 5 years from the date of vesting or 10 years from the date of grant, whichever is later.

ESOS 2008

The Nomination and Remuneration Committee at its Meeting held on May 8, 2014 has granted options in respect of 285,000 equity shares to the eligible employees at an exercise price of Rs. 174.15. The options will vest in graded proportion of 20% each year after the expiry of 1, 2, 3,4 and 5 year respectively. All the options are exercisable within 5 years from the date of vesting or 10 years from the date of grant, whichever is later.

ESOS 2009

No further options were granted during the year under this scheme. The options will vest in graded proportion of 25% each year after the expiry of 1, 2, 3 and 4 year respectively. All the options are exercisable within 5 years from the date of vesting or 10 years from the date of grant, whichever is later.

ESOS 2011

The Nomination and Remuneration Committee at its Meeting held on May 8, 2014 and December 5, 2014 has granted options in respect of 270,000 equity shares and 60,000 equity shares respectively to the eligible employees at an exercise price of Rs. 174.15 and Rs. 353.90 respectively. The options will vest in graded proportion of 20% each year after the expiry of 1, 2, 3, 4 and 5 year respectively. All the options are exercisable within 5 years from the date of vesting or 10 years from the date of grant, whichever is later.

ESOS 2012

No further options were granted during the year under this scheme. The options will vest in graded proportion of 25% each year after the expiry of 1, 2, 3 and 4 year respectively. All the options are exercisable within 5 years from the date of vesting or 10 years from the date of grant, whichever is later.

ESOS 2014

The Nomination and Remuneration Committee at its Meeting held on April 2, 2014 has granted options in respect of 6,500,000 equity shares to the Chairman and Managing Director at an exercise price of Rs. 207.00. The said options were approved by the shareholders in the Annual General Meeting held on June 18, 2014. The options will vest in graded proportion of 25% each year after the expiry of 1, 2, 3 and 4 year respectively. All the options are exercisable on completion of 5th anniversary from effective grant date but prior to the expiry of 10th anniversary from the effective grant date.

33. Segment Reporting

Since the Company has only one reportable business segment "loans given" as primary segment and it operates in a single geographical segment within India, no disclosure is required to be given as per Accounting Standard - 17 ''Segmental Reporting'' as notified under Section 133 of the Companies Act, 2013 (''the Act'') read together with paragraph 7 of the Companies (Accounts) Rules, 2014.

6. Related Party Disclosures

Names of related parties where control exists irrespective of whether transactions have occurred or not:

Relationship Name of the Party

Holding Company Cloverdell Investment Ltd

Subsidiaries Capital First Investment Advisory Limited

Capital First Securities Limited Capital First Commodities Limited Capital First Home Finance Private Limited Anchor Investment and Trading Private Limited

Names of other related parties irrespective of whether transactions have occurred or not:

Relationship Name of the Party

Fellow subsidiaries Dayside Investment Ltd.

Key Management Personnel Mr. V. Vaidyanathan - Chairman and Managing Director

Enterprises significantly influenced by key JV & Associates LLP management personnel Refer Annexure 1 and 1A for the transactions with related parties for the year ended March 31, 2015.

7. Operating Leases

The Company''s significant leasing arrangements are in respect of operating leases are for premises (residential and office) and vehicle which are renewable on mutual consent at agreed terms. Certain agreements provide for cancellation by either party or certain agreements contains clause for escalation and renewal of agreements. The non-cancellable operating lease agreements are ranging for a period 36 to 60 months. There are no sub leases.

8. The Company had allotted on March 26, 2015, 7,692,300 equity shares of the Company of Rs. 10/- each, at the premium of Rs. 380/- each to qualified institutional buyers. The said funds aggregating to Rs. 29,999.97 lakhs received pursuant to the aforesaid allotment have been utilised as on March 31, 2015.

9. The Company had extended loans to its Employee Welfare Trusts (''Trusts'') for purchase of shares of the Company. As per the Guidance Note issued by the ICAI on Accounting for Employee Share-based payment, till March 31, 2014, the Company adjusted the loan of Rs. 1,490.35 granted to the Trusts against the Share Capital to the tune of Rs. 60.97 lakhs and Securities Premium to the tune of Rs. 1,429.38 lakhs in respect of 609,713 shares held by the Trusts. During the year, the Trusts had sold all the shares held by them. An amount of Rs. 1,306.76 lakhs had been received by the Company from the Trust. Post the sale, the Share Capital and Securities Premium has been reinstated by an aggregate amount of Rs. 1,490.35 lakhs and the shortfall of Rs. 183.59 lakhs, after adjusting the repayment received from the Trusts is adjusted against the Reserves & Surplus.

10. During the year, the Board of Directors vide Circular Resolution dated February 04, 2015 has decided to exit gold loan business.

11. Tax for earlier year includes Rs. 489.96 lakhs (Previous Year: Rs. Nil) in respect of Minimum Alternate Tax credit entitlement which was recognized on completion of assessment for AY 2012-13.

During the previous year, an amount of Rs. 1,732.72 lakhs related to tax credit of Assessment Year 2011-12 in respect of bad debts written off which was allowed as a deduction on completion of assessment.

12. During the previous year, the Company had received dividend of Rs. 2,050.42 lakhs from its wholly owned foreign subsidiary on which income tax of Rs. 348.47 lakhs had been paid by the Company. As per the provision of the Income Tax Act, 1961, the tax paid was eligible for set off against the tax on dividend paid by the Company aggregating to Rs. 281.12 lakhs. Hence there was no dividend tax liability in the previous year on the Company relating to dividend proposed.

13. The Company''s pending litigations comprise of claims against the Company primarily by the customers and proceedings pending with Tax authorities. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed the contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a material adverse effect on its financial results at March 31, 2015. Refer note 30 for details on contingent liabilities.

14. At the year end, the Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

15. Additional information as per guidelines issued by the Reserve Bank of India is respect of Non-Banking Financial (Non-deposit accepting or holding) Systemically Important (NBFC-ND-SI) is given in Annexure 2.

16. Figures for previous year have been regrouped and/or reclassified wherever considered necessary, to conform to current year''s classification.

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Mar 31, 2014

1 CORPORATE INFORMATION

Capital First Limited (the ''Company'' or ''CFL'') is a public Company domiciled in India and incorporated on October 18, 2005 under the provisions of the Companies Act'' 1956. The Company has received a Certificate of Registration from the Reserve Bank of India (''RBI'') on April 10, 2006 to commence/carry on the business of Non-Banking Financial Institution (''NBFC'') without accepting public deposits.

2 BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The financial statements have been prepared to comply in all material respects with the notified Accounting Standard (''AS'') notified under the Companies Act, 1956 (the ''Act''), read with General Circular 8/2014 dated April 4, 2014 and as per the guidelines issued by Reserve Bank of India (''RBI'') as applicable to a Non-Banking Financial (Non-deposit accepting or holding) Companies (''NBFC Regulation''). The financial statements have been prepared underthe historical cost convention on an accrual basis. The notified Accounting Standards (AS) are followed by the Company insofar as they are not inconsistent with the NBFC Regulation.

The accounting policies adopted in the preparation of Financial Statements are consistent with those used in the previous year.

3. Contingent Liabilities

a. Contingent Liabilities not provided for in respect of:

Rs. in Lakhs

Particulars As at As at March 31, 2014 March 31, 2013

Corporate guarantee given by Company to banks 900.00 1,900.00

Income-tax matters under dispute* 142.99 142.99

* Future cash outflows are determinable only on receipt of judgements/ decisions pending with various forums/ authorities.

4. Post-employment Benefit Plans

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn) for each completed year of service. Gratuity expense has been included in Salaries, wages and allowances under Personnel expenses.

The following table summaries the components of net benefit expense recognized in the statement of profit and loss and amounts recognized in the balance sheet for the respective plans.

5. Segment Reporting

Primary segment information (by business segments):

As permitted by paragraph 4 of Accounting Standard-17 (AS-17), ''Segment Reporting'', if a single financial report contains both consolidated financial statements and the separate financial statements of the parent, segment information need be presented only on the basis of the consolidated financial statements. Thus, disclosures required by AS-17 are given in consolidated financial statements.

Geographical Segments:

The Company operates solely in one Geographic segment namely "Within India" and hence no separate information for Geographic segment wise disclosure is required.

6. Operating Leases

The Company''s significant leasing arrangements are in respect of operating leases are for premises (residential and office) and vehicle which are renewable on mutual consent at agreed terms. Certain agreements provide for cancellation by either party or certain agreements contains clause for escalation and renewal of agreements. The non-cancellable operating lease agreements are rangingfor a period 36 to 60 months. There are no sub-leases.

7. During the year, the Board of Directors vide Circular Resolution dated March 28, 2014 allotted 11,607,145 equity shares of the Company of Rs. 10/- each, at the premium of Rs. 143.80/- each on preferential basis. The said funds aggregating to Rs. 17,851.79 lakhs received pursuant to the aforesaid allotment have been unutilised as on March 31, 2014. The aforesaid allotment is subject to the lock-in requirements as per the SEBI (Issue of Capital am Disclosure Requirements) Regulations, 2009, as amended from time to time, with regard to the Preferential Issue.

8. As per the Guidance Note issued by the Chartered Accountants of India on Accounting for Employee Share-based payment which requires that shares allotted to a trust but not transferred to the employees be reduced from Share Capita I and Reserves. Accordingly, the Company has adjusted the Share Capital by Rs. 60.97 lakhs (Previous year: Rs. 60.97 lakhs) and Securities Premium by Rs. 1,429.38 lakhs (Previous year: Rs. 1,457.38 lakhs) in respect of Rs. 609,713 (Previous year: 609,713) shares held by the trusts. The current year amount is after adjusting the repayment received from the trust.

9. Additional disclosures as required by Circular No. DNBS.CC.PD.No.356/03.10.01/2013-14 dated September 16, 2013 issued by Reserve Bank of India:

10. An amount of Rs. 1,732.72 lakhs relates to tax credit of Assessment Year 2011-12 in respect of bad debts written off allowed as a deduction on completion of assessment.

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Mar 31, 2013

1. CORPORATE INFORMATION

Capital First Limited (Formerly known as Future Capital Holdings Limited) (the ''Company'' or ''CFL'') is a public Company domiciled in India and incorporated on October 18, 2005 under the provisions of the Companies Act'' 1956. The Company has received a Certificate of Registration from the Reserve Bank of India (''RBI'') on April 10, 2006 to commence / carry on the business of Non-Banking Financial Institution (''NBFC'') without accepting public deposits.

The Board at its Meeting held on June 4, 2012 had approved the execution of Share Purchase Agreement (SPA) with Pantaloon Retail (India) Limited, Future Value Retail Limited, Mr. Kishore Biyani and Cloverdell Investment Ltd. ("Cloverdell") and also the execution of Share Subscription Agreement (SSA) with Cloverdell pursuant to which open offer was also proposed by Cloverdell. Consequently, the Board of Directors at its Meeting held on September 28, 2012 allotted 3,086,420, 0.01% Compulsorily Convertible Preference Shares (''CCPS'') each convertible into equal number of equity shares of the Company of Rs. 10/- each, at the premium of Rs. 152/- each and 3,086,420 Equity Shares of Rs. 10/- each, at the premium of Rs. 152/- each to Cloverdell Investment Limited on preferential basis.

The Compulsorily Convertible Preference Shares were converted to 3,086,420 equity shares of Rs. 10/- each fully paid up at a premium of Rs. 152 per share vide Board resolution passed by circulation on March 14, 2013.

2. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The financial statements have been prepared to comply in all material respects with the notified Accounting Standard (''AS'') by Companies (Accounting Standards) Rules, 2006, the relevant provisions of the Companies Act, 1956 (the ''Act'') and as per the guidelines issued by Reserve Bank of India (''RBI'') as applicable to a Non-Banking Financial (Non-deposit accepting or holding) Companies (''NBFC Regulation''). The financial statements have been prepared under the historical cost convention on an accrual basis. The notified Accounting Standards (AS) are followed by the Company insofar as they are not inconsistent with the NBFC Regulation.

The accounting policies adopted in the preparation of Financial Statements are consistent with those used in the previous year except for the change in Accounting Policy explained in Point No 2.1 (a).

3. CONTINGENT LIABILITIES AND COMMITMENTS

a. Contingent Liabilities not provided for in respect of:

Rs. in Lakhs

Particulars As at As at March 31, 2013 March 31, 2012

Income-tax matters under dispute* 142.99 -

Corporate guarantee given by Company to banks 1,900.00 900.00

* Future cash outflows are determinable only on receipt of judgements/decisions pending with various forums/authorities.

b. Capital commitments:

Rs. in Lakhs

Particulars As at As at March 31, 2013 March 31, 2012

Estimated amount of contracts remaining to be executed on capital account and 205.24 291.87 not provided for

Commitments relating to granting of loan 15,820.48 28,996.33

4. POST-EMPLOYMENT BENEFIT PLANS

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn) for each completed year of service. Gratuity expense has been included in Salaries, wages and allowances under Personnel expenses.

The following table summaries the components of net benefit expense recognized in the Statement of Profit and Loss and amounts recognized in the balance sheet for the respective plans.

5. SEGMENT REPORTING

Primary segment information (by business segments):

As permitted by paragraph 4 of Accounting Standard-17 (AS-17), ''Segment Reporting'', if a single financial report contains both consolidated financial statements and the separate financial statements of the parent, segment information need be presented only on the basis of the consolidated financial statements. Thus, disclosures required by AS-17 are given in consolidated financial statements.

Geographical Segments:

The Company operates solely in one Geographic segment namely "Within India" and hence no separate information for Geographic segment wise disclosure is required.

6. OPERATING LEASES

The Company''s significant leasing arrangements are in respect of operating leases are for premises (residential and office) and vehicle which are renewable on mutual consent at agreed terms. Certain agreements provide for cancellation by either party or certain agreements contains clause for escalation and renewal of agreements. The non-cancellable operating lease agreements are ranging for a period 36 to 60 months. There are no sub leases.

7. The Company has started recognising deferred tax asset on provision for standard assets and unamortised fees and deferred tax liability on loan origination cost from the current year. An amount of Rs. 174.74 lakhs (Previous year - Rs. NIL) (net credit) in the current year is towards the same.

8. During the year ended March 31, 2012, Capital First Investment Advisory Limited (formerly known as Kshitij Investment Advisory Company Limited) (''KIACL''), wholly owned subsidiary of the Company, had filed a petition with the Bombay High Court for the purpose of Amalgamation (in the nature of merger) of FCH Securities & Advisory Services Limited and Future Capital Investment Advisors Limited with KIACL. KIACL has obtained approval from the Bombay High Court on April 13, 2012 for the scheme of Amalgamation which was filed with the Registrar of Company (''ROC'') on June 2, 2012. Accordingly, the Scheme has been given effect in the books of accounts in the current year. The said scheme became effective from June 2, 2012 but operative with retrospective effect from April 1, 2011, the appointed date.

9. During the previous year, the Company had allotted 10,000,000 share warrants pursuant to the approval of Members at the Extra Ordinary General Meeting held on August 27, 2010. These share warrants were convertible into equal number of equity shares at the option of the holder within 18 months from the date of allotment. As per SEBI (ICDR) guidelines, the Company had received upfront money as advance from the allotees. Since the holders of the option did not exercise the option to convert the share warrants into equity shares, the entire share warrant application money has been transferred to Capital Reserve.

10. As per the Guidance Note issued by the Chartered Accountants of India on Accounting for Employee Share-based payment which requires that shares allotted to a trust but not transferred to the employees be reduced from Share Capital and Reserves. Accordingly, the Company has adjusted the Share Capital by Rs. 60.97 lakhs (Previous year: Rs. 30.00 lakhs) and Securities Premium by Rs. 1,457.38 lakhs (Previous year: Rs. 1,096.35 lakhs) in respect of 609,713 (Previous year: 300,000) shares held by the trusts.

11. During the year ended March 31, 2013, the Company had noticed fraud in respect of Gold loans involving collusion with employees of the Company who had availed loans and embezzled loans aggregating to Rs. 405.51 lakhs from the Company on the basis of fraudulent documents and gold. The Company has initiated legal proceedings for recovery of the said amount against the said customers and employees from whom gold was seized but the gold is still lying with police custody. The Company has also filed an insurance claim for claiming the loss. During the year ended March 31, 2013, the Company has written off loan amount aggregating to Rs. 405.51 lakhs which was fully provided in earlier quarters.

12. During the year ended March 31, 2013, the Company has changed its policy related leave encashment. The outstanding leave balances as at March 31, 2013 will not be carried forward and leave balance up to a maximum of 36 days will be paid to the employees based on their basic salary. Going forward, all the earned leave during the financial year and remaining unutilized will be encashed at the yearend based on basic salary. Consequent to the change in policy, the profit for the year ended is lower by Rs. 4.05 lakhs.

13. Additional information as per guidelines issued by the Reserve Bank of India is respect of Non-Banking Financial (Non-deposit accepting or holding) Systemically Important (NBFC-ND-SI) is given in Annexure 2.

14. Figures for previous year have been regrouped/rearranged wherever necessary, to conform to current year''s classification.

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Mar 31, 2012

1. CORPORATE INFORMATION

Future Capital Holdings Limited (the 'Company') is a public Company domiciled in India and incorporated on October 18, 2005 under the provisions of the Companies Act' 1956. The Company has received a Certificate of Registration from the Reserve Bank of India ('RBI') on April 10, 2006 to commence / carry on the business of Non-Banking Financial Institution ('NBFC') without accepting public deposits.

2. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP) under the historical cost convention on an accrual basis in compliance with all material aspect with the Accounting Standard notified by Companies Accounting Standard Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956 except for dividend from mutual fund units, which is in accordance with the Non-Banking Financial (Non Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 ('NBFC Regulation'). The accounting policies adopted in the preparation of Financial Statements are consistent with those used in the previous year except for the change in Accounting Policy explained in Point No 2.1 (a).

3. Contingent liabilities and commitments

a. Contingent Liabilities not provided for in respect of:

(Amount in Rs.)

Particulars As at As at March 31, 2012 March 31, 2011

Income-tax matters under dispute - 8,199,480

Corporate guarantee given by Company to banks 90,000,000 -

b. Capital commitments:

(Amount in Rs.)

Particulars As at As at March 31, 2012 March 31, 2011

Estimated amount of contracts remaining to be executed on capital account and not provided for 29,186,765 52,409,014

Commitments relating to granting of loan 2,899,633,455 -

4. Post-employment benefit plans

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn) for each completed year of service. Gratuity expense has been included in Salaries, wages and allowances under Personnel expenses.

ESOS 2008

During the year, the Company has granted 65,000 options to the eligible employee at weighted average exercise price of Rs. 133.70. Options will vest in graded proportion of 20%, 30% and 50% after the expiry of 1, 2 and 3 year respectively. All the options are exercisable within 4 years from the date of vesting.

ESOS 2011

The Compensation and Nomination Committee through Resolution passed by circulation dated June 29, 2011, December 26, 2011 and January 12, 2012 has granted options in respect of 835,000, 70,000 and 297,000 equity shares to the eligible employees at an exercise price of Rs. 133.70, Rs. 122.95 and Rs. 120.05 respectively pursuant to ESOS 2011 Scheme. The options will vest in graded proportion of 20%, 30% and 50% after the expiry of 1, 2 and 3 year respectively. The same will be exercisable within 4 years from the date of vesting.

5. The Company had allotted 10,000,000 share warrants pursuant to the approval of Members at the Extra Ordinary General Meeting held on August 27, 2010. These share warrants were convertible into equal number of equity shares at the option of the holder within 18 months from the date of allotment. As per SEBI (ICDR) guidelines, the Company had received upfront money as advance from the allotees. Since the holders of the option did not exercise the option to convert the share warrants into equity shares, the entire share warrant application money has been transferred to Capital Reserve.

6. Segmental Reporting

The Company has organized its operations into two major business verticals: Retail Financial Services and Wholesale credit services. A description of the types of products and services provided by each reportable segment is as follows:

Retail Financial Services:

Under the retail financial service category, the Company provides (i) property loans (ii) gold loans (iii) consumption loans (iv) auto loans (v) two wheeler loans (vi) wealth management and (vii) property broking.

Wholesale credit and Treasury:

The wholesale credit business uses our proprietary balance sheet to build a unique structured credit business that focuses on mezzanine, promoter, project and acquisition financing as well other special situations related financing. The treasury operations ensure liquidity for business and manage investment of surplus funds to optimize returns within the approved risk management framework.

Geographical Segments :

The Company has identified geographical segments within India and there is no reportable segment outside India.

For Segment Information - Refer Annexure 1

7. In the previous year, pursuant to the Scheme of Arrangement between Future Capital Financial Services Limited (FCFSL), Future Capital Holdings Limited (FCH) and their respective shareholders (Scheme), inter-alia in terms of which FCFSL had merged with FCH, under the provisions of Section 391 to 394, read with Sections 78, 100 to 103 of the Companies Act, 1956. The said scheme became effective from June 29, 2011 but operative with retrospective effect from March 1, 2011, the appointed date. Pursuant to the accounting treatment as prescribed under the scheme in respect of the difference between the investment value of FCFSL in the books of FCH and the net assets acquired from FCFSL had been adjusted in the Securities Premium of FCH.

8. During the year, the Company has sold its investments in wholly owned subsidiaries, Future Hospitality Management Limited and Kshitij Property Solutions Private Limited vide share purchase agreement dated September 2, 2011 and December 1, 2011 respectively at book value.

9. During the year, the Company has provided Rs. 35,000,000 towards diminution in the value of investments, other than of temporary nature, in Centrum Capital Limited.

10. Pursuant to the Scheme of Arrangement and Amalgamation referred to in note 42 above, FCFSL had been amalgamated with FCH under pooling of interest method. All the assets and liabilities of FCFSL were merged on a line by line basis with the assets and liabilities of FCH.

11. Pursuant to the Scheme of Arrangement and Amalgamation referred to in note 42 above, figures for the current year are not strictly comparable with that of the previous year. Prior year figures have been reclassified/ regrouped to confirm with the current year's presentation, wherever applicable.

12. The Board of Directors of the Company at its meeting held on May 25, 2012 have evaluated various proposals to divest its stake in Myra Mall Management Company Limited and Future Finance Limited, wholly owned subsidiaries of the Company at a price not lower than the book value of respective companies. Hence the same are classified as current investments.

13. Additional information as per guidelines issued by the Reserve Bank of India is respect of Non-Banking Financial (Non-deposit accepting or holding) Systemically Important (NBFC-ND-SI) is given in Annexure 3.

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Mar 31, 2011

A. NATURE OF OPERATIONS

1. Future Capital Holdings Limited (the 'Company') is a Non Banking Financial Company. The Company was incorporated on October 18, 2005 and has received a Certificate of Registration from the Reserve Bank of India ('RBI') on April 10, 2006 to commence / carry on the business of Non-Banking Financial Institution without accepting public deposits.

2. Scheme of Arrangement and Amalgamation

The Board of Directors at its meeting held on November 2, 2010, approved a Scheme of Arrangement between Future Capital Financial Services Limited (FCFSL), Future Capital Holdings Limited (FCH) and their respective shareholders (Scheme), inter- alia in terms of which FCFSL has merged with FCH, under the provisions of Section 391 to 394, read with Sections 78,100 to 103 of the Companies Act, 1956. The Appointed Date under the Scheme is March 1, 2011. The Scheme has been approved by the Shareholders of the Company and by the Hon'ble High Court of Judicature at Bombay vide its order dated June 17, 2011. The Company has filed the court order approving the Scheme with the Registrar of Companies ('ROC') on June 29, 2011, Mumbai as required under Section 391 of the Companies Act. The said scheme became effective from June 29, 2011 but operative with retrospective effect from March 1, 2011, the appointed date. Pursuant to the Scheme:

a) FCFSL has been amalgamated with FCH under the pooling of interest method;

b) Since FCFSL is a wholly owned subsidiary of the Company, no consideration has been paid against the net assets acquired.

c) Pending the scheme becoming effective FCFSL has, in trust, carried on the business from March 1, 2011 to March 31, 2011.

The accounting treatment as prescribed under the scheme in respect of the difference between the investment value of FCFSL in the books of FCH and the net assets acquired from FCFSL is adjusted in the Securities Premium of FCH.

1. Contingent liabilities and commitments

a. Contingent Liabilities not provided for in respect of:

(Amount in Rs.)

Particulars As at As at March 31, 2011 March 31, 2010

Guarantees given by the Company on behalf of a subsidiary company Nil 6,730,224,621

Income-tax matters under dispute 8,199,480 4,520,786

2. Details of dues to Micro, Small and Medium Enterprises as per MSMED Act, 2006

The Company did not have any transactions with Small, Micro and Medium Enterprises as defined under "Micro, Small and Medium Enterprises Development Act, 2006" and hence there are no amounts due to such undertakings. The identification of units is based on the management's knowledge of their status.

3. Post-employment benefit plans:

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn) for each completed year of service. Gratuity expense has been included in Salaries, wages and allowances under Personnel expenses.

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. There are no material experience adjustment during the year.

Since the Company has not funded its gratuity liability there are no returns on the planned assets and hence the details related to changes in fair value of assets have not been given.

4. Employee Stock Option Scheme ('ESOS')

ESOS 2007

Pursuant to ESOS 2007 the Company had granted options in respect of 1,000,000 equity shares to the eligible employees at an exercise price of Rs. 178. The original vesting period for the options was modified from three years ending in October/November 2010 to December 15, 2009 by the remuneration committee vide its meeting held on December 11, 2009.

ESOS 2008

Pursuant to ESOS 2008 the Company had granted options in respect of 948,500 equity shares to the eligible employees at an exercise price of Rs. 102. The vesting period for options was modified from three years ending on March 31, 2012 to March 31, 2010 by the remuneration committees vide its meeting held on December 11, 2009.

5. Segmental Reporting

Pursuant to the Scheme the Company has organized its operations into three major business verticals: Retail Financial Services, Wholesale credit services and Investment Advisory services. A description of the types of products and services provided by each reportable segment is as follows:

Retail Financial Services:

Under the retail financial service category, the Company provides (i) property loans (ii) gold loans and (iii) consumer durable loans (iv) broking and wealth management

Wholesale credit and Treasury:

The wholesale credit business uses our proprietary balance sheet to build a unique structured credit business that focuses on mezzanine, promoter and project financing as well as other special situations related financing. The treasury operations ensure liquidity for business and manage investment of surplus funds to optimize returns within the approved risk management framework.

Investment Advisory:

The Company provides investment advisory services to its clients. These investment advisory services include investment analysis, research and investment recommendations.

Geographical Segments :

The Company has identified geographical segments as within India and outside India.

For Segment Information - Refer Annexure 1

6. Related Party Disclosure:

Names of related parties where control exists irrespective of whether transactions have occurred or not

Relationship Name of the Party

Holding Company Pantaloon Retail (India) Limited

Subsidiaries Kshitij Investment Advisory Company Limited

Future Securities and Advisors Limited

(formerly Ambit Investment Advisory Company Limited)

Myra Mall Management Company Limited

Future Capital Financial Services Limited

(upto February 28, 2011 thereafter merged with Future Capital Holdings Limited)

Future Hospitality Management Limited

Future Capital Investment Advisors Limited

Future Finance Limited

Kshitij Property Solutions Private Limited

Axon Development Solutions Limited

Anchor Investment and Trading Private Limited (w.e.f. October 14, 2010)

Future Capital Home Finance Private Limited (w.e.f. December 23, 2010)

FCH Centrum Wealth Managers Limited (w.e.f. March 29, 2011)

Joint Ventures Realterm FCH Logistics Advisors Private Limited (upto December 31, 2009)

FCH CentrumDirect Limited (upto March 28, 2011)

FCH Centrum Wealth Managers Limited (upto March 28, 2011)

Names of other related parties with whom transactions have taken place during the year

Relationship Name of the Party

Fellow subsidiaries Home Solutions Retail (India) Limited

Future Media India Limited

Key Management Personnel Mr. V. Vaidyanathan Vice Chairman and Managing Director (w.e.f. August 4, 2010)

Mr. Krishan Kant Rathi, Manager (w.e.f. April 6, 2010 till August 10,2010)

Mr. Sameer Sain, Vice Chairman and Managing Director (upto February 5, 2010)

Mr. Dhanpal Jhaveri, Whole time Director designated as Executive Director (upto April 6, 2010)

Refer Annexure 2 and 2A for the transactions with related parties.

7. Earnings Per Share ('EPS')

Basic and diluted EPS has been computed by dividing the net profit after tax for the year attributable to equity shareholders by weighted average number of equity shares outstanding during the year.

Note: The figures for the year ended March 31, 2011 are in respect of joint venture with FCH Centrum Wealth Managers Limited ('FCWML'). FCWML was joint venture upto March 28, 2011 thereafter it became a wholly owned subsidiary of the Company. Hence disclosure in respect of assets and liabilities is not applicable as per Accounting Standard (AS-27) issued by ICAI.

11. During the year, the Company has sold its 50% stake in joint venture FCH CentrumDirect Limited to Centrum Capital Limited vide Share Purchase Agreement dated March 28, 2011 for a consideration of Rs. 1,000,000,000. The profit on sale of shares aggregating Rs. 250,136,882 has been shown under other income.

The Company acquired additional 50% stake in FCH Centrum Wealth Managers Limited ('FCWML') from Centrum Capital Limited for a consideration of Rs. 10,000,000 vides Share Purchase Agreement dated March 28, 2011. Consequently, FCWML has become a wholly owned subsidiary of the Company. FCWML is in the business of retail broking and distribution of mutual funds, insurance and other financial products.

8. Provision for diminution in investments

The Company has made provision for diminution in investments aggregating Rs. 247,938,400 in respect of:

a) FCH Centrum Wealth Managers Limited ('FCWML') Rs. 239,698,400. The Company had carried out an external valuation for FCH Centrum Wealth Managers Limited ('FCWML') valuing FCWML at Rs. 20,000,000. Based on the valuation, the excess of carrying cost of investments over its fair value has been provided for.

b) Ambit Investment Advisory Company Limited Rs. 7,240,000 due to erosion in its net worth

c) Axon Development Solutions Limited Rs. 500,000 due to erosion in its net worth

d) Future Hospitality Management Limited Rs. 500,000 due to erosion in its net worth

Note:

a. Remuneration paid to the Managing Director exceeds the limit prescribed under Schedule XIII to the Companies Act, 1956 for which the Company has received approval from the Central Government.

b. Costs pertaining to group medical and group life insurance cover and contribution towards benefit in respect of gratuity are being funded on an overall Company basis and accordingly have not been considered in the above information.

9. In the previous year, pursuant to the composite Scheme of Amalgamation & Arrangement (the 'Scheme'), as approved by the Hon'ble High Court of Mumbai, involving Future Capital Holdings Limited ('FCH'), Future Capital Financial Services Limited (FCFSL) and Future Capital Credit Limited (FCCL), in terms of which Credit Business Division of the Company was de-merged and vested with FCFSL. The Scheme also provided for the Amalgamation of FCC into FCFSL. The said scheme became effective from February 1, 2010 but operative with retrospective effect from April 1, 2009, the Appointed date.

10. In the previous year, the Board of Directors at their meeting held on December 11, 2009, approved the realignment of the investment advisory activities of the Company. The Company had entered into appropriate agreements with Everstone Investment Advisors Private Limited ('EIAPL'), to realign its investment advisory activities with a view to having a focused and dedicated approach to the investment advisory business.

11. Additional information pursuant to the provisions of paragraph 3, 4C and 4D of part II of the Schedule VI to the Companies Act, 1956 have been given to the extent applicable and necessary.

12. Additional information as per guidelines issued by the Reserve Bank of India is respect of Non-Banking Financial (Non-deposit accepting or holding) Systemically Important (NBFC-ND-SI) is given in Annexure 3.

13. Pursuant to the Scheme of Arrangement and Amalgamation referred in note A2 above, figures for the current year are not strictly comparable with that of the previous year. Prior period figures have been reclassified/ regrouped to confirm with the current period's presentation, wherever applicable.