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Notes to Accounts of Aditya Birla Sun Life AMC Ltd.
Mar 31, 2025
xxi. Provisions, Contingent Liabilities and
Contingent Assets
A provision is recognised when the Company has a present
obligation (legal or constructive) as a result of past events
and it is probable that an outflow of resources will be
required to settle the obligation in respect of which a
reliable estimate can be made. When some or all of the
economic benefits required to settle a provision are
expected to be recovered from a third party, a receivable
is recognized as an asset if it is virtually certain that
reimbursement will be received and the amount of the
receivable can be measured reliably. The expense relating
to a provision is presented in the statement of profit and
loss net of any reimbursement.
If the effect of the time value of money is material,
provisions are discounted using a current pre-tax rate
that reflects, when appropriate, the risks specific to the
liability. These are reviewed at each balance sheet date and
adjusted to reflect the current best estimates.
Contingent liabilities are disclosed when there is a possible
obligation arising from past events, the existence of which
will be confirmed only by the occurrence or non-occurrence
of one or more uncertain future events not wholly within
the control of the Company or a present obligation that
arises from past events where it is either not probable
that an outflow of resources will be required to settle the
obligation or a reliable estimate of the amount cannot be
made. Claims against the Company, where the possibility
of any outflow of resources in settlement is remote are
not disclosed as contingent liabilities. A contingent asset
is not recognised but disclosed in the financial statements
where an inflow of economic benefit is virtually certain.
xxii. Share Based Payments
Employees (including senior executives) of the Group
receive remuneration in the form of share-based payments,
whereby employees render services as consideration for
equity instruments (equity-settled transactions).
The Company measures the cost of equity-settled
transactions with employees using Black-Scholes Model
to determine the fair value of the liability incurred on
the grant date. Estimating fair value for share-based
payment transactions requires determination of the
most appropriate valuation model, which is dependent on
the terms and conditions of the grant. This estimate also
requires determination of the most appropriate inputs
to the valuation model including the expected life of the
share option, volatility and dividend yield, and making
assumptions about them.
Equity-settled share-based payments to employees are
measured by reference to the fair value of the equity
instruments at the grant date using Black- Scholes Model.
The fair value, determined at the grant date of the equity-
settled share-based payments, is charged to profit and
loss on the straight-line basis over the vesting period of
the option, based on the Company''s estimate of equity
instruments that will eventually vest, with a corresponding
increase in equity.
In case of forfeiture/lapse stock option, which is not vested,
amortised portion is reversed by credit to employee
compensation expense. In situation where the stock option
expires unexercised, the related balance standing to the
credit of the Employee Stock Options Outstanding Account
is transferred within equity.
The dilutive effect of outstanding options is reflected as
additional share dilution in the computation of diluted
earnings per share
Also, a separate Employee stock options scheme (ESOP)
("the scheme") has been established by Aditya Birla Capital
Limited ("ABCL") (Entity having significant influence). The
scheme provides that employees are granted an option to
subscribe to equity shares of ABCL that vest in a graded
manner. The options may be exercised within a specified
period. Measurement and disclosure of Employee share-
based payment plan is done in accordance with Ind AS 102
Share Based Payments.
ABCL follows the Black-Scholes Merton Value method to
account for its stock-based employee compensation plans.
The cost incurred by the ABCL, in respect of options granted
to employees of the Company is charged to the Statement
of Profit and Loss during the year and recovered by them.
xxiii. Cash Dividend to equity holders of the
Company
The Company recognises a liability to make cash
distributions to equity holders of the Company when the
distribution is authorised and the distribution is no longer
at the discretion of the Company. As per the corporate laws
in India, a distribution is authorised when it is approved by
the shareholders except in the case of interim dividend. A
corresponding amount is recognised directly in equity.
xxiv. Segment reporting
Operating segments are reported in a manner consistent
with the internal reporting provided to the chief operating
decision maker (CODM). The CODM''s function is to allocate
the resources of the Company and assess the performance
of the operating segments of the Company.
xxv. Standards notified but not yet effective:
There are no standards that are notified and not yet
effective as on the date.
Nature and Purpose of the reserves
Securities premium:
Securities Premium is used to record the premium on issue of shares. The reserve can be utilised only for limited purposes such
as issuance of bonus shares in accordance with the provisions of Section 52 of Companies Act, 2013. The securities premium also
includes amount transferred from Share options outstanding account upon exercise of options by employees and subsequent
allotment of shares to them.
General reserve:
Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of net income at a specified
percentage in accordance with applicable regulations. The purpose of these transfers was to ensure that if a dividend distribution
in a given year is more than 10% of the paid up share capital of the Company for that year, then the total dividend distribution is
less than total distributable reserve for that year.
Consequent to introduction of the Companies Act 2013, the requirement to mandatorily transfer a specified percentage of net
profit to general reserve has been withdrawn. However the amount previously transferred to the general reserve can be utilised
only in accordance with the specific requirements of the Companies Act, 2013.
Retained earnings:
Retained earnings are the profits that a company has earned to date, less any dividends or other distributions paid to the
Shareholders, net of utilisation as permitted under applicable regulations.
Share option outstanding account:
The grant date fair value of equity-settled share-based payment transactions with employees and directors are recognised in the
Statement of Profit and Loss with the corresponding credit to this account over the vesting period.
Share application pending allotment:
Until the shares are allotted, the amount received is shown under the Share Application Money Pending Allotment.
NOTE: 24 MANAGEMENT RIGHTS
During financial year ended 31st March, 2015 Aditya Birla Sun Life Trustee Company Private Limited took over the mutual fund
schemes from ING Trust Company Private Limited and simultaneously the Company acquired the right to manage the said schemes
from ING Asset Management (India) Private Limited.
The consideration paid to acquire the right to manage the said schemes along with the incidental expenditure incurred
thereon aggregating to ? 3.79 crores has been treated as Investment Management Right. The Investment Management
Right has been amortized fully over a period of 120 months. For the year ended 31st March, 2025, an amount of ? 0.20 crores
(Previous year ? 0.38 crores) has been amortised.
Above figures are excluding contribution to PF and Other Funds of ? 1.65 crores (Previous year ? 1.00 crores) reimbursed to
related parties - Aditya Birla Financial Shared Services Limited & Aditya Birla Capital Limited.
b. Share based payments
Pursuant to ESOP Plan by ABCL, stock options were granted to the employees of the Company during the year. Total cost
incurred by ABCL till date is being recovered from the Company over the period of vesting of the ESOP grants. A sum of
? 1.27 crores (Previous year ? 0.48 crores) has been charged to the Statement of Profit and Loss. The balance sum of
? 6.03 crores will be recovered in future years as at 31st March, 2025.
c. Gratuity (Defined Benefit Plan)
The following table sets out the status of the gratuity plan as required under IND AS 19 as certified by actuary. Reconciliation
of opening and closing balances of the present value of the defined benefit obligation.
NOTE: 30 CAPITAL MANAGEMENT
For the purpose of the Company''s capital management, capital includes issued equity capital, share premium and all other equity
reserves attributable to the equity holders of the Company. The primary objective of the Company''s capital management is to
maximise the shareholder value.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements
of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to
shareholders, return capital to shareholders or issue new shares.
No changes were made in the objectives, policies or processes for managing capital during the year ended 31st March, 2025.
* The management assessed that investments in subsidiaries, cash and cash equivalents, trade receivables, other financial assets, trade payables, lease
liabilities and other financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. Accordingly,
fair value hierarchy for these financial instruments have not been presented above.
Valuation techniques used to determine fair value:
- Mutual Funds: Net Asset Value (NAV) declared by the mutual fund at which units are issued or redeemed
Alternative Investment Funds: Net Asset Value (NAV) provided by issuer fund which is arrived at based on valuation from
independent valuer for unlisted portfolio companies, quoted price of listed portfolio companies and price of recent investments
- Debt Securities:
- Fair value of debt securities which are actively traded bonds, is derived on the basis of quoted price available on the
National Stock Exchange
- Fair value of Non-Convertible Debentures, is derived on the basis of Fair Valuation report obtained from an Independent
Registered Valuer.
- Equity Instruments: On the basis of Networth of the Company
In order to assess Level 3 valuations as per Company''s investment policy, the management reviews the performance of the investee
companies (including unlisted portfolio companies of venture capital funds and alternative investment funds) on a regular basis
by tracking their latest available financial statements/financial information, valuation report of independent valuers, recent
transaction results etc. which are considered in valuation process.
NOTE: 32 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Company''s principal financial liabilities comprise trade and other payables. The Company''s principal financial assets include trade
and other receivables, and cash and cash equivalents that derive directly from its operations. The Company also holds investments
in mutual fund units, debt and equity instruments.
The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management oversees the management
of these risks. The Company''s financial risk management is an integral part of how to plan and execute its business strategies. The
Company''s financial risk management policy is set by Risk Management Committee and the auditors have relied on the same. The
Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.
A. Market Risk
Market risk is the risk of loss of future earnings, fair values or future cash flows related to financial instrument that may result
from adverse changes in market rates and prices (such as foreign exchange rates, interest rates, other prices). The Company
is exposed to market risk primarily related to interest rate risk and price risk.
(i) Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because
of changes in market interest rates. The sensitivity of the portfolio towards the interest rate is mentioned in the
table below
Sensitivity
The following table demonstrates the sensitivity to:
⢠Interest Rate Risk is basis impact on debt portfolios for 1% change in interest rates.
⢠Hybrid funds considered at 100% as a conservative basis for assessing interest rate impact on portfolio. (which form
approximately 1% of the entire portfolio of schemes).
(ii) Foreign Currency Risk
The Company has insignificant amount of foreign currency denominated assets and liabilities. Accordingly, there is no
significant exposure to currency risk.
(iii) Price Risk
Price risk is the risk that the value of the financial instrument will fluctuate as a result of changes in market prices and
related market variables including interest rate for investments in debt oriented mutual funds and debt securities,
caused by factors specific to an individual investment, its issuer and market.
The Company''s exposure to price risk arises from investments in Units of mutual funds, alternative investment funds,
etc which are classified as financial asset at Fair Value through Profit and Loss and is as follows:
B. Credit Risk
Credit Risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading
to a financial loss. The Company''s has clearly defined policies to mitigate counterparty risks. Cash and liquid investments
are held primarily in mutual funds and banks with good credit ratings. Defined limits are in place for exposure to individual
counterparties in case of mutual fund houses and banks.
Customer credit risk is managed by each business unit subject to the Company''s established policy, procedures and control
relating to customer credit risk management. Company has major receivable from mutual fund schemes.
Expected Credit Loss on Financial Assets
The Company continuously monitors all financial assets subject to ECLs. In order to determine whether an instrument is subject
to 12 month ECL or life time ECL, the company assesses whether there has been a significant increase in credit risk or the
asset has become credit impaired since initial recognition. For trade receivables, the company applies a simplified approach
in calculating ECLs. Therefore, the company does not track changes in credit risk, but instead recognises a loss allowance
based on lifetime ECLs at each reporting date. The company has determined based on historical experience and expectations
that the ECL on its trade receivables is insignificant and was not recorded. The company applies following quantitative and
qualitative criteria to assess whether there is significant increase in credit risk or the asset has been credit impaired:
⢠Historical trend of collection from counterparty
⢠Company''s contractual rights with respect to recovery of dues from counterparty
⢠Credit rating of counterparty and any relevant information available in public domain
ECL is a probability weighted estimate of credit losses. It is measured as the present value of cash shortfalls (i.e., the difference
between the cash flows due to the company in accordance with contract and the cash flows that the Company expects to
receive).
The Company has three types of financial assets that are subject to the expected credit loss:
⢠Cash and cash equivalent
⢠Trade and other receivables
⢠Investment in debt securities measured at amortised cost
Trade and Other Receivables:
Exposures to customers'' outstanding at the end of each reporting period are reviewed by the Company to determine incurred
and expected credit losses. Historical trends of collection from counterparties on timely basis reflects low level of credit risk.
As the Company has a contractual right to such receivables as well as the control over such funds due from customers, the
Company does not estimate any credit risk in relation to such receivables.
Cash and Cash Equivalents:
The Company holds cash and cash equivalents and other bank balances as per note 3 and 4. The credit worthiness of such
banks and financial institutions is evaluated by the management on an ongoing basis and is considered to be high.
Investment in Debt Securities measured at amortised cost:
Funds are invested after taking into account parameters like safety, liquidity and post tax returns etc. The Company avoids
concentration of credit risk by spreading them over several counterparties with good credit rating profile and sound financial
position. The Company''s exposure and credit ratings of its counterparties are monitored on an ongoing basis.
NOTE: 35 EMPLOYEE STOCK OPTIONS SCHEME
At the Board Meeting held on 14th April, 2021 the Company approved the grant of not more than 46,08,000 Equity Shares by way
of grant of Stock Options and restricted Stock Units ("RSUs"). Out of these, the Nomination, Remuneration and Compensation
Committee has granted 32,32,899 ESOPs, 5,08,117 PRSU, 1,96,374 Long Term RSU & 2,46,863 RSU Founder under the Scheme
titled "Aditya Birla Sun Life AMC Limited Employee Stock Option Scheme 2021" in 4 categories of Long Term Incentive Plans ("LTIP")
identified as LTIP 1, LTIP 2, LTIP 3 & LTIP 4 respectively. The Scheme allows the Grant of Stock options to employees of the Company
(whether in India or abroad) that meet the eligibility criteria. Each option comprises one underlying Equity Share. There are no cash
settlement alternatives. The Group accounts for the employees stock option scheme as an equity-settled plan.
The Company has not borrowed any fund from bank or financial Institution or other lender hence disclosure is not applicable.
NOTE: 39
The Company does not have any transactions which were not recorded in the books of account but offered as income during the
year in the income tax assessment.
NOTE: 40
The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for
holding any Benami property.
NOTE: 41
The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
NOTE: 42
The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
NOTE: 43
The Company has complied with the number of layers prescribed under section 186(1) and clause 87 of section 2 of the Companies
Act 2013.
NOTE: 44
The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities
(Intermediaries) with the understanding that the Intermediary shall:
a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the
Company (Ultimate Beneficiaries) or
b. provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the
understanding (whether recorded in writing or otherwise) that the Company shall:
a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the
Funding Party (Ultimate Beneficiaries)or
b. provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
NOTE: 46
The Company did not enable audit trail on database feature in Sun System due to application performance consideration in
FY 2023-24 however video recording via PAM (Privilege Access Management) tool was available for rolling 6 months period. This
was remediated by the company on 30th May, 2024.Further no instance of audit trail feature being tampered with was noted in
respect of the software.
NOTE: 47 EVENTS AFTER THE REPORTING PERIOD
The Board of Directors have proposed a final dividend of ? 24 per equity share (face value of ? 5 each) for the year ended March
31, 2025, subject to the approval of the shareholders at the ensuing Annual General Meeting.
As per our report of even date attached For and on behalf of the Board of Directors of
For S.R.Batliboi & Co LLP Aditya Birla Sun Life AMC Limited
Chartered Accountants
Firm''s Registration No.: 301003E/E300005
Rutushtra Patell Vishakha Mulye A. Balasubramanian
Partner Director Managing Director and CEO
Membership No. 123596 DIN: 00203578 DIN: 02928193
Pradeep Sharma Prateek Savla
Chief Financial Officer Company Secretary
ACS No. 29500
Place: Mumbai Place: Mumbai
Date: 28th April, 2025 Date: 28th April, 2025
Mar 31, 2024
a) Term/right attached to equity shares
The Company has only one class of equity shares having a par value of ''5 per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive the remaining assets of the Company after distributions of all preferential amounts. However, no such preferential amount exist currently. The distribution will be in the proporation to the number of equity shares held by the shareholders.
##In order to achieve Minimum Public Shareholding (MPS) of 25% post IPO, in compliance with the SEBI MPS guidelines, the Promoters of the Company i.e. Aditya Birla Capital Limited and Sun Life (India) AMC Investments Inc had sold in aggregate 11.16% shareholding in the Company on 19th March, 2024 and 20th March, 2024 by way Offer for Sale (OFS) through Stock Exchange Mechanism. Post OFS and as on 31st March, 2024, the Promoters and the Public shareholding in the Company is 75.32% and 24.68%, respectively.
Nature and Purpose of the reserves Securities premium:
Securities Premium is used to record the premium on issue of shares. The reserve can be utilised only for limited purposes such as issuance of bonus shares in accordance with the provisions of Section 52 of Companies Act, 2013. The securities premium also includes amount transfered from Share options outstanding account upon exercise of options by employees and subsequent allotment of shares to them.
General reserve:
Under the erstwhile Companies Act, 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations. The purpose of these transfers was to ensure that if a dividend distribution in a given year is more than 10% of the paid up share capital of the Company for that year, then the total dividend distribution is less than total distributable reserve for that year.
Consequent to introduction of the Companies Act, 2013, the requirement to mandatorily transfer a specified percentage of net profit to general reserve has been withdrawn. However the amount previously transferred to the general reserve can be utilised only in accordance with the specific requirements of the Companies Act, 2013.
Retained earnings:
Retained earnings are the profits that a company has earned to date, less any dividends or other distributions paid to the Shareholders, net of utilisation as permitted under applicable regulations.
Share option outstanding account:
The grant date fair value of equity-settled share-based payment transactions with employees and directors are recognised in the Statement of Profit and Loss with the corresponding credit to this account over the vesting period.
Share application pending allotment:
Until the shares are allotted, the amount received is shown under the Share Application Money Pending Allotment.
NOTE: 24 MANAGEMENT RIGHTS
During financial year ended 31st March, 2015 Aditya Birla Sun Life Trustee Company Private Limited took over the mutual fund schemes from ING Trust Company Private Limited and simultaneously the Company acquired the right to manage the said schemes from ING Asset Management (India) Private Limited.
The consideration paid to acquire the right to manage the said schemes along with the incidental expenditure incurred thereon aggregating to '' 3.79 Crore has been treated as Investment Management Right. The Investment Management Right will be amortised over a period of 120 months. For the year ended 31st March, 2024, an amount of I 0.38 Crore (Previous year I 0.38 Crore) has been amortised. Balance life of Investment Management Right is 6 months.
NOTE: 25 EMPLOYEE BENEFITS
In accordance with the Indian Accounting Standard (Ind AS) 19 "Employee Benefits", the Company has classified the various benefits provided to the employees as under:
a) Defined Contribution Plan
Defined Contribution Plan - The Company has recognised the following amounts in the Statement of Profit and Loss Account which are included under contribution to Provident Fund and other fund.
b) Share-based payments
Pursuant to ESOP Plan by ABCL, stock options were granted to the employees of the Company during the year. Total cost incurred by ABCL till date is being recovered from the Company over the period of vesting of the ESOP grants. A sum of ? 0.48 Crore (Previous year ? 0.56 Crore) has been charged to the Statement of Profit and Loss. The balance sum of ? 2.74 Crore will be recovered in future years as at 31st March, 2024.
c) Gratuity (Defined Benefit Plan)
The following table sets out the status of the gratuity plan as required under IND AS 19 as certified by actuary. Reconciliation of opening and closing balances of the present value of the defined benefit obligation.
NOTE: 28 SEGMENT INFORMATION
The CEO of the Company has been identified as the Chief Operating Decision Maker (CODM) as defined by Ind AS 108 - "Operating Segments". The CODM evaluates the Company''s performance and allocates resources. The Company''s operations predominantly relate to providing asset management services, portfolio management and other advisory services. In the opinion of the CODM and Management, the risks and rewards attached to the business are similar in nature. Hence the separate Segment under Ind AS 108 on "Operating Segments" is not required to be reported as the Company''s business is restricted to single Operating Segment i.e., Asset Management Services.
NOTE: 30 CAPITAL MANAGEMENT
For the purpose of the Company''s capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company''s capital management is to maximise the shareholder value.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.
No changes were made in the objectives, policies or processes for managing capital during the year ended 31st March, 2024.
*The management assessed that investments in subsidiaries, cash and cash equivalents, trade receivables, other financial assets, trade payables, lease liabilities and other financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. Accordingly, fair value hierarchy for these financial instruments have not been presented above.
Valuation techniques used to determine fair value:- Mutual Funds:- Net Asset Value (NAV) declared by the mutual fund at which units are issued or redeemed
Alternative Investment Funds:- Net Asset Value (NAV) provided by issuer fund which is arrived at based on valuation from independent valuer for unlisted portfolio companies, quoted price of listed portfolio companies and price of recent investments
- Debt Securities:- Fair value of debt securities which are actively traded bonds, is derived on the basis of quoted price available on the National Stock Exchange
- Equity Instruments:- On the basis of Net worth of the Company.
In order to assess Level 3 valuations as per Company''s investment policy, the management reviews the performance of the investee companies (including unlisted portfolio companies of venture capital funds and alternative investment funds) on a regular basis by tracking their latest available financial statements / financial information, valuation report of independent valuers, recent transaction results etc. which are considered in valuation process.
NOTE: 32 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Company''s principal financial liabilities comprise trade and other payables. The Company''s principal financial assets include trade and other receivables, and cash and cash equivalents that derive directly from its operations. The Company also holds investments in mutual fund units, debt and equity instruments.
The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management oversees the management of these risks. The Company''s financial risk management is an integral part of how to plan and execute its business strategies. The Company''s financial risk management policy is set by Risk Management Committee and the auditors have relied on the same. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.
A. Market Risk
Market risk is the risk of loss of future earnings, fair values or future cash flows related to financial instrument that may result from adverse changes in market rates and prices (such as foreign exchange rates, interest rates, other prices). The Company is exposed to market risk primarily related to interest rate risk and price risk.
(i) Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The sensitivity of the portfolio towards the interest rate is mentioned in the table below:
Sensitivity
The following table demonstrates the sensitivity to:
⢠Interest Rate Risk is basis impact on debt portfolios for 1% change in interest rates.
⢠Hybrid funds considered at 100% as a conservative basis for assessing interest rate impact on portfolio. (which form approximately 1% of the entire portfolio of schemes).
(ii) Foreign Currency Risk
The Company has insignificant amount of foreign currency denominated assets and liabilities. Accordingly, there is no significant exposure to currency risk.
(iii) Price Risk
Price risk is the risk that the value of the financial instrument will fluctuate as a result of changes in market prices and related market variables including interest rate for investments in debt oriented mutual funds and debt securities, caused by factors specific to an individual investment, its issuer and market.
B. Credit Risk
Credit Risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company''s has clearly defined policies to mitigate counterparty risks. Cash and liquid investments are held primarily in mutual funds and banks with good credit ratings. Defined limits are in place for exposure to individual counterparties in case of mutual fund houses and banks.
Customer credit risk is managed by each business unit subject to the Company''s established policy, procedures and control relating to customer credit risk management. Company has major receivable from mutual fund schemes.
Expected Credit Loss on Financial Assets
The Company continuously monitors all financial assets subject to ECLs. In order to determine whether an instrument is subject to 12 month ECL or life time ECL, the Company assesses whether there has been a significant increase in credit risk or the asset has become credit impaired since initial recognition. For trade receivables, the Company applies a simplified approach in calculating ECLs. Therefore, the Company does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Company has determined based on historical experience and expectations that the ECL on its trade receivables is insignificant and was not recorded. The Company applies following quantitative and qualitative criteria to assess whether there is significant increase in credit risk or the asset has been credit impaired:
- Historical trend of collection from counterparty
- Company''s contractual rights with respect to recovery of dues from counterparty
- Credit rating of counterparty and any relevant information available in public domain.
ECL is a probability weighted estimate of credit losses. It is measured as the present value of cash shortfalls (i.e., the difference between the cash flows due to the Company in accordance with contract and the cash flows that the Company expects to receive).
The Company has three types of financial assets that are subject to the expected credit loss:
- Cash and cash equivalent
- Trade and other receivables
- Investment in debt securities measured at amortised cost.
Trade and Other Receivables:-
Exposures to customers'' outstanding at the end of each reporting period are reviewed by the Company to determine incurred and expected credit losses. Historical trends of collection from counterparties on timely basis reflects low level of credit risk. As the Company has a contractual right to such receivables as well as the control over such funds due from customers, the Company does not estimate any credit risk in relation to such receivables.
Cash and Cash Equivalents:-
The Company holds cash and cash equivalents and other bank balances as per note 3 and 4. The credit worthiness of such banks and financial institutions is evaluated by the management on an ongoing basis and is considered to be high.
Investment in Debt Securities measured at amortised cost:-
Funds are invested after taking into account parameters like safety, liquidity and post tax returns etc. The Company avoids concentration of credit risk by spreading them over several counterparties with good credit rating profile and sound financial position. The Company''s exposure and credit ratings of its counterparties are monitored on an ongoing basis.
C. Liquidity Risk
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations or at a reasonable price. The Company''s Finance department is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management.
Maturity profile of Financial liabilities
The table below provides details regarding the remaining contractual maturities of financial liabilities at the reporting date based on contractual undiscounted payments.
NOTE: 35 EMPLOYEE STOCK OPTIONS SCHEME
At the Board Meeting held on 14th April, 2021 the Company approved the grant of not more than 46,08,000 Equity Shares by way of grant of Stock Options and restricted Stock Units ("RSUs"). Out of these, the Nomination, Remuneration and Compensation Committee has granted 32,32,899 ESOPs, 5,08,117 PRSU , 1,96,374 Long-Term RSU & 2,46,863 RSU Founder under the Scheme titled "Aditya Birla Sun Life AMC Limited Employee Stock Option Scheme 2021 " in 4 categories of Long-Term Incentive Plans ("LTIP") identified as LTIP 1, LTIP 2, LTIP 3 & LTIP 4 respectively. The Scheme allows the Grant of Stock options to employees of the Company (whether in India or abroad) that meet the eligibility criteria. Each option comprises one underlying Equity Share. There are no cash settlement alternatives. The Group accounts for the employees stock option scheme as an equity-settled plan
The fair value at grant date is independently determined by valuer using Black-Scholes Merton Model which takes into account the exercise price, the term of the option, the share price at grant date and historical volatility of the Peer companies and Index, the expected dividend yield and the risk-free interest rate for the term of the option.
Apart from stock options granted as above, the Nomination, Remuneration and Compensation Committee has granted 6,45,337 ESOPs & 13,192 PRSU under the Scheme titled "Aditya Birla Sun Life AMC Limited Employee Stock Option Scheme 2021 " in 2 categories of Long-Term Incentive Plans ("LTIP") identified as LTIP 1 & LTIP 2 respectively. The Scheme allows the Grant of Stock options to employees of the Company (whether in India or abroad) that meet the eligibility criteria. Each option comprises one underlying Equity Share. There are no cash settlement alternatives. The Group accounts for the employees stock option scheme as an equity-settled plan.
The fair value at grant date is independently determined by valuer using Black-Scholes Merton Model which takes into account the exercise price, the term of the option, the share price at grant date and historical volatility of the Peer companies and Index, the expected dividend yield and the risk-free interest rate for the term of the option.
Apart from stock options granted as above, the Nomination, Remuneration and Compensation Committee has granted 72,862 ESOPs & 11,451 RSU & 30,075 ESOPs under the Scheme titled "Aditya Birla Sun Life AMC Limited Employee Stock Option Scheme 2021" in 2 categories of Long-Term Incentive Plans ("LTIP") identified as LTIP 1, LTIP 2 & LTIP 3 respectively. The Scheme allows the Grant of Stock options to employees of the Company (whether in India or abroad) that meet the eligibility criteria. Each option comprises one underlying Equity Share. There are no cash settlement alternatives. The Group accounts for the employees stock option scheme as an equity-settled plan.
The fair value at grant date is independently determined by valuer using Black-Scholes Merton Model which takes into account the exercise price, the term of the option, the share price at grant date and historical volatility of the Peer companies and Index, the expected dividend yield and the risk-free interest rate for the term of the option.
The Company has not borrowed any fund from bank or financial Institution or other lender hence disclosure is not applicable.
NOTE: 39
The Company does not have any transactions which were not recoded in the books of account but offered as income during the year in the income tax assessment.
NOTE: 40
The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
NOTE: 41
The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
NOTE: 42
The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
NOTE: 43
The Company has complied with the number of layers prescribed under section 186(1) and clause 87 of section 2 of the Companies Act, 2013.
NOTE: 44
The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries)or
b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries)or
b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
NOTE: 46
The Code on Social Security 2020, relating to employee benefits during employment and post-employment, has been notified in the Official Gazette on 29th September, 2020, which could impact the contributions made by the Company towards Provident Fund and Gratuity. The effective date from which the changes are applicable is yet to be notified, and the rules are yet to be framed. Impact, if any, of the change will be assessed and accounted in period of notification of the relevant provisions.
NOTE: 47
Daily back up of books of account and accounting records is taken on servers physically located in India.
NOTE: 48
The Company has used accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software. The Company did not enable audit trail on database feature due to application performance consideration which has been recorded through PAM system (Privilege Access Management) in the form of video logs which are maintained for rolling 6 months. Further no instance of audit trail feature being tampered with was noted in respect of the software.
NOTE: 49
In order to achieve Minimum Public Shareholding (MPS) of 25% post IPO, in compliance with the SEBI MPS guidelines, the Promoters of the Company i.e. Aditya Birla Capital Limited and Sun Life (India) AMC Investments Inc had sold in aggregate 11.16% shareholding in the Company on 19th March, 2024 and 20th March, 2024 by way Offer for Sale (OFS) through Stock Exchange Mechanism. Post OFS and as on 31st March, 2024, the Promoters and the Public shareholding in the Company is 75.32% and 24.68%, respectively.
NOTE: 50 EVENTS AFTER THE REPORTING PERIOD
The Board of Directors have proposed a final dividend of ? 13.50 per equity share (face value of ? 5 each) for the year ended 31st March, 2024, subject to the approval of the shareholders at the ensuing Annual General Meeting.
NOTE: 51 PRIOR PERIOD COMPARATIVES
Previous year''s figures have been regrouped/reclassified wherever necessary to correspond with the current year''s classification/ disclosure.
Mar 31, 2023
a) Term/right attached to equity shares
The Company has only one class of equity shares having a par value of '' 5 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive the remaining assets of the Company after distributions of all preferential amounts. However, no such preferential amount exist currently. The distribution will be in the proporation to the number of equity shares held by the shareholders.
Pursuant to a resolution of Board of Directors dated 05th April, 2021 and the shareholders meeting dated 06th April, 2021, the Authorised Share Capital of the Company has been increased from ? 2,000 Lakh consisting of 40,000,000 Equity Shares of ? 5/- (Rupees Five only) each to ? 16,000 Lakh consisting of 320,000,000 Equity Shares of ? 5/- each.
The Board of Directors pursuant to a resolution dated 05th April, 2021 and the shareholders special resolution dated 06th April, 2021 have approved the issuance of seven bonus equity shares of face value ? 5 each for every one existing fully paid up equity share of face value ? 5 each and accordingly 252,000,000 bonus equity shares were issued and allotted in accordance with the Section 63 of the Companies Act, 2013.
Nature and purpose of the reserves Share Premium:
Share Premium is used to record the premium (amount received in excess of face value of equity shares) on issue of shares. The reserve can be utilised only for limited purposes such as issuance of bonus shares in accordance with the provisions of Section 52 of Companies Act, 2013. The Company has utilsed the Share Premium in issue of bonus equity shares in the previous year.
General reserve:
Under the erstwhile Companies Act, 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations. The purpose of these transfers was to ensure that if a dividend distribution in a given year is more than 10% of the paid up share capital of the Company for that year, then the total dividend distribution is less than total distributable reserve for that year.
Consequent to introduction of the Companies Act, 2013, the requirement to mandatorily transfer a specified percentage of net profit to general reserve has been withdrawn. However the amount previously transferred to the general reserve can be utilised only in accordance with the specific requirements of the Companies Act, 2013.
Retained earnings:
Retained earnings are the profits that a company has earned to date, less any dividends or other distributions paid to the Shareholders, net of utilisation as permitted under applicable regulations.
Share Option Outstanding Account:
The grant date fair value of equity-settled share-based payment transactions with employees and directors are recognised in the Statement of Profit and Loss with the corresponding credit to this account over the vesting period.
|
NOTE: 23 CONTINGENT LIABILITIES AND COMMITMENTS |
||
|
(i) Contingent liabilities: |
(? in Lakh) |
|
|
No. Particulars |
As at 31st March, 2023 |
As at 31st March, 2022 |
|
Claims against the Company not acknowledged as debts in respect of; |
||
|
i) Income tax matters |
*18,992.16 |
4,638.78 |
|
ii) Other matters |
159.15 |
83.85 |
|
*Note: Includes - |
||
1. AY 2020-21- Demand of '' 8,643.89 Lakh was raised by the officer during assessment proceedings. Credit for dividend distribution tax (DDT) of '' 6,783.24 Lakh was not provided by the officer and consequently, interest on DDT of '' 2,287.80 Lakh was levied. High court has directed the Income-tax department to decide the rectification application filed and has granted stay ad-interim.
2. AY 2016-17- Demand of '' 3,910.12 Lakh was raised by the officer during reassessment proceedings. The demand was due to adhoc addition of '' 5,951.45 Lakh and consequential levy of interest. High court has directed the Income-tax department to decide the rectification application filed and has granted stay ad-interim.
3. AY 2013-14- Demand of '' 4,834.96 Lakh was raised by the officer during reassessment proceedings. The demand was due to nongranting of TDS credit. High court has directed the Income-tax department to decide the rectification application filed and has granted stay ad-interim.
|
(ii) Commitments - unexecuted contracts: |
(? in Lakh) |
|
|
Particulars |
As at 31st March, 2023 |
As at 31st March, 2022 |
|
Commitments for the acquisition of property, plant and equipment |
746.60 |
543.76 |
|
Commitments for investment activities |
925.00 |
*14,445.95 |
|
* This includes commitment to invest ? 13,820.95 Lakh in Mutual Fund schemes IMD-IDOF5/P/CIR/2021/624 dated 02nd September, 2021 |
managed by the Company vide SEBI circular SEBI/HO/IMD/ |
|
The Company has issued a bank guarantee of ? 2,468.25 Lakh to NSE for the purpose of IPO during FY2021-22 and the same is in force as on FY 2022-23.
During financial year ended 31st March, 2015 Aditya Birla Sun Life Trustee Company Private Limited took over the mutual fund schemes from ING Trust Company Private Limited and simultaneously the Company acquired the right to manage the said schemes from ING Asset Management (India) Private Limited.
The consideration paid to acquire the right to manage the said schemes along with the incidental expenditure incurred thereon aggregating to '' 378.51 Lakh has been treated as Investment Management Right. The Investment Management Right will be amortised over a period of 120 months. For the year ended 31st March, 2023, an amount of '' 37.85 Lakh (Previous year '' 37.85 Lakh) has been amortised. Balance life of Investment Management Right is 18 months.
Above figures are excluding contribution to PF and Other Funds of ? 94.13 Lakh (Previous year ? 95.77 Lakh) reimbursed to related parties - Aditya Birla Financial Shared Services Limited & Aditya Birla Capital Limited.
b) Share based payments
Pursuant to ESOP Plan by ABCL, stock options were granted to the employees of the Company during the year. Total cost incurred by ABCL (net of reversals) till date is being recovered from the Company over the period of vesting of the ESOP grants. A sum of ? 56.50 Lakh (Previous year ? (4.71) Lakh) has been charged to the Statement of Profit and Loss. The balance sum of ? 4.76 Lakh will be recovered in future years as at 31st March, 2023.
The impact of split of shares and issue of bonus shares are retrospectively considered for the computation of EPS as per the requirement of Ind AS 33.
The CEO of the Company has been identified as the Chief Operating Decision Maker (CODM) as defined by Ind AS 108 - âOperating Segmentsâ. The CODM evaluates the Companyâs performance and allocates resources. The Companyâs operations predominantly relate to providing asset management services, portfolio management and other advisory services. In the opinion of the CODM and Management, the risks and rewards attached to the business are similar in nature. Hence the separate Segment under Ind AS 108 on âOperating Segmentsâ is not required to be reported as the Companyâs business is restricted to single Operating Segment i.e., Asset Management Services.
For the purpose of the Companyâs capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Companyâs capital management is to maximise the shareholder value.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.
No changes were made in the objectives, policies or processes for managing capital during the year ended 31st March, 2023.
The management assessed that cash and cash equivalents, trade receivables, other financial assets, trade payables, lease liabilities and other financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. Accordingly, fair value hierarchy for these financial instruments have not been presented above.
Valuation techniques used to determine fair value: -
- Mutual Funds: - Net Asset Value (NAV) declared by the mutual fund at which units are issued or redeemed
- Alternative Investment Funds: - Net Asset Value (NAV) provided by issuer fund which is arrived at based on valuation from independent valuer for unlisted portfolio companies, quoted price of listed portfolio companies and price of recent investments
- Debt Securities: - Fair value of debt securities which are actively traded bonds, is derived on the basis of quoted price available on the National Stock Exchange
- Equity Instruments: - Discounted cash flow based on present value of the expected future economic benefit
In order to assess Level 3 valuations as per Companyâs investment policy, the management reviews the performance of the investee companies (including unlisted portfolio companies of venture capital funds and alternative investment funds) on a regular basis by tracking their latest available financial statements / financial information, valuation report of independent valuers, recent transaction results etc. which are considered in valuation process.
NOTE: 32 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Companyâs principal financial liabilities comprise trade and other payables. The Companyâs principal financial assets include trade and other receivables, and cash and cash equivalents that derive directly from its operations. The Company also holds investments in mutual fund units, debt and equity instruments.
The Company is exposed to market risk, credit risk and liquidity risk. The Companyâs senior management oversees the management of these risks. The Companyâs financial risk management is an integral part of how to plan and execute its business strategies. The Companyâs financial risk management policy is set by Risk Management Committee and the auditors have relied on the same. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.
Market risk is the risk of loss of future earnings, fair values or future cash flows related to financial instrument that may result from adverse changes in market rates and prices (such as foreign exchange rates, interest rates, other prices). The Company is exposed to market risk primarily related to interest rate risk and price risk.
(i) Interest Rate Risk
I nterest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The sensitivity of the portfolio towards the interest rate is mentioned in the table below
Sensitivity
The following table demonstrates the sensitivity to:
⢠Interest Rate Risk is basis impact on debt portfolios for 1% change in interest rates.
⢠Hybrid funds considered at 100% as a conservative basis for assessing interest rate impact on portfolio. (which form approximately 1% of the entire portfolio of schemes).
(ii) Foreign Currency Risk
The Company has insignificant amount of foreign currency denominated assets and liabilities. Accordingly, there is no significant exposure to currency risk.
(iii) Price Risk
Price risk is the risk that the value of the financial instrument will fluctuate as a result of changes in market prices and related market variables including interest rate for investments in debt oriented mutual funds and debt securities, caused by factors specific to an individual investment, its issuer and market.
The Companyâs exposure to price risk arises from investments in Units of mutual funds, alternative investment funds, etc which are classified as financial asset at Fair Value through Profit and Loss and is as follows:
B. Credit Risk
Credit Risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Companyâs has clearly defined policies to mitigate counterparty risks. Cash and liquid investments are held primarily in mutual funds and banks with good credit ratings. Defined limits are in place for exposure to individual counterparties in case of mutual fund houses and banks.
Customer credit risk is managed by each business unit subject to the Companyâs established policy, procedures and control relating to customer credit risk management. Company has major receivable from mutual fund schemes.
Expected Credit Loss on Financial Assets
The Company continuously monitors all financial assets subject to ECLs. In order to determine whether an instrument is subject to 12 month ECL or life time ECL, the Company assesses whether there has been a significant increase in credit risk or the asset has become credit impaired since initial recognition. For trade receivables, the Company applies a simplified approach in calculating ECLs. Therefore, the Company does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The company has determined based on historical experience and expectations that the ECL on its trade receivables is insignificant and was not recorded. The company applies following quantitative and qualitative criteria to assess whether there is significant increase in credit risk or the asset has been credit impaired:
- Historical trend of collection from counterparty
- Companyâs contractual rights with respect to recovery of dues from counterparty
- Credit rating of counterparty and any relevant information available in public domain
ECL is a probability weighted estimate of credit losses. It is measured as the present value of cash shortfalls (i.e., the difference between the cash flows due to the Company in accordance with contract and the cash flows that the Company expects to receive).
The Company has three types of financial assets that are subject to the expected credit loss:
- Cash and cash equivalent
- Trade and other receivables
- Investment in debt securities measured at amortised cost
Trade and Other Receivables:-
Exposures to customersâ outstanding at the end of each reporting period are reviewed by the Company to determine incurred and expected credit losses. Historical trends of collection from counterparties on timely basis reflects low level of credit risk. As the Company has a contractual right to such receivables as well as the control over such funds due from customers, the Company does not estimate any credit risk in relation to such receivables.
Cash and Cash Equivalents:-
The Company holds cash and cash equivalents and other bank balances as per note 3 and 4. The credit worthiness of such banks and financial institutions is evaluated by the management on an ongoing basis and is considered to be high.
Investment in Debt Securities measured at amortised cost:-
Funds are invested after taking into account parameters like safety, liquidity and post tax returns etc. The Company avoids concentration of credit risk by spreading them over several counterparties with good credit rating profile and sound financial position. The Companyâs exposure and credit ratings of its counterparties are monitored on an ongoing basis.
C. Liquidity risk
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations or at a reasonable price. The Companyâs Finance department is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management.
Since all the options were granted/lapsed, at the same exercise price per option under the respective category of ESOPs, the weighted average exercise price per option for all these line items under the respective category of ESOPs is the same.
Fair valuation
The fair value at grant date is independently determined by valuer using Black-Scholes Merton Model which takes into account the exercise price, the term of the option, the share price at grant date and historical volatility of the Peer companies and Index, the expected dividend yield and the risk-free interest rate for the term of the option.
Apart from stock options granted as above, the Nomination, Remuneration and Compensation Committee has granted 645,337 ESOPs & 13,192 PRSU under the Scheme titled âAditya Birla Sun Life AMC Limited Employee Stock Option Scheme 2021â in 2 categories of Long-Term Incentive Plans (âLTIPâ) identified as LTIP 1 & LTIP 2 respectively. The Scheme allows the Grant of Stock options to employees of the Company (whether in India or abroad) that meet the eligibility criteria. Each option comprises one underlying Equity Share. There are no cash settlement alternatives. The Group accounts for the employees stock option scheme as an equity-settled plan.
The Company had completed its Initial Public Offering (IPO) of 38,880,000 equity shares of face value of ? 5/- each for cash at an issue price of ? 712/- per equity share aggregating to ? 276,825.60 Lakh, consisting of an offer for sale of 38,880,000 equity shares aggregating to ? 276,825.60 Lakh by the selling shareholders. The equity shares of the Company were listed on BSE Limited and National Stock Exchange of India Limited on 11th October, 2021.
With regard to the new amendments under âDivision III of Schedule IIIâ under âPart I - Balance Sheet - General Instructions for preparation of Balance Sheetâ there are no balances that are required to be disclosed or there are no ratios which are applicable/ calculable with regard to the following clauses WA, WB (i),(ii),(iii),(iv),(v),(viii),(ix),(x),(xii),(xiii),(xv) and (xvi) for the Company.
With regard to the new amendments under âDivision III of Schedule IIIâ under âPart II - Statement of Profit and Loss - General Instructions for preparation of Statement of Profit and Lossâ there are no transactions that are required to be disclosed with regard to the following clauses 11(v) and 11(vii) for the Company.
NOTE: 40 EVENTS AFTER THE REPORTING PERIOD
The Board of Directors have proposed a final dividend of ? 5.25 per equity share (face value of ? 5 each) for the year ended 31st March, 2023, subject to the approval of the shareholders at the ensuing Annual General Meeting. Please refer note 16 for details.
NOTE: 41 PRIOR PERIOD COMPARATIVES
Previous yearâs figures have been regrouped/reclassified wherever necessary to correspond with the current yearâs classification/ disclosure.
Mar 31, 2022
a. Term/right attached to equity shares
The Company has only one class of equity shares having a par value of '' 5 per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive the remaining assets of the company after distributions of all preferential amounts. However, no such preferential amount exist currently. The distribution will be in the proporation to the number of equity shares held by the shareholders.
#Pursuant to a resolution passed by our Board on 5th April 2021 and a resolution of shareholders dated, 6th April 2021, each equity share of face value of f 10 each has been split into two equity shares of face value of f 5 each. Accordingly, the issued, subscribed and paid up capital of our Company was subdivided from 180,00,000 equity shares of face value of f 10 each to 360,00,000 equity shares of face value of f 5 each. Pursuant to a resolution of Board of Directors dated 5th April 2021 and the shareholders meeting dated 6th April 2021, the Authorised Share Capital of the Company has been increased from f 2,000 lakhs consisting of 4,00,00,000 Equity Shares of f 5/- (Rupees Five only) each to f 16,000 lakhs consisting of 32,00,00,000 Equity Shares of f 5/- each.
The Board of Directors pursuant to a resolution dated 5th April 2021 and the shareholders special resolution dated 6th April 2021 have approved the issuance of seven bonus equity shares of face value f 5 each for every one existing fully paid up equity share of face value f 5 each and accordingly 25,20,00,000 bonus equity shares were issued and allotted in accordance with the Section 63 of the Companies Act, 2013.
Nature and Purpose of the reserves Share Premium:
Share Premium is used to record the premium (amount received in excess of face value of equity shares) on issue of shares. The reserve can be utilised only for limited purposes such as issuance of bonus shares in accordance with the provisions of Section 52 of Companies Act, 2013. The Company has utilsed the Share Premium in issue of bonus equity shares in the current year.
General reserve:
Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations. The purpose of these transfers was to ensure that if a dividend distribution in a given year is more than 10% of the paid up share capital of the Company for that year, then the total dividend distribution is less than total distributable reserve for that year.
Consequent to introduction of the Companies Act 2013, the requirement to mandatorily transfer a specified percentage of net profit to general reserve has been withdrawn. However the amount previously transferred to the general reserve can be utilised only in accordance with the specific requirements of the Companies Act, 2013.
Retained earnings:
Retained earnings are the profits that a company has earned to date, less any dividends or other distributions paid to the Shareholders, net of utilisation as permitted under applicable regulations.
Share Option Outstanding Account:
The grant date fair value of equity-settled share-based payment transactions with employees and directors are recognised in the Statement of Profit and Loss with the corresponding credit to this account over the vesting period.
(iii) Bank guarantee
In the current year, the Company has issued a bank guarantee of ? 2,468.25 lakh to NSE for the purpose of IPO.
NOTE: 24 MANAGEMENT RIGHTS
During financial year ended 31st March 2015 Aditya Birla Sun Life Trustee Company Private Limited took over the mutual fund schemes from ING Trust Company Private Limited and simultaneously the Company acquired the right to manage the said schemes from ING Asset Management (India) Private Limited.
The consideration paid to acquire the right to manage the said schemes along with the incidental expenditure incurred thereon aggregating to '' 378.51 lakh has been treated as Investment Management Right. The Investment Management Right will be amortized over a period of 120 months. For the year ended 31st March 2022, an amount of '' 37.85 lakh (Previous year '' 37.85 lakh) has been amortised. Balance life of Investment Management Right is 30 months.
NOTE: 25 EMPLOYEE BENEFITS
In accordance with the Indian Accounting Standard (Ind AS) 19 âEmployee Benefitsâ, the Company has classified the various benefits provided to the employees as under:
a. Defined contribution plan
Defined Contribution Plan - The Company has recognized the following amounts in the Statement of Profit and Loss Account which are included under contribution to Provident Fund and other fund.
b. Share based payments
Pursuant to ESOP Plan by ABCL, stock options were granted to the employees of the Company during the year. Total cost incurred by ABCL (net of reversals) till date is being recovered from the Company over the period of vesting of the ESOP grants. A sum of ? (4.71) lakh (Previous year 387.49 lakh) has been charged to the Statement of Profit and Loss. The balance sum of ? 78.42 lakh will be recovered in future years as at 31st March 2022.
c. Gratuity (Defined Benefit Plan)
The following table sets out the status of the gratuity plan as required under IND AS 19 as certified by actuary. Reconciliation of opening and closing balances of the present value of the defined benefit obligation.
The impact of split of shares and issue of bonus shares are retrospectively considered for the computation of EPS as per the requirement of IND AS 33.
NOTE: 28 SEGMENT INFORMATION
The CEO of the Company has been identified as the Chief Operating Decision Maker (CODM) as defined by Ind AS 108 - "Operating Segmentsâ. The CODM evaluates the Companyâs performance and allocates resources. The Companyâs operations predominantly relate to providing asset management services, portfolio management and other advisory services. In the opinion of the CODM and Management, the risks and rewards attached to the business are similar in nature. Hence the separate Segment under Ind AS 108 on âOperating Segmentsâ is not required to be reported as the Companyâs business is restricted to single Operating Segment i.e., Asset Management Services.
NOTE: 30 CAPITAL MANAGEMENT
For the purpose of the Companyâs capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Companyâs capital management is to maximise the shareholder value.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.
No changes were made in the objectives, policies or processes for managing capital during the year ended 31st March 2022.
The management assessed that cash and cash equivalents, trade receivables, other financial assets, trade payables, lease liabilities and other financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. Accordingly, fair value hierarchy for these financial instruments have not been presented above.
Valuation techniques used to determine fair value:-
⢠Mutual Funds:- Net Asset Value (NAV) declared by the mutual fund at which units are issued or redeemed
Alternative Investment Funds:- Net Asset Value (NAV) provided by issuer fund which is arrived at based on valuation from independent valuer for unlisted portfolio companies, quoted price of listed portfolio companies and price of recent investments
⢠Debt Securities:- Fair value of debt securities which are actively traded bonds, is derived on the basis of quoted price available on the National Stock Exchange
⢠Equity Instruments:- Discounted cash flow based on present value of the expected future economic benefit
In order to assess Level 3 valuations as per Companyâs investment policy, the management reviews the performance of the investee companies (including unlisted portfolio companies of venture capital funds and alternative investment funds) on a regular basis by tracking their latest available financial statements / financial information, valuation report of independent valuers, recent transaction results etc. which are considered in valuation process.
NOTE: 32 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Companyâs principal financial liabilities comprise trade and other payables. The Companyâs principal financial assets include trade and other receivables, and cash and cash equivalents that derive directly from its operations. The Company also holds investments in mutual fund units, debt and equity instruments.
The Company is exposed to market risk, credit risk and liquidity risk. The Companyâs senior management oversees the management of these risks. The Company''s financial risk management is an integral part of how to plan and execute its business strategies. The Company''s financial risk management policy is set by Risk Management Committee and the auditors have relied on the same. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.
A. Market risk
Market risk is the risk of loss of future earnings, fair values or future cash flows related to financial instrument that may result from adverse changes in market rates and prices (such as foreign exchange rates, interest rates, other prices). The Company is exposed to market risk primarily related to interest rate risk and price risk.
(i) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The sensitivity of the portfolio towards the interest rate is mentioned in the table below
Sensitivity
The following table demonstrates the sensitivity to :
⢠Interest Rate Risk is basis impact on debt portfolios for 1% change in interest rates.
⢠Hybrid funds considered at 100% as a conservative basis for assessing interest rate impact on portfolio. (which form approximately 1% of the entire portfolio of schemes).
(ii) Foreign currency risk
The Company has insignificant amount of foreign currency denominated assets and liabilities. Accordingly, there is no significant exposure to currency risk.
(iii) Price risk
Price risk is the risk that the value of the financial instrument will fluctuate as a result of changes in market prices and related market variables including interest rate for investments in debt oriented mutual funds and debt securities, caused by factors specific to an individual investment, its issuer and market.
The Companyâs exposure to price risk arises from investments in Units of mutual funds, alternative investment funds, etc which are classified as financial asset at Fair Value through Profit and Loss and is as follows:
B. Credit risk
Credit Risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company''s has clearly defined policies to mitigate counterparty risks. Cash and liquid investments are held primarily in mutual funds and banks with good credit ratings. Defined limits are in place for exposure to individual counterparties in case of mutual fund houses and banks.
Customer credit risk is managed by each business unit subject to the Companyâs established policy, procedures and control relating to customer credit risk management. Company has major receivable from mutual fund schemes.
Expected Credit Loss on Financial Assets
The Company continuously monitors all financial assets subject to ECLs. In order to determine whether an instrument is subject to 12 month ECL or life time ECL, the company assesses whether there has been a significant increase in credit risk or the asset has become credit impaired since initial recognition. For trade receivables, the company applies a simplified approach in calculating ECLs. Therefore, the company does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The company has determined based on historical experience and expectations that the ECL on its trade receivables is insignificant and was not recorded. The company applies following quantitative and qualitative criteria to assess whether there is significant increase in credit risk or the asset has been credit impaired:
⢠Historical trend of collection from counterparty
⢠Companyâs contractual rights with respect to recovery of dues from counterparty
⢠Credit rating of counterparty and any relevant information available in public domain
ECL is a probability weighted estimate of credit losses. It is measured as the present value of cash shortfalls (i.e., the difference between the cash flows due to the company in accordance with contract and the cash flows that the Company expects to receive).
The Company has three types of financial assets that are subject to the expected credit loss:
⢠Cash and cash equivalent
⢠Trade and other receivables
⢠Investment in debt securities measured at amortised cost
Trade and Other Receivables:-
Exposures to customersâ outstanding at the end of each reporting period are reviewed by the Company to determine incurred and expected credit losses. Historical trends of collection from counterparties on timely basis reflects low level of credit risk. As the Company has a contractual right to such receivables as well as the control over such funds due from customers, the Company does not estimate any credit risk in relation to such receivables.
Cash and Cash Equivalents:-
The Company holds cash and cash equivalents and other bank balances as per note 3 and 4. The credit worthiness of such banks and financial institutions is evaluated by the management on an ongoing basis and is considered to be high.
Investment in Debt Securities measured at amortised cost:-
Funds are invested after taking into account parameters like safety, liquidity and post tax returns etc. The Company avoids concentration of credit risk by spreading them over several counterparties with good credit rating profile and sound financial position. The Companyâs exposure and credit ratings of its counterparties are monitored on an ongoing basis.
C. Liquidity Risk
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations or at a reasonable price. The Company''s Finance department is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management.
NOTE: 35 EMPLOYEE STOCK OPTIONS SCHEME
At the Board Meeting held on 14th April 2021 the Company approved the grant of not more than 46,08,000 Equity Shares by way of grant of Stock Options and restricted Stock Units (âRSUsâ). Out of these, the Nomination, Remuneration and Compensation Committee has granted 32,32,899 ESOPs, 5,08,117 PRSU , 1,96,374 Long Term RSU & 2,46,863 RSU Founder under the Scheme titled âAditya Birla Sun Life AMC Limited Employee Stock Option Scheme 2021 â in 4 categories of Long Term Incentive Plans (âLTIPâ) identified as LTIP 1, LTIP 2, LTIP 3 & LTIP 4 respectively. The Scheme allows the Grant of Stock options to employees of the Company (whether in India or abroad) that meet the eligibility criteria. Each option comprises one underlying Equity Share. There are no cash settlement alternatives. The Group accounts for the employees stock option scheme as an equity-settled plan.
Fair valuation
The fair value at grant date is independently determined by valuer using Black-Scholes Merton Model which takes into account the exercise price, the term of the option, the share price at grant date and historical volatility of the Peer companies and Index, the expected dividend yield and the risk-free interest rate for the term of the option.
NOTE: 36
The Code on Social Security, 2020 (âCodeâ) relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified and the final rules/interpretation have not yet been issued. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.
NOTE: 37
The Company has completed its Initial Public Offering (IPO) of 3,88,80,000 equity shares of face value of ? 5/- each for cash at an issue price of 712/- per equity share aggregating to ? 2,76,825.60 lakh, consisting of an offer for sale of 3,88,80,000 equity shares aggregating to ? 2,76,825.60 lakh by the selling shareholders. The equity shares of the Company were listed on BSE Limited and National Stock Exchange of India Limited on 11th October 2021.
NOTE: 39
With regard to the new amendments under âDivision III of Schedule IIIâ under âPart I - Balance Sheet - General Instructions for preparation of Balance Sheetâ there are no balances that are required to be disclosed or there are no ratios which are applicable/ calculable with regard to the following clauses WA, WB (i),(ii),(iii),(iv),(v),(viii),(ix),(x),(xii),(xiii),(xiv),(xv) and (xvi) for the Company.
NOTE: 40
With regard to the new amendments under âDivision III of Schedule IIIâ under âPart II - Statement of Profit and Loss - General Instructions for preparation of Statement of Profit and Lossâ there are no transactions that are required to be disclosed with regard to the following clauses 11(v) and 11(vii) for the Company.
NOTE: 41 EVENTS AFTER THE REPORTING PERIOD
The Board of Directors have proposed a final dividend of ? 5.85 per equity share (face value of ? 5 each) for the year ended 31st March 2022, subject to the approval of the shareholders at the ensuing Annual General Meeting. Please refer note 16 for details.
NOTE: 42 PRIOR PERIOD COMPARATIVES
Previous yearâs figures have been regrouped/reclassified wherever necessary to correspond with the current yearâs classification/ disclosure.
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More Information on Aditya Birla Sun Life AMC Ltd.
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Aditya Birla Sun Life AMC Ltd. Company Details
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Aditya Birla Sun Life AMC Ltd. Financial Data
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Aditya Birla Sun Life AMC Ltd. Reports
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Aditya Birla Sun Life AMC Ltd. Corporate Announcements
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