IdfC fund of funds Limited

idfc.com

IdfC fund of funds Limited

IDFC Fund of

Funds Limited

BOARD OF DIRECTORS

¬ ¬ Kevin Brennan

¬ ¬ Karen Haith

AUDITORS

¬ ¬ Deloitte LLP

REGISTERED OFFICE

1 Royal Plaza

Royal Avenue

St Peter Port

Guernsey

GY1 2HL

230

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Annual Repo rt 10–11


e p o r t o f t h e D i r e ct o r s

The Directors present their Report and the Audited financial

statements of IDFC Fund of Funds Limited (“the Company”) for the

year ended March 31, 2011.

History

The Company was incorporated in Guernsey on June 26, 2009 and

commenced activity on October 28, 2009.

Activities

The Company is a Limited Partner of Emerging Markets Private

Equity Fund, L.P. (the “Partnership”), a Limited Partnership

registered in Guernsey. The Company has invested in the

Partnership as Founder Partner with a commitment of

USD 50,000,000.

Results and Dividends

The results for the year are set out in the Statement of

Comprehensive Income on page 7. No dividend was declared during

the year (2010: $ Nil), in accordance with Clause 13 of the Articles

of Association.

Directors

The Directors of the Company during the year were as set out on

page 2.

Secretary

The Secretary of the Company who has served for the whole year

is Ipes (Guernsey) Limited (formerly International Private Equity

Services Limited).

Directors’ responsibilities for the financial

statements

The Directors are responsible for preparing the Annual Report and

the financial statements in accordance with applicable law and

regulations.

Company law requires the Directors to prepare financial

statements for each financial year. Under that law the Directors

have elected to prepare the financial statements in accordance

with International Financial Reporting Standards (IFRSs). Under

company law the Directors must not approve the financial

statements unless they are satisfied that they give a true and fair

view of the state of affairs of the company and of the profit or

loss of the company for that period. In preparing these financial

statements, International Accounting Standard 1 requires that

Directors:

¬ ¬ properly select and apply accounting policies;

¬ ¬ present information, including accounting policies, in a manner that

provides relevant, reliable, comparable and understandable information;

¬ ¬ provide additional disclosures when compliance with the specific

requirements in IFRSs are insufficient to enable users to understand the

impact of particular transactions, other events and conditions on the

entity’s financial position and financial performance; and

¬ ¬ make an assessment of the company’s ability to continue as a going

concern.

The Directors are responsible for keeping adequate accounting records

that are sufficient to show and explain the company’s transactions and

disclose with reasonable accuracy at any time the financial position of

the company and enable them to ensure that the financial statements

comply with the Companies (Guernsey) Law, 2008. They are also

responsible for safeguarding the assets of the company and hence for

taking reasonable steps for the prevention and detection of fraud and

other irregularities.

Going Concern

The Company receives financial support from IDFC Capital Limited

(previously known as IDFC-SSKI Limited) as necessary to continue as

a going concern. This support is in the form of capital invested in the

Company to enable it to meet its commitments as stated in Note 12 to

invest in its subsidiary entity.

On this basis, the Company is deemed to be a going concern.

Independent Auditor

So far as the Directors are aware, there is no relevant audit information

of which the Company’s auditor is unaware, and each Director has taken

all the steps that he or she ought to have taken as a Director in order to

make himself or herself aware of any relevant audit information and to

establish that the Company’s auditor is aware of that information.

This confirmation is given and should be interpreted in accordance with

the provisions of Section 249 of the Companies (Guernsey) Law, 2008.

The auditor, Deloitte LLP has indicated its willingness to continue

in office. A resolution to re-appoint Deloitte LLP as auditor will be

proposed at the next Annual General Meeting.

Kevin BRENNAN

Director

April 15, 2011

kAREN Haith

Director

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i n d e p e n d e n t A u d i t o r s ’ R e p o r t

Independent Auditors’ Report to the Members of

Idfc Fund of Funds Limited

We have audited the financial statements of IDFC Fund of Funds

Limited for the year ended March 31, 2011 which comprise the

Statement of Comprehensive Income, Statement of Financial

Position, Statement of Changes in Equity and Statement of Cash

Flows and the related notes 1 to 13. The financial reporting

framework that has been applied in their preparation is applicable

law and International Financial Reporting Standards (IFRSs).

This report is made solely to the company’s members, as a body,

in accordance with Section 262 of the Companies (Guernsey) Law,

2008. Our audit work has been undertaken so that we might state to

the company’s members those matters we are required to state to

them in an auditor’s report and for no other purpose. To the fullest

extent permitted by law, we do not accept or assume responsibility

to anyone other than the company and the company’s members as a

body, for our audit work, for this report, or for the opinions we have

formed.

Respective responsibilities of directors and auditor

As explained more fully in the Directors’ Responsibilities Statement,

the directors are responsible for the preparation of the financial

statements and for being satisfied that they give a true and fair view.

Our responsibility is to audit and express an opinion on the financial

statements in accordance with applicable law and International

Standards on Auditing (UK and Ireland). Those standards require us

to comply with the Auditing Practices Board’s Ethical Standards for

Auditors.

misstatement, whether caused by fraud or error. This includes an

assessment of: whether the accounting policies are appropriate to

the company’s circumstances and have been consistently applied and

adequately disclosed; the reasonableness of significant accounting

estimates made by the directors; and the overall presentation of the

financial statements.

Opinion on financial statements

In our opinion the financial statements:

¬ ¬ give a true and fair view of the state of the company’s affairs as at

March 31, 2011 and of its loss for the year then ended;

¬ ¬ have been properly prepared in accordance with IFRSs; and

¬ ¬ have been prepared in accordance with the requirements of the

Companies (Guernsey) Law, 2008.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where

the Companies (Guernsey) Law, 2008 requires us to report to you if,

in our opinion:

¬ ¬ proper accounting records have not been kept; or

¬ ¬ the financial statements are not in agreement with the accounting

records; or

¬ ¬ we have not received all the information and explanations we require

for our audit.

Deloitte LLP

Chartered Accountants

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and

disclosures in the financial statements sufficient to give reasonable

assurance that the financial statements are free from material

St. Peter Port, Guernsey

April 15, 2011

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Annual Repo rt 10–11


st at e m e n t o f c o m p r e h e n s i v e i n c o m e For the yEAR ENDED MARCH 31, 2011

Expenditure

Year to

March 31, 2011

June 26, 2009 to

March 31, 2010

Notes USD USD USD USD

Provision for Impairment 3 2,222,285 1,865,448

Administration fee 52,575 15,620

Directors’ fees 5&6 5,161 1,637

Audit fees 8,013 7,548

Disbursements 1,112 322

Sundry expenses 978 405

Legal and professional fees 735 –

Loss/(gain) on foreign exchange 2 1,325 (1,137)

(2,292,184) (1,889,843)

Total Comprehensive loss for the year/period (2,292,184) (1,889,843)

The notes on pages 11 to 15 form part of these Financial Statements

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st at e m e n t o f f i n a n c i a l p o s i t i o n AS AT MARCH 31, 2011

2011 2011 2010 2010

Notes USD USD USD USD

Non Current Assets

Investment in Subsidiary 3 7,412,612 4,203,702

Current assets

Prepayments 7 417 2,325

Cash and cash equivalents 10,382 436,354

Total Current Assets 10,799 438,679

Total Assets 7,423,411 4,642,381

Equity and Liabilities

Share capital 9 11,577,712 6,505,504

Reserves (4,182,027) (1,889,843)

10 7,395,685 4,615,661

Current Liabilities

Trade and other payables 8 27,726 26,720

27,726 26,720

Total Equity and Liabilities 7,423,411 4,642,381

The Financial Statements on pages 7 to 15 were approved by the Board of Directors on April 15, 2011 and are signed on their behalf by:-

Directors of IDFC Fund of Funds Limited

Kevin Brennan

Karen Haith

The notes on pages 11 to 15 form part of these Financial Statements

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Annual Repo rt 10–11


st at e m e n t o f c h a n g e s i n e q u i ty for the yEAR ENDED MARCH 31, 2011

Share Capital Deficit Total

USD USD USD

At April 1, 2010 6,505,504 (1,889,843) 4,615,661

Issue of Shares 5,072,208 – 5,072,208

Total Comprehensive loss for the period – (2,292,184) (2,292,184)

At March 31, 2011 11,577,712 (4,182,027) 7,395,685

At June 26, 2009 – – –

Issue of Shares 6,505,504 – 6,505,504

Total Comprehensive loss for the period – (1,889,843) (1,889,843)

At March 31, 2010 6,505,504 (1,889,843) 4,615,661

The notes on pages 11 to 15 form part of these Financial Statements

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st at e m e n t o f c a s h f l ow s for the yEAR ENDED MARCH 31, 2011

Year to

March 31, 2011

June 26, 2009 to

March 31, 2011

USD USD USD USD

Cash flows from operating activities

Loss for the year (2,292,184) (1,889,843)

Adjustments for:

Impairment provision 2,222,285 1,865,448

Changes in working capital:

Decrease/(Increase) in receivables 1,908 (2,325)

Increase in payables 18,136 9,590

Net cash (outflow) from operating activities (49,855) (17,130)

Cash flows from investing activities

Purchase of investments (5,431,195) (6,069,150)

Net cash inflow from investing activities (5,431,195) (6,069,150)

Cash flows from financing activities

Proceeds from issue of shares 5,072,208 6,505,504

(Decrease)/increase in loan from the Partnership (17,130) 17,130

Net cash inflow from financing activities 5,055,078 6,522,634

Net (decrease)/increase in cash and cash

equivalents (425,972) 436,354

Cash and cash equivalents at beginning of the

year/period 436,354 –

Cash and cash equivalents at the end of the

year/period 10,382 436,354

The notes on pages 11 to 15 form part of these Financial Statements

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NOTES TO FINANCIAL STATEMENTS for the year ended March 31, 2011

1 PRINCIPAL ACTIVITIES

IDFC Fund of Funds Limited (the "Company") was incorporated in Guernsey on June 26, 2009.

The principal activity of the Company is to invest into Emerging Markets Private Equity Fund, L.P. (the “Partnership”), a Limited Partnership

registered in Guernsey.

2 PRINCIPAL ACCOUNTING POLICIES

The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the

Company’s financial statements.

Standards and amendments and interpretation to published standards effective on or after January 1, 2010.

¬ ¬ There are no new standards, amendments or interpretations to existing standards that are relevant or mandatory for the Company’s accounting

period beginning on or after January 1, 2010.

Basis of Accounting

The financial statements have been prepared under the historical cost convention and in accordance with applicable International Financial

Reporting standards.

Going Concern

The Company receives financial support from IDFC Capital Limited (previously known as IDFC-SSKI Limited) as necessary to continue as a going

concern. This support is in the form of capital invested in the Company to enable it to meet its commitment as stated in Note 12.

On this basis, the Company is deemed to be a going concern.

Critical accounting and judgements in applying accounting estimates

The Company makes estimates and assumptions that affect the reported amounts of assets and liabilities. Estimates are continually evaluated

and based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the

circumstances.

Investment in subsidiary

The investment held in the Partnership has been accounted for at cost less provision for impairment with the provision being the difference

between the capital contributed less the Net Asset Value of the Partnership. The underlying investments in the Partnership are derived from the

capital account valuations at December 31, 2010 and adjusting those valuations for cost movements between that date and the Statement of

Financial Position date.

Bank Interest

Bank interest is accounted for on an accruals basis.

Foreign Exchange

Monetary assets and liabilities in currencies other than USD are translated into USD at the rate of exchange ruling at the balance sheet

date. Transactions in currencies other than USD are translated into USD at the rate of exchange ruling at the date of the transaction. Foreign

exchange gains and losses resulting from settlement of such transactions and from the translation at year-end exchange rates are recognised in

the Statement of Comprehensive Income for the year.

Consolidation

The Company has elected not to prepare consolidated financial statements because it is itself a wholly owned subsidiary of Infrastructure

Development Finance Company Limited whose consolidated accounts are available for public use at KRM Tower, 8th Floor, No. 1, Harrington

Road, Chetpet, Chennai – 600031.

3 INVESTMENT IN SUBSIDIARY

The Company investments relate to its interests which is an amount of USD 50,000,000 as commitment in the Partnership and comprise of

(i) investments in portfolio entities through Emerging Markets Private Equity Fund, L.P. and (ii) other funding provided to the Partnership.

The investments relates to the capital contributed to the Partnership as the sole capital partner as at March 31, 2011. The Partnership is

a limited partnership registered in Guernsey and is wholly owned by the Company. The General Partner of the Partnership is IDFC General

Partners Limited.

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2011 2010

USD

USD

Investments

Cost less impairment brought forward 4,203,702 –

Additions 5,431,195 6,069,150

Provision for impairment charged (2,222,285) (1,865,448)

Cost less impairment carried forward 7,412,612 4,203,702

4 TAXATION

The Company has been taxed in Guernsey at the standard rate of 0%.

5 MATERIAL AGREEMENTS

Administration Services Agreement

Under the Secretarial and Administration Agreement dated October 28, 2009, Ipes (Guernsey) Limited (formerly International Private Equity

Services Limited), provides secretarial, directors and administrative services to the Company and is entitled to receive administration fees,

Directors’ fees and reimbursement of expenses as may be determined from time to time by the parties.

6 INFORMATION REGARDING DIRECTORS AND EMPLOYEES

The average monthly number of employees (including Directors) was:

2011 2010

Number

Number

Directors 2 2

2 2

There were no other employees apart from the Directors.

2011 2010

USD

USD

Directors’ fee paid 3,100 1,299

3,100 1,299

7 PREPAYMENTS

2011 2010

USD

USD

Directors’ fee paid 417 2,325

417 2,325

8 TRADE AND OTHER PAYABLES

2011 2010

USD

USD

Administration fee accrual 18,415 1,634

Audit fees accrual 8,259 7,548

Sundry creditors 1,052 408

Advance from Emerging Markets Private Equity Fund, L.P. – 17,130

27,726 26,720

9 SHARE CAPITAL

2011 2010

USD

USD

Authorised: Unlimited

Issued and fully paid Share Capital 11,577,712 Shares of USD 1 each 11,577,712 6,505,504

11,577,712 6,505,504

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10 STATEMENT OF MOVEMENT IN EQUITY SHAREHOLDERS’ FUNDS

2011 2010

Opening equity shareholders’ funds 4,615,661 –

Share Capital issued 5,072,208 6,505,504

Loss for year/period (2,292,184) (1,889,843)

Closing equity shareholders’ funds 7,395,685 4,615,661

11 CONTROLLING PARTY

The ultimate controlling party of the Company is considered to be IDFC Capital Limited previously known as IDFC-SSKI Limited, which has a

100% stake in the Company.

12 COMMITMENTS

Contribution from IDFC Capital Limited

USD

Commitments 50,000,000

Drawdowns as at March 31, 2011 (11,577,712)

Undrawn Commitment 38,422,288

This is the commitment from the Company’s backer to invest in the Company.

Contribution to Emerging Markets Private Equity Fund, L.P

USD

Commitments 50,000,000

Drawdowns as at March 31, 2011 (11,500,345)

Undrawn Commitment 38,499,655

This is the commitment for this company to invest into its subsidiary.

13 POST BALANCE SHEET EVENTS

There were no material post balance sheet events that require adjustment or disclosure in the financial statements.

USD

USD

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