Future Capital Holdings

A.  NATURE OF OPERATIONS
 
 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.
 The Company is engaged into three major business verticals: investments
 advisory, wholesale credit and treasury and retail financial services.
 
 1.  Contingent liabilities and commitments
 
 a.  Contingent Liabilities
 
 (Amount in Rs.)
  Particulars              As at march 31 2009      As at march 31 2008
 
 Guarantees given by banks on 
 behalf of the Company               24,567,210              24,567,210
 
 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 managements
 knowledge of their status.
 
 3.  Fees received in advance
 
 In the last year, the Company had entered into an agreement with ICICI
 Bank Limited for distribution of co-branded credit cards. The Company
 had received an amount of Rs. 440,000,000 (inclusive of service tax Rs.
 48,401,566) as advance towards account set up fees payable by ICICI
 Bank Limited to the Company. Balance amount of Rs. 385,917,688 (net of
 service tax, sourcing fees and spends income) has been shown as fees
 received in advance under the head Current Liabilities.
 
 4.  Gratuity and other 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 profit and loss account and amounts recognized in the
 balance sheet for the respective plans.
 
 The estimates of future salary increases, considered in actuanal
 valuation, take account of inflation, senionty, promotion and other
 relevant factors, such as supply and demand in the employment market.
 
 Since the Company has not funded its gratuity liability and leave
 encashment there are no returns on the planned assets and hence the
 details related to changes in fair value of assets have not been given.
 
 5.  Employee Share Purchase Scheme (ESPS 2008)
 
 During the year under review, the Company has allotted 300,000 equity
 shares of Rs. 10 each to eligible employee under the FCH Employees
 Stock Purchase Scheme -2008. These shares have been offered at Rs.
 375.45 per share including a premium of Rs. 365.45 per share. Since the
 said shares have been offered at market price, no compensation cost is
 recognised in the Profit and Loss Account of the Company for the year
 under review.
 
 6.  Segmental Reporting
 
 The Company has organized its operations into three major business
 verticals: Investment advisory, Wholesale credit & Treasury and Retail
 financial services. A description of the types of products and services
 provided by each reportable segment is as follows:
 
 Investment Advisory:
 
 The Company provides investment advisory services to onshore and
 offshore clients. These investment advisory services include investment
 analysis, research and investment recommendations. The in-house
 research team assists the process of value creation for private equity
 and real estate advisory businesses through macro economic analysis,
 survey based field work, in-house data and real time business
 experience.
 
 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 manages investment of surplus funds to optimize
 returns within the approved risk management framework.
 
 Retail Financial Services:
 
 Under the retail financial service category, the Company provides (i)
 consumption loans which are loans to finance the purchase of durables,
 furniture and other personal goods, (ii) personal loans which are
 unsecured credit lines to individual customers and (iii) home equity
 loans.
 
 Geographical Segments:
 
 The Company has identified geographical segments as within India and
 outside India.
 
 For Segment Information - Refer Annexure 1
 
 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.  In the previous year, the Company had applied to the Central
 Government for remuneration paid to executive director of the Company.
 The Company is awaiting the approval from the Central Government.
 Pending such approval the amount paid is shown under Loans and
 Advances.
 
 c.  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.
 
 7.  The Board of Directors (including the Committee of Directors
 constituted in this regard) have approved vide its meeting dated March
 31, 2009, a composite Scheme of Amalgamation and Arrangement involving
 the Company and two of its wholly owned subsidiaries, Future Capital
 Financial Services Limited and Future Capital Credit Limited (the
 Scheme) whereby, inter-alia, the Credit Business Division of the
 Company will be demerged from the Company under the Scheme pursuant to
 the provisions of Sections 391 to 394 and other applicable provisions
 of the Companies Act, 1956.  The Appointed date under the Scheme is
 proposed to be April 1, 2009. The Scheme has been approved by the
 shareholders of the Company at a meeting dated June 15, 2009, convened
 pursuant to the directions of the Honble High Court of Judicature at
 Mumbai and the further requirements towards approval of the Scheme are
 being undertaken.
 
 8.  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.
 
 9.  Prior year figures have been reclassified/ regrouped to conform
 with the current years presentation, wherever applicable.
 
 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 Companies Prudential Norms (Reserve Bank)
 Directions, 1998.
 
 3 All Accounting Standards and Guidance Notes issued by the Institute
 of Chartered Accountants of India (ICAI) are applicable including for
 calculation 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 5 above.