BOARD OF DIRECTORS...The Board of Directors, in their meeting held on 30th January, 2010 revised the...

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BOARD OF DIRECTORS

Mr. Lalit Bhasin Chairman

Mr. R. K. Bhargava Director

Mr. B. L. Chadha Director

Mr. R. C. Sharma Director

Mr. J.M.L. Suri Director

Mr. Anil Goyal Managing Director

COMPANY SECRETARYMs. Nishu Tomar

AUDITORSP. Bholusaria & Co.Chartered Accountants26/11, Shakti Nagar,Delhi - 110 007

REGISTERED OFFICEPlot No. 31, Echelon Institutional Area,Sector-32, Gurgaon - 122 001, HaryanaPh : 0124-4675500, Fax : 0124-4370985

WEBSITEwww.hbportfolio.com

REGISTRAR & SHARE TRANSFER AGENTRCMC Share Registry Pvt. Ltd.,B-106, Sector - 2,Noida - 201 301Ph : 0120-4015880, Fax : 0120-2444346

CONTENTS

Notice ................................................................................................... 2

Directors’ Report .................................................................................. 4

Management Discussion and Analysis &Report on Corporate Governance ...................................................... 5

Auditors’ Report ................................................................................... 8

Balance Sheet ...................................................................................... 9

Profit & Loss Account .......................................................................... 9

Schedules ............................................................................................. 9

Balance Sheet Abstract & Company’s General Business Profile ... 16

Cash Flow Statement ........................................................................ 16

Consolidated Accounts of the Company .......................................... 17

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NOTICENOTICE is hereby given that the 15th Annual General Meeting of the Company will be held asfollows:Day : FridayDate : 20th August, 2010Time : 11.00 A. M.Place : GIA House, I.D.C., Mehrauli Road, Opp. Sector 14, Gurgaon (Haryana) - 122 001.to transact the following business/(s):AS ORDINARY BUSINESS:1. To receive, consider and adopt the Audited Balance Sheet as at 31st March 2010 and

the Profit & Loss Account for the year ended on that date together with the Report ofDirectors and Auditors thereon.

2. To declare dividend on equity shares3. To appoint a Director in place of Mr. R.C Sharma, who retires by rotation and being

eligible offers himself for re-appointment.4. To appoint a Director in place of Mr. R.K Bhargava, who retires by rotation and being

eligible offers himself for re-appointment.5. To appoint Auditors and to fix their remuneration.AS SPECIAL BUSINESS6. To consider and if thought fit, to pass with or without modification(s) the following resolution

as Special Resolution:-“RESOLVED THAT pursuant to the resolution passed by the Board of Directors in theirmeeting held on 30th January, 2010 and subject to the provisions of Section 198, 310and 316 read with Schedule XIII and other applicable provisions, if any, of the CompaniesAct, 1956, the consent of the Company be and is hereby granted to the revision/ increasein the remuneration of Mr. Anil Goyal, Managing Director, who is also the ManagingDirector of HB Leasing & Finance Co. Ltd., as set out in the Explanatory Statement.”“RESOLVED FURTHER THAT the above remuneration shall be payable as minimumremuneration to the Managing Director in the event of absence/inadequacy of profits inany financial year and that the aforesaid remuneration shall be effective upto 19thFebruary, 2012 unless otherwise revised by the Board of Directors.”“RESOLVED ALSO THAT Mr. Anil Goyal shall not draw any remuneration from HBLeasing & Finance Co. Ltd. so long as he draws remuneration from the company.”

BY THE ORDER OF THE BOARDFOR HB PORTFOLIO LIMITED

Place : Gurgaon NISHU TOMARDate : 12.05.2010 COMPANY SECRETARY

NOTES1. A MEMBER ENTITLED TO ATTEND AND VOTE IS ENTITLED TO APPOINT A PROXY

TO ATTEND AND VOTE INSTEAD OF HIMSELF/HERSELF AND THE PROXY NEEDNOT BE A MEMBER. A PROXY IN ORDER TO BE EFFECTIVE MUST BE LODGEDAT THE REGISTERED OFFICE OF THE COMPANY AT LEAST 48 HOURS BEFORETHE TIME OF THE MEETING.

2. Explanatory Statement(s) pursuant to Section 173(2) in respect of the Special Businessesherein is annexed hereto and form part of this notice.

HB PORTFOLIO LIMITED3. The Register of Members and Share Transfer Books of the Company shall remain closed

from 17th August, 2010 to 20th August, 2010. (Both days inclusive).

4. Dividend, if declared at the Annual General Meeting will be paid within 30 days thereof tothose members whose names appear on the Register of Members of the Company aftergiving effect to all valid requests for transfer of shares lodged with the Company on orbefore the close of business hours on 16th August, 2010 or to their mandates. The dividendin respect of shares held in dematerialised form would be payable to the beneficial ownersof shares recorded with the depositories as at the end of 16th August, 2010 as per thedetails furnished by the Depositories for the purpose.

5. Securities and Exchange Board of India (SEBI) has made mandatory for all Companiesto use the bank account details furnished by the shareholders for distributing dividendthrough Electronic Clearing Service (ECS), wherever ECS and Bank details are available.In the absence of ECS facility being made available for any reason, the Companies arerequired to print the bank account details on the payment instrument for distribution ofdividends to the investors. Accordingly shareholders holding shares in physical form arerequested to notify their bank details giving the name of the bank, the branch, the accountnumber to the Company’s Registrar and Share Transfer Agent, M/s RCMC Share RegistryPvt. Ltd. In case the holdings are in dematerialised form, the said details should beconveyed to their Depository Participant. Shareholders who wish to avail the ECS facilityoffered by the Company should in addition to the aforesaid bank details also furnish aphotocopy of the cheque leaf to Company’s Registrar and Share Transfer Agent in caseof holding in physical mode and to the Depository Participant in case of dematerialisedholding.

The bank particulars of the shareholders recorded with the Depository Participant as onthe book closure date, the data of which will be received through Depositories will beused by the Company for printing on dividend warrants. This would ensure that the dividendwarrants cannot be deposited in any account other than the one specified on the warrants.For safety and in the interest of shareholders, it is important that bank account details arecorrectly provided to the Depository participants. The bank details (mandate) for sharesheld in physical form will not be applicable/applied for shares held in dematerialised formand vice versa.

6. Members/Proxies should bring Attendance Slips duly filled in for attending the meeting.

7. Shareholders seeking any information with regard to Accounts are requested to write tothe Company at least 7 days before the date of the meeting so as to enable themanagement to keep the information ready.

8. Members are requested to:

(a) Notify any change in their address to the Company including PINCODE to the Registrarand Share Transfer Agent of the company namely, RCMC Share Registry Pvt. Ltd.,B-106, Sector-2, Noida. Phones: 4015880. Fax 2444346. E-mail:[email protected]. Members whose shareholding is in electronic mode arerequested to direct change of address notifications and bank particulars for receivingthe dividend, if declared, through electronic credit under ECS, to their respectiveDepository participants.

(b) Bring their copies of Annual Report with them to the meeting as the same will not besupplied again at the Meeting as a measure of economy.

9. Details of Directors seeking appointment/ reappointment at the ensuing Annual GeneralMeeting (Pursuant to Clause 49 of the Listing Agreement).

ANNEXURE TO THE NOTICENotes on directors seeking appointment / re-appointment as required under Clause 49 of the Listing Agreement entered into with Stock Exchange:PROFILE OF DIRECTORS SEEKING APPOINTMENT / REAPPOINTMENTAT THE ENSUING (15th) AGM (Refer Note No. 3 and 4 of the Notice for AGM)

Name of the Director Mr. R.C. Sharna Mr. R.K. Bhargava

Date of Birth 24th January, 1939 26th October, 1935

Date of Appointment 27th July, 2004 25th July, 2001

Profile/ Expertise in Specific functional Areas. Administration Administration

Qualifications M.A. (Econ.) & B.A. (Econ. & Geography) M.A . & B.A.(Hons.)

List of directorship in other Public 1. Sir Shaadi Lal Enterprises Ltd. 1. Kajaria Ceramics Ltd.Companies.(As on 31st March 2010) 2. CHL Ltd. 2. Duncan’s Limited

3. PCI Ltd. 3. Noida Toll Bridge Company Ltd.4. SIS Ltd. 4. Andhra Cements Ltd.5. Insec Securities & Finance Ltd. 5. Asian Hotels Ltd. (West)

6. Innova Hotels and Resorts Ltd.Membership of Committee of the Board in other Audit Committee Audit CommitteePublic Companies (As on 31st March 2010) 1. PCI Ltd. 1. Noida Toll Bridge Company Ltd.

2. Sir Shaadi Lal Enterprises Ltd. 2. Asian Hotels Ltd. (West)3. CHL Ltd. 3. Duncan’s LimitedCorporate Governor and Grivance Committee 4. Andra Cement Limited1. PCI Ltd. 5. Kajaria Ceramics LimitedRemuneration Committee Shareholder/Investor Grievance Committee1. PCI Ltd. 1. Noida Toll Bridge Company Ltd.2. Sir Shaadi Lal Enterprises Ltd. 2. Asian Hotels Ltd. (West)

3. Duncan’s Limited4. Kajaria Ceramics Limited.

Shares held by the Director Nil 7118



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ITEM NO. 6Mr. Anil Goyal was re-appointed as Managing Director of the company on 20.02.2007 for a period of 5years and payment of remuneration was approved w.e.f 1st April, 2007 for a period of 3 years upto to31st March, 2010. Therefore the remuneration payable to him was effective only upto 31st March, 2010.The Board of Directors, in their meeting held on 30th January, 2010 revised the remuneration of Mr.Anil Goyal for the remaining currency of his tenure as Managing Director upto 19th February, 2012,subject, however, to approval of the shareholders of the company, as under:1. WITH EFFECT FROM 1ST APRIL 2010:-

a) BASIC SALARYRs.2,00,000/- (Rupees Two Lacs only) per month.

b) PERQUISITESHOUSING (either of the following at the option of the Managing Director)I. The expenditure by the company on hiring accommodation for the Managing Director

will be subject to the ceiling of 60% of the salary of the Managing Director; orII. In case the accommodation provided to the Managing Director is owned by the

Company, the company shall deduct 10% of the salary of the Managing Director; orIII. In case no accommodation is provided by the company to the Managing Director,

House Rent Allowance @ 60% shall be paid by the company to the ManagingDirector.

c) MEDICAL REIMBURSEMENTExpenses incurred for self and family subject to a ceiling of Rs. 30,000/- in a year.

d) LEAVE TRAVEL CONCESSIONExpenses incurred for self and family subject to a ceiling of Rs. 60,000/- in a year.

e) CHILDREN EDUCATION ALLOWANCEExpenses incurred on children’s education upto Rs. 15,000/- per month.

(f) CLUB FEESFees of clubs, subject to a maximum of two clubs. However, admission and lifemembership fees shall not be allowed.

(g) PERSONAL ACCIDENT INSURANCEPremium subject to a maximum of Rs. 10,000/- per annum.

(h) PROVIDENT FUNDCompany’s contribution towards Provident Fund, subject to a ceiling, as prescribed under

the provisions of law applicable in this regard.(i) SUPERANNUATION FUND

Company’s contribution towards superannuation fund upto Rs. 1,00,000 per annum.(j) GRATUITY

Half month’s basic salary for each completed year of service on the basis of last basicsalary drawn.

(k) CAR AND TELEPHONE. The Company shall provide car for use on company’s business and telephone at the

residence of the Managing Director. However, personal long distance calls on telephoneand use of car for private purposes shall be billed by the Company to the ManagingDirector.

(l) LEAVEEarned / Privilege leave, not exceeding one month for every eleven months of service,on full salary and allowance.

(m) Apart from the aforesaid salary, perquisite, allowances and benefits, the Managing Directorwill be entitled to reimbursement of expenses incurred in connection with business of thecompany.

(n) No sitting fees will be paid to the Managing Director for attending the meetings of theBoard of Directors of the company or committees thereof.

2. ACCUMULATED LEAVE ENCASHMENTIn accordance with the change in the policy of the company with effect from 1st April, 2009,leaves accumulated and not availed of, in excess of 90 days as at the end of every financialyear shall be encashed yearly on the basis of basic salary drawn as at the end of the saidfinancial year and the balance unencashed accumulated leaves may be encashed at the timeof his ceasing to be Managing Director of the Company.The above remuneration shall be payable as minimum remuneration to the Managing Directorin the event of absence/inadequacy of profits in any financial yearThe aforesaid revision made by the Board of Directors in the terms and conditions of appointmentof Mr. Anil Goyal, Managing Director is placed before the Members for formal approval. Noneof the Directors, except Mr. Anil Goyal, are in any way concerned or interested in this resolution.

The Additional disclosures mentioned in Para 1(B)(iv) of Section II of Part I of Schedule XIII of the Companies Act, 1956 is as under:I. GENERAL INFORMATION

1. Nature of Industry Investment in Securities2. Date or expected date of Commencement of Production Existing Company. The company is not engaged in any manufacturing activities.

3. In case of new Companies, expected date of Not Applicablecommencement of activities as per project approved byfinancial institutions appearing in the Prospectus.

4. Financial Performance based on given indicators – (in Lacs )

Particulars 2009-2010 2008-2009Total Sales and other Income 1133.62 902.93Profit before Depreciation & tax 1036.20 804.07

Depreciation 3.20 4.58

Provision for Taxation 188.41 85.785. Export performance and net foreign Exchange Not Applicable

collaborations

6. Foreign Investments or collaborators, if any The company has no foreign investments or foreign collaborations.

II. INFORMATION ABOUT THE APPOINTEE1. Background details Mr. Anil Goyal is a Chartered Accountant with nearly 27 years of experience in the field of finance, taxation, Investment,

banking, corporate restructuring and strategic planning.

2. Past remuneration Rs. 37,80,000/- for the financial year 2009-2010.3. Recognition or awards None

4. Job profile and his suitability Being top level position, the job profile essentially requires a leader who is innovative, self motivated and result oriented.Mr. Goyal being an expert in finance and taxation with his vast experience is most suitable for the job.

5. Remuneration proposed Mentioned in the Explanatory Statement.6. Comparative remuneration profile with respect to Thou gh the exact latest data of the comparative profile with remuneration of CEO/MD/Key Personnel of Financial Services

industry, size of the company, profile of the position Companies is not available, however the CEO’s/MDs/Key Managerial personnel of financial services/NBFC Companiesand person (in case of expatriates the relevant details of comparable status are generally receiving remuneration above Rs. 100 lacs per annum.would be w.r.t. the country of his origin)

7. Pecuniary relationship directly or indirectly with the company, He does not have any other pecuniary relationship with the company nor is he related to or has pecuniary relationship withor relationship with the managerial personnel, if any. any of the directors of the company.

III. OTHER INFORMATION1. Reasons of loss or inadequate profits The Company has adequate profits for the current Financial year for paying the proposed remuneration to Mr. Goyal.

2. Steps taken or proposed to be taken for improvement Though the Company has adequate profits, however the process of further improving the profitability is an ongoingprocess which shall be adhered to by taking the following steps :-• Professionalise the management of operations.• Additional recruitment of staff in areas of investment management, research, operations and new business

development.• Review current HR & compensation policies and bring them in line with market practice.• Review and modify current accounting and investment management systems, processes and controls as well

as the IT systems supporting them.• Reduce concentration risk of the investment portfolio, exit from all non remunerative investments except

where there is a strategic intent and also appoint professional outside money managers for a part of theportfolio to inject competition and external benchmarking.

3. Expected increase in productivity and profits in Increased return on the Investment Portfolio leading to enhanced stake holder’s value.measurable terms

IV. DISCLOSURESRemuneration package payable to Mr. Anil Goyal, Managing Director of the Company has been disclosed in the commencing paragraph of this Explanatory Statement.All elements of remuneration package to all directors are disclosed in the Corporate Governance Report.The above may also be deemed to be Notice under Section 302 of the Companies Act, 1956 to the Shareholders of the Company.None of the Directors except Mr. Anil Goyal is concerned or interested in this resolution. The Directors recommend the resolution for approval by the members.



EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956

HB PORTFOLIO LIMITED

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ANNEXURE TO DIRECTORS’ REPORTInformation as per Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 and forming part of Directors’ Report for the year ended 31st March2010.S. No. Name of Date of Qualifications Designation/ Gross Particulars of previous Experience Whether relative of anyNo. Employee/ Age Employment Nature of job Remuneration employment (Designation/ (No. of years) Director or Manager

(years) (Rs.) Name of the Employer) of the Company

1 Mr. Anil Goyal 19.2.1997 B.Com FCA Managing Director 37,80,000/- Managing Director 27 NOAged 51 years HB Leasing & Finance Co. Ltd.

Note: Remuneration includes salary, Cost of leased accommodation, Company’s contribution to Provident Fund & Superannuation Fund and other sums & allowances actually received by theemployee during the financial year but does not include gratuity and leave encashment. The Perquisites are valued in accordance with the Income Tax Act, 1961 and Rules made thereunder.The appointment is contractual.

STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956

Name of the Subsidiary HB Securities Ltd. HB Corporate Services Ltd.The Financial Year of the subsidiary ended on 31.03.2010 31.03.2010No. of Equity Share held by the Holding Company as on date 72,07,570 Equity Shares of Rs. 10/- each 42,51,070 Equity Shares of Rs. 10/- eachExtent of Holding 100% 100%The Net Aggregate of the profit / (loss) of subsidiary so far as they concernthe members of the company for the year ended 31st March 2010(i) For the financial year of the subsidiary Rs. (1341392) Rs. (27861)(ii) For the previous financial periods of the subsidiary Rs. (914444) Rs. (257326)The net aggregate of the profit/ (loss) of subsidiary so far as they concernthe members of the company and which are dealt with in the accounts ofthe company for the year ended 31st March 2010.(i) for the financial year of the subsidiary Nil Nil(ii) for the previous financial periods of the subsidiary Nil Nil

DIRECTORS’ REPORTTo the Members,Your Directors are pleased to present the 15th Annual Report together with the AuditedStatements of Accounts for the year ended 31st March 2010.

FINANCIAL RESULTSThe summarized financial results of the Company during the year under review are as under.

(Rs. in Lakhs)Year Ended Year Ended

PARTICULARS31.03.2010 31.03.2009

Gross Profit/(Loss) 1036.20 804.07Less :(a) Depreciation 3.20 4.57(b) Provision for Income Tax

– Current 185.00 87.00– Deferred Tax charge/(credit) 3.34 (2.72)– Fringe Benefit Tax 0.00 1.50– Tax Adjustment for earlier year 0.07 0.01

Net Profit /(Loss) 844.59 713.71ADD / LESS(a) Provision for sub-standard & doubtful assets written back 3.10 1.54(b) Transfer to Statutory Reserve Fund 169.54 143.05(c) Transfer to General Reserve 550.00 300.00(d) Proposed Dividend 239.84 239.84(e) Tax on Dividend 39.83 40.76(f) Residual Dividend of last year & Tax thereon 0.00 0.00(g) Balance brought forward 953.55 961.95(h) Balance carried forward to Balance Sheet 802.02 953.55

DIVIDENDIn view of the Company having distributable profits after providing for depreciation, your directorsare please to recommend dividend @ Rs 2/- per equity share (20%) for the year under review.

PERFORMANCE REVIEW & OUTLOOKThe stock market index which declined by almost 40% in the year 2008, undertook a sharprevival and increased by 77% in 2009-2010. The BSE Sensitive Index which was 9901.99 atthe start of the financial year, ended the year at 17527.77 on 31st March 2010. During the yearunder review, your Company posted a Gross Profit of Rs. 1036.20 Lakhs as compared to Rs.804.07 Lakhs in the previous year. Net Profit after tax for the year under review was Rs.844.59 Lakhs as compared to Rs. 713.71 Lakhs in the previous year.The fiscal year 2009-10 closed on a relatively good note, amidst the pressures that emanatedfrom the global economic crisis. Being the least hit of all economies, the Indian economy hassurvived the storm of global financial crisis. Supported by monetary and fiscal policies, arecovery in economic activity was visible from the second quarter of the Financial Year 2009-10. The GDP growth rate for the year 2009-10 was estimated to be 7.2 percent compared withthe growth of 6.7 percent attained in 2008-09. The Indian rupee also generally exhibitedstrengthening trend against US dollar on the back of capital inflows.The overall risks to the outlook however remain slated to the downside. There are also loomingconcerns over a second round of convulsion in the advanced economies. If this was to happen,the recovery process is bound to be impacted.Industry Trends and its future prospects have been summed up in the Management Discussionand Analysis Report which forms part of this report.

NBFC REGISTRATION WITH RESERVE BANKAs already reported in the last annual report, a fresh application for registration as NBFC wasfiled with the Regional Office of RBI, Delhi on 23rd October, 2006 and the same continues to bepending.

STATUTORY STATEMENTSYour Company has not accepted any deposits from the public during the year under review.The particulars under Companies (Disclosure of Particulars in the Report of Board of Directors)Rules, 1988 on conservation of energy, technology absorption are not applicable to yourcompany. The total foreign exchange earnings during the year under review and previousperiod is NIL and total foreign exchange out go during the year under review and the previousperiod is NIL.The particulars pursuant to Section 217(2A) of the Companies Act, 1956 read with theCompanies (Particulars of Employees) Rules, 1975 as amended, are furnished in a separatestatement annexed to and forming part of this report.Pursuant to Section 217(2AA) it is hereby stated that in the preparation of the Annual Accounts,the applicable accounting standards have been followed. The Director’s have selected suchaccounting policies and applied them consistently and made judgments and estimates, thatare reasonable and prudent so as to give a true and fair view of the state of affairs of thecompany at the end of the financial year and of the profit or loss of the company for that period.The Director’s have taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of this Act for safeguarding the assets of the companyand for preventing and detecting fraud and other irregularities. Further, the Director’s haveprepared the annual accounts on a going concern basis.

SUBSIDIARIES OF THE COMPANYIn terms of the approval granted by the Central Government under section 212(8) of theCompanies Act, 1956, a copy of the Balance Sheet, profit and Loss Account, Report of Directorsand Auditors of the subsidiaries namely HB Securities Ltd. and HB Corporate Services Ltd.have not been attached with the Balance Sheet of the Company. However the financial data ofthe subsidiaries have been furnished under “Summary of Financial Information of SubsidiaryCompanies” and forms part of this Annual Report. The annual accounts of the subsidiarycompanies will be made available upon request by any member of the Company interested inobtaining the same. The annual accounts of the subsidiary companies will also be kept forinspection by any member of the company at its registered office.

CORPORATE GOVERNANCEThe report of Corporate Governance for the year under review is annexed hereto and forms apart of the Director’s Report.

STATEMENT PURSUANT TO LISTING AGREEMENTThe Company’s equity shares are listed at Bombay Stock Exchange Ltd, Mumbai. The listingfee for the year under review has been paid to BSE.

AUDITORS REPORTObservations of the Auditors are explained, wherever necessary, by notes to accounts.

AUDITORSThe Auditors, M/s P. Bholusaria & Co., Chartered Accountants, retire at the ensuing AnnualGeneral Meeting and are eligible for reappointment.

DIRECTORSMr. R.C. Sharma and Mr. R.K. Bhargava Directors retire by rotation at the ensuing AnnualGeneral Meeting and being eligible offer themselves for reappointment.

ACKNOWLEDGMENTSYour Directors wish to thank and acknowledge the co-operation, assistance and supportextended by the Banks, Company’s Shareholders and Employees.

FOR AND ON BEHALF OF THE BOARDFor HB PORTFOLIO LIMITED

Place : Gurgaon LALIT BHASINDate : 12.05.2010 CHAIRMAN


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MANAGEMENT’S DISCUSSION AND ANALYSIS1. Operating Results

The company’s total income for the year under review is Rs. 1133.62 lakhs as comparedto Rs. 902.92 lakhs in the previous year. During the year under review the administrativeand other expenses amounted to Rs. 97.02 Lakhs as compared to Rs 98.07 Lakhs duringthe previous year. Interest and financial charges for the year under review were Rs. 0.40Lakhs as compared to Rs 0.77 Lakhs in the previous year.

2. Industry Trends and Business Analysis2009 was a satisfactory year for securities traders and investors. The BSE SensitiveIndex which was 9901.99 at the start of the financial year, rebounded and closed at17527.77 on 31st March 2010. Thus for the FY 2009-2010 the BSE Sensex registered anoverall recovery of 77%.The NBFC sector in India has become mature with reduced dependence on theacceptance of public deposits as part of overall funding. The NBFC sector is nowrepresented by a mix of a few large companies with nationwide presence and a largenumber of small and medium sized companies with regional focus.

3. Opportunities and ThreatsWith the globalization and the electronic age, Indian stock market has changed over thepast decade. Nearly 100% of all transactions are executed through electronic media online trading system. The developments of high-tech and transparent markets with anincreasingly wide geographic footprint have increased the number of trading venuesoffering diverse pools of liquidity.During the period 2007-2009, Capital Markets around the globe had gone throughextremely uncertain times on account of the sub prime crisis triggered with adverseconsequences for banks and financial markets. The global financial turmoil had knock-on effects on our financial markets as well. It is still a big uncertainty that the world economyis totally back on growth track.

4. Future Prospects and OutlookThe global financial markets during 2009 exhibited significant stabilization, despite thedrag from the global financial crisis. Stock prices in India displayed a continuous upwardmomentum throughout the year, except for some occasional corrections on Dubai Worlddefault and the Greek sovereign debt concerns. Following the optimism on account ofmeasures announced in the Union Budget 2010-11 such as the roadmap for fiscalconsolidation and PSU divestment, stock prices recorded further gains. The gains instock prices were associated with substantial increase in the activity in the derivativesegment and also led by the FII investments.However uncertainties about the path of future global recovery and risks arising fromlarge sovereign debt continue to threaten the return to stability in the international financialmarkets. These developments in the global financial markets transmitted to the domesticfinancial markets could give way to volatility in stock prices and the exchange rate.The Company on being granted the NBFC registration from RBI, intends to actively pursuegrowth opportunities in the fast growing financial sector in the country, by providing financial

services with wide activities. (The Company’s NBFC registration matter has been dealtwith in detail in the Directors Report.)

5. Risks and concernsThe Company like any other Company is exposed to specific risks that are particular toits business and the environment within which it operates. The company is exposed tothe market risk (including liquidity risk) and also the factors that are associated with capitalmarket, which inter alia includes economic/business cycle, fluctuations in the stock pricesin the market, besides the interest rate volatility, and credit risk.The Company is confident of managing these risks by maintaining a conservative financialprofile, and by following prudent business and risk management practices.

6. Internal control system and their adequacyThe Company has proper and adequate system of internal controls to ensure that all itsassets are safeguarded and protected against loss from unauthorized use or dispositionof assets and that the transactions are recorded and reported.The Company ensures adherence to all internal control policies and procedures as wellas compliance with all regulatory guidelines.Besides, the Audit Committee reviews the internal controls at periodic intervals in closecoordination with the Internal Auditors.

7. Financial performancea) Share Capital: The Company’s issued and subscribed share capital consists of Equity

Share capital only. The paid-up share capital of the company as at 31st March 2010stood at Rs.11,99,23,290 comprised of 1,19,92,329 Equity Shares of Rs.10/- each.

b) Reserves and Surplus: During the year under review the reserves and surplusincreased to Rs. 9871.36 lakhs as against Rs 9303.35 lakhs during the previousyear.

c) Loans: During the year under review the secured loans is Rs. 2.54 lakhs as againstRs 7.32 lakhs during the previous year.

d) Current Assets & Current Liabilities: The current assets, loan and advances andcurrent liabilities & provisions for the year under review stood at Rs. 3477.49 lakhsand Rs. 860.29 lakhs respectively against Rs. 2596.23 lakhs and Rs. 673.08 lakhsfor the previous year.

8. Human ResourcesThe company has adequate human resources which is commensurate with the currentvolume of activity and is reviewed by the management periodically and the companywould induct competent personnel on increase/expansion of the activity.

9. Cautionary Statement:Statements in this “Management’s Discussion and Analysis” describing the Company’sobjectives, projections, estimates, expectations or predictions may be “forward lookingstatements” within the meaning of applicable securities laws and regulations. Actual resultscould differ materially from those expressed or implied. Important factors that could make adifference to the Company’s operations include interest rates and changes in the Governmentregulations, tax regimes, economic developments and other factors such as litigation etc.

REPORT ON CORPORATE GOVERNANCEREPORT ON CORPORATE GOVERNANCE1. Company’s philosophy on Corporate Governance

The Company’s philosophy on Corporate Governance envisages adopting the highstandards of transparency, accountability and ethics in all transactions and interactionswith all stakeholders including but not limited to the shareholders, the Government,Suppliers, Contractors and other business associates.

2. Size and Composition of the BoardThe Board of Directors of your company comprises of 6 directors out of whom 5 are non-

executive and 4 directors are Non- Executive Independent directors. The non-executivedirectors are proficient in their own fields and bring with them decades of rich experience.Mr. Lalit Bhasin is the Chairman and Non - Executive Director of the Company. Mr. AnilGoyal is the Managing Director of your company. He has to his credit nearly 27 years ofcorporate experience. He is responsible for overall management of the company. Thecomposition of the Board is in conformity with the Clause 49 of the Listing Agreement.Five Board meetings were held during the year under review on 12th May, 2009, 28th July,2009, 4th August, 2009, 30th October 2009 and 30th January 2010.The particulars regarding composition of the Board of Directors and its Meetings heldduring the year are given hereunder: -

Name of the Category Directorships in other Committee No. of Board AttendedDirector public companies# Membership held in Meetings during Last Shares

Other public companies# the year AGM held

Director Chairman Member Chairman Held Attended

Mr. Lalit Bhasin Promoter Non Executive 14 3 4 NIL 5 5 Yes 8,42,398

Mr. J.M.L. Suri Independent Non Executive 9 NIL 4 1 5 5 Yes 500*

Mr. R.K.Bhargava Independent Non Executive 6 2 9 1 5 5 Yes 7118

Mr. B.L. Chadha Independent Non Executive NIL NIL NIL NIL 5 4 Yes NIL

Mr. R.C. Sharma Independent Non Executive 5 NIL 6 NIL 5 5 Yes NIL

Mr. Anil Goyal Non-Independent Executive 11 NIL 5 1 5 5 Yes NIL

# As on 31.03.2010* Jointly held with wife.

In terms of the provisions of the Articles of Association of the company, one-third directorsof the company retire at every annual general meeting. Accordingly, Mr. R.C Sharma andMr. R.K Bhargava would retire by rotation at the ensuing Annual General Meeting andbeing eligible offers themselves for re-appointment.

3. Board CommitteesThe Board of Directors of your company has in its meeting held on 28th July 2001constituted two committees namely; Shareholders/Investors Grievance Committee andAudit Committee in due compliance with Section 292A of the Companies Act, 1956 andClause 49 of the Listing Agreement. The Board has also constituted a RemunerationCommittee on 19th December 2001. Each of these committees is having its own charterduly approved by the Board.

(A) Audit Committee: The Audit Committee as reconstituted on 27th July 2004 comprises ofMr. R.K. Bhargava as its Chairman, Mr. J.M.L. Suri and Mr. B.L. Chadha, as its Membersand the Company Secretary of the Company as Secretary to the Committee. The AuditCommittee has been empowered, inter-alia, to carry out the following functions:

1. To lay down, review and revise the accounting policies of the company.2. To review the financial operations and performance of the company.3. To review the Quarterly, half-yearly and annual financial accounts and other financial

reports and statements, before placement thereof before the Board of Directors.4. To consider and constitute sub-committees, wherever necessary for carrying out

and/or monitoring the financial operations of the company.5. To appoint whenever deemed expedient, an independent internal auditor to carry

out continuous audit of the accounts and systems of the company, and also considerand/or review the appointment and removal of auditors of the company.

6. To consider and set up adequate internal control systems and review and monitorthe same in consultation with the internal auditors and the auditors of the companyand ensure compliance of the same.

7. To receive, discuss and consider the observations and reports of the internal auditorsand auditors of the company from time to time.

8. To review and investigate on the matter of financial nature, as and when deemednecessary and expedient.


6

9. To give report and/or recommendations to the Board on the matters concerningfinancial operations of the company.

10. To invite and summon any executive of the company and/or appoint experts,wherever necessary, and discuss with them the matters relating to the finance, auditand internal control system etc.

11. To obtain legal and professional advise wherever found necessary and expedient.12. To consider and act on any matters as or included under Clause 49 of the Listing

Agreement and/or as may be so included from time to time, whether provided herein above or not.

13. To deal with any other matters related and or incidental to the above or as may beassigned, in addition to the aforesaid, by the Board from time to time.

During the year under review four Audit Committee Meetings were held on 12th May,2009, 28th July 2009, 30th October, 2009 and 30th January 2010 and the same wereattended by all the committee members except the meeting held on 30th January 2010,which was not attended by Mr. B.L. Chadha.

(B) Shareholders / Investors Grievance Committee: The Shareholders / InvestorsGrievance Committee comprises of Mr. J. M. L. Suri as its Chairman, Mr. R. K. Bhargavaand Mr. Anil Goyal as its Members and the Company Secretary as Secretary to theCommittee. The Shareholders committee has been empowered, inter-alia, to carry outthe following functions: -1. To consider and approve the transfer, transmission and issue of fresh/duplicate

share certificates.2. To review the status of dematerialization of company’s shares and matters incidental

thereto.3. To review and monitor the approval to the transfers and transmissions made by the

Executive Director, under executive authority delegated to him from time to time.4. To monitor the matters of litigation related to shareholders and take decisions relating

thereto.5. To consider, review and monitor the matters related to the shareholders grievances.6. To consider and finalize the Report on Corporate Governance to be annexed with

the Annual Report of the company.7. To deal with any other matters related and/or incidental to the shareholders.The Mr. Anil Goyal, Managing Director has, however, been empowered to approvetransfers up to 10,000 Equity Shares under one folio at a time.During the year under review eleven Shareholders Committee Meetings were held on16th April, 2009, 12th May, 2009, 23rd June, 2009, 28th July, 2009, 5th September, 2009, 8th

October, 2009, 30th October, 2009, 3rd December, 2009, 16th January, 2010, 30th January,2010 and 18th February, 2010 and the same were attended by all the committee members.

(C) Remuneration Committee: The Board of Directors in their meeting held on 19th December2001 had constituted Remuneration Committee in terms of the provisions of the ListingAgreement. The Committee as reconstituted on 30th October 2004, comprises - Mr. R.K.Bhargava as its Chairman, Mr. B.L. Chadha and Mr. R.C. Sharma as its members. Thecommittee has been empowered, inter-alia, to consider and approve remuneration paid/payable to Managing Director and other managerial personnel as per the provisions ofthe Companies Act.A meeting of Remuneration Committee was held on 30th January, 2010 to revise/ increasethe remuneration of Mr. Anil Goyal, Managing Director w.e.f 1st April, 2010.

Remuneration paid during the year ended 31st March 2010 is as under:

Director Relationship with Sitting Fees Salary & Commission,other Director(s) Paid (Rs.) Perks (Rs.) if any

Mr. Lalit Bhasin N.A 50,000/- Nil Nil

Mr. J.M.L. Suri N.A. 1,12,000/- Nil Nil

Mr. R.K. Bhargava N.A. 1,14,000/- Nil Nil

Mr. B.L. Chadha N.A. 70, 000/- Nil Nil

Mr. R.C. Sharma N.A. 52,000/- Nil Nil

Mr. Anil Goyal N.A. NIL 32,94,000/- Nil

The non-executive directors are paid sitting fees for attending each meeting of the Board ofDirectors and the Committees constituted by the Board. The sitting fee for each meeting ofBoard of Directors and the Committee of Directors is fixed by the Board of Directors within theoverall ceiling laid down under the Companies Act.The aggregate value of salary and perquisites paid for the year ended March 31, 2010 to Mr.Anil Goyal, Managing Director is as follows:-Salary Rs 18,00,000/- and Perquisites Rs. 14,94,000/-Besides this he is entitled to Company’s contribution to Provident Fund, Superannuation Fundor Annuity Fund, to the extent not taxable and Gratuity and encashment of leave at the end oftenure.The notice period for the Managing Director is three months and there is no severance fee.

(D) Finance and Borrowings Committee: The Board of Directors in their meeting held on30th April 2003 constituted a Finance and Borrowings Committee. The Committeecomprises of Mr. JML Suri, Mr. R.K. Bhargava and Mr. Anil Goyal as its members. TheCommittee has been empowered, inter-alia, to carry out the following functions:a. To sanction and approve borrowal of funds from any financial institution, banks or

any body (ies) corporate, otherwise than on debentures not exceeding a sum of Rs.50 crores etc.

b. To approve creation of security for borrowings whether by way of a promissory note/post dated cheques or by way of a mortgage, charge, hypothecation of assets of thecompany, which shall include both movable and immovable assets of the companyor by any combination thereof;

c. To approve deeds and documents to be executed with the lenders (which term shallinclude financial institution, banks or any body(ies) corporate in connection with the

borrowings approved by the committee including loan agreement, deed ofhypothecation etc.;

d. To delegate power/ authority to any director/officer or any authorised person/signatory of the company to execute the documentation on behalf of the companyand to affixation of Common Seal of the company to any of the documents;

e. To approve opening of new bank account and / or closing of the existing bank account,as the case may be:

The presence of any two directors shall constitute a valid quorum for transaction of thebusiness of the committee. During the year under review no meeting of Finance andBorrowings Committee was held.

4. General Body Meetings(A) Details of Annual General Meetings:

(i) Location and time where the last 3 AGM’s were held

Year Type Location Date Time

2008-09 AGM GIA House, I.D.C.,Mehrauli Road,Opp. Sector 14,Gurgaon - 122 001(Haryana) 04.08.2009 10.30 A.M

2007-08 AGM GIA House, I.D.C.,Mehrauli Road,Opp. Sector 14,Gurgaon - 122 001(Haryana) 22.08.2008 10.00 A.M

2006-07 AGM GIA House, I.D.C.,Mehrauli Road,Opp. Sector 14,Gurgaon - 122 001(Haryana) 24.08.2007 10.00 A.M.

(ii) List of Special Resolutions passed in the previous 3 AGMs

S. No. Subject Matter AGM Reference andDate of passing

1. • Approval for increase/revision in 13th AGMremuneration of Mr. Anil Goyal, 22nd August, 2008Managing Director of the Company.

2 • No Special Resolution was passed. 12th AGM24th August, 2007

(iii) Whether Special Resolutions were put through postal ballot last year No

(iv) Are polls proposed to be conducted through postal ballot this year No

5. DISCLOSURESI. There have been no materially significant related party transactions, pecuniary

transactions or relationships other than those disclosed in the financial statementsfor the year ended 31st March 2010 (Refer Note No 9 of Schedule 12 forming part ofBalance Sheet and Profit & Loss Account). Accordingly, the same have not beenreproduced here.

II. No penalty has been imposed nor any strictures have been passed by the StockExchanges or SEBI or any other Statutory Authority on any matter related to CapitalMarkets during the last three years.

III. The Company has adopted a code of conduct applicable to all Directors and seniormanagement personnel of the Company and the same has been posted on thewebsite of the Company www.hbportfolio.com. For the year under review, all directorsand senior management personnel have confirmed their adherence to the provisionsof said code.

IV. None of the Company’s subsidiaries viz., HB Securities Ltd. and HB CorporateServices Ltd. is “Material Non-Listed Subsidiary” in terms of Clause 49 of the ListingAgreement. However, the financial results and the investments (as and when made)are placed before the Audit Committee of the Company regularly for review.

V. The Managing Director (CEO & CFO) of the Company has, as required underclause 49 of the Listing Agreement, given the certificate on the review of financialstatements, including Cash Flow, for the year ended 31st March, 2010 to the Boardof Directors.

VI. Risk Assessment and Minimization procedures are in existence and are reviewedperiodically.

VII. Whistle Blower policy a Non – Mandatory requirement has not been reviewed by theCompany.

VIII. All the mandatory requirements under Clause 49 (relating to Corporate Governancenorms) of the Listing Agreement are being adhered to / complied with. The NonMandatory requirement relating to Remuneration Committee has been adopted bythe Company.

6. MEANS OF COMMUNICATIONI. Quarterly Results: Dissemination through Stock Exchange, Company’s Website and

through publication in newspaper as required under Listing Agreement.II. Newspaper wherein results normally published: Business Standard Hindi & English.III. Website where displayed: www.hbportfolio.comIV. The website also displays official news releases and important communications

made to Stock Exchange. As and when any presentation is made to institutionalinvestors the same would be simultaneously uploaded in the Company’s Website.

HB PORTFOLIO LIMITEDHB PORTFOLIO LIMITED

7

7. GENERAL SHAREHOLDER INFORMATIONI. Ensuing Annual General Meeting Date, time and venue:

Location : GIA House, I.D.C., Mehrauli Road,Opp. Sector 14, Gurgaon (Haryana) – 122 001

Date : 20th August 2010Time : 11.00 A.M.

II. Financial Year : 31st March 2010III. Date of Book Closure : 17th August, 2010 to 20th August, 2010IV. Dividend Payment Date:

Subject to the approval of dividend by the shareholders, dividend warrants will be mailedto eligible members/ beneficial owner’s (in respect of shares held in dematerialized form)on or before 19th September, 2010.

V. Listing on Stock ExchangesThe Company’s equity shares are listed at Bombay Stock Exchange Limited, Mumbai

VI. Stock Code: The Company’s scrip code at BSE is 532333.VII. Market Price Data: The monthly High, Low price of the Company during each month in

the last financial year at BSE is as under:

Date High Low Close Volume

Apr-2009 29.45 20.00 28.05 24612

May-2009 41.50 26.65 41.50 27303

Jun-2009 44.70 32.15 33.60 32602

July-2009 40.50 29.00 35.45 33886

Aug-2009 39.75 30.40 38.20 42467

Sep-2009 52.00 36.00 45.75 87270

Oct-2009 49.80 42.00 43.00 127527

Nov-2009 48.00 41.80 43.35 170200

Dec-2009 60.00 40.00 56.30 252648

Jan-2010 58.90 45.10 47.25 71212

Feb-2010 52.45 39.25 42.00 60167

Mar-2010 46.90 39.15 45.30 73541

VIII. Performance in Broad based indices:

IX. Stock Performance-Absolute returns1 YEAR

HB Portfolio : 107.8%BSE Sensex : 77.01%BSE 200 : 89.60%

X. Registrar of Transfer Agents:RCMC Share Registry Pvt. Ltd.B-106, Sector-2, Noida - 201301Phones: - 4015880. Fax: - 2444346.E-mail:- [email protected].

XI. Share Transfer SystemShare Transfers are registered and returned within a period of 30 days from the date ofreceipt, if the documents are clear in all respects. The authority for transfer of shares hasbeen delegated to the Managing Director for transfer of shares up to a fixed numberbeyond which the matters are placed before the shareholders Committee, which meetsas and when required. As reported by Company’s RTA all valid requests for transferduring the year under review were transferred within stipulated time limit.

XII. The status of Investor’s Grievance Redressal from 1.04.2009 to 31.03.2010 is as under:

Nature of Grievance Received Cleared

Relating to Dividend 37 37

Relating to transfer, transmission, exchange etc. 22 22

Non Receipt of Annual Report 1 1

TOTAL 60 60

HB PORTFOLIO LIMITEDXIII. The distribution of shareholdings of the company as on 31st March 2010 is as under:

Shareholders ShareholdingNo. of Shares

Nos. % to total Shares % to totalUp to 5,000 78396 99.62 3300877 27.525,001-10,000 168 0.21 122375 1.0210,001-20,000 57 0.07 77401 0.6520,001-30,000 19 0.02 45101 0.3830,001-40,000 12 0.02 40788 0.3440,001-50,000 9 0.01 42365 0.3550,001-1,00,000 7 0.01 54400 0.451,00,001 and above 27 0.03 8309022 69.29TOTAL 78695 100.00 11992329 100.00

The category-wise distribution of Shareholders is as follows:

Category No of Shares held % of Shareholding

A. Promoters Holding

• Indian Promoter 73,30,332 61.13

• Foreign Promoters 0 0.00

B. Public Shareholding (Institutions)

• Mutual Funds and UTI 1,17,206 0.98

• Banks/Financial Institutions 75,525 0.63

• Foreign Institutional Investors 0 0.00

C. Public Shareholding (Non Institutions)

• Bodies Corporate 3,19,243 2.66

• NRIs 91,507 0.76

• Indian Public 40,53,431 33.80

• Clearing Member/ Intermediary 5,085 0.04

Total 1,19,92,329 100.00

XIV. Dematerialization of Share and LiquidityThe trading in the Equity Shares of the Company has come under compulsorydematerialization w.e.f. 26th February 2001 in terms of the SEBI-Notification No. SMDRP/POLICY/CIR - 23 / 2000 dated 29th May 2000.The company has joined the National Securities Depository Ltd. (NSDL) and CentralDepository Services (India) Ltd. (CDSL). The ISIN No. allotted to the Company isINE638B01017. As at 31st March 2010, 97,10,580 Equity Shares of the Company areheld in dematerialized form constituting 80.97% of the Company’s subscribed share capital.

XV. The Company has no outstanding GDRs/ ADRs/ Warrants or any other instrumentsconvertible into equity.

XVI. Address for CorrespondenceHB Portfolio LimitedPlot No-31, Echelon Institutional Area,Sector-32, Gurgaon – 122 001.

MANAGING DIRECTOR’S DECLARATION ON CODE OF CONDUCTThe Members ofHB Portfolio LimitedI, Anil Goyal, Managing Director (As Chief Executive Officer and as Chief Financial Officer) of theCompany declare that all the members of the Board of Directors; and Senior Management of theCompany have affirmed compliance with the Code of Conduct.

For HB Portfolio Limited

Anil GoyalDate : 12th May 2010 Managing Director

AUDITOR’S CERTIFICATE ON CORPORATE GOVERNANCETo the Members ofHB Portfolio LimitedGurgaon.We have examined the compliance of conditions of Corporate Governance by HB PORTFOLIOLIMITED for the year ended on 31st March 2010, as stipulated in Clause 49 of the ListingAgreement of the Company with the Stock Exchanges.The compliance of conditions of Corporate Governance is the responsibility of the management.Our examination has been limited to a review of the procedures and implementation thereof,adopted by the Company for ensuring the compliance with the conditions of CorporateGovernance as stipulated in the said clause. It is neither an audit nor an expression of opinionon the financial statements of the Company.In our opinion and to the best of our information and according to the explanations given to us,and based on the representations made by the Directors and the management, we certify thatthe Company has complied with the conditions of Corporate Governance as stipulated in Clause49 of the above mentioned Listing Agreement.We further state that such compliance is neither an assurance as to the future viability of theCompany nor the efficiency or effectiveness with which the management has conducted theaffairs of the Company.

For P. BHOLUSARIA & CO.Chartered Accountants

FRN : 000468N

(AMIT GOEL)Place : Gurgaon PARTNERDated : 12th May, 2010 (M. No. 92648)


8


AUDITOR’S REPORTThe members ofHB PORTFOLIO LIMITED

We have audited the attached Balance Sheet of M/s. HB PORTFOLIO LIMITED as at 31st

March, 2010 and also the Profit and Loss Account and Cash flow Statement for year ended onthat date annexed thereto. These financial statements are the responsibility of the company’sManagement .Our responsibility is to express an opinion on these financial statements basedon our audit.

We conducted our audit in accordance with auditing standards generally accepted in India.Those standards require that we plan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free from material misstatements. An audit alsoincludes examining, on a test basis, evidence supporting the amounts and disclosures in thefinancial statement presentation. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating theoverall financial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.

1. As required by Companies (Auditor’s Report) Order, 2003 (as amended) issued by theCentral Government of India in terms of section 227 (4A) of the Companies Act, 1956,we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the saidorder to the extent applicable.

2. Further to our comments in the Annexure referred to in paragraph 1 above, we reportthat: -a) We have obtained all the information and explanations which to the best of our

knowledge and belief were necessary for the purpose of our audit.b) In our opinion proper books of account as required by law have been kept by the

company so far, as appears from our examination of the said books;c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with

by this report are in agreement with the books of account;d) In our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow Statement

comply with the accounting Standards referred to in Sub Section (3C) of section211 of the Companies Act, 1956.

e) As informed and explained to us, none of the directors of the company is disqualifiedas on 31st March, 2010 from being appointed as director in terms of clause (g) ofsub-section (1) of Section 274 of the Companies Act, 1956.

f) In our opinion and to the best of our information and according to the explanationsgiven to us, the said accounts read together with significant accounting policiesand notes thereon, particularly note no. 5 and note no. 6 of Schedule 12, give theinformation required by the Companies Act, 1956 in the manner so required andgive a true and fair view in conformity with the accounting principles generallyaccepted in India :-

a) In the case of the Balance Sheet of the State of Affairs of the Company as at 31st

March, 2010 andb) In the case of the Profit & Loss account of the Profit for the year ended on that date andc) In the case of Cash Flow Statement, of the Cash Flow for the year ended on that date.


FRN : 000468N

Place : Gurgaon (AMIT GOEL)Dated : 12th May, 2010 PARTNER

(M. No. 92648)

ANNEXURE TO AUDITORS’ REPORTRe. HB Portfolio Ltd.Referred to in Paragraph 1 of our report of even date for the year ended 31st March, 2010

1. a. The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

b. As explained to us, the fixed assets have been physically verified by the managementduring the year in a phased periodical manner, which in our opinion is reasonable,having regard to the size of the company and nature of its assets. No materialdiscrepancies were noticed on such physical verification

c. In our opinion, the Company has not disposed of substantial part of fixed assetsduring the year that would affect going concern status of the Company.

2. a. As explained to us, the company does not have any inventories. The Shares/securities held as investments have been physically verified by the management atreasonable intervals during the year.

b. In our opinion and according to the information and explanations given to us, theprocedures of physical verification of Shares/securities followed by the managementare reasonable and adequate in relation to the size of the Company and the natureof its business and activities.

c. The Company has maintained proper records of investments. As explained to us,no material discrepancies have been noticed on physical verification of investmentsas compared to the book records.

3. a) The Company has granted unsecured loans of Rs.18,00,00,000/- during the earlieryears to two companies covered in the register maintained under Section 301 ofthe Companies Act, 1956. The year end balance of such loans including interestreceivable was Rs.18,74,43,125/- and the maximum amount outstanding duringthe year was Rs.18,75,00,824/-

b) In our opinion and according to the information and explanations give to us, therate of interest and other terms and conditions of such loans are prima facie, notprejudicial to the interest of the company.

c) The loanee Companies are regular in payment of interest and principal as stipulated.d) There is no overdue amount receivable.e) As informed to us, the company has not taken any loans, secured or unsecured

from companies, firms or other parties covered in the register maintained underSection 301 of the Companies Act, 1956. Accordingly, the provisions of Clause4(iii)(e,f and g) of the Companies (Auditor’s Report) order, 2003 are not applicableto the company.

4. In our opinion and according to the information and explanations given to us, there isadequate internal control system commensurate with the size of the Company and thenature of its business for the purchases of Investments and fixed assets and sale ofgoods (Investments). During the year, there was no Sale of Services. During the courseof our audit, we have neither come across nor we have been informed of any instance ofmajor weakness in the aforesaid internal control system.

5. a. In our opinion and according to the information and explanations given to us, theparticulars of contracts or arrangements referred to in Section 301 of the CompaniesAct, 1956 have been entered into in the register required to be maintained underthat section.

b. In our opinion and according to the information and explanations given to us, thetransactions made in pursuance of such contracts or arrangements have been madeat prices which are reasonable having regard to the market price prevailing at therelevant time.

6. The Company has not accepted any deposits from the public.

7. In our opinion the internal audit system of the Company is commensurate with its sizeand nature of its business.

8. The nature of the company’s business/activities is such that Clause 4(viii) of theCompanies (Auditor’s Report) Order 2003 regarding maintenance of Cost Records is notapplicable to the company.

9. a. According to the records of the Company, undisputed statutory dues includingProvident Fund, Income Tax, Wealth Tax, cess and other statutory dues asapplicable have been generally regularly deposited by the company during theyear with the appropriate authorities except for non payment of installments ofadvance tax. According to the information and explanations given to us, noundisputed amounts payable in respect of the aforesaid dues were outstanding asat 31st March, 2010 for a period of more than six months from the date of becomingpayable except for Rs. 59,85,000/- on account of Advance Tax instalments for Juneand September, 2009 quarter.

b. According to the records of the Company, there are no disputed statutory dues thathave not been deposited on account of matters pending before appropriateauthorities except income tax demand of Rs. 20,77,254/- for Assessment Year 2005-06 and Rs. 9,27,540/- for Assessment Year 2007-08 for which the company hasfiled appeal before Commissioner of Income Tax (Appeal) and has also filedrectification application before the Assessing Officer.

10. The company does not have accumulated losses. The company has not incurred cashlosses during the financial year covered by our audit or in the immediately precedingfinancial year.

11. Based on our audit procedures and according to the information and explanation givento us, we are of the opinion that the Company has not defaulted in repayment of dues tofinancial institutions, banks or debenture holders.

12. In our opinion and according to the information and explanation given to us, no loansand advances have been granted by the Company on the basis of security by way ofpledge of shares, debentures and other securities.

13. In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society.Therefore, clause 4(xiii) of the Companies (Auditor’s Report) order 2003 is not applicableto the company.

14. The Company has maintained proper records of transactions and contracts in respect oftrading (investments) in shares, securities and other investments and timely entries havebeen made therein. All shares, securities and other investments have been held by theCompany in its own name except for shares given as margin/pledged or bad deliveriespending for rectification.

15. The Company has given guarantees for loans taken by others from banks or financialinstitutions. According to the information and explanations given to us, we are of theopinion that the other terms and conditions thereof are not primafacie prejudicial to theinterests of the Company.

16. The Company has not raised any term loans during the year.17. According to the information and explanations given to us and on an overall examination

of the Balance Sheet of the Company, we report that the company has not raised anyfunds during the year either on long term or on short term basis.

18. During the year, the Company has not made any preferential allotment of shares to partiesand companies covered in the Register maintained under Section 301 of the CompaniesAct, 1956.

19. No debentures have been issued by the company and hence the question of creatingsecurities in respect thereof does not arise.

20. The Company has not raised any money by way of public issue during the year.21. In our opinion and according to the information and explanation given to us, no fraud on

or by the Company has been noticed or reported during the year.


FRN : 000468N

Place : Gurgaon (AMIT GOEL)Dated : 12th May, 2010 PARTNER

(M. No. 92648)

9

BALANCE SHEET AS AT 31ST MARCH, 2010As at As at

Particulars Schedule 31.03.2010 31.03.2009(In Rs.) (In Rs.)

SOURCES OF FUNDSShareholders’ FundsShare Capital 1 122659589 122659589Reserves & Surplus 2 987136229 1109795818 930335360 1052994949

------------------------------------------------ ------------------------------------------------LOAN FUNDS

253720 732479Secured Loans 3

--------------------------------------------------- ---------------------------------------------------Total 1110049538 1053727428

=========================== ===========================APPLICATION OF FUNDSFixed Assets 4Gross Block 3897573 5530274Less: Depreciation 1879759 2605770

--------------------------------------------------- ---------------------------------------------------Net Block 2017814 2924504

--------------------------------------------------- ---------------------------------------------------Investments 5 836204186 848045621Share Application Money 10000000 10000000

--------------------------------------------------- ---------------------------------------------------846204186 858045621

--------------------------------------------------- ---------------------------------------------------Deferred Tax Assets/(Net) (Refer Note No 7) 107764 442192CURRENT ASSETS,LOANS & ADVANCES 6a) Cash & Bank Balances 86828576 11050444b) Loans and Advances 260920219 248572715

--------------------------------------------------- ---------------------------------------------------347748795 259623159

Less : CURRENTLIABILITIES & PROVISIONS 7a) Liabilities 8242398 6124306b) Provisions 77786623 61183742

--------------------------------------------------- ---------------------------------------------------86029021 67308048

--------------------------------------------------- ---------------------------------------------------Net Current Assets 261719774 192315111

--------------------------------------------------- ---------------------------------------------------Total 1110049538 1053727428

=========================== ===========================Significant Accounting Policies 11Notes on Accounts 12As per our Report of even dateFor P. Bholusaria & Co. For and on behalf of the BoardChartered AccountantsFRN : 000468NAmit Goel Nishu Tomar Anil Goyal J.M.L. SuriPartner Company Secretary Managing Director DirectorM.No. 92648Place : GurgaonDate : 12th May, 2010


As at As atParticulars 31.03.2010 31.03.2009

(In Rs.) (In Rs.)

SCHEDULE ‘1’ : SHARE CAPITALAUTHORISED2,00,00,000 Equity Shares of Rs. 10/- each. 200000000 2000000001,00,00,000 Redeemable Preference Shares ofRs.10/-each. 100000000 100000000

--------------------------------------------------- ---------------------------------------------------300000000 300000000

=========================== ===========================ISSUED12821630 Equity Shares of Rs10/- each 128216300 128216300

--------------------------------------------------- ---------------------------------------------------SUBSCRIBED AND PAIDUP1,19,92,329 Equity Shares of Rs 10/- each fully paid up 119923290 119923290Add:- Forfeited Shares(Amount originally paid upon 829301 Shares) 2736299 2736299

--------------------------------------------------- ---------------------------------------------------Total 122659589 122659589

=========================== ===========================SCHEDULE ‘2’: RESERVE AND SURPLUSA. SHARE PREMIUM ACCOUNT

As per last Account 499736601 499736601--------------------------------------------------- ---------------------------------------------------

B. GENERAL RESERVE ACCOUNTAs per Last Account 229252875 199130449Add : Effect pertaining to earlier period on account of 0 122426Accounting Standard-15(Refer note no. 16(a) )Add : Transferred from Profit & Loss account 55000000 284252875 30000000 229252875

--------------------------------------------------- ---------------------------------------------------C. PROFIT & LOSS ACCOUNT 80202125 95355072

(As per annexed account)D. STATUTORY RESERVE FUND *

Opening Balance 105990812 91685662Add : Transferred from Profit & Loss Account 16953816 122944628 14305150 105990812

--------------------------------------------------- --------------------------------------------------- --------------------------------------------------- ---------------------------------------------------Total 987136229 930335360

=========================== ===========================* Created Pursuant to The Reserve Bank Of India (Amendment) Act,1997.

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2010Current Year Previous Year

Particulars Schedule 31.03.2010 31.03.2009(in Rs.) (in Rs.)

INCOMEIncome from Operations and Other Income 8 113362430 90292870

--------------------------------------------------- ---------------------------------------------------Total 113362430 90292870

EXPENDITUREa) Administrative & Other Expenses 9 9702200 9807705b) Interest & Financial Charges 10 40301 77508c) Depreciation 319820 457937

--------------------------------------------------- ---------------------------------------------------Total 10062321 10343150

--------------------------------------------------- ---------------------------------------------------Profit for the year before Taxation 103300109 79949720Provision For TaxationCurrent 18500000 8700000Deferred Tax Charge / (Credit) 334428 (272569)Fringe benefit Tax 0 150000Tax Adjustment for earlier year 6703 1114

--------------------------------------------------- ---------------------------------------------------Profit for the year after Taxation andbefore exceptional items 84458978 71371175Exceptional Items :-Provision for Sub -standard and doubtfulAssets written back 310101 154574

--------------------------------------------------- ---------------------------------------------------Profit for the year after exceptional items 84769079 71525749AppropriationsTransferred to Statutory Reserve Fund 16953816 14305150Transferred to General Reserve 55000000 30000000Proposed Dividend 23984658 23984658Tax on Dividend 3983552 4076193Residual Dividend of Last year and Tax thereon 0 181Balance brought forward From last Year 95355072 96195505

--------------------------------------------------- ---------------------------------------------------Balance carried forward to Balance Sheet 80202125 95355072

=========================== ===========================Basic Earning Per Share– Excluding Exceptional Items 7.04 5.95– Including Exceptional Items 7.07 5.96Diluted Earning Per Share– Excluding Exceptional Items 7.04 5.95– Including Exceptional Items 7.07 5.96Significant Accounting Policies 11Notes on Accounts 12As per our Report of even dateFor P. Bholusaria & Co. For and on behalf of the BoardChartered AccountantsFRN : 000468NAmit Goel Nishu Tomar Anil Goyal J.M.L. SuriPartner Company Secretary Managing Director DirectorM.No. 92648Place : GurgaonDate : 12th May, 2010

10


(In Rs.) (In Rs.)

SCHEDULE ‘3’: SECURED LOANSLoan from Banks (Secured by hypotheciation of vehicles financed) 253720 732479(Repayable within a year Rs 2,53,720/- Previous year Rs. 4,78,759/-)

--------------------------------------------------- ---------------------------------------------------Total 253720 732479

========================== ===========================

SCHEDULE ‘4’ : FIXED ASSETS (AS ON 31.03.2010) (Amount in Rs.)

G R O S S B L O C K D E P R E C I A T I O N N E T B L O C K

Assets As at Additions Deletion As at Upto For the Adjustments Total Upto As at As at01.04.2009 31.03.2010 31.03.2009 Year 31.03.2010 31.03.2010 30.03.2009

Data ProcessingMachinery 900202 8050 — 908252 760970 32656 — 793626 114626 139232Office Equipments 278276 — — 278276 149276 13218 — 162494 115782 129000Furniture & Fixture 21643 — — 21643 13534 1370 — 14904 6739 8109Vehicles 4330153 — 1640751 2689402 1681990 272576 1045831 908735 1780667 2648163

TOTAL 5530274 8050 1640751 3897573 2605770 319820 1045831 1879759 2017814 2924504

PREVIOUS YEAR 5530274 0 0 5530274 2147833 457937 0 2605770 2924504 3382441

SCHEDULE ‘5’ : INVESTMENTS - LONG TERMFace As at As at

Name of the Company Value 31.03.2010 31.03.2009(In Rs.) Qty.(Nos.) Amount (In Rs.) Qty.(Nos.) Amount (In Rs.)

(A) QUOTED (TRADE) FULLY PAID-UP EQUITY SHARECeat Ltd. 10 0 0 17000 688212Crompton Greaves Limited 2 179824 757477 240657 1766322CHI Investments Ltd 10 17027 689305 17027 689305Federal Mugul(Gotze India) Ltd 10 60730 7786214 116372 14920094H S I L Ltd 2 62741 1166983 62741 1166983Jai corp Ltd 1 3000 3052216 3000 3052216Jaiprakash Associates Ltd. 2 11296657 377499570 6920085 220504533Jai Prakash Hydro Ltd 10 23762 1734175 23762 1734175Jay Pee Hotels Ltd 10 0 0 811020 164280970Mawana Sugar Limited 10 0 0 7957 1594311NIIT LTD 2 0 0 5988 960375PBA Infrastructure Ltd. 10 6940 1103494 31756 5049362*RRB Securities Ltd. 10 100000 10000000 100000 10000000JSW Steel Ltd 10 9000 4866090 46409 25092261Tata Tea Ltd. 10 100 67814 100 67814Uflex Ltd 10 16939 2777793 16939 2777793Unitech Ltd. 2 917600 113822628 367600 73751660Ultramarine & Pigments Ltd. 2 100000 1920047 100000 1920047

--------------------------------------------------- --------------------------------------------------- --------------------------------------------------- ---------------------------------------------------Total - A 12794320 527243805 8888413 530016433

--------------------------------------------------- --------------------------------------------------- --------------------------------------------------- ---------------------------------------------------(B) IN MUTUAL FUNDS (NON-TRADE),UNQUOTED

Taurus Mutual Fund-Libra Tax Shield-96 10 400000 3836000 400000 3836000SBI Multipliers 10 500 5220 500 5220Taurus Mutual Fund - Bonanza Exclusive Growth Scheme 10 2232055 33736791 2832055 42805598INVESTMENTS AS SPONSOR IN TAURUS MUTUAL FUNDCORPUS — 200000 — 200000

--------------------------------------------------- --------------------------------------------------- --------------------------------------------------- ---------------------------------------------------Total - B 2632555 37778011 3232555 46846818

--------------------------------------------------- --------------------------------------------------- --------------------------------------------------- ---------------------------------------------------(C) UNQUOTED (NON-TRADE)FULLY PAID-UP EQUITY SHARES

Taurus Investment Trust Co. Ltd. 10 49040 498999 49040 498999HB Insurance Advisors Ltd. 10 20010 200100 20010 200100Taurus Asset Management Co. Ltd. 10 6275000 58140000 6275000 58140000Har Sai Investments Ltd. 10 200000 2000000 200000 2000000Pisces Portfolio Pvt Ltd. 10 3189980 69899800 3189980 69899800Kesoram Textiles Ltd. 10 49699 357071 49699 357071IN WHOLLY OWNED SUBSIDIARY COMPANIESHB Securities Ltd. 10 7207570 89075700 7207570 89075700HB Corporate Services Ltd. 10 4251070 51010700 4251070 51010700

--------------------------------------------------- --------------------------------------------------- --------------------------------------------------- ---------------------------------------------------Total - C 21242369 271182370 21242369 271182370

--------------------------------------------------- --------------------------------------------------- --------------------------------------------------- ---------------------------------------------------Total- A+B+C 36669244 836204186 33363337 848045621

=========================== =========================== =========================== ===========================Notes :a) Market Price of Quoted Investments (Other than Mutual Fund Units) Rs 1,84,77,93,280 /- (Previous Year Rs.72,24,65,159/-) and cost of Quoted investments Rs 52,72,43,805./-

(Previous Year Rs. 53,00,16,433/-)b) Net asset value of Investments in units of Mutual Fund Rs 9,98,89,044./-(Previous year Rs 6,91,75,063/-) and cost of units of Mutual fund Rs 3,77,78,011./-( Previous Year Rs.

4,68,46,818/-)c) Market Price of Investments Listed but not Quoted have been taken at Cost.d) Aggregate cost of unquoted investments (other than units of Mutual Funds) Rs 27,11,82,370./- ( Previous year Rs. 27,11,82,370/- )e) Investments costing to Rs.1,79,78,144/- (Previous year Rs. 3,18,13,478/-) have been given as Margin or pledged.

* Company under the same management


11


(In Rs.) (In Rs.)

SCHEDULE ‘6’ : CURRENT ASSETS, LOANS AND ADVANCESA. CURRENT ASSETS

Cash & Bank Balances– Cash in hand 231927 221927

(As certified by the Management)Balance with Scheduled Banks

– In Current Account 77248065 5555353– In Dividend Account 7243199 5273164– In FDR Accounts (Pledged with Bank) 2100000 0– Interest Accured on FDR 5385 0

--------------------------------------------------- ---------------------------------------------------Total (A) 86828576 11050444

--------------------------------------------------- ---------------------------------------------------B. LOANS AND ADVANCES

(Unsecured, considered good unless Otherwise stated )a) Loans

– * Considered Good-Standard 187443125 183819749( Including interest receivable Rs 74,43,125 /-Previous Year Rs.38,19,749/-)

b) Advances Recoverable in cash or in kind orfor value to be received.– Considered good -Standard 212172 699379– Considered Doubtful 1971221 2281322

c) Advance Tax & Tax Deducted at Source 36785261 27225545d) Security Deposits With Govt.

Department and others** 34508440 34546720--------------------------------------------------- ---------------------------------------------------

Total (B) 260920219 248572715--------------------------------------------------- ---------------------------------------------------

Total (A+B) 347748795 259623159=========================== ===========================

* Include Rs. 9,48,46,686/- (Previous Year Rs. 9,20,59,575/-) Due from HB Estate DevelopersLtd, and Rs. 9,25,96,439/-(Previous Year Rs. 9,17,60,174/-) From HB Stockholdings LtdCompanies under the same management.Maximum amount outstanding during the yearRs. 9,48,46,686/-(Previous year Rs. 9,21,05,343/-)and Rs. 9,26,54,138/-(Previous YearRs. 9,17,60,174/-) respectively

** Include Rs. 3,45,00,000/- (Previous Year Rs. 3,45,00,000/-) Due from HB Estate DevelopersLtd, a Company under the same management. Maximum amount outstanding during theyear Rs. 3,45,00,000/-(Previous Year Rs,3,45,00,000/-)

SCHEDULE ‘7’: CURRENT LIABILITIES AND PROVISIONSA. CURRENT LIABILITIES

a) Sundry Creditors– Due to Micro Enterprises and Small Enterprises 0 0– Others 869224 689654

b) Unclaimed Dividend* 7243199 5273164c) Other liabilities 129975 161488

--------------------------------------------------- ---------------------------------------------------Total (A) 8242398 6124306

--------------------------------------------------- ---------------------------------------------------* There is no amount due and outstanding to be credited to Investor Education & Protection

FundB. PROVISIONS

a) For Income tax 47200000 28700000b) For Leave encashment 560541 1991569c) For Gratuity 86651 0d) For Doubtful Debts and Advances 1971221 2281322e) For Proposed Dividend 23984658 23984658f) For Tax on dividend 3983552 4076193g) For Fringe Benefit Tax 0 150000

--------------------------------------------------- ---------------------------------------------------Total (B) 77786623 61183742

--------------------------------------------------- ---------------------------------------------------Total (A+B) 86029021 67308048

=========================== ===========================

Current Year Previous YearParticulars 31.03.2010 31.03.2009

(In Rs.) (In Rs.)

SCHEDULE ‘8’ : INCOME FROM OPERATIONS AND OTHER INCOMEGain on sale of Long Term Investments (Net) 79786425 67099024Dividend Income (Gross)– On Long Term (Trade) Investments 10135099 9100084– On Short Term (Trade) Investments

in Mutual Fund 901264 11036363 841054 9941138----------------------------------------- --------------------------------------

Interest Income On Loans 22500001 13075891(Tax Deducted at Source Rs 29,60,173/-Previous Year Rs. 29,62,997/-)Interest Income On FDR 39641 0(Tax Deducted at Source Rs 3,964/-Previous Year Rs. Nil/-)Other Income 0 176817

------------------------------------------ -------------------------------------------Total 113362430 90292870

====================== ========================

For the For theyear ended year ended

Particulars 31.03.2010 31.03.2009(In Rs.) (In Rs.)

SCHEDULE ‘9’ : ADMINISTRATIVE & OTHER EXPENSESSalaries & Benefits 1008342 1328763Contribution to Provident & Gratuity funds 643721 43184Managing Director’s remuneration 3780000 3540000Travelling & Conveyance 169824 208459Communication 853799 809373Repair & Maintenance – Others 9705 90909Printing & Stationery 346614 338772Legal & Professional 460416 627286Electricity 5555 66444Listing Fee 33090 33251Staff Welfare 13524 17920Advertisement 71518 40511Vehicle Running and Maintenance 167465 271564Director Sitting fees 398000 410000Insurance 53605 84376Rent & Facilities 949944 1422405Depository and Custodial 53482 67733Loss on sale of Fixed Assets 369920 0Miscellaneous 184071 292314Auditors Remuneration– Audit fees 66180 66180– Tax Audit fees 16545 16545– Others 46880 129605 31716 114441

----------------------------------------- ------------------------------------------ ---------------------------------- -------------------------------------Total 9702200 9807705

====================== =====================

SCHEDULE ‘10’ : INTEREST & FINANCIAL CHARGESInterest to Banks on Vehicle Loans 40301 77508

-------------------------------------------- -------------------------------------------Total 40301 77508

======================= ========================

SCHEDULE - 11 : SIGNIFICANT ACCOUNTING POLICIESAnnexed to and forming part of the Statement of Accounts for the year ended 31st March, 2010.A. BASIS OF PREPRATION OF FINANCIAL STATEMENTS :

(1) The Financial Statements have been prepared under the Historical Cost Conventionmethod in accordance with the generally accepted Accounting Principles and theAccounting Standards referred to in Section 211(3C) of the Companies Act, 1956.

(2) USE OF ESTIMATES : The preparation of financial statements in conformity withgenerally accepted accounting principles (GAAP) requires Management to makeestimates and assumptions that affect the reported amounts of assets and liabilitiesand the disclosures of contingent liabilities on the date of financial statements andreported amounts of revenue and expenses for that year. Actual results could differfrom these estimates. Any revision to accounting estimates is recognizedprospectively in current and future periods.

B. REVENUE RECOGNITION :(1) All Income & Expenditure are accounted for on accrual basis except in case of

uncertainties where accrual is postponed upto resolution of uncertainty.(2) Investments are capitalized at cost inclusive of brokerage, Service Tax, education

cess, Transfer stamps and Security Transaction Tax. Depository Charges and othermiscellaneous transaction charges which due to practical difficulty cannot beidentified/allocated to a particular transaction are charged directly to the Profit andLoss Account.

C. FIXED ASSETS : Fixed Assets are stated at cost less depreciation.D. DEPRECIATION : Depreciation is provided on Straight Line Method at the rate and in

the manner specified in Schedule XIV to the Companies Act, 1956.E. INVESTMENTS : Long term Investments are stated at cost. Provision for diminution in

the value of Long Term Investments is made only if such a decline is other than temporary.F. EMPLOYEE BENEFITS : Employee Benefits are recognized/accounted for on the

basis of revised AS-15 detailed as under :-a) Short Term Employee benefits are recognized as expense at the undiscounted

amount in the Profit & Loss account of the year in which they are incurred.b) Employee benefits under defined contribution plans comprise of contribution to

Provident Fund and Superannuation. Contributions to Provident Fund are depositedwith appropriate authorities and charged to Profit & Loss account. Contribution toSuperannuation are funded with Life Insurance Corporation of India.

c) Employee Benefits under defined benefit plans comprise of gratuity and leaveencashment which are accounted for as at the year end based on actuarial valuationby following the Projected Unit Credit (PUC) method. Liability for gratuity is fundedwith Life Insurance Corporation of India.

d) Termination benefits are recognized as an Expense as and when incurred.e) The actuarial gains and losses arising during the year are recognized in the Profit &

Loss account of the year without resorting to any amortization.G. TAXATION : Tax expenses for the year comprise of current tax and deferred tax charge

or credit. The deferred tax asset and deferred tax liability is calculated by applying taxrates and tax laws that have been enacted or substantially enacted by the Balance Sheetdate. Deferred tax assets arising mainly on account of brought forward losses andunabsorbed depreciation under tax laws are recognised, only if there is a virtual certainlyof its realisation. Other deferred tax assets are recognised only to the extent there is areasonable certainty of realisation in future. Deferred tax assets/liabilities are reviewedat each balance sheet date based on developments during the year, further futureexpectations and available case laws to reassess realisation/liabilities.

H. IMPAIRMENT OF FIXED ASSETS : Consideration is given at each balance sheet dateto determine whether there is any indication of impairment of the carrying amount of the


12

Company’s Assets. If any indication exists, an asset’s recoverable amount is estimated.An impairment loss is recognized whenever the carrying amount of an asset exceeds itsrecoverable amount. The recoverable amount is the greater of the net selling price andvalue in use. In assessing value in use, the estimated future cash flows are discounted totheir present value based on an appropriate discount factor.Reversal of impairment losses recognized in prior years is recorded when there is anindication that the impairment losses recognized for the asset no longer exist or havedecreased. However, the increase in carrying amount of an asset due to reversal of animpairment loss is recognized to the extent it does not exceed the carrying amount thatwould have been determined (net of depreciation) had no impairment loss beenrecognized for the assets in prior years.

I. CONTINGENCIES : The company creates a provision when there is present obligationas a result of a past event that probably requires an outflow of resources and a reliableestimate can be made of the amount of the obligation. A disclosure for a contingentliability is made when there is a possible obligation or a present obligation that may, butprobably will not, require an outflow of resources. When there is a possible obligation ora present obligation in respect of which the likelihood of outflow of resources is remote,no provision or disclosure is made.

SCHEDULE - 12 : NOTES ON ACCOUNTSAnnexed to and forming part of Statement of Accounts for the year ended 31st March, 20101. Particulars of Managerial Remuneration are as under: -

Particulars Current Year (Rs.) Previous Year (Rs.)

a) Salary 18,00,000 18,00,000

b) Contribution to Provident andSuperannuation Fund 4,86,000 4,86,000

c) House Rent 10,80,000 10,80,000

d) Medical 30,000 30,000

e) Children Education Allowance 1,44,000 1,44,000

f) L.T.A. 2,40,000 Nil

Total 37,80,000 35,40,000

Note : The figures does not include gratuity and leave encashment as valuation forsame is available for company as a whole.

2. Debtors and Advances Includes:a) Due from Subsidiary Company HB Corporate Services Ltd. Rs.12,525/-

(Previous year Rs. Nil ) Maximum Balance outstanding at any time during the yearRs. 20,663/- (Previous year Rs.8,138/-).

b) Due from Subsidiary Company HB Securities Ltd. Rs.Nil (Previous year Rs.Nil)Maximum Balance outstanding at any time during the year Rs.2,00,00,000/-(Previous year Rs. 9,50,00,000/-)

3. a) Contingent liability in respect of Guarantee issued on behalf of subsidiary companyHB Securities Ltd. Rs.8 Crores (previous year Rs. 8 Crores)

b) Contingent liability in respect of Income Tax demand Rs.36,23,154/- (Previous yearRs. 20,77,254/-) against which the company has preferred appeal before theappropriate authorities and has also filed rectification application before theAssessing Officer. There are apparent calculation mistakes in the working ofAssessing Officer and once the same is rectified, there will be no demandoutstanding.

4. In the opinion of management, current assets, loans and advances are approximately ofthe value stated, if realised, in the ordinary course of business.

5. In the opinion of management, no provision is required to be made for diminutionamounting to Rs.5,06,85,601/- (Previous year Rs.19,88,63,130/-) in the value of some ofthe long-term investments, as the same is considered to be temporary.

6. The company made an application for issue of Certificate of Registration with ReserveBank of India (RBI) under Section 45IA of the Reserve Bank of India Act, 1934 so as tocommence and carry on the business of Non-Banking Financial Institution. The application

of the company was, however, returned by RBI vide its letter dated December 24, 2004with an advice to resubmit the application on the completion of SEBI’s enquiry againstthe group companies.

In an Appeal filed by the company before the Appellate Authority (in the Ministry of Finance)against the aforesaid decision of RBI, the Appellate Authority vide its Order datedSeptember 25, 2006, directed the company to resubmit the application along with thelatest balance sheets and other relevant details within 30 days to RBI and RBI to thereafterdecide the case by obtaining necessary response from SEBI within 3 months from thedate of receipt of the Order. The company has resubmitted its application to RBI’s RegionalOffice at New Delhi on 23rd October 2006 as per the aforesaid directions of the AppellateAuthority. Additional details / documents / clarifications as required by RBI from time totime have been submitted. The decision of RBI is awaited. The management is confidentof receiving the Certificate of Registration.

7. Breakup of Deferred Tax Asset/Liability is as follows: -

Particulars As on As on31.03.2010 31.03.2009

a) Deferred tax asset– Expenses allowable u/s 43B of

Income Tax Act. 2,14,997/- 6,76,934/-

b) Deferred tax liability– Fixed Assets 1,07,233/- 2,34,742/-

Net Deferred Tax Assets (a – b) 1,07,764/- 4,42,192/-

8. In the opinion of the management, there are no separate reportable segments as perAccounting Standard on segment reporting (AS-17).

9. Disclosure of related party transaction in accordance with Accounting Standard (AS-18)‘Related Party Disclosures’ – As per Annexure —

10. Disclosure pursuant to Accounting Standards AS-19 for Leases: -A) Operating Lease

a) Particulars of the minimum lease payments under Operating Lease :-I. Not Later than One year. Rs.9,49,944/- (Rs. 9,49,944/-)II. Later than one year and not

later than five year Nil (Rs. 9,49,944/-)III. Later than five years — (—)

b) Minimum lease payments recognised in the statement of profit & loss account duringthe year ended 31st March, 2010 is Rs.9,49,944/- (Rs. 14,22,405/-)

c) General description of the lease arrangement.– The Lessee shall not sublet or otherwise part with possession of a part or

whole of the premise without the previous consent in writing of the lessor.– The lessee shall use the premises for commercial purposes only.– The lease can be terminated by the lessee by serving one month notice to the

lessor.

11. Earning Per Share :-

Particulars Current Year Previous Year(in Rs.) (in Rs.)

– Net Profit for the year as per Profit & Lossaccount before exceptional items 8,44,58,978 7,13,71,174

– Exceptional items 3,10,101 1,54,574– Profit for the year after exceptional items 8,47,69,079 7,15,25,748

Basic & Diluted Earning per Share -– Weighted average no. of equity

Shares outstanding. 1,19,92,329 1,19,92,329– Excluding Exceptional items 7.04 5.95– Including Exceptional items 7.07 5.96

12. Quantitative information in respect of investments: -

Particulars OPENING PURCHASES SALES CLOSING

Quantity Amount Quantity Amount Quantity Amount Quantity Amount(No.) (Rs.) (No.) (Rs.) (No.) (Rs.) (No.) (Rs.)

Shares 30130782 801198803 4394302 40070968 488395 106478056 34036689 798426175

(32572024) (843660504) (267539) (61224114) (2708781) (170784840) (30130782) (801198803)

Units of Mutual Funds 3232555 46846818 15718912 214350800 16318912 239571572 2632555 37778011

(3232555) (46846818) (7600415) (80841054) (7600415) (80841054) (3232555) (46846818)

Total 33363337 848045621 20113214 254421768 16807307 346049628 36669244 836204186

(35804579) (890507322) (7867954) (142065168) (10309196) (251625894) (33363337) (848045621

13. In view of facts explained in Note No.6 above, the provisions of Non-Banking Financial(Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank)Directors, 2007) are yet to be applicable to the company. However, as the company hasapplied to Reserve Bank of India for registration as NBFC, as a matter of prudent andproper practice, disclosure of details as required by Para 13 of aforesaid directions isannexed. Similarly the transfer of profit to Reserve Fund as required by Reserve Bank ofIndia (Amendment) Act,1997 is also being made.

14. Gain on sale of Long Term Investments (Net) includes Rs. 1,61,51,965/- (Previousyear Rs. Nil ) on Non Trade Investments and Rs. 6,36,34,460/- (Previous yearRs. 6,70,99,024/-) on Trade Investments.

15. Disclosure of Loans/Advances and Investments in its own shares by the listed companies,their subsidiaries, associates etc. (as certified by the management)


13

Amount in Rs.

Outstanding Max balanceParticulars balance as on outstanding

31.03.2010 during the year

i. Loans & Advances in the nature of loans Nil Nilto Subsidiaries. (Nil) (Nil)

ii. Loans & Advances in the nature of loans Nil Nilto Associates (Nil) (Nil)

iii. Loans & Advances in the nature of loanswhere there is no repayment schedule, nointerest or interest below Section 372(A)of Companies Act, 1956)(1) Nova Electromagnetics Ltd. Nil Nil

(Nil) (1,00,00,000)

iv. Loans & Advances in the nature of Loans tofirms/companies in which directors areinterested *.

HB Estate Developers Ltd. 9,48,46,686/- 9,48,46,686/-(9,20,59,575/-) (9,21,05,343/-)

HB Stockholdings Ltd. * 9,25,96,439/- 9,26,54,138/-Loan given at market rate of interest (9,17,60,173/-) (9,17,60,173/-)

v. Investments by loanee in the shares of No. of Shares No. of Sharesparent company and subsidiary companywhen the company has made loan oradvance in the nature of loan.

1) HB Stockholdings Ltd.

– Equity Shares 1,00,000 1,00,000(1,00,000) (1,00,000)

– Preference Shares 10,000 10,000(10,000) (10,000)

16. Disclosure pursuant to Accounting Standard - 15a) The company has adjusted Rs.Nil (Previous year Rs.1,22,426/- ) (net off deferred

tax of Rs. Nil (Previous year Rs.63,040/-)) towards the earlier years effect of definedbenefit obligation in respect of employee benefits to the balance of General Reserve.

b) Defined Contribution Plan

Amount recognized as expense for defined contribution plans are as under :-

Particulars Amount Head under which shown in(in Rs.) Profit & Loss Account

· Contribution to 2,97,639 – Managing Directors RemunerationProvident Fund (3,07,185) – Rs.2,16,000/-

(Previous year Rs.2,16,000/-)– Contribution to Provident Fund and

Gratuity Fund for – Rs.81,639/-(Previous year Rs.91,185/-)

· Contribution to 2,70,000Superannuation (2,70,000) – Managing Directors Remuneration

c) Defined Benefit Plan

Movement in net liability

Gratuity Leave EncashmentParticulars (Funded) (unfunded)

Current Previous Current PreviousYear Year Year Year

Present value of obligations as atthe beginning of year (A) 1403021 1481386 1991569 1911893

Adjustment for increase(Decrease)in opening obligation (B) Nil (185466) Nil –

Interest Cost (C) 112242 103674 159326 152951

Current service cost (D) 82418 88084 11147 133048

Benefits paid (E) 0 0 1613910 13832

Actuarial (gain)/loss on obligation (F) 536483 (84657) 12409 (192491)

Present value of obligations as atend of year (G=A+B+C+D-E+F) 2134164 1403021 560541 1991569

d) The amounts recognized in the balance sheet and Profit & loss account are as follows :



Present value of obligation (A) 2134164 1403021 560541 1991569

Estimated fair value of 2047513 1878452 Nil Nilplan assets (B)

Net Liability / (Asset) (C=A-B) 86651 (475431) 560541 1991569



Amounts in the Balance SheetLiabilities (Asset) 86651 (475431) 560541 1991569

Amount charged to Profit &Loss AccountCurrent Service Cost 82418 88084 11147 133048

Interest Cost 112242 103674 159326 152951

Expected Return on Plan Asset (169061) (155102)

Actuarial(Gain)/Loss 536483 (84657) 12409 (192491)

562082 (48001) 182882 93508

Head under which shown in the Contribution to – Salary & OtherProfit & Loss account Provident and Gratuity benefits

Fund

e) The Actual Return on Plan Assets is as follows :

Sl. No. Particulars GratuityCurrent Previous

Year Yeari) Actual return on plan assets 169061 155102

f) Following are the Principal Actuarial Assumptions used as at the balance sheet date :

Particulars GratuityCurrent Previous

Year YearDiscount Rate 8% 8%

Expected Rate of Return on Plan Assets 9% 9%

Salary Escalation Rate 6% 5%

g) A reconciliation of the opening and closing balances of the fair value of plan assets :

Sl. No. Particulars GratuityCurrent Previous

Year YearOpening Fair Value of Plan Assets 1878452 1723350

i) Expected Return on Plan Assets 169061 155102

ii) Actuarial Gains / (Losses) Nil Nil

iii) Contribution by the Employer Nil Nil

iv) Benefits Paid Nil Nil

Closing Fair Value of Plan Assets 2047513 1878452

17. a) To the extent information available with the company, Sundry Creditor include Nil,(Previous year Nil) due to Small Scale Industrial Undertaking.

b) The company has not received any information from suppliers regarding their statusunder the Micro, Small and Medium Enterprises Development Act, 2006. To theextent information available with the company, the company does not owe any sumincluding interest required to be disclosed under the said Act.

18. The company has not remitted any dividend in foreign currency and does not haveinformation as to the extent to which remittance, if any, in foreign currency on account ofdividends have been made by / on behalf of non-resident shareholders. The particularsof dividend paid to non-resident shareholders are as under :-

Sl. No. Particulars Current PreviousYear Year

a No. of Non-resident shareholders 662 613

b No. of Equity Shares held by them 93875 80224

c i) Amount of dividend paid (Gross) 187750 160448

ii) Tax Deducted at Source – –

iii) Year to which dividend relates 2008-09 2007-08

19. Information pursuant to Part IV of Schedule VI of Companies Act, 1956 is annexed.20. Previous year figures have been regrouped / rearranged wherever considered necessary.21. Schedule 1 to 12 from an integral part of the accounts.

As per our Report of even date annexed theretoFor P. Bholusaria & Co. For and on behalf of the BoardChartered AccountantsFRN : 000468N

Amit Goel Nishu Tomar Anil Goyal J.M.L. SuriPartner Company Secretary Managing Director DirectorM.No. 92648

Place : GurgaonDate : 12th May, 2010


14

ANNEXURE REFERRED TO IN NOTE NO. 9 OF SCHEDULE 12 TO THE ACCOUNTS.RELATED PARTY DISCLOSURES(AS IDENTIFIED BY MANAGEMENT AND RELIED UPON BY AUDITORS )As per Accounting Standard (AS-18) on “Related Party Disclosures”, the disclosure oftransactions with the related party as defined in the Accounting Standard are given below :-1. List of related parties with whom transactions have taken place and relationship :-

a) Subsidiaries :-i) HB Securities Ltd.ii) HB Corporate Services Ltd.

b) Key Managerial Personneli) Mr.Anil Goyal, Managing Director

c) Person having control/significant influence/major shareholders :-i) Sh.H.C.Bhasinii) Sh.Lalit Bhasin

d) Enterprises over which significant influence/control exist of the relatives of thepersons mentioned in (c) above :-i) RRB Master Securities Delhi Ltd.

e) Companies under common control/significant influence :-i) HB Stockholdings Ltd.ii) HB Estate Developers Ltd.

f) Enterprises over which direct/indirect significant influence exists.i) Merwanjee Securities Ltd.

2. Transactions during the year with Related Parties.

Related Party (Amount in Rs.)Sl.No. Nature of Transaction Referred in Referred in Referred in Referred in Referred in Referred in

1(a) above 1(b) above 1(c) above 1(d) above 1(e) above 1(f) above1. Purchase of Investments — — — 4,00,70,968 —

(—) ( — ) ( — ) (1,44,75,148) (11,36,22,117)2 Sale of Investments — — 10,48,53,528 16,24,528

(—) ( — ) (11,36,22,117) (2,15,27,267)3 Depository Charges paid 12,537 —

(45,261) ( — )4 Advances/margin given 2,45,00,000 —

(11,10,00,000) ( — )5 Advances/margin received/recovered 2,45,00,000

(11,10,00,000)6 Reimbursement of expenses 12,525 —

(8,138) ( — )7 Remuneration & Other Services — 37,80,000

( — ) (35,40,000)8 Payment against Current 16,10,000

Liabilities & Provisions ( — )9 Sitting Fee — — 50,000

( — ) ( — ) (50,000)10 Dividend paid 1,37,92,244 2,00,000

(1,26,23,292) (2,00,000)11 Guarantee issued by the Company 8,00,00,000 — —

(8,00,00,000) ( — ) ( — )12 Loan given —

(9,00,00,000)13 Interest Income on loan 2,25,00,001

(1,30,75,891)(—)

14 Rent paid 9,49,949(9,66,213)

15 Outstanding as on 31.03.2010– Receivables in respect of . 12,525 — — —

Current Assets (—) ( — ) (—) (—)– in respect of Security Deposit — — — — 3,45,00,000

Paid for Premises on Rent (—) ( — ) (—) ( — ) (3,45,00,000)– Receivable in respect of — — — — 18,74,43,125

Loan and Interest (—) ( — ) (—) ( — ) (18,38,19,748)

Note: Figures in bracket relates to previous year.SCHEDULE TO THE BALANCE SHEET OF HB PORTFOLIO LTD. AS ON 31.03.2010 (ASREQUIRED IN TERMS OF PARAGRAPH 13 OF NON-BANKING FINANCIAL (NON-DEPOSIT ACCEPTING OR HOLDING) COMPANIES PRUDENTIAL NORMS (RESERVEBANK) DIRECTIONS, 2007)

(Rs. in lakhs)Amount Amout Particulars Outstanding Overdue

LIABILITIES SIDE :(1) Loans and advances availed by the NBFCs

inclusive of interest accrued thereon but not paid(a) Debentures : Secured Nil Nil

: Unsecured Nil Nil(other than falling within the meaningof public deposits)

(b) Deferred Credits Nil Nil(c) Term Loans Nil Nil(d) Inter-corporate loans and borrowing Nil Nil(e) Commercial Paper Nil Nil(f) Public Deposits Nil Nil(g) Other Loans (Vehicle Loan) 2.54 Nil

(2) Break-up of (1)(f) above (Outstanding public depositsinclusive of interest accrued thereon but not paid):a) In the form of Unsecured debentures Nil Nil

(Rs. in lakhs)

Amount AmoutParticulars Outstanding Overdueb) In the form of partly secured debentures i.e. Nil Nil

debentures where there is a shortfall in thevalue of security

c) Other public deposits Nil Nil

Amount Particulars Outstanding*ASSETS SIDE :(3) Break-up of Loans and Advances including bills receivables

[other than those included in (4) below] :(a) Secured Nil(b) Unsecured 2221.63

*Net of Provisions(4) Break up of Leased Assets and stock on hire and

hypothecation loans counting towards EL/HP activities(i) Lease assets including lease rentals under sundry debtors :

(a) Financial lease Nil(b) Operating lease Nil

(ii) Stock on hire including hire charges under sundry debtors:(a) Assets on hire Nil(b) Repossessed Assets Nil


15

(iii) Hypothecation loans counting towards EL/HP activities(a) Loans where assets have been repossessed Nil(b) Loans other than (a) above Nil

(5) Break-up of Investments :Current Investments

1. Quoted :

(i) Shares : (a) Equity Nil(b) Preference Nil

(ii) Debentures and Bonds Nil

(iii) Units of mutual funds Nil

(iv) Government Securities Nil

(v) Others (please specify) Nil

2. Unquoted :(i) Shares : (a) Equity Nil

(b) Preference Nil





Long Term investments

1. Quoted :(i) Shares : (a) Equity 5272.44

(b) Preference Nil





2. Unquoted :(i) Shares : (a) Equity 2711.82

(b) Preference Nil


(iii) Units of mutual funds 377.78



(6) Borrower group-wise classification of all leased assets, stock-on-hireand loans and advances :

Amount net of provisions CategorySecured Unsecured Total

1. Related Parties

(a) Subsidiaries — 0.10 0.10

(b) Companies in the same group — 2219.43 2219.43

(c) Other related parties — Nil Nil

2. Other than related parties — 2.10 2.10

Total — 2221.63 2221.63

(7) Investor group-wise classification of all investments (current and long term)in shares and securities (both quoted and unquoted):*

Category Market Value/Break up or Book Value (Net offair value or NAV Provisions)

1. Related Parties(a) Subsidiaries 1393.74 1400.86(b) Companies in the same group 100.00 100.00(c) Other related parties 3735.13 1287.39

2. Other than related parties 19400.39 5573.79

Total 24629.26 8362.04

* Break up Value in the case of unquoted companies has been taken on the basis of lastavailable Balance Sheet. Where the balance sheet is not available, the break up value/fairvalue/NAV has been taken at cost.

(8) Other information

Particulars Amount

(i) Gross Non-Performing Assets —(a) Related parties —(b) Other than related parties —

(ii) Net Non-Performing Assets —(a) Related parties —(b) Other than related parties —

(iii) Assets acquired in satisfaction of debt —

Additional Disclosure as per Para 10 of aforesaid Directions1. CRAR

Items Current Year Previous Year

i) CRAR (%) 109% 99%ii) CRAR - Tier I capital (%) 109% 99%iii) CRAR - Tier II Capital (%) — —

2. ExposuresExposure to Real Estate Sectora) Direct exposure — —

(i) Residential Mortgages - — —

Lending fully secured by mortgages on — —residential property that is or will beoccupied by the borrower or that is rented;(Individual housing loans up to Rs.15 lakhmay be shown separately)

(ii) Commercial Real Estate - — —Lending secured by mortgages on — —commercial real estates (office buildings,retail space, multipurpose commercialpremises, multi-family residential buildings,multi-tenanted commercial premises,industrial or warehouse space, hotels,land acquisition, development andconstruction, etc.). Exposure would alsoinclude non-fund based (NFB) limits;

(iii) Investments in Mortgage Backed Securities(MBS) and other securitised exposures - — —a. Residential, — —b. Commercial Real Estate. — —

b) Indirect ExposureFund based and non-fund based exposureson National Housing Bank (NHB) and HousingFinance Companies (HFCs).

3. Asset Liability ManagementMaturity pattern of certain items of assets and liabilities

(Rs. In lacs)

1 day to Over one Over 2 Over 3 Over 6 Over 1 year Over 3 years Over 5 years Total30/31 days month to months upto months upto months upto to 3 years to 5 years

(one month) 2 months 3 months 6 months 1year

Liabilities

Borrowings from banks 0.39 0.39 0.39 1.19 0.17 — — — 2.53

Market Borrowings — — — — — — — — —

Assets

Advances 74.43 — — — 1800 — — — 1874.43

Investments — — — — — — — 8362.04 8362.04


16

CASH FLOW STATEMENT FOR THE PERIOD ENDED 31ST MARCH, 2010(Rs. in Thousands)

Year Ended Year EndedParticulars 31.03.2010 31.03.2009

(A) CASH FLOW FROM OPERATION ACTIVITIESNet Profit Before Tax and Extraordinary Item 103300 79950

Adjustment for :Depreciation 320 458Provision for Gratuity & Leave encashment 183 80Profit on Sale of Investments -79786 -67099Interest/Dividend -33536 -22940Loss on Sale of Fixed Assets 370 0

----------------------------------------- -------------------------------------Operating Profit before Working Capital Changes -9149 -9551

Adjustment for :Trade and other Receivables 0 0Trade and other payables 282 -824

----------------------------------------- -------------------------------------Cash Generated from Operation -8867 -10375Interest Paid -40 -78Direct Taxes paid -9716 -7133

----------------------------------------- -------------------------------------Cash Flow Before Extraordinary Items -18623 -17586Extra Ordinary Items 310 155

----------------------------------------- -------------------------------------Net Cash Flow from Operation Activities (A) -18313 -17431

(B) CASH FLOW FROM INVESTMENTS ACTIVITIESPurchase of Fixed Assets -8 0Sale of Fixed Assets 225 0Purchase of Investments -254422 -142065Sale of Investments 346050 251626Loans & Advances -2788 -81372Interest Received 22540 13076Dividend Received 11036 9941

----------------------------------------- -------------------------------------Net Cash from (-used) in Investment Activities (B) 122633 51206

(C) CASH FLOW FROM FINANCING ACTIVITIESShare Allotment Money received 0 0Increase / (Decrease) in Short Term (Secured Loans) -479 -528Dividend paid -23985 -23985Tax on Dividend -4076 -4076Net Cash Flow From Financing Activities (C) -28540 -28589

----------------------------------------- -------------------------------------Net Increase in Cash & Cash Equivalents (A+B+C) 75780 5186Cash & Cash Equivalents (Opening Balance) 11050 5864

----------------------------------------- -------------------------------------Cash & Cash Equivalents (Closing Balance) 86830 11050

As per our Report of even date

For P. Bholusaria & Co. For and on behalf of the BoardChartered AccountantsFRN : 000468N

Amit Goel Nishu Tomar Anil Goyal J.M.L. SuriPartner Company Secretary Managing Director Director(M. No. 92648)


BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE ASPER SCHEDULE VI, PART-(IV) OF THE COMPANIES ACT,1956

1. Registration Details

Registration No 34148 State Code 05

Balance Sheet Date 31.03.2010

2. Capital Raised During the Year(Amount in Rs.Thousands)

Public Issue Nil Right Issue Nil

Bonus Issue Nil Private Placement Nil

3. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)

Total Liabilities 1110050 Total Assets 1110050

Sources of Funds

Paid - up Capital 122660 Reserve & Surplus 987136

Secured Loans 254 Unsecured Loans Nil

Application of Funds

Net Fixed Assets 2018 Investments 846204

Net Current Assets 261720 Deferred Tax Assets 108

4. Performance of Company (Amount in Rs.Thousands)

Turnover 113362 Total Expenditure 10062

+/ - Profit Before Tax 103300 +/ - Profit after Tax and 84459before exceptional items

+/ - Profit after exceptional items 84769 +/ - Exceptional items 310

Earning Per Share in Rs.(Annualised) Dividend Rate % 20Basic earning per share

Excluding exceptional items 7.04

Including exceptional items 7.07

5. Generic names of principal Products/Services of Company(as per monetary terms)

Item Code N.A

Product Description Investments





SUMMARY OF FINANCIAL INFORMATION OF SUBSIDIARY COMPANIES (PURSUANT TO SECTION 212 (8) OF COMPANIES ACT, 1956). (Amount in Rs.)

Name of the Issues Reserves Total Total Investments Turnover/ Profit Provision Profit after ProposedSubsidiary Subscribed Assets Liabilities Total before for Taxation DividendCompany and paid-up Income Taxation Taxation

Share Capital

HB Corporate 42,510,700 8,500,000 51,010,700 51,010,700 Nil Nil -27861 Nil -27861 NilServices Ltd (42,510,700) (8,500,000) (51,010,700) (51,010,700) (Nil) (Nil) (-26270) (Nil) (-26270) (Nil)

HB Securities Ltd 92,075,700 17,000,000 109,253,572 109,253,572 15,221,367 6,518,075 -1,309,908 35,853 -1,341,392 Nil(92,075,700) (17,914,445) (110,963,724) (110,963,724) (15,221,367) (8,135,047) ( -269,492) (-95843) (-173,649) (Nil)

* The figures in bracket relates to the previous year.


17

HB PORTFOLIO LIMITED (Consolidated Accounts)

AUDITOR’S REPORTThe Board of Directors of, HB PORTFOLIO LIMITEDReport on the Consolidated Financial Statements of HB Portfolio Ltd. and its Subsidiaries.We have audited the attached Consolidated Balance Sheet of HB Portfolio Ltd. and its twosubsidiaries as at 31st March, 2010 and the Consolidated Profit & Loss Account andConsolidated Cash Flow Statement for the year ended on that date.These Consolidated financial statements are the responsibility of the HB Portfolio Ltd.’sManagement. Our responsibility is to express an opinion on these financial statements basedon our audit. We conducted our audit in accordance with the generally accepted auditingstandards in India. These Standards require that we plan and perform the audit to obtainreasonable assurance whether the financial statements are prepared, in all material respects,in accordance with an identified financial reporting framework and are free of materialmisstatements. An audit also includes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overall financial statements. Webelieve that our audit provides a reasonable basis for our opinion.The financial statements of four associate companies are unaudited and our opinion in so far asit relates to the amounts included in respect of these four associate companies is based solelyon the management certified financial statements. The financial statement of one associatecompany is available for year ended 31.03.2009 and these financial statements have been auditedby other auditors and our opinion, in so far as it relates to amount included in respect of thisassociate is based solely on their reports. (Also refer to Note No. 2 of Schedule 12)

We report that the consolidated financial statements have been prepared by the Company inaccordance with the requirements of Accounting Standard(AS)21, Consolidated Financial Statementsand Accounting Standard (AS) 23, Accounting for investments in associates in consolidated financialstatements notified pursuant to Companies (Accounting Standard) Rules, 2006.On the basis of the information and explanations given to us and based on our audit on theconsideration of the separate audit reports on individual audited financial statements of HBPortfolio Ltd. and its aforesaid two subsidiaries and on the other financial information of thecomponents, we are of the opinion that the said Consolidated Financial Statement gives a trueand fair view in conformity with the accounting principles generally accepted in India:-a) In the case of Consolidated Balance Sheet of the consolidated state of affairs as at 31st

March, 2010 andb) In the case of Consolidated Profit & Loss Account of the consolidated results of operations

for the year ended on that date andc) In the case of Consolidated Cash Flow Statement of the Consolidated Cash Flow for the

year ended on that date.For P.BHOLUSARIA & CO.

Chartered AccountantsFRN : 000468N

Place : Gurgaon AMIT GOELDate : 12th May, 2010 PARTNER

(M.No. 92648)

CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED31ST MARCH, 2010

Current Year Previous YearParticulars Schedule 31.03.2010 31.03.2009

(In Rs.) (In Rs.)INCOMEIncome from Operations andOther Income 8 119867967 98382656

--------------------------------------------------- ---------------------------------------------------Total 119867967 98382656

--------------------------------------------------- ---------------------------------------------------EXPENDITUREa) Administrative & Other Expenses 9 16811050 16706712b) Interest & Financial Charges 10 93044 882329c) Miscellaneous Expenditure Written off 15337 18235d) Depreciation 986197 1121424

--------------------------------------------------- ---------------------------------------------------Total 17905628 18728700

--------------------------------------------------- ---------------------------------------------------Profit for the year before Taxation 101962339 79653956

--------------------------------------------------- ---------------------------------------------------Provision For Taxation— Current 18500000 8700000— Deferred 370281 -488412— Fringe Benefit Tax 0 270000— Tax adjustment for Earlier Year 2334 1874

--------------------------------------------------- ---------------------------------------------------Profit After Taxation 83089724 71170494Share of Profit/(Loss) in Associates 26838059 -52305199

--------------------------------------------------- ---------------------------------------------------Profit before Exceptional Items 109927783 18865295Exeptional ItemsProvision for sub-standard anddoubtful Assets written back 310101 154574

--------------------------------------------------- ---------------------------------------------------Profit After Exeptional Items 110237884 19019869Residual Dividend of Last year and Tax thereon 0 181Transferred to Statutory Reserve Fund 16953816 14305150Transferred to General Reserve 55000000 30000000Proposed Dividend 23984658 23984658Tax on Dividend 3983552 4076193Balance brought forward From last Year 321940867 375287180

--------------------------------------------------- ---------------------------------------------------Balance carried forward to Balance Sheet 332256725 321940867

=========================== ============================Basic & Diluted Earning Per Share— Excluding Exceptional Items 9.07 1.47— Including Exceptional Items 9.09 1.49

Significant Accounting Policies 11Notes on Accounts 12

As per our Report of even date annexed theretoFor P. Bholusaria & Co. For and on behalf of the BoardChartered AccountantsFRN : 000468NAmit Goel Nishu Tomar Anil Goyal J.M.L. SuriPartner Company Secretary Managing Director Director(M. No. 92648)Place : GurgaonDate : 12th May, 2010

CONSOLIDATED BALANCE SHEET AS AT 31ST MARCH, 2010As at As at

Particulars Schedule 31.03.2010 31.03.2009(In Rs.) (In Rs.)

SOURCES OF FUNDSShareholders FundsShare Capital 1 142659589 142659589Reserves & Surplus 2 1238582497 1156312823Loan FundsSecured Loans 431592 1706058(From banks secured against hypothication ofvehicles financed)Repayable within a year Rs 431592/-(Previous Year Rs.1274466/-)

--------------------------------------------------- ---------------------------------------------------Total 1381673678 1300678470

=========================== ==========================APPLICATION OF FUNDSFixed Assets 3Gross Block 16401387 18014788Less: Depreciation 11012150 11071784

--------------------------------------------------- ---------------------------------------------------Net Block 5389237 6943004

--------------------------------------------------- ---------------------------------------------------Investments 4— In Associates 392897303 366059243— In Others 570600254 582441689

--------------------------------------------------- ---------------------------------------------------Share Application Money(Pending Allotment) 10000000 10000000

--------------------------------------------------- ---------------------------------------------------973497557 958500932

--------------------------------------------------- ---------------------------------------------------Deferred Tax Assets/Liability (Net) 124450 494731(Refer Note No. - 6)Current Assets, Loans & Advances 5a) Stock In Trade 7786 7786b) Sundry Debtors 35078 96358c) Cash & Bank Balances 140643338 85078137d) Loans and Advances 369161139 327577413

--------------------------------------------------- ---------------------------------------------------509847341 412759694

--------------------------------------------------- ---------------------------------------------------Less : Current Liabilities & Provisions 6a) Liabilities 28894355 15525198b) Provisions 78290552 62510030

--------------------------------------------------- ---------------------------------------------------107184907 78035228

--------------------------------------------------- ---------------------------------------------------Net Current Assets 402662434 334724466

--------------------------------------------------- ---------------------------------------------------Miscellaneous Expenditure 7(to the extent not written off/adjusted) 0 15337

--------------------------------------------------- ---------------------------------------------------Total 1381673678 1300678470

=========================== ==========================Significant Accounting Policies 11Notes on Accounts 12As per our Report of even date annexed theretoFor P. Bholusaria & Co. For and on behalf of the BoardChartered AccountantsFRN : 000468NAmit Goel Nishu Tomar Anil Goyal J.M.L. SuriPartner Company Secretary Managing Director Director(M. No. 92648)Place : GurgaonDate : 12th May, 2010

18

SCHEDULE ‘2’: RESERVES AND SURPLUSAs at As at


A. SHARE PREMIUM ACCOUNTAs per last Account 499736601 499736601

B. GENERAL RESERVES ACCOUNTAs per Last Account 228644543 198439659Add-Transitional effect on ofAccount of AS-15 0 204884Refer Note no-14Add : Transferred fromProfit & Loss Account 55000000 283644543 30000000 228644543

----------------------------------- ---------------------------------

C. PROFIT & LOSS ACCOUNT 332256725 321940867(As per annexed account)

D. STATUTORY RESERVE FUND*Opening balance 105990812 91685662Add : Transferred fromProfit & Loss Account 16953816 122944628 14305150 105990812

----------------------------------- ------------------------------------ --------------------------------- -------------------------------------TOTAL 1238582497 1156312823

========================= ===========================* Created pursuant to The Reserve Bank of India (Amendment) Act, 1997

SCHEDULE ‘1’ : SHARE CAPITALAs at As at


AUTHORISED CAPITAL2,00,00,000 Equity Shares of Rs. 10/- each. 200000000 2000000001,00,00,000 RedeemablePreference Shares of Rs.10/-each. 100000000 10000000040,000 Redeemable Cumulative 40000000 40000000Preference Share of Rs 1000/- each ---------------------------------------- ----------------------------------------

340000000 340000000---------------------------------------- ---------------------------------------

ISSUED1,28,21,630 Equity Shares of Rs 10/-each 128216300 12821630020,000/- 6% Redeemable CumulativePreference Shares of Rs 1000/- each fully paid up 20000000 20000000

---------------------------------------- ---------------------------------------148216300 148216300

---------------------------------------- ---------------------------------------SUBSCRIBED AND PAID-UP1,19,92,329 Equity Shares 119923290 119923290of Rs.10/-each Fully paid upAdd- Forfeited Shares(Amount originally paid up) 2736299 122659589 2736299 12265958920000 Redeemable 6% Cumulative ----------------------------------- ----------------------------------Preference Shares of Rs 1000/- eachfully paid up 20000000 20000000

--------------------------------------- --------------------------------------Total 142659589 142659589

=========================== =============================

SCHEDULE ‘3’ : FIXED ASSETS AS ON 31.03.2010G R O S S B L O C K D E P R E C I A T I O N N E T B L O C K

As at Additions Deletions As at Upto For the Adjust- Upto As at As atAssets 01.04.2009 31.03.2010 31.03.2009 year ments 31.03.2010 31.03.2010 31.03.2009

Data Processing Machinery 5465417 8050 5473467 5247437 48801 5296238 177229 217980Office Equipment 721177 19300 740477 254606 34752 289358 451119 466571Furniture & Fixture 21643 21643 13534 1370 14904 6739 8109Vehicles 10089501 1640751 8448750 5054563 819714 1045831 4828446 3620304 5034938Generator 1717050 1717050 501644 81560 583204 1133846 1215406Total 18014788 27350 1640751 16401387 11071784 986197 1045831 11012150 5389237 6943004PREVIOUS YEAR 17977995 36793 0 18014788 9950359 1121424 0 11071784 6943004 8027636

SCHEDULE ‘4’ : INVESTMENTS - LONG TERM Amount in Rs.

Unquoted Fully Paid up Equity Shares, Non-Trade Face As at 31st March, 2010 As at 31st March, 2009Name of the Company Value Qty. (Nos.) Amount Qty. (Nos.) AmountINVESTMENTS : In AssociatesTaurus Investment Trust Co. Ltd. 10 49040 49040Cost of acquisition 498999 498999Add / (Less) : Group Share of Profits/(Losses) upto year end 1895909 1856350

2394908 2355349Pisces Portfolios Pvt.Ltd. 10 3189980 3189980Cost of acquisition 69899800 69899800Add / (Less) : Group Share of Profits/(Losses) upto year end 243523194 226933594

313422994 296833394Merwanjee Securities Ltd. 10 1200000 1200000Cost of acquisition 12000000 12000000Add / (Less) : Group Share of Profits/(Losses) upto year end 7383570 7662253

19383570 19662253

Taurus Asset Management Co. Ltd. 10 6275000 6275000Cost of acquisition 58140000 58140000Add / (Less) : Group Share of Profits/(Losses) upto year end -444169 -10931753

57695831 47208247HB Insurance Advisors Ltd. 10 20010 20010Cost of acquisition 200100 200100Add / (Less) : Group Share of Profits/(Losses) upto year end -200100 -200100

0 0

TOTAL 392897303 366059243

INVESTMENTS In Others(A) QUOTED (TRADE) FULLY PAID-UP EQUITY SHARE

Ceat Ltd. 10 0 0 17000 688212Crompton Greaves Limited 2 179824 757477 240657 1766322CHI Investments Ltd 10 17027 689305 17027 689305Federal Mugul(Gotze India) Ltd 10 60730 7786214 116372 14920094Hindustan Sanitary Ware Ltd. 2 62741 1166983 62741 1166983Jai corp Ltd 1 3000 3052216 3000 3052216Jaiprakash Associates Ltd. 2 11296657 377499570 6920085 220504533Jai Prakash Hydro Ltd 10 23762 1734175 23762 1734175Jay Pee Hotels Ltd 10 0 0 811020 164280970Mawana Sugar Limited 10 0 0 7957 1594311NIIT LTD 2 0 0 5988 960375PBA Infrastructure Ltd. 10 6940 1103494 31756 5049362


19

Name of the Company Face As at 31st March, 2010 As at 31st March, 2009Value Qty. (Nos.) Amount Qty. (Nos.) Amount

Southern*RRB Securities Ltd. 10 100000 10000000 100000 10000000JSW Steel Ltd 10 9000 4866090 46409 25092261Tata Steel Ltd 10 100 67814 100 67814Uflex Ltd 10 16939 2777793 16939 2777793Unitech Ltd. 2 917600 113822628 367600 73751660Ultramarine & Pigments Ltd. 2 100000 1920047 100000 1920047Total - A 12794320 527243805 8888413 530016433

(B) QUOTED (NON-TRADE) FULLY PAID-UP EQUITY SHAREBee Electronics Machine Ltd 10 6500 184501 6500 184501Nitta Gelatin India Ltd 10 15000 712500 15000 712500Nahar Spning Mills Ltd 5 607 42490 607 42490Pasupati Spning & Wvg.Mills Ltd 10 4000 282335 4000 282335Tata Tea Ltd. 10 1163 505500 641 192300Nahar Capital and financial services Ltd 10 258 36120 258 36120PREFERENCE SHARESTata Steel Ltd -CCPS 100 0 0 3132 313200Total - B 27528 1763446 30138 1763446

(C) IN MUTUAL FUNDS (NON-TRADE),UNQUOTEDTaurus Mutual Fund-Libra Tax Shield-96 10 400000 3836000 400000 3836000SBI Multipliers 10 500 5220 500 5220Taurus Mutual Fund - Bonanza Exclusive Growth Scheme 10 2232055 33736791 2832055 42805598INVESTMENTS AS SPONSOR IN TAURUS MUTUAL FUNDCORPUS —- 200000 —- 200000Total - C 2632555 37778011 3232555 46846818

(D) UNQUOTED (NON-TRADE)FULLY PAID-UP EQUITY SHARESHar Sai Investments Ltd. 10 200000 2000000 200000 2000000Delhi Stock Exchange Ltd 1 47044 1457921 47044 1457921Kesoram Textiles Ltd. 10 49699 357071 49699 357071Total - D 296743 3814992 296743 3814992Total- A+B+C+D 15751146 570600254 12447849 582441689

Notes :a) Market Price of Quoted Investments (Other than Mutual Fund Units) Rs 185,13,13,967 /- (Previous Year Rs.72,36,31,545/-) and cost of Quoted investments Rs 52,90,07,251./- (Previous

Year Rs. 53,17,79,879/-)b) Net asset value of Investments in units of Mutual Fund Rs 9,98,89,044./- (Previous year Rs 6,91,75,063/-) and cost of units of Mutual fund Rs 3,77,78,011./- ( Previous Year Rs. 4,68,46,818/-)


(In Rs.) (In Rs.)

SCHEDULE ‘5’ : CURRENT ASSETS, LOANS AND ADVANCESA. CURRENT ASSETS

a) Stock In Trade 7786 7786b) Sundry Debtors

(Unsecured considered goodunless otherwise stated)– Outstanding exceeding Six months 26493 64293– Others 8584 32065

c) Cash & Bank Balance– Cash in hand 374241 364241(As certified by the Management)– Balance with Scheduled Banksin current accounts 106067052 54590377fixed Deposit(Including interest accrued) 26958845 24850355in Dividend Account 7243199 5273164

--------------------------------------- --------------------------------------Total ‘A’ 140686200 85182281

--------------------------------------- --------------------------------------

B. LOANS AND ADVANCES(Unsecured considered good Unless Otherwise stated)a) Loans - Standard

– Considered good 187443125 183819749(Including Interest Receivable Rs. 74,43,125 /-Previous Year Rs,3819749/-)

b) Advances Recoverable in cash or in kindfor value to be received– Considered good 52137401 52442087– Considered doubtful 1971221 2281322

c) Advance Tax & Tax Deducted at Sources 41848452 30890035d) Security Deposits with

Govt Department and others 85760940 58144220--------------------------------------- --------------------------------------

Total ‘B’ 369161139 327577413--------------------------------------- --------------------------------------

Total ‘A’+’B’ 509847339 412759694=========================== =============================

SCHEDULE ‘6’: CURRENT LIABILITIES AND PROVISIONSCURRENT LIABILITIESa) Sundry Creditors

— Due to Micro Enterprises and Small Enterprises 0 0— Others 21465176 10033556

b) Other liabilities 185980 218478c) Unclaimed Dividend 7243199 5273164

--------------------------------------- --------------------------------------Total 28894355 15525198

--------------------------------------- --------------------------------------


(In Rs.) (In Rs.)

PROVISIONSa) For Income Tax 47200000 29065600b) For Leave encashment 1151121 2832257c) For Doubtful Loans and Advances 1971221 2281322d) For Fringe Benefit Tax 0 270000e) For Proposed Dividend 23984658 23984658f) For Tax on Dividend 3983552 4076193

--------------------------------------- --------------------------------------Total 78290552 62510030

--------------------------------------- --------------------------------------Grand Total 107184907 78035228

=========================== =============================SCHEDULE ‘7’ : MISCELLANEOUS EXPENDITURE(To the extent not written off or adjusted)PRELIMINARY EXPENSESAs per last year 15337 33572Less: Proportionate amount Written off 15337 0 18235 15337

------------------------------- ------------------------------- ------------------------------ -----------------------------Total 0 15337

====================== =====================SCHEDULE ‘8’ : INCOME FROM OPERATIONS AND OTHER INCOMEGain on sale of Long Term Investments (Net) 81874659 66895576Dividend Income (Gross)— On Long Term Trade Investments 10135099 9100084— On Long Term (Non Trade) Investments 66678 38826— On stock in trade 1100 0— On Short Term(trade) investments in Mutual Fund 987615 913677Income from Services rendered/Commission (Net) 2170644 2693122(Tax Deducted at Source Rs.166863 /-Previous Year 23459/-)Interest on fixed deposit 2132171 5468123(Tax Deducted at Source Rs.195519 /-Previous Year 1122799/-)Interest Income On Loan 22500001 13075891(Tax Deducted at Source Rs.29,60,173 /-Previous Year 2962997/-)Other Income 0 176817Interest on Income Tax Refund 0 20540

--------------------------------------- --------------------------------------Total 119867967 98382656

=========================== =============================SCHEDULE ‘9’ : ADMINISTRATIVE & OTHER EXPENSESSalaries & Benefits 2093729 2974608Contribution to Provident & Gratuity funds 1198448 153728Managerial Remuneration 5817520 5397150Travelling & Conveyance 550519 456060


20


(In Rs.) (In Rs.)

Communication 923719 984977Repair & Maintenance 525071 620813Printing & Stationery 465313 396058Legal & Professional 803596 765927Electricity 565179 526688Advertisement 71518 40511Vehicle Running and Maintenance 770132 877927Director Sitting fees 398000 410000Listing Fee 33090 33251Staff Welfare 13524 17920Insurance 177503 227684Loss on sale of Fixed Assets 369920 0Vsat Charges 73514 150822Rent 949944 1422405Depository and Custodial 40945 22472Miscellaneous 782266 1054135Auditors Remuneration— Audit fees 96695 99270— Tax Audit Fees 31545 33090— Others 59360 187600 41216 173576

----------------------------------- ----------------------------------- ---------------------------------- ----------------------------------Total 16811050 16706712

========================= ==========================

SCHEDULE ‘10’ : INTEREST & FINANCIAL CHARGESOn Loan From Bank 0 677339Vehicle Finance Charges 93044 204990

--------------------------------------- --------------------------------------Total 93044 882329

=========================== =============================

SCHEDULE - 11 : SIGNIFICANT ACCOUNTING POLICIESAnnexed to and forming part of the statement of Accounts for the year ended 31st March, 2010A. PRINCIPLES OF CONSOLIDATION

The consolidated Financial Statements relate to HB Portfolio Limited (the company) andits subsidiary companies HB Securities Ltd. and HB Corporate Services Ltd. Theconsolidated financial statements have been prepared in accordance with AccountingStandard (AS-21) “Consolidated Financial Statements” on the following basis :i) The Financial statements of the Company and the subsidiary company have been

combined on a line by line basis by adding together the book values of like items ofassets, liabilities, income and expenses, after fully eliminating intra-group balancesand intra-group transactions resulting in unrealized profit or losses.

ii) As far as possible, the consolidated financial statements have been prepared usinguniform accounting policies for like transactions and other events in the similarcircumstances and are presented to, to the extent possible, in the same manner asthe company’s separate financial statements.

iii) In case of associates, where the company directly or indirectly through subsidiariesholds more than 20% of the equity, Investments in Associates are accounted forusing equity method in accordance with The Accounting Standard (AS) 23 –“Accounting for Investments in Associates in Consolidated Financial Statements”.

iv) The company accounts for its shares in the change in net assets of the associates,post acquisition after eliminating unrealized profit & loss resulting from transactionbetween the company and its associates to the extent of its share, through its profitand loss account to the extent such change is attributable to the associates’ profitand loss account and through its reserves for the balances, based on availableinformation.

B. Investments other than in associates have been accounted as per Accounting Standard(AS) 13 – “Accounting for Investments”.

C. OTHER SIGNIFICANT ACCOUNTING POLICIESThese are said out under “Significant Accounting Policies” as given in the FinancialStatements of HB Portfolio Ltd. and its subsidiaries HB Securities Ltd. and HB CorporateServices Ltd.

SCHEDULE 12 : NOTES ON ACCOUNTSAnnexed to and forming part of Statement of Accounts for the year ended on 31st March, 2010.1. The accompanying consolidated financial statement includes the accounts of HB Portfolio

Ltd. and its following subsidiaries :-Name of Company Country of Proportion of ownership Financial

Incorporation interest and relationship Year Ended

HB Securities Ltd. India 100% subsidiary of 31.03.2010HB Portfolio Ltd.

HB Corporate India 100% subsidiary of 31.03.2010Services Ltd. HB Portfolio Ltd.

2. The accompanying Consolidated Financial Statements consider the following associatecompanies :-

Sl. Name of Associate Country of Proportion ofNo. Company Incorporation ownership Interest

(i) Taurus Asset Management Co. Ltd.** India 50.00 %(ii) Taurus Investment Trust Co. Ltd.* India 50.00 %(iii) HB Insurance Advisors Ltd.** India 39.96 %(iv) Merwanjee Securities Ltd.** India 48.00 %(v) Pisces Portfolio Pvt. Ltd. ** India 38.00 %

* Valuation has been considered on the basis of last audited financial statement foryear ended 31.03.2009.

** Valuation done on the basis of available unaudited, management certified financialstatements for year ended 31.03.2010.

3. Particulars of Managerial Remuneration are as under :-

Current PreviousParticulars Year (In Rs.) Year (In Rs.)

a) Salary 28,56,000 27,65,000b) Contribution to Provident and Superannuation Fund 6,12,720 6,01,800c) House Rent 17,66,400 17,07,250d) L.T.A. 3,28,000 75,000e) Medical 30,000 30,000f) Children Education Allowance 1,44,000 1,44,000g) Entertainment Allowance 80,400 74,100

TOTAL 58,17,520 53,97,150

Note: The figures do not include gratuity and leave encashment as valuation for thesame is available for company as a whole

4. In the opinion of management, current assets, loans and advances are approximately ofthe value stated, if realised, in the ordinary course of business.

5. The company made an application for issue of Certificate of Registration with ReserveBank of India (RBI) under Section 45IA of the Reserve Bank of India Act, 1934 so as tocommence and carry on the business of Non-Banking Financial Institution. The applicationof the company was, however, returned by RBI vide its letter dated December 24, 2004with an advice to resubmit the application on the completion of SEBI’s enquiry againstthe group companies.In an Appeal filed by the company before the Appellate Authority (in the Ministry of Finance)against the aforesaid decision of RBI, the Appellate Authority vide its Order datedSeptember 25, 2006, directed the company to resubmit the application along with thelatest balance sheets and other relevant details within 30 days to RBI and RBI to thereafterdecide the case by obtaining necessary response from SEBI within 3 months from thedate of receipt of the Order. The company has resubmitted its application to RBI’s RegionalOffice at New Delhi on 23rd October 2006 as per the aforesaid directions of the AppellateAuthority. Additional details / documents / clarifications as required by RBI from time totime have been submitted. The decision of RBI is awaited. The management is confidentof receiving the Certificate of Registration.

6. Deferred Tax Asset/Liability (Net) consists of the following :-As on As onParticulars 31.03.2010 31.03.2009

Deferred Tax Liability (a)– Fixed Assets 2,86,738 4,41,976Deferred Tax Assets (b)– Expenses allowable on payment basis

under Income Tax Act 4,11,188 9,36,707----------------------------------- ----------------------------------

Net Deferred Tax Assets (b – a) 1,24,450 4,94,731

7. In the opinion of management, there are no separate reportable segments as peraccounting standard segment reporting (AS-17).

8. Disclosure of related party transaction in accordance with Accounting Standard (AS-18)‘Related Party Disclosures’ - As per Annexure :-

9. Earning Per Share :-

Particulars Current Year Previous Year

– Net Profit for the year as per Profit &Loss account before exceptional items 8,30,89,724 7,11,70,495Add : Share of Profit(Loss) in Associates 2,68,38,059 (5,23,05,199)Less : Preference Share Dividend 12,00,000 12,00,000Net Profit available for Equity Shareholdersbefore exceptional item 10,87,27,783 1,76,65,296Add : Exceptional items 3,10,101 1,54,574

– Net Profit available for Equity Shareholdersafter exceptional items 10,90,37,884 1,78,19,870

Basic & Diluted earning per Share -– Weighted average no. of equity Shares

outstanding. 1,19,92,329 1,19,92,329– Excluding Exceptional items 9.07 1.47– Including Exceptional items 9.09 1.49

10. Gain on sale of Long Term Investments (Net) includes Profit of Rs.1,82,40,200/- (Previousyear Loss of Rs.2,03,448/-) on Non Trade Investments and Profit of Rs.6,36,34,461/-(Previous year Rs.6,70,99,024/-) on Trade Investments.

11. Disclosure pursuant to Accounting Standards AS-19 for Leases: -A) Operating Leasea) Particulars of the minimum lease payments under Operating Lease :-

I. Not Later than One year. Rs.9,49,944/-(Rs. 9,49,944/-)

II. Later than one year and not later than five year Rs.Nil(Rs. 9,49,944/-)

III. Later than five years —(—)

b) Minimum lease payments recognised in the statement of profit & loss account duringthe year ended 31st March, 2010 is Rs.9,49,944/- (Rs.14,22,405/-)


21

c) General description of the lease arrangement.— The Lessee shall not sublet or otherwise part with possession of a part or

whole of the premise without the previous consent in writing of the lessor.— The lessee shall use the premises for commercial purposes only.— The lease can be terminated by the lessee by serving one month notice to the

lessor.12. Detail of Closing Stock of Shares

Name of the Company Face As on 31.03.2010 As on 31.03.2009Value Qty. Amount Qty. Amount(Rs.) (Nos.) (Rs.) (Nos.) (Rs.)

State Bank of Bikaner &Jaipur Ltd. 10 50 1,711 50 1,711

Titan Industries Ltd. 10 100 6,075 100 6,075

TOTAL 150 7,786 150 7,786

13. Disclosure pursuant to Accounting Standard - 15a) Defined Contribution Plan

Amount recognized as expense for defined contribution plans are as under :-

Particulars Amount Head under which shown in(in Rs.) Profit & Loss Account

• Contribution to 5,03,903/- - Managerial RemunerationProvident Fund (5,23,951/-) - Rs.3,42,720/-

(Rs.3,31,800/-)- Contribution to Provident Fund and

Gratuity Fund for – Rs.1,61,183/-(Rs.1,92,151/-)

• Contribution to 2,70,000/- - Managerial RemunerationSuperannuation (2,70,000/-)

b) Defined Benefit PlanMovement in net liability



Present value of obligationsas at beginning (A) 16,72,438 18,42,443 28,32,257 23,48,349

Adjustment for increase/(decrease) in openingprovision (B) — (3,10,384) — —

Interest Cost (C) 1,33,795 1,22,565 2,26,581 1,87,867

Current service cost (D) 1,01,816 1,02,632 17,790 2,20,566

Benefits paid (E) — — 20,27,510 17,332

Actuarial loss/(gain) onobligation (F) 9,98,632 (84,818) 1,02,003 92,807

Present value of obligationsas at the year end(G=A+B+C+D-E+F) 29,06,681 16,72,438 11,51,121 28,32,257

c) The amounts recognized in the balance sheet and Profit & loss account are as follows:



Present value of obligation (A) 29,06,681 16,72,440 11,51,121 28,32,257

Estimated fair value ofplan assets (B) 30,29,517 21,80,974 Nil Nil

Net Liability/(Asset) (C=A-B) (1,22,836) (5,08,534) 11,51,121 28,32,257

Amounts in theBalance Sheet

Liability/(Asset) (1,22,836) (5,08,534) 11,51,121 28,32,257

Amount charged toProfit & Loss Account

Current Service Cost 1,01,816 1,02,632 17,790 2,20,566

Interest Cost 1,33,795 1,22,565 2,26,581 1,87,867

Expected Return onPlan Asset (2,02,939) (1,78,802) — —

Actuarial(Gain)/Loss 9,98,632 (84,818) 1,02,003 92,807

10,31,304 (38,423) 3,46,374 5,01,240

Head under which shown Contribution to Provident Salary & Other benefitsin the Profit & Loss account and Gratuity Fund

d) The Actual Return on Plan Assets is as follows :

GratuityS.No. Particulars Current Previous

Year Yeari) Actual return on plan assets (1,22,836) 1,78,802

e) Following are the Principal actuarial assumptions used as at the Balance Sheet date :-


Year Yeari. Discount rate 8 % 8 %

ii Expected rate of return on Plan Assets 9 % 9 %

iii Salary Escalation Rate 6 % 5 %

f) A reconciliation of the opening and closing balances of the fair value of plan assets:


Year YearOpening Fair Value of Plan Assets 21,80,974 20,02,172

i) Expected Return on Plan Assets 2,02,939 1,78,802

ii) Actuarial Gains / (Losses) — —

iii) Contribution by the Employer 6,45,604 —

iv) Benefits Paid — —

Closing Fair Value of Plan Assets 23,83,913 21,80,974

14. The company had allotted 20000, 6% redeemable cumulative Preference Shares of theFace value of Rs.1000/- each on 13/12/2007 which are redeemable at par in 3 annualinstallment of Rs.330/-, Rs.330/- and Rs.340/- per share at the expiry of 5th, 6th and 7thyear respectively from the date of allotment.

15. Contingent liability in respect of Income Tax demand Rs. 36,23,154/- (Previous yearRs. 20,77,254/-) against which the company has preferred appeal before the appropriateauthorities and has also filed rectification application before the Assessing Officer. Thereare apparent calculation mistakes in the working of Assessing Officer and once the sameis rectified, there will be no demand outstanding.

16. Previous year figures have been regrouped/rearranged wherever considered necessary.

17. Schedule 1 to 12 form an integral part of the accounts.

As per our Report of even date annexed thereto

For P. Bholusaria & Co. For and on behalf of the BoardChartered Accountants



ANNEXURE REFERRED TO IN NOTE NO. 8 OF SCHEDULE 12 TO THE ACCOUNTS.RELATED PARTY DISCLOSURES, (As identified by Management and relied upon byAuditors)

As per Accounting Standard (AS-18) on “Related Party Disclosures”, the disclosure oftransactions with the related party as defined in the Accounting Standard are givenbelow :-

1. List of related parties with whom transactions have taken place and relationship :-

a) Key Managerial Personneli) Sh.Anil Goyal, Managing Directorii) Sh.Praveen Gupta – Whole Time Director

b) Enterprise over which significant influence exists :-i) Pisces Portfolios Pvt. Ltd.ii) Merwanjee Securities Ltd.

c) Person having control/significant influence and their relatives :-i) Sh.H.C.Bhasinii) Sh.Lalit Bhasiniii) Mrs.Anju Bhasin

d) Enterprises over which significant influence/control exist of the relatives of thepersons mentioned in (c) above :-i) RRB Master Securities Delhi Ltd.

e) Companies under common control/significant influence.i) HB Stockholdings Ltd.ii) HB Estate Developers Ltd.iii) RRB Securities Ltd.iv) HB Leasing & Finance Co. Ltd.


2. Transactions during the period with Related Parties.Related Party (Amt. in Rs.)

Sl. Nature of Transaction Referred in Referred in Referred in Referred in Referred inNo. 1 (a) above 1 (b) above 1 (c) above 1 (d) above 1 (e) above1. Purchase of Investments — — — 40070968 —

( — ) (113622117) ( — ) (14475148) ( — )2. Sale of Investments — 1624528 — 104853528 —

( — ) (21527267) ( — ) (113622117) ( — )3. Margin paid/received (Net) — — — 16000000 —

( — ) (58250000) ( — ) (23000000) (—)4. Remuneration & Other Services 5817520 — — — —

(5397150) ( — ) ( — ) ( — ) ( — )5. Sitting Fee — — 50,000 — —

( — ) ( — ) (50,000) ( — ) ( — )6. Dividend Paid — — 13792244 — 2,00,000

( — ) ( — ) (1262329) ( — ) (2,00,000)7. Brokerage charges received in respect of Sale/

purchase of securities thru us. — 159847 — — 102791( — ) (309123) (1,200) (—) (473074)

8. Depository charges received 331 20,825 681 490768 55056(2186) (38,370) (968) (222763) (687114)

9. Loan given —(90000000)

10. Reimbursement of Interest —(4093177)

11. Interest Income on loan 22500001(1307589)

12. Rent paid 949944(966213)

13. Payment against Current Liabilities & Provisions 1610000 — — — —(—) ( — ) ( — ) ( — ) ( — )

14. Outstanding as on 31.03.2010– Payable in respect of Current Liabilities — — — — —

( — ) ( — ) ( — ) (—) ( — )– In respect of Security Deposit paid for premises on rent 34500000

(34500000)– Receivable in respect of loan and advances 25000000 187443125

(25000000) (183819748)Note : Figures in bracket relates to previous year.

As per our Report of even date annexed theretoFor P. Bholusaria & Co. For and on behalf of the BoardChartered AccountantsFRN : 000468NAmit Goel Nishu Tomar Anil Goyal J M L SuriPartner Company Secretary Managing Director Director(M. No. 92648)


CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31STMARCH, 2010

(Rs. in Thousands)

Year Ended Year EndedParticulars 31.03.2010 31.03.2009

A) CASH FLOW OPERATION ACTIVITIESNet Profit Before Tax and Extraordinary Item 101962 79654Adjustment for :Depreciation 986 1121Share of Profit/(Loss) in Associates -26838 52305Provision for Gratuity and Leave encashment 346 484Profit on Sale of Investments -81875 -66896Loss on Sale of Fixed Assets 370 0Interest/Dividend -35730 -27735Preliminary Expenses W/off 15 18

------------------------- -------------------------Operating Profit before Working Capital Changes -40764 38951Adjustment for :Trade and other Receivables -61 377Share Application money pending allotmentInventories 0Trade and other payables 10657 -84288

------------------------- -------------------------Cash Generated from Operation -30168 -44960Interest Paid -93 -882Direct Taxes paid -11098 -9307

------------------------- -------------------------Cash Flow Before Extraordinary Items -41359 -55149Extra Ordinary Items 310 155

------------------------- -------------------------Net Cash Flow from Operation Activities (A) -41049 -54994

(B) CASH FLOW FROM INVESTMENTS ACTIVITIESPurchase of Fixed Assets -27 -37Sale of Fixed Assets 225 0Loans & Advances -30625 -54429Purchase of Investments -647008 -142065Sale of Investments 740724 251676Interest Received 24632 18565Dividend Received 11190 10053Share of Profit/(Loss) in Associates 26838 -52305

------------------------- -------------------------Net Cash from (-used) in Investment Activities (B) 125949 31458

(C) CASH FLOW FROM FINANCING ACTIVITIESShare Allotment Money received 0 0Repayment of Short Term(Secured Loans) -1274 -1354Dividend paid -23985 -23985Tax on Dividend -4076 -4076

------------------------- -------------------------Net Cash Flow From Financing Activities (C) -29335 -29415

------------------------- -------------------------Net Increase in Cash & Cash Equivalents (A+B+C) 55565 -52951

------------------------- -------------------------Cash & Cash Equivalents (Opening Balance) 85078 138029Cash & Cash Equivalents (Closing Balance) 140643 85078






22

Folio No. ........................................

(To be filled in by the Shareholder)

HB PORTFOLIO LIMITEDPROXY FORM

I/We .............................................................................................................................................................................................................................................

of.......................................................................................................................................................................................................................................................................

being a member(s) of HB PORTFOLIO LIMITED, hereby appoint.......................................................................................................................................

...............................................................................................................................................................................................................................................................

of ..................................................................................................................................................................................................................................... or

failing him/her of ........................................................................................................................................................................................................................

as my/our proxy to attend and vote for me/us on my/our behalf at the 15th Annual General Meeting of the Company to be held on, 20th of August, 2010

and at any adjournment thereof. As witness my hand/our hands this day.................................of 2010.

DP-Id : ...................................................................................

Client-Id : ...................................................................................

Signed by the Said : ...............................................................................

NOTE : The proxy must be deposited at the Registered Office of the Company at Plot No. 31, Echelon Institutional Area, Sector-32, Gurgaon - 122 001,Haryana not less than 48 hours before the time of holding the Meeting.

HB PORTFOLIO LIMITEDATTENDANCE SLIP

15TH ANNUAL GENERAL MEETING

Time : 11.00 A.M., 20th day of August, 2010

Place : GIA House, I.D.C. Mehrauli Road, Opp. Sector - 14, Gurgaon - 122 001, Haryana

FULL NAME OF THE FIRST SHAREHOLDER.............................................................................................................................................................................

Joint Shareholders, if any.............................................................................................................................................................................................................

Father’s/Husband’s Name ............................................................................................................................................................................................................

Address in full...............................................................................................................................................................................................................................

FULL NAME(S) OF THE PERSON ATTENDING THE MEETING AS A PROXY/SHAREHOLDER(S)

.....................................................................................................................................................................................................................................................................

I/We hereby record my/our presence at the 15th Annual General Meeting held on Friday, 20th day of August, 2010 at 11.00 A.M. at GIA House, I.D.C.Mehrauli Road, Opp. Sector - 14, Gurgaon - 122 001, Haryana

Folio No. / DP-Id: ......................................................................................

Client-Id : ......................................................................................

No. of Shares : ...................................................................................... Signature(s).......................................................

Members may please note that the Auditorium Authorities do not permit carrying of bags/articles/snack packets etc. inside the meeting hall. TheCompany will not make any arrangements for safe keeping of articles etc. outside the Hall. Members may make their own arrangements which shall besolely at their risk and cost and the Company will in no way be responsible for any loss/theft of articles etc.

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