Global Investment Opportunities Fund Limited
Unaudited Financial Statements
for quarter from 01 July 2012 to 30 September 2012
Contents
Pages
Corporate data
1
Statement of financial position
2
Statement of comprehensive income
3
Statement of changes in net assets attributable to the holders of participating shares
4
Statement of cash flows
5
Notes to the financial statements
6 - 24
1
Global Investment Opportunities Fund Limited
Corporate data
Date of appointment
22 July 2002
06 April 2006
06 April 2006
07 October 2008
02 December 2008
14 January 2011
Date of resignation
18 October 2012
-
Directors
Ravilochan Pola
Louis Didier Merle
Sow Man Ah Yuk Shing
Abdool Azize Owasil
Riad Aubdool
Ruchit Puri
Secretary and
Administrator:
Cim Fund Services Ltd
3rd Floor, Rogers House,
5, President John Kennedy Street
Port-Louis
Republic of Mauritius
Registered office:
Cim Fund Services Ltd
3rd Floor, Rogers House
5, President John Kennedy Street
Port-Louis
Republic of Mauritius
Auditors
KPMG
KPMG Centre
31, Cybercity
Ebene
Republic of Mauritius
Investment Manager
Kotak Mahindra (UK) Limited
Farringdon Place, 20, Farringdon Road
London - EC1M 3AP
United Kingdom
Bankers
The Hongkong and Shanghai Banking Corporation Limited
2nd Floor, ‘Shiv’, Plot No 139-140 B
Western Express Highway
Mumbai
India
HSBC Bank (Mauritius) Limited
6th Floor, HSBC Centre,
18 Cyber City
Ebene
Republic of Mauritius
Professional Clearing Member Kotak Mahindra Bank Limited
36 – 38A, Nariman Bhavan
Nariman Point
Mumbai
India
2
Global Investment Opportunities Fund Limited
Statement of financial position
as at 30 September 2012
2012
September
USD
AUDITED
2012
March
USD
4(a)
79,960,257
2,289,580
--------------82,249,837
---------------
85,431,996
2,313,324
--------------87,745,320
---------------
5
75,063
---------------
75,416
---------------
75,063
75,416
205
--------------75,268
---------------
205
--------------75,621
---------------
82,174,569
=========
87,669,699
=========
Note
Assets
Financial Assets
Cash and cash equivalents
Total assets
Liabilities
Payables
Total liabilities (excluding net assets attributable to
the holders of participating shares)
Management shares
Net assets attributable to the holders of participating
shares
The notes on pages 6 to 24 form part of these financial statements.
3
Global Investment Opportunities Fund Limited
Statement of comprehensive income
for quarter from 01 July 2012 to 30 September 2012
AUDITED
For the
Quarter
For the
ended
quarter ended
30 September 30 September
2011
2012
USD
USD
For the
year ended
31 March
2012
USD
-----------------------------
34,829
-------------34,829
--------------
53,145
--------------53,145
---------------
61,440
5,000
11,863
5,000
17,233
--------------100,536
---------------
82,530
71,829
9,455
------------163,814
-------------
324,711
9,487
77,585
103,494
11,920
35,018
--------------562,215
---------------
(100,536)
(128,985)
(509,070)
Loss on exchange
(356,340)
Net realised loss on sale of financial assets
(314,291)
Change in unrealised (loss)/gain on revaluation of financial assets 12,078,215
--------------11,407,584
---------------
(40,353)
(902,693)
(16,618,509)
--------------(17,561,555)
---------------
(64,037)
(3,029,713)
(13,458,434)
--------------(16,552,184)
---------------
Change in net assets attributable to the holders of
participating shares resulting from operations before
taxation
11,307,048
(17,690,540)
(17,061,254)
---------------
---------------
---------------
11,307,048
=========
(17,690,540)
=========
(17,061,254)
=========
Income
Dividend
Expenses
Investment management and regulatory & administrative
services fee
Transaction and custody charges
Legal and professional fees
Upfront and placement fees
Audit fees
Other operating expenses
Net loss from operations before taxation
Realised gain and unrealised loss on depreciation of
investments and foreign currency transactions
Taxation
Change in net assets attributable to the holders of
participating shares resulting from operations
The notes on pages 6 to 24 form part of these financial statements.
4
Global Investment Opportunities Fund Limited
Statement of changes in net assets attributable to the holders of participating shares
for quarter from 01 July 2012 to 30 September 2012
At 01 April 2011
Participating
shares
USD
Share
premium
USD
Retained
earnings
USD
Total
USD
18,704
44,959,194
64,598,807
109,576,705
(17,061,254)
(17,061,254)
Change in net assets attributable
to holders of participating
shares
Contributions and redemptions by
holders of participating
shares:
Issue of participating shares
during the year
Redemption of participating
shares during the year
At 31 March 2012
Change in net assets attributable
to holders of participating
shares
Contributions and redemptions by
holders of participating shares:
Issue of participating shares
during the period
Redemption of participating
shares during the period
At 30 June 2012
Change in net assets attributable
to holders of participating
shares
Contributions and redemptions by
holders of participating
shares:
Issue of participating shares
during the period
Redemption of participating
shares during the period
At 30 September 2012
-
-
19,366
36,821,740
(8,222)
----------------29,848
==========
(41,678,636)
-----------------40,102,298
==========
-
36,841,106
---------------47,537,553
=========
(41,686,858)
----------------87,669,699
==========
(7,724,937)
-
-
(7,724,937)
1,923
2,322,755
-
(919)
---------------30,853
=========
(9,380,864)
---------------33,044,189
=========
2,324,678
---------------39,812,616
=========
(9,381,783)
----------------72,887,658
==========
-
11,307,048
11,307,048
77
1,214,196
-
1,214,273
(1,072)
--------------29,858
=========
(3,233,338)
--------------31,025,047
=========
-
The notes on pages 6 to 24 form part of these financial statements.
5
--------------51,119,664
=========
(3,234,410)
----------------82,174,569
==========
Global Investment Opportunities Fund Limited
Statement of cash flows
for quarter from 01 July 2012 to 30 September 2012
Operating activities
Change in net assets attributable to holders of participating
shares resulting from operations before taxation
Adjustments for:
Net realised loss on sale of investments
Change in unrealised loss/(gain) on revaluation of financial
assets
Dividend income
Loss on exchange
Operating loss before working capital changes
Increase in receivables
Decrease in payables
Net cash used in operating activities
Investing activities
Payments for purchase of investments
Proceeds from sale of investments
Realised loss/(gain) on derivatives
Dividend received
Net cash generated from investing activities
Financing activities
Proceeds from issue of shares
Payments on redemption of shares
Net cash used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of the period/year
Cash and cash equivalents at end of the period/year
The notes on pages 6 to 24 form part of these financial statements.
6
For the quarter
ended
30 September
2012
USD
AUDITED
For the year
ended
31 March
2012
USD
11,307,048
(17,061,254)
314,291
3,029,713
(12,078,215)
356,340
---------------(100,536)
13,458,434
(53,145)
---------------(626,252)
26,374
----------------(74,162)
-----------------
81,694
(44,272)
----------------(588,830)
-----------------
(1,840,191)
4,015,844
----------------2,175,653
-----------------
(36,915,642)
40,039,430
23,175
53,145
----------------3,200,108
-----------------
1,214,274
(3,234,410)
----------------(2,020,137)
----------------81,355
36,841,106
(41,686,858)
----------------(4,845,752)
----------------(2,234,474)
2,208,225
----------------2,289,580
==========
4,547,798
----------------2,313,324
==========
Global Investment Opportunities Fund Limited
Notes to and forming part of the financial statements
for quarter from 01 July 2012 to 30 September 2012
1.
General Information
Global Investment Opportunities Fund Limited (the "Company") was previously incorporated
under the name of Kotak Mahindra Investment Company Limited, PCC as a private company
limited by shares with a protected cell company status on 31 January 2001 in the Republic of
Mauritius. On 13 June 2003, the Company has by a special resolution converted itself into a
public company and on 25 July 2003 changed its name to Global Investment Opportunities Fund
Limited.
The Company as a holder of a Category 1 Global Business Licence under the Companies Act
2001 and the Financial Services Act 2007 is required to carry on its business in a currency other
than the Mauritian rupee. Since the Company operates in an international environment and
conducts most of its transactions in foreign currencies the Company has chosen to retain the
United States dollar ("USD") as its reporting currency.
2 (a). Basis of preparation
(a) Statement of compliance
The financial statements have been prepared in accordance with International Financial
Reporting Standards (IFRSs).
(b) Basis of measurement
The financial statements have been prepared under the historical cost convention, as modified
by the fair valuation of investments and derivative financial instruments, and in accordance
with International Financial Reporting Standards ("IFRS"). The preparation of financial
statements in conformity with IFRS requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting year. Actual results could differ from those estimates.
(c) Functional and presentation currency
These financial statements are presented in United States dollar (“USD”), which is the
Company’s functional and presentation currency.
(d) Changes in accounting policies
There were no changes in the accounting policies of the Company during the year.
7
Global Investment Opportunities Fund Limited
Notes to and forming part of the financial statements
for quarter from 01 July 2012 to 30 September 2012
2 (b). Significant accounting policies
(a) Foreign currencies
Market value of investments and other assets and liabilities denominated in currencies other
than US dollars have been translated at the exchange rates prevailing at the date of the
financial statements. Purchases and sales of investments and income and expenditures
denominated in currencies other than US dollars have been translated at the exchange rates
prevailing on the day of the transaction.
Realised and unrealised gains and losses on foreign currency transactions are charged or
credited to the statement of comprehensive income as foreign currency gains and losses,
except where they relate to investments where such amounts are included within realised
and unrealised gains and losses on investments.
(b) Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow
to the Company and the revenue can be reliably measured. Revenue is measured at the fair
value of the consideration received, excluding discounts, rebates, and sales taxes or duty.
Revenue represents commission; fees and other revenue invoiced and are recognised on an
accrual basis. Revenue also includes realised gains and losses and changes in unrealised
gains and losses on all instruments classified at fair value through profit or loss, investments
held for trading and derivative financial instruments.
Interest income is recognised in the statement of comprehensive income using the effective
interest method.
Dividends are recognised in statement of comprehensive income on the dates the securities
are first quoted “ex-dividend” to the extent that information thereon is reasonably available
to the Company.
(c) Expenses
Expenses are accounted for in the statement of comprehensive income on the accrual basis.
(d) Taxation
Income tax expense comprises current and deferred tax. Current tax and deferred tax are
recognised in statement of comprehensive income except to the extent that it relates to a
business combination, or items recognised directly in equity or in other comprehensive
income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the
year, using tax rates enacted or substantively enacted at the reporting date, and any
adjustment to tax payable in respect of prior year.
8
Global Investment Opportunities Fund Limited
Notes to and forming part of the financial statements
for quarter from 01 July 2012 to 30 September 2012
2(b). Significant accounting policies (Continued)
(e) Cash and cash equivalents
Cash comprises current deposits with banks. Cash equivalents are short-term highly liquid
investments that are readily convertible to known amounts of cash, are subject to an
insignificant risk of changes in value, and are held for the purpose of meeting short-term cash
commitments rather than for investment or other purposes.
(f) Receivables
Receivables are stated at cost less impairment losses.
(g) Payables
Payables are stated at cost.
(h) Financial instruments
(i)
Classification
The category of financial assets and financial liabilities at fair value through profit or loss
comprises:

Financial instruments which are held-for-trading include futures, forwards and options.
All derivatives in a net receivable position (positive fair value), as well as options
purchased, are reported as financial assets held-for-trading. All derivatives in a net
payable position (negative fair value), as well as options written, are reported as financial
liabilities held-for-trading.

Financial instruments designated at fair value through profit or loss upon initial
recognition. These include financial assets that are not held for trading purposes and
which may be sold. These are investments in Indian exchange equity instruments and
various funds listed in India and other countries.
Financial liabilities that are not at fair value through profit or loss include balances due to
brokers and accounts payable.
9
Global Investment Opportunities Fund Limited
Notes to and forming part of the financial statements
for quarter from 01 July 2012 to 30 September 2012
2(b). Significant accounting policies (Continued)
(h) Financial instruments (Continued)
(ii)
Recognition
The Company recognises financial assets and financial liabilities on the date it becomes a
party to the contractual provisions of the instrument.
Purchase of financial assets is recognised using trade date accounting. From this date, any
gains and losses arising from changes in fair value of the financial assets or financial
liabilities are recorded.
(iii)
Measurement
Financial instruments are measured initially at cost (transaction price) plus, in case of
transaction costs that are directly attributable to the acquisition or issue of the financial
asset or financial liability.
Derivatives are recognised at fair value on the date on which a derivative contract is entered
into and are subsequently re-measured at their fair value.
Subsequent to initial recognition, all instruments classified at fair value through profit or
loss are measured at fair value with changes in their fair value recognised in the statement
of comprehensive income.
Financial assets classified as loans and receivables are carried at amortised cost using the
effective interest rate method, less impairment losses, if any.
Financial liabilities, other than those at fair value through profit or loss, are measured at
amortised cost using the effective interest rate.
(iv)
Fair value measurement principles
The fair value of financial instruments is based on their quoted market prices at the
reporting date without any deduction for estimated future selling costs. Financial assets are
priced at close prices which are obtained from active markets.
If a quoted market price is not available on a recognised stock exchange or from a broker/
dealer for non-exchange-traded financial instruments, the fair value of the instrument is
estimated using appropriate valuation techniques, include use of recent arm’s length market
transactions, reference to the current fair value of another instrument that is substantially the
same, discounted cash flow techniques, option pricing models or any other valuation
technique that provides a reliable estimate of prices obtained in actual market transactions.
10
Global Investment Opportunities Fund Limited
Notes to and forming part of the financial statements
for quarter from 01 July 2012 to 30 September 2012
2(b). Significant accounting policies (Continued)
(h) Financial instruments (Continued)
(iv)
Fair value measurement principles (Continued)
Where discounted cash flow techniques are used, estimated future cash flows are based on
management’s best estimates and the discount rate used is market rate at the reporting date
applicable for an instrument with similar terms and conditions. Where other pricing models
are used, inputs are based on market date at the reporting date. Fair values for unquoted
equity investments are estimated, if possible, using applicable price/ earnings ratios for
similar listed companies adjusted to reflect the specific circumstances of the issuer.
The fair value of derivatives that are not exchange-traded is estimated at the amount that the
Company would receive or pay to terminate the contract at year end taking into account the
current market conditions (volatility, appropriate yield curve) and the current
creditworthiness of the counterparties. Specifically, the fair value of an option contract is
determined by applying the Black-Scholes option valuation model.
Investments in other unlisted open-ended investments funds are recorded at the net asset
value per share as reported by the administrator of such funds.
(v)
Impairment
Financial assets that are stated at cost or amortised cost are reviewed at each reporting date
to determine whether there is objective evidence of impairment. If any such indication
exists, an impairment loss is recognised in the statement of comprehensive income as the
difference between the asset’s carrying amount and the present value of estimated future
cash flows discounted at the financial asset’s original effective interest rate.
If in a subsequent period the amount of an impairment loss recognised on a financial asset
carried at amortised cost decreases and the decrease can be linked objectively to an event
occurring after the write-down, the write-down is reversed through the statement of
comprehensive income.
(vi)
Derecognition
The Company derecognises a financial asset when the contractual rights to the cash flows
from the financial asset expire or it transfers the financial asset and the transfer qualifies for
derecognition in accordance with IAS 39.
The Company uses the weighted average method to determine realised gains and losses
on derecognition.
A financial liability is derecognised when the obligation specified in the contract is
discharged, cancelled or expired.
11
Global Investment Opportunities Fund Limited
Notes to and forming part of the financial statements
for quarter from 01 July 2012 to 30 September 2012
2(b). Significant accounting policies (Continued)
(i) Share capital
Management shares
Management shares are not redeemable and do not participate in the dividends of the
Company and are classified as equity.
Participating shares
All participating shares issued by the Company are redeemable and provide the investors
with the right to require redemption for cash at the value proportionate to the investors’
share in the Company’s net asset at the redemption date. In accordance to IAS 32, such
instrument give rise to a financial liability for the actual value of redemption amount.
On the issue of participating shares, the difference between the issue price and the nominal
value is credited to the share premium account. On redemption, the nominal value is debited
to the share capital account and any excess to the share premium account.
(j) Related parties
For the purposes of these financial statements, parties are considered to be related to the
Company if they have the ability, directly or indirectly, to control the Company or exercise
significant influence over the Company in making financial and operating decisions, or vice
versa, or where the Company is subject to common control or common significant
influence. Related parties may be individuals or other entities.
(k) Provisions
A provision is recognised if, as a result of a past event, the Company has a present legal or
constructive obligation that can be estimated reliably, and it is probable that an outflow of
economic benefits will be required to settle the obligation. Provisions are determined by
discounting the expected future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and the risks specific to the liability.
All known liabilities have been accounted for in the preparation of the financial statements.
The materiality of the events occurring after the reporting date has been considered and
appropriate adjustments and provisions have been made in the financial statements where
necessary.
(l) Comparative information
Comparative information has been restated or reclassified, as necessary, to conform to the
current year’s presentation.
12
Global Investment Opportunities Fund Limited
Notes to and forming part of the financial statements
for quarter from 01 July 2012 to 30 September 2012
3.
Critical accounting judgements and key sources of estimation and uncertainty
Critical accounting judgements in applying the Company’s accounting policies
In the process of applying the Company’s accounting policies, which are described in note 2, the
directors have made the following judgements that have the most significant effect on the amounts
recognised in the financial statements.
Determination of functional currency
The determination of the functional currency of the Company is critical since recording of
transactions and exchange differences arising therefrom are dependent on the functional currency
selected. As described in note 2, the directors have considered those factors described therein and
have determined that the functional currency of the Company is the United States Dollar ('USD').
These disclosures supplement the commentary on financial instruments and associated risks.
Determining fair values
The determination of fair value for financial assets and liabilities for which there is no observable
market price requires the use of valuation techniques as described in note 2. For financial instruments
that trade infrequently and have little price transparency, fair value is less objective, and requires
varying degrees of judgement depending on liquidity, concentration, uncertainty of market factors,
pricing assumptions and other risks affecting the specific instrument.
Valuation of financial instruments
The Company’s accounting policy on fair value measurements is discussed in note 2.
The Company measures fair values using the following fair value hierarchy that reflects the
significance of the inputs used in making the measurements:

Level 1: Quoted market price (unadjusted) in an active market for an identical instrument.

Level 2: Valuation techniques based on observable inputs, either directly (i.e. as prices) or
indirectly (i.e. derived from prices). This category includes instruments valued using: quoted
market prices in active markets for similar instruments; quoted prices for identical or similar
instruments in markets that are considered less than active; or other valuation techniques
where all significant inputs are directly or indirectly observable from market data.

Level 3: Valuation techniques using significant unobservable inputs. This category includes
all instruments where the valuation technique includes inputs not based on observable data
and the unobservable inputs have a significant effect on the instrument’s valuation. This
category includes instruments that are valued based on quoted prices for similar instruments
where significant unobservable adjustments or assumptions are required to reflect
differences between the instruments.
Fair values of financial assets and financial liabilities that are traded in active markets are based on
quoted market prices or dealer price quotations. For all other financial instruments the Company
determines fair values using valuation techniques.
13
Global Investment Opportunities Fund Limited
Notes to and forming part of the financial statements
for quarter from 01 July 2012 to 30 September 2012
4.
Financial assets
(a) Listed and unlisted financial assets
Cost at start of quarter/year
Purchases
Proceeds from sale
Realised loss on sale
Cost at end of quarter/year
Unrealised loss/gain on revaluation
Market value at end of quarter/year
30 September
2012
USD
31 March
2012
USD
85,711,622
1,840,191
(4,015,844)
(314,291)
-----------------83,221,678
(3,261,421)
-----------------79,960,257
==========
101,125,301
36,806,222
(39,990,371)
(3,052,888)
-----------------94,888,264
(9,456,268)
-----------------85,431,996
===========
(b) Schedule of listed financial assets
Description
Others - listed
Birla Sunlife Frotline Equity Fund - Plan A - Growth
Canara Robeco Equity Diversified-Growth
Fidelity Equity Fund-Growth Option
Franklin India Bluechip Fund-Growth
HDFC Midcap Opportunites Fund Growth
HDFC Top 200 Fund Growth
ICICI Prudential Discovery Fund - Growth
ICICI Prudential Focused Bluechip Equity Fund Retain
Growth
Kotak Nifty ETF
UTI - Equity Fund-Growth Option
SBI MSFU Emerging Businesses Fund Growth
Others - listed total
Others - unlisted
Kotak Funds - India Midcap Fund
Kotak Funds - India Blue Chip Fund Limited
Kotak Funds - India Blue Chip Fund Limited - Series 1
Others –unlisted Total
Total
14
30 September
2012
USD
31 March
2012
USD
3,106,600
2,120,275
3,383,744
1,742,548
2,957,981
1,747,595
399,462
1,282,850
2,978,749
3,071,294
2,209,797
2,963,665
2,139,867
3,481,798
3,421,125
612,526
------------------22,574,192
-------------------
3,069,070
2,313,848
888,331
------------------21,316,933
-------------------
31,508,368
766,789
25,110,908
------------------57,386,065
------------------70,960,257
===========
27,442,132
36,156,616
516,315
-------------------64,115,063
-------------------85,431,996
===========
Global Investment Opportunities Fund Limited
Notes to and forming part of the financial statements
for quarter from 01 July 2012 to 30 September 2012
4.
Financial assets
(c) Net realised gain on sale of financial assets
Realised loss on financial assets
Realised gain on futures contracts
Net realised loss on sale of financial assets
5.
30 September
2012
USD
31 March
2012
USD
(314,291)
--------------(314,291)
=========
(3,052,888)
23,175
--------------(3,029,713)
=========
Payables
Other charges payables
Audit fees
Investment management and regulatory & administrative
services fee
15
30 September
2012
USD
31 March
2012
USD
70,063
5,000
39,479
11,920
-----------75,063
=======
24,017
-----------75,416
=======
Global Investment Opportunities Fund Limited
Notes to and forming part of the financial statements
for quarter from 01 July 2012 to 30 September 2012
6.
Share capital
30 September
2012
USD
31 March
2012
USD
205
--------205
======
205
--------205
======
205 management shares of USD 1 each
Management shares
Management shares shall only be issued at par value and shall not be redeemed.
The Management shares shall not be class shares. All proceeds of allotment of Management
shares shall be kept separately identifiable from class portfolio.
Management shares shall confer on the holders thereof:
(a) voting rights in any members meeting other than class meetings of holders of class shares.
Each Management share shall carry one vote.
(b) the right to participate in so much only of the profits and assets of the Company as are
attributable to the Management shares; and
(c) in a winding up the right set out in Article 52 of the Constitution.
Participating shares
No Management shares shall at any time be held otherwise than by the subscribers set out in the
first schedule to the Constitution or such person as may be approved by an unanimous resolution
of the Board of Directors. The Management shares are currently held by Kotak Mahindra Bank
Limited and Kotak Mahindra (International) Limited.
(a) be issued in respect of a specifically designated class, at a price not below the nominal value
of the shares or at such higher price as the Directors may determine from time to time;
(b) carry a right to class dividend; and
(c) confer upon the holders thereof in a winding up to the rights set out in Article 52 of the
Constitution.
16
Global Investment Opportunities Fund Limited
Notes to and forming part of the financial statements
for quarter from 01 July 2012 to 30 September 2012
6.
Share capital (Continued)
Participating shares (Continued)
The Participating shares consist of class A to S shares, and shares:
The Participating shares shall be divided into such number of classes as the Board may from time
to time determine. On or before the issue or allotment of a Participating share, the Directors
shall determine to which class it shall be attributable and each Participating share shall be issued
or allotted as a Participating share or a designated class.
The Directors shall at their sole discretion determine the voting rights for Participating shares of
a designated class. Each Participating share of a class will confer upon the holder thereof the
same voting rights as every other share of that class. The Directors at their sole discretion may
determine that all Participating shares of a class, but not some, may be issued with no voting
rights.
7.
Capital management
The Company’s primary objectives when managing capital are to safeguard the Company’s
ability to continue as a going concern. As the Company is part of a larger group, the Company’s
sources of additional capital and policies for distribution of excess capital may also be affected
by the group’s capital management objectives.
The Company defines “capital” as including all components of equity. Trading balances that
arise as a result of trading transactions with other group companies are not regarded by the
Company as capital.
The Company’s capital structure is regularly reviewed and managed with due regard to the
capital management practices of the group to which the Company belongs. Adjustments are
made to the capital structure in light of changes in economic conditions affecting the Company
and additional needs for capital.
8.
Fees
Investment management fee
Kotak Mahindra (UK) Limited acts as the investment manager to the Company. It advises the
directors on the investment and disinvestment activities of the Company’s assets.
Under the Investment Management Agreement dated 01 May 2006, the fees are as follows:
(a) A NAV linked fee based on the net assets, which would not exceed 3% p.a. of the NAV as
agreed with each Class Portfolio from time to time.
(b) The investment manager would also retain a share of the profits of certain class portfolios.
The method of calculation of the profit shares as indicated in the Private Placement
Memorandum. The percentage of the profits to be retained by the investment manager would
vary for each class portfolio and would range from 0% to 25%.
17
Global Investment Opportunities Fund Limited
Notes to and forming part of the financial statements
for quarter from 01 July 2012 to 30 September 2012
8.
Fees (continued)
Regulatory & administrative services fee
Kotak Mahindra (UK) Limited acts as the regulatory & administrative service provider (the
“Service provider”) to the Company. The Service provider assists the Company in formulating
and implementing a program for continued registration of the Company with Securities and
Exchange Board of India as a sub-account.
Under the Agreement dated 1 August 2003, the terms are as follows:
(a) A transaction fee as agreed with each Class Portfolio from time to time, payable for each
transaction executed, which would not exceed 2.5% of the transaction value.
(b) The fees of the investment facilitator for each Class Portfolio are set out in the Amended
Investment Facilitation Agreement.
Custodian fee
The HSBC Bank (Mauritius) Limited acts as the Company’s cash custodian. The cash custodian
is entitled to a custody and transaction fees as agreed from time to time between the Company
and the custodian.
The Hong Kong and Shanghai Banking Corporation Limited (Mumbai branch) has been
appointed as custodian of investments and other assets held in safe custody.
The Company pays the custodian a fee for the provision of its services as agreed between them
from time to time.
Administrator and other fees
Cim Fund Services Ltd acts as the Company’s administrator. Cim Fund Services Ltd also
provides secretarial services and is responsible for the tax affairs of the Company in Mauritius.
The administrator is entitled to a fee equivalent as agreed between the parties from time to time.
The fee is payable quarterly in arrears.
The administrator is also entitled to reimbursement of certain out of pocket expenses.
9.
Financial risk management and associated risks
The Company maintains positions in a variety of derivative and non-derivative financial
instruments as dictated by the investment management strategy. The Company’s investment
portfolio comprises quoted and unquoted equity investments and derivative financial
instruments.
The Company’s investing activities expose it to various types of risks that are associated with the
financial instruments and markets it invests. The most important types of financial risk to which
the Company is exposed are market risk, credit risk and liquidity risk.
Exposure to credit, liquidity, interest rate, foreign currency and equity price risks arises in the
normal course of the Company’s business. These risks are limited by the Company’s financial
management policies and practices described below:
18
Global Investment Opportunities Fund Limited
Notes to and forming part of the financial statements
for quarter from 01 July 2012 to 30 September 2012
9.
Financial risk management and associated risks (continued)
(a) Market risk
Market risk embodies the potential for both loss and gains and includes currency risk, interest
rate risk and price risk. The Company’s strategy on the management of investment risk is
driven by the Company’s investment objective. The Company’s market risk is managed on a
daily basis by the Investment Manager in accordance with policies and procedures in place.
Details of the Company’s investment portfolio at the reporting date are disclosed in note 4(b).
(i) Currency risk
The Company invests in stocks denominated in Indian rupee (INR). Consequently, the Company
is exposed to the risk that the exchange rate of the USD relative to the INR may change in a
manner which has a material effect on the reported values of the Company’s assets and liabilities
which are in denominated in INR.
(ii) Interest rate risk
The majority of the Company’s financial assets and liabilities are non-interest bearing, with the
exception of cash and cash equivalents and investments in underlying debt funds in India.
Interest income from cash deposits may fluctuate in amount, in particular due to changes in the
interest rates. Whilst the Company seeks to optimise overall performance from the assets it holds,
it does not seek to maximise interest income in view of its policy to focus on investments in equity
securities that neither earn nor pay interest. The debt funds in India earn interest at fixed coupon
rates.
Hence, as a result the Company is not subject to significant amounts of risk due to fluctuations in
the prevailing levels of market interest rates.
Sensitivity analysis
The Company is exposed to interest rate risk only to the extent that it earns interest on cash and
cash equivalents. The impact of interest rate fluctuations on interest income earned on bank
balances is expected to be minimal.
(iii) Price risk
Price risk is the risk that value of the instrument will fluctuate as a result of changes in market
prices, whether caused by factors specific to an individual investment, its issuer or all factors
affecting all instruments traded in the market. The Company’s financial instruments are
recognised as held-for-trading financial assets, measured at fair value, and hence fair value
changes are recognised through the statement of comprehensive income. Any change in market
price would affect the profit or loss of the Company.
In cases where no market prices were available for unquoted equity investments, the net asset
value per share of that instrument has been used for fair value purposes. A change in the net asset
value per share has been considered to be price risk.
Price risk is mitigated by the Company’s Investment Manager by constructing a diversified
portfolio of instruments.
19
Global Investment Opportunities Fund Limited
Notes to and forming part of the financial statements
for quarter from 01 July 2012 to 30 September 2012
9.
Financial risk management and associated risks (Continued)
(b) Credit risk
The Company takes on exposure to credit risk, which is the risk that a counterparty will be unable
to pay amounts in full when due. Financial assets which potentially subject the Company to
concentrations of credit risk consist principally of bank balances. These assets are held in a
number of reputable financial institutions. Accordingly, the Company has no significant
concentration of credit risk. Credit risk in relation to securities transactions awaiting settlement is
managed effectively by the Investment manager.
(c) Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they
fall due. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will
always have sufficient liquidity to meet its liabilities when due, under both normal and stressed
conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.
The Company ensures that they have sufficient cash on demand to meet its expected operational
expenses for a period of minimum 60 days, including the servicing of any financial obligations.
This excludes the potential impact of extreme circumstances which cannot be reasonably predicted,
for example, natural disasters.
(d) Concentration risk
At 30 September 2012, a significant portion of the Company’s net assets consisted of investments in
a single country, India. The sector wise exposure for the investments are disclosed in note 4(b).
20
Global Investment Opportunities Fund Limited
Notes to and forming part of the financial statements
for quarter from 01 July 2012 to 30 September 2012
10.
New standards, interpretations and amendments to published standards
At the date of authorisation of the financial statements of the Company for the period ended 30
September 2012, the following Standards and Interpretations were in issue but not yet effective:
Standard/Interpretation
Related Party Disclosures
IAS 24 (revised)
Effective date*
Annual periods beginning on or
after 1 January 2011
11 individual amendments Improvements to International
to 6 standards
Financial Reporting Standards
2010
Amendments are effective for
annual periods beginning on or
after 1 January 2011
IFRS 7 amendment
Disclosures – Transfers
Financial Assets
Financial Instruments
Annual periods beginning on or
after 1 July 2011
IFRS 9
Annual periods beginning on or
after 1 January 2015
IFRS 9
Additions to IFRS 9 Financial Annual periods beginning on or
Instruments
after 1 January 2015
IFRS 10
Consolidated Financial Statements Annual periods beginning on or
after 1 January 2013
IFRS 11
Joint Arrangements
Annual periods beginning on or
after 1 January 2013
IFRS 12
Disclosure of Interest in Other Annual periods beginning on or
Entities
after 1 January 2013
IAS 12 amendment
Deferred tax: Recovery of Annual periods beginning on or
Underlying Assets
after 1 January 2012
IFRIC 14 amendment
Prepayments of a Minimum Annual periods beginning on or
Funding Requirement
after 1 January 2011
IAS 1 amendment
Presentation of items of other Annual periods beginning on or
comprehensive income
after 1 July 2012
IFRS 13
Fair Value Measurement
Annual periods beginning on or
after 1 January 2013
IAS 19 amendment
Employee Benefits
Annual periods beginning on or
after 1 January 2013
IAS 27
Separate Financial Statements Annual periods beginning on or
(2011)
after 1 January 2013
IAS 28
Investments in Associates and Annual periods beginning on or
Joint Ventures (2011)
after 1 January 2013
*All Standards and Interpretations will be adopted at their effective date (except for those Standards and
Interpretations that are not applicable to the entity).
21
of
Global Investment Opportunities Fund Limited
Notes to and forming part of the financial statements
for quarter from 01 July 2012 to 30 September 2012
10.
New standards, interpretations and amendments to published standards (Continued)
The directors are of the opinion that the impact of the application of the remaining Standards and
Interpretations will be as follows:
IAS 24 (revised): Related Party Disclosures
IAS 24 (revised) will be adopted by the Company for the first time for its financial reporting period
ending 31 March 2013. The standard will be applied retrospectively.
IAS 24 (revised) addresses the disclosure requirements in respect of related parties, with the main
changes relating to the definition of a related party and disclosure requirements by governmentrelated entities.
The change in the definition of a related party has resulted in a number of new related party
relationships being identified.
IFRS 7 amendment: Disclosures – Transfers of Financial Assets
The amendments to IFRS 7 will be adopted by the Company for the first time for its financial
reporting period ending 31 March 2013.
In terms of the amendments additional disclosure will be provided regarding transfers of financial
assets that are:


not derecognised in their entirety and
derecognised in their entirety but for which the Company retains continuing involvement.
IFRS 9: Financial Instruments
IFRS 9 will be adopted by the Company for the first time for its financial reporting period ending 31
March 2016. The standard will be applied retrospectively, subject to transitional provisions.
IFRS 9 addresses the initial measurement and classification of financial assets and will replace the
relevant sections of IAS 39.
Under IFRS 9 there are two options in respect of classification of financial assets, namely, financial
assets measured at amortised cost or at fair value. Financial assets are measured at amortised cost
when the business model is to hold assets in order to collect contractual cash flows and when they
give rise to cash flows that are solely payments of principal and interest on the principal
outstanding. All other financial assets are measured at fair value.
Embedded derivatives are no longer separated from hybrid contracts that have a financial asset host.
The impact on the financial statements has not yet been estimated.
22
Global Investment Opportunities Fund Limited
Notes to and forming part of the financial statements
for quarter from 01 July 2012 to 30 September 2012
10.
New standards, interpretations and amendments to published standards (Continued)
Additions to IFRS 9: Financial Instruments
The additions to IFRS 9 will be adopted by the Fund for the first time for its financial reporting
period ending 31 March 2016. The standard will be applied retrospectively, subject to transitional
provisions.
Under IFRS 9 (2010), the classification and measurement requirements of financial liabilities are
the same as per IAS 39, barring the following two aspects:

fair value changes for financial liabilities (other than financial guarantees and loan
commitments) designated at fair value through profit or loss, attributable to the changes in
the credit risk of the liability will be presented in other comprehensive income (OCI). The
remaining change is recognised in profit or loss. However, if the requirement creates or
enlarges an accounting mismatch in profit or loss, then the whole fair value change is
presented in profit or loss. The determination as to whether such presentation would create
or enlarge an accounting mismatch is made on initial recognition and is not subsequently
reassessed.

Under IFRS 9 (2010) derivative liabilities that are linked to and must be settled by delivery
of an unquoted equity instrument whose fair value cannot be reliably measured, are
measured at fair value.
IFRS 9 (2010) incorporates, the guidance in IAS 39 dealing with fair value measurement,
derivatives embedded in host contracts that are not financial assets, and the requirements of IFRIC 9
Reassessment of Embedded Derivatives.
The impact on the financial statements has not yet been estimated.
IFRS 10 Consolidated Financial Statements
IFRS 10 changes the definition of control, such that the same consolidation criteria will apply to all
entities. The revised definition focuses on the need to have both "power" and "variable returns" for
control to be present. Power is the current ability to direct the activities that significantly influence
returns. Variable returns can be positive, negative or both. The determination of power is based on
current facts and circumstances (including substantive potential voting rights) and is continuously
assessed. An investor with more than half the voting rights would meet the power criteria in the
absence of restrictions or other circumstances. However, an investor could have power over the
investee even when it holds less than the majority of the voting rights in certain cases. IFRS 10
provides guidance on participating and protective rights, and brings the notion of "de facto" control
firmly within the guidance. The standard also requires an investor with decision making rights to
determine if it is acting as a principal or an agent and provides factors to consider. If an investor acts
as an agent, it would not have the requisite power and, hence, would not consolidate.
The impact on the financial statements has not yet been estimated.
Global Investment Opportunities Fund Limited
Notes to and forming part of the financial statements
for quarter from 01 July 2012 to 30 September 2012
10.
New standards, interpretations and amendments to published standards (Continued)
IFRS 12 Disclosure of Involvement with Other Entities
IFRS 12 sets out the required disclosures for entities reporting under IFRS 10 and IFRS 11. The
objective of IFRS 12 is to require entities to disclose information that helps financial statement
readers to evaluate the nature, risks, and financial effects associated with the entity’s involvement
with subsidiaries, associates, joint arrangements, and unconsolidated structured entities. Specific
disclosures include the significant judgments and assumptions made in determining control as well
as detailed information regarding the entity's involvement with these investees.
The impact on the financial statements has not yet been estimated.
Amendment to IAS 12 Deferred tax: Recovery of Underlying Assets
The amendment introduces an exception to the general measurement requirements of IAS 12
Income Taxes in respect of investment properties measured at fair value. The measurement of
deferred tax assets and liabilities, in this limited circumstance, is based on a rebuttable presumption
that the carrying amount of the investment property will be recovered entirely through sale. The
presumption can be rebutted only if the investment property is depreciable and held within a
business model whose objective is to consume substantially all of the asset’s economic benefits
over the life of the asset.
The impact on the financial statements has not yet been estimated.
Amendment to IFRIC 14 Limit on a Defined Benefit Asset, Minimum Funding Requirements and
their Interaction
The amendments to IFRIC 14 address the accounting treatment for prepayments made when there is
a minimum funding requirement (MFR). The amendments will be applied prospectively from the
beginning of the earliest comparative period presented.
Under the amended IFRIC 14 an asset would be recognised in respect of such a prepayment, made
to the defined benefit pension plan, on the basis that the entity has a future economic benefit from
the prepayment.
The impact on the financial statements has not yet been estimated.
Amendment to IAS 1 Presentation of Financial Statements: Presentation of Items of Other
Comprehensive Income
The amendments:



Require that an entity present separately the items of other comprehensive income that would be
reclassified to profit or loss in the future if certain conditions are met from those that would
never be reclassified to profit or loss;
Do not change the existing option to present profit or loss and other comprehensive income in
two statements; and
Change the title of the statement of comprehensive income to the statement of profit or loss and
other comprehensive income. However, the entity is still allowed to use other titles.
The amendments do not address which items are presented in other comprehensive income or which
items need to be reclassified. The requirements of other IFRSs continue to apply in this regard.
The amendment is not expected to have a significant impact on the financial statements.
1
Global Investment Opportunities Fund Limited
Notes to and forming part of the financial statements
for quarter from 01 July 2012 to 30 September 2012
10.
New standards, interpretations and amendments to published standards (Continued)
IFRS 13 Fair Value Measurement
IFRS 13 replaces the fair value measurement guidance contained in individual IFRSs with a single
source of fair value measurement guidance. It defines fair value, establishes a framework for
measuring fair value and sets out disclosure requirements for fair value measurements. It explains
how to measure fair value when it is required or permitted by other IFRSs. It does not introduce
new requirements to measure assets or liabilities at fair value, nor does it eliminate the practicability
exceptions to fair value measurements that currently exist in certain standards.
IFRS 13 defines fair value as the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date, i.e. an exit
price.
The impact on the financial statements has not yet been estimated.
Amendments to IAS 19 Employee Benefits
The amended IAS 19 include the following requirements:

Actuarial gains and losses are recognized immediately in other comprehensive income;
this change will remove the corridor method and eliminate the ability for entities to
recognize all changes in the defined benefit obligation and in plan assets in profit or loss,
which is currently allowed under IAS 19; and

Expected return on plan assets recognized in profit or loss is calculated based on the rate
used to discount the defined benefit obligation.
The impact on the financial statements has not yet been estimated.
Amendment to IAS 27 Consolidated and Separate Financial Statements
The standard contains accounting and disclosure requirements for investments in subsidiaries, joint
ventures and associates when an entity prepares separate financial statements. The Standard requires
an entity preparing separate financial statements to account for those investments at cost or in
accordance with IFRS 9 Financial Instruments.
The impact on the financial statements has not yet been estimated.
Amendment to IAS 28 Investments in Associates and Joint Ventures
IAS 28 makes the following amendments:

IFRS 5 applies to an investment, in an associate or a joint venture that meets the criteria to
be classified as held for sale; and

On cessation of significant influence or joint control, even if an investment in an associate
becomes an investment in a joint venture or vice versa, the entity does not remeasure the
retained interest.
The impact on the financial statements has not yet been estimated.
2
Global Investment Opportunities Fund Limited
Unaudited Financial Statements
for the quarter from 01 July 2012 to 30 September 2012