aditya birla capital ltd Directors report

Dear Members,

The Board of Directors of Aditya Birla Capital Limited ("your Company" or "the Company" or "ABCL") is pleased to present the 16^th_(Sixteenth) Annual Report and the Audited Financial Statements (Consolidated and Standalone) of the Company for the financial year ended 31^st March 2023 ("financial year under review").

FINANCIAL SUMMARY AND HIGHLIGHTS

The highlights of the Consolidated and Standalone Financial Statements are detailed hereunder.

The Companys financial performance for the financial year ended 31^st March 2023 as compared to the previous financial year ended 31^st March 2022 is summarized below:

( in crore)

Particulars	Consolidated		Standalone
	2022-23	2021-22	2022-23	2021-22
Revenue from Operations	27,415.65	22,229.91	218.56	452.71
Profit Before Share of Associates and Joint Ventures and	5,362.66	1,945.82	184.20	419.05
Tax
Share of Profit of Associate/Joint Venture Companies	272.57	340.90	-	-
Profit/ (Loss) before Tax	5,635.23	2,286.72	184.20	419.05
Tax Expense	811.16	626.65	42.91	74.36
Profit/ (Loss) aƒer Tax Attributable to:	4,824.07	1,660.07	141.29	344.69
Owners of the Company	4,795.77	1,705.97	141.29	344.69
Non-Controlling Interest	28.30	(45.90)	-	-
Other Comprehensive Income Attributable to:	(102.29)	(35.69)	(0.40)	0.03
Owners of the Company	(40.44)	(3.54)	(0.40)	0.03
Non-Controlling Interest	(61.85)	(32.15)	-	-
Total Comprehensive Income Attributable to:	4,721.78	1,624.38	140.89	344.72
Owners of the Company	4,755.33	1,702.43	140.89	344.72
Non-Controlling Interest	(33.55)	(78.05)	-	-
Profit/ (Loss) attributable to owners of the Company	4,795.77	1,705.97	141.29	344.69

The above figures are extracted from the Consolidated and Standalone Financial Statements prepared in accordance with Indian Accounting Standards ("IND AS") as notified under Sections 129 and 133 of the Companies Act, 2013 ("the Act") read with the Companies (Accounts) Rules, 2014 and other relevant provisions of the Act and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations").

RESULTS OF OPERATIONS AND THE STATE OF COMPANYS AFFAIRS

For the financial year ended 31^st March 2023, on a Standalone basis revenue of the Company was 219 Crore and Net Profit was 141 Crore.

Key Highlights of the Companys Consolidated Performance for the Financial Year Ended 31^st March 2023 are as under:

• Strong performance with accelerated growth momentum across businesses

• Consolidated Revenue: 27,416 Crore (grew 23 % year on year)

• Consolidated Net Profit (excluding fair value and stake sale gains) : 2,057 Crore (grew 33% year on year)

• Active customer base at ~38 Million (grew 8% year on year) aided by focus on granular retail growth across all businesses of the Subsidiaries and Associate(s).

• Overall AUM across asset management, life insurance and health insurance at over 3.6 lacs Crore (de-grew 3% year on year)

• Overall lending book (NBFC and Housing Finance) at 94,364 Crore (grew 40% year on year)

• Gross premium (across Life and Health Insurance) at 17,787 Crore (grew 28% year on year)

The financial results of the Company and its Subsidiaries and Associate(s) are elaborated upon in the Management Discussion and Analysis Report, which forms part of this Annual Report.

ACCOUNTING METHOD

The Consolidated and Standalone Financial Statements of the Company have been prepared in accordance with Indian Accounting Standards as notified under Sections 129 and 133 of the Act read with the Companies (Accounts) Rules, 2014, as amended and other relevant provisions of the Act.

In accordance with the provisions of the Act, applicable Accounting Standards, the SEBI Listing Regulations, the Audited Standalone and Consolidated Financial Statements of the Company for the financial year ended 31^st March 2023, together with the Auditors Report form part of this Annual Report. The Audited Financial Statements (including the Consolidated Financial Statements) of the Company as stated above and the Financial Statements of each of the Subsidiaries of the Company, whose financials are consolidated with that of the Company, are available on the Companys website at https:// www.adityabirlacapital.com/Investor-Relations.

MATERIAL EVENTS DURING THE YEAR

There were no material events during the year having an impact on the Companys business.

HOLDING/ SUBSIDIARIES/ JOINT VENTURES/ ASSOCIATES COMPANIES

Holding Company

During the financial year under review, Grasim Industries Limited continued to remain the Holding Company of the Company. Grasim Industries Limited is listed at BSE Limited and National Stock Exchange of India Limited. As per Regulation 16(1)(c) of SEBI Listing Regulations, the Company is considered as a Material Subsidiary of Grasim Industries Limited.

Subsidiaries and Associates

As a Core Investment Company, the Company is primarily a Holding Company and holds investments in its group companies (Subsidiaries, Joint Ventures and Associates).

As on 31^st March 2023, the Company had 18 (Eighteen) Indian Subsidiaries, 5 (Five) Foreign Subsidiaries (including step down Subsidiaries) and 1 (One) Associate.

Provisions of Regulations 24 and 24A of SEBI Listing Regulations, with reference to Subsidiaries were duly complied with to the extent applicable.

During the financial year under review, the major changes with respect to the Subsidiaries and Associate(s) of the Company were as under:

• Aditya Birla Health Insurance Co. Limited ("ABHI"), a non-material Subsidiary of the Company, on 21^st October 2022, allotted 5,07,07,454 (Five Crore Seven Lakh Seven Thousand Four Hundred and Fiƒy Four) fully paid-up Equity Shares of 10/- each on private placement basis to Platinum Jasmine A 2018 Trust, acting through its trustee, Platinum Owl C 2018 RSC Limited ("Allottee"), being a wholly owned Subsidiary of Abu Dhabi Investment Authority ("Investor") for an aggregate consideration of 664,26,76,474/- (Rupees Six Hundred Sixty Four Crore Twenty Six Lakh Seventy Six Thousand Four Hundred and Seventy Four Only). Pursuant to the above allotment of Equity Shares, the Investor owns 9.99% stake, the Company holds 45.91% stake and Momentum Metropolitan Strategic Investments (Pty) Ltd holds 44.10% stake, respectively, in ABHI. Hence, it ceased to be a Subsidiary of the Company and became an Associate of the Company w.e.f. 21^st_October 2022.

• Vide publication of the notice in Form No. STK- 7 (Notice of striking off and dissolution) in the Official Gazette on 21^st_January 2023, ABCAP Trustee Company Private Limited ("ABCAP") a wholly owned Subsidiary of the Company, was voluntarily struck-off from the Register of Companies by Registrar of Companies, Mumbai, Maharashtra. Hence, it ceased to be a Subsidiary of the Company.

• Aditya Birla Capital Digital Limited ("ABCDL") was incorporated as a wholly owned Subsidiary of the Company with effect from 23^rd March 2023.

• On 27^th March 2023, the Board of Directors, subject to requisite approvals, approved the sale of the Companys entire stake of 25,65,103 (Twenty Five Lakh Sixty Five Thousand One Hundred and Three) fully paid-up Equity Shares of 10/- each in Aditya Birla Insurance Brokers Limited ("ABIBL") (a non-material Subsidiary of the Company), representing 50.002% of the issued and paid-up share capital of ABIBL to Edme Services Private Limited ("Purchaser"), an affiliate of Samara Alternate Investment Fund. As on the date of this report, approval of Insurance Regulatory and Development Authority of India ("IRDAI") for the sale of shares was awaited.

MATERIAL SUBSIDIARIES

As required under Regulations 16(1)(c) of the SEBI Listing Regulations, the Board has approved and adopted the Policy for determining Material Subsidiaries. The Policy is available on the Companys website at https://www.adityabirlacapital. com/investor-relations/policies-and-code.

During the financial year under review, Aditya Birla Sun Life Insurance Company Limited, Aditya Birla Finance Limited, Aditya Birla Sun Life AMC Limited and Aditya Birla Housing Finance Limited were the Material Subsidiaries of the Company as per Regulation 16(1)(c) of the SEBI Listing Regulations. With effect from 1^st April 2023, Aditya Birla Housing Finance Limited has ceased to be a Material Subsidiary of the Company as per Regulation 16(1)(c) of the SEBI Listing Regulations.

REGISTRATION AS A CORE INVESTMENT COMPANY _"CIC"_¹

The Company is registered as a Non-Deposit taking Systemically Important - Core Investment Company ("CIC- ND-SI") pursuant to the receipt of Certificate of Registration from the Reserve Bank of India ("RBI") dated 16^th October 2015, under Section 45-IA of the Reserve Bank of India Act, 1934 ("RBI Act") and Master Direction – Core Investment Companies (Reserve Bank) Directions 2016 as amended ("RBI Master Directions").

TRANSFER TO RESERVES

For the financial year ended 31^st March 2023 an amount of 28.26 Crore was transferred to Special Reserve in terms of Section 45-IC of the RBI Act.

DIVIDEND

The Directors do not recommend any dividend for the financial year under review. In terms of the provisions of Regulation 43A of the SEBI Listing Regulations, the Company has formulated and adopted a Dividend Distribution Policy. The policy is available on the Companys website at https://www.adityabirlacapital.com/ investor-relations/policies-and-code.

SHARE CAPITAL

As on 31^st March 2023, the Companys paid-up Equity Share Capital was 24,17,99,40,420 divided into 2,41,79,94,042 Equity Shares of 10 each.

On 11^th May 2023, the Board of Directors have approved the raising of funds, inter alia, by way of issuance of Equity Shares, global depository receipts, American depository receipts, foreign currency convertible bonds fully/partly convertible debentures, non-convertible debentures, and/or any other financial instruments convertible into equity shares (including warrants, or otherwise, in registered or bearer form) and/ or any security convertible into equity shares or combination of any of the aforementioned securities in one or more tranches through one or more public and/ or private offerings including by way of a qualified institutional placement or any combination thereof or any other method as may be permitted under applicable laws to eligible investors and in such manner and on such price, terms and conditions, in accordance with the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, as amended and applicable provisions of the Companies Act, 2013 and rules issued thereunder, as amended in each case, the enabling provisions of the Memorandum and Articles of Association of the Company and any other provisions of applicable laws, for an aggregate amount not exceeding 3,000 Crore (Rupees Three Thousand Crore Only) subject to such regulatory/ statutory approvals as may be required, including the approval of the Shareholders of the Company in the general meeting. The proceeds from the aforesaid proposed fund raising are intended to be utilised for meeting funding requirements and growth objectives of the Company and its businesses including but not limited to supporting growth in lending and insurance businesses, strengthening digital offerings, meeting capital adequacy and solvency related requirements and other business and general corporate purposes.

Mr. Amber Gupta, Company Secretary and Compliance Officer of the Company has been appointed as the Nodal Officer and Mr. Pramod Bohra, Vice President, has been appointed as the Deputy Nodal Officer for and on behalf of the Company for the purpose of verification of claims and co-ordination with Investor Education and Protection Fund Authority.

Their details are available on the website of the Company at https://www.adityabirlacapital.com/investor-relations/ shareholder-centre.

DEPOSITORY

As on 31^st March 2023, out of the Companys paid-up Equity Share Capital comprising of 2,41,79,94,042 Equity Shares, 2,39,12,85,302 Equity Shares (98.89%) were held in dematerialised mode.

The Companys Equity Shares are compulsorily tradable in electronic form.

RESOURCE MOBILISATION

During the financial year under review, no funds have been mobilised by way of Non-Convertible Debentures (NCD) or Term Loans/ Working Capital Demand Loan (WCDL) from banks or through Commercial Paper. The Company is a debt free Company.

INVESTMENT IN SUBSIDIARIES AND ASSOCIATE_S_

During the year under review, the Company subscribed to Equity Share Capital in the following Subsidiaries/ Associate(s):

Name of Subsidiary/ Associate(s)	Amount of capital infused
	(Equity Shares) ( in Cr)
Aditya Birla Health Insurance Co. Limited	145.35
Aditya Birla Sun Life Insurance Company	132.60
Limited
Aditya Birla Capital Digital Limited	25.00

Further, details of investment in Subsidiaries/ Associate(s) are stated in the notes to the Financial Statements forming part of this Annual Report.

CREDIT RATING

The Company has neither issued any debt instruments nor undertaken any fixed deposit programme or any scheme or proposal involving mobilisation of funds in India or abroad during the financial year under review.

However, the Company continues to avail the below ratings from Credit Rating agencies to meet any unforeseen fund requirements and ensure continuation of ratings through any of the following instruments:

Sr. No. Nature of Instrument	Name of Instrument	Name of Credit Rating Agency	Amount Rated ( in Cr)	Current Rating
1 Short Term Instrument	Commercial Paper	CRISIL	900	A1+
2 Short Term Instrument	Commercial Paper	ICRA Ltd	900	A1+
3 Long Term Instrument	Non-Convertible Debenture	ICRA Ltd	200	AAA

PUBLIC DEPOSITS

The Company, being a CIC-ND-SI, has not accepted any deposits from the public during the financial year under review in accordance with Section 73 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014.

PARTICULARS OF LOANS GIVEN, INVESTMENT MADE, GUARANTEES GIVEN OR SECURITY PROVIDED

The Company is registered as a Core Investment Company with RBI. Thus, particulars of loans, guarantees and investments under the provisions of Section 186 of the Act read with the Companies (Meetings of Board and its Powers) Rules, 2014, are not applicable to the Company.

CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION

As the Company is a Core Investment Company investing in Subsidiaries and Associate(s), the particulars regarding conservation of energy and technology absorption as required to be disclosed pursuant to provision of Section 134(3)(m) of the Act read with Rule 8(3) of the Companies (Accounts) Rules, 2014 are not relevant to its activities.

However, some of the steps taken by the Company along with its Subsidiaries/ Associate(s) for conservation of energy include:

• The Company and its Subsidiaries/ Associate(s) are committed to reducing negative environmental impact.

• The Company along with Subsidiaries/ Associate(s) tied up with ViaGreen, an organisation that helps us in waste management and recycling.

• Most of the offices of the Company and its Subsidiaries/ Associate(s) have installed LED lights making them very energy-efficient Rooƒop solar panel has been installed at Pune, Bengaluru and Noida branch offices.

• As a step towards further reducing the environmental impact, the documents for Board and Committee meetings of the Company and its Subsidiaries/ Associate(s) are transmitted electronically using a secure web-based application, thereby saving paper.

• The energy saving measures taken also include selecting and designing offices to facilitate maximum natural light utilisation, video-conferencing facilities across all offices to reduce the need of employee travel, digital learning initiatives for employees, optimised usage of lights and continuous monitoring and control of the operations of the air conditioning equipment as well as elimination of non-recyclable plastic in offices.

FOREIGN EXCHANGE EARNINGS AND OUTGO

There were no foreign exchange earnings during the financial year under review as well as during the previous financial year. The foreign exchange outgo during the financial year under review was 0.52 Crore as compared to 0.09 Crore, during the previous financial year.

PARTICULARS OF EMPLOYEES

Disclosures pertaining to remuneration and other details, as required under Section 197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are attached as Annexure I to this report.

Details as required under Section 197(12) of the Act, read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, with respect to information of employees of the Company will be provided upon request by a Member. In terms of the provisions of Section 136(1) of the Act, the Annual Report is being sent to all the Members of the Company whose email address(es) are registered with the Company/ Depository Participants via electronic mode, excluding the aforesaid Annexure which shall be made available for inspection by the Members via electronic mode. If any Member is interested in obtaining a copy thereof, the Member may write to the Company Secretary at the Registered Office of the Company in this regard or send an email to abc.secretarial@adityabirlacapital.com.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

The Company forms part of the top 1000 listed entities on BSE and NSE as on 31^st March 2023. Accordingly pursuant to Regulation 34(2) of SEBI Listing Regulations, Business Responsibility and Sustainability Report forms part of this Annual Report. The report is also available on the Companys website at https://www.adityabirlacapital.com/%20investor-relations/financial-reports.

MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION OF THE COMPANY

There were no material changes and commitments affecting the financial position of the Company from the end of the financial year up to the date of this Report.

CHANGE IN NATURE OF BUSINESS

During the financial year under review, there has been no change in the nature of business of the Company.

EMPLOYEE STOCK OPTION PLAN

Aditya Birla Capital Limited Employee Stock Option and Performance Stock Unit Scheme 2022

Pursuant to the approval of the members received through Postal Ballot on 16^th October 2022, the Company has adopted "Aditya Birla Capital Limited Employee Stock Option and Performance Stock Unit Scheme 2022" ("Scheme 2022") for the benefit of the employees of the Company and its Subsidiaries, Associates and Group companies.

Aditya Birla Capital Limited Employee Stock Option and Performance Stock Unit Scheme 2017 and ABCL Incentive Scheme for Stock Options and Restricted Stock Units – 2017

The Company also adopted "Aditya Birla Capital Limited Employee Stock Option and Performance Stock Unit Scheme 2017" ("Scheme 2017") for the benefit of the employees of the Company and its Subsidiaries and "ABCL Incentive Scheme for Stock Options and Restricted Stock Units – 2017" ("ABCL Incentive Scheme") pursuant to the Composite Scheme of Arrangement between erstwhile Aditya Birla Nuvo Limited and Grasim Industries Limited and the Company and their respective Shareholders and Creditors.

Scheme 2022, Scheme 2017 and ABCL Incentive Scheme are hereinaƒer collectively referred to as the "ESOP Schemes". The aforesaid ESOP Schemes are in compliance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 and the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 (collectively referred to as "SEBI (SBEB) Regulations"), as applicable.

Aditya Birla Capital Limited Stock Appreciation Rights Scheme 2019

The Company also adopted "Aditya Birla Capital Limited Stock Appreciation Rights Scheme 2019" ("SARs Scheme 2019"), which is a cash based plan linked to the actual stock price movement over the plan tenure.

Further details on the ESOP Schemes and the SARs Scheme 2019 are provided in the Corporate Governance Report which forms part of this Annual Report.

There were no material changes made to the aforesaid schemes during the financial year under review.

The details/disclosure(s) on the aforesaid ESOP Schemes as required to be disclosed under the SEBI (SBEB) Regulations are available on the Companys website at https://www. adityabirlacapital.com/investor-relations/financial-reports. Certificates from the Secretarial Auditors on the implementation of the ESOP Schemes will be made available via electronic mode at the ensuing 16^th (Sixteenth) Annual General Meeting ("AGM") of the Company for inspection by the Members.

MANAGEMENT DISCUSSION AND ANALYSIS

Pursuant to Regulation 34(2) of SEBI Listing Regulations, the Management Discussion and Analysis Report for the financial year under review forms part of this Annual Report.

CORPORATE GOVERNANCE REPORT

The Corporate Governance Report as stipulated under Regulation 34(3) read with Schedule V of the SEBI Listing Regulations forms part of this Annual Report. The requisite certificate from M/s. Makarand M. Joshi & Co., Practising Company Secretaries on compliance with the requirements of Corporate Governance forms part of this Annual Report.

STATEMENT CONTAINING SALIENT FEATURES OF THE FINANCIAL STATEMENTS OF SUBSIDIARY AND ASSOCIATE COMPANIES

A report on the performance and financial position of each of the Companys Subsidiary and Associate companies as per Section 129(3) of the Act read with the Companies (Accounts) Rules, 2014, in the prescribed Form AOC-1 is attached as Annexure II to the Boards Report.

RISK MANAGEMENT

Risk Management is at the core of our business and ensuring we have the right risk-return trade-off in line with our risk appetite is the essence of our Risk Management practices while looking to optimise the returns that go with that risk.

The Board has constituted a Risk Management Committee as required under RBI Master Directions read with Regulation 21 of the SEBI Listing Regulations to frame, implement and monitor the Risk Management Plan of the Company.

The Company has in place a Risk Management Policy ("RMC Policy") which has been uploaded on the website of the Company at https://www.adityabirlacapital.com/investor-relations/policies-and-code.

The objectives and the scope of the Risk Management Committee broadly include:

• Risk Identification;

• Risk Assessment;

• Risk Response and Risk Management Strategy; and

• Risk Monitoring, Communication and Reporting.

The Management Discussion and Analysis Report sets out the risks identified and the mitigation plans thereof.

The Company is a CIC and the risks therefore largely relate to investments made in its Subsidiaries/ Associate(s). The operations of each of the Subsidiaries/ Associate(s), the risks faced by them and the risk mitigation tools used to manage them are reviewed periodically by their Risk Management Committees and Boards of Directors.

Over the years, the Company and its Subsidiaries/ Associate(s) have built a strong Risk Management Framework supported by well- established policies and procedures and a talented pool of Risk Professionals.

The Subsidiaries/ Associate(s) of the Company also have well-established Risk Management Frameworks designed to identify, assess, monitor and mitigate risks inherent in their business. The framework enables effective Risk Management through a structure of Committees, policies, internal controls and reporting. The organisational structure to manage the risk consists of "Three lines of defense":

First is: Line Management (Functional Heads) to ensure that accountability and ownership is as close as possible to the activity that creates the risks; Second is: Risk Oversight including the Risk and Compliance Function and Risk Management Committee; Third is: Independent Assurance through Internal Audits being conducted under the supervision of the Audit Committee. Risk Management Committee, Asset Liability Management Committee and Audit Committee have been set-up to ensure monitoring of risks and provide Governance as applicable. These Committees are prima facie governed by their Charters.

Business Continuity

The Company and its Subsidiaries/ Associate(s) have well-documented Business Continuity Management Programmes which have been designed to ensure continuity of critical processes during any disruption. A robust Disaster Recovery framework has been put in place to ensure uninterrupted operations and service to customers.

In view of the increased move to digital modes of business and adoption of new technologies, there was an enhanced focus on Cyber Security and the Company and its Subsidiaries/ Associate(s) continued to invest in a strong Cyber Defence Programme. The Risk Management teams of the Company and its Subsidiaries/ Associate(s) are continuously scanning the internal and external environment to identify Risks and also to capitalise upon the opportunities presented in the environment.

CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES

During the financial year under review, all transactions entered into by the Company with related parties were in ordinary course of business and on arms length basis and were not considered material as per the provisions of Section 188 of the Act read with the Companies (Meetings of Board and its Powers) Rules, 2014. Hence, disclosure in Form AOC-2 under Section 134(3) (h) of the Act, read with the Rule 8 of the Companies (Accounts of Companies) Rules, 2014, is not applicable.

Prior approval of the Audit Committee is obtained for all Related Party Transactions ("RPTs") including omnibus approval for transactions which are of a repetitive nature and entered into in the ordinary course of business and at arms length in accordance with the Policy on Related Party Transactions of the Company. A statement on RPTs specifying the details of the transactions pursuant to each omnibus approval granted, is placed on a quarterly basis for review by the Audit Committee. Pursuant to Regulation 23(9) of SEBI Listing Regulations, disclosures of RPTs are submitted to the Stock Exchanges on a half-yearly basis and published on the Companys website at https://www.adityabirlacapital.com/investor-relations/ announcements-and-updates.

There were no material transactions entered into with related parties during the period under review, which may have had any potential conflict with the interests of the Company at large. The details of transactions with related parties of the Company for the financial year under review, are given in notes to the Financial Statements, which form part of this Annual Report. The Policy on Related Party Transactions as approved by the Audit Committee and the Board, is available on the Companys website at https://www.adityabirlacapital.com/investor-relations/policies-and-code.

INTERNAL FINANCIAL CONTROLS

The Company and its Subsidiaries/ Associate(s) have well-established internal control systems in place which are commensurate with the nature of their business and size, scale and complexity of their operations. Standard Operating Procedures (SOP) and Risk Control Matrices designed to provide a reasonable assurance are in place and are being continuously monitored and updated.

The Company along with its Subsidiaries/ Associate(s) also periodically engage outside experts to carry out independent review of the effectiveness of various business processes. The observations and best practices suggested are reviewed by the management and Audit Committee and appropriately implemented with a view to continuously strengthen internal controls.

INTERNAL AUDIT

The Company has in place an effective Internal Audit Framework to monitor the efficacy of internal controls with the objective of providing to the Audit Committee and the Board of Directors, an independent and reasonable assurance on the adequacy and effectiveness of the organisations Risk Management, internal control and governance processes. The framework is commensurate with the nature of the business, size, scale and complexity of its operations with a Risk Based Internal Audit (RBIA) approach.

The Company has implemented a RBIA Programme in accordance with the requirements of RBI circular dated 3^rd_February 2021. The Internal audit plan is approved by the Audit Committee and Internal audits are undertaken on a periodic basis to independently validate the existing controls. Internal Audit Reports are regularly reviewed by the management and corrective action is initiated to strengthen controls and enhance the effectiveness of existing systems.

Significant audit observations, if any, are presented to the Audit Committee along with the status of management actions and the progress of implementation of recommendations.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Act and to the best of their knowledge and belief and according to the information and explanations obtained from the operating management, Directors of the Company state that:-i) in the preparation of the Annual Accounts for the financial year ended 31^st March 2023, the applicable Accounting Standards have been followed and there were no material departures from the same; ii) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31^st March 2023 and of the profit/ loss of the Company for the financial year ended on that date; iii) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; iv) the Directors had prepared the Annual Accounts on a ‘going concern basis; v) the Directors had laid down Internal Financial Controls and that such Internal Financial Controls were adequate and were operating effectively; and vi) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Appointment / Re-Appointment / Resignation of Directors

As on 31^st March 2023, the Board of Directors of the Company ("the Board") comprised 8 (Eight) Directors including 1 (One) woman Director.

No Director was appointed/ has resigned from the Board during the financial year under review.

Retirement by Rotation

Pursuant to Section 152 of the Act read with the Articles of Association of the Company, Dr. Santrupt Misra (DIN: 00013625), Non-Executive Non-Independent Director retires from the Board by rotation at the ensuing AGM of the Company. Although being eligible, he has not offered himself for re-appointment.

Declaration by Independent Directors

All Independent Directors have submitted their declaration of independence, pursuant to the provisions of Section 149(7) of the Act and Regulation 25(8) of the SEBI Listing Regulations, stating that they meet the criteria of independence as provided in Section 149(6) of the Act and Regulation 16(1)(b) of the SEBI Listing Regulations and they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence.

The Board is of the opinion that the Independent Directors of the Company possess requisite qualifications, experience and expertise and hold the highest standards of integrity.

All Independent Directors of the Company have registered their name in the data bank maintained with the Indian Institute of Corporate Affairs in terms of the provisions of the Companies (Appointment and Qualification of Directors) Rules, 2014.

Key Managerial Personnel

Mr. Ajay Srinivasan stepped down as Chief Executive Officer (CEO) of the Company w.e.f. 30^th June 2022. Mrs. Vishakha Mulye took over as CEO w.e.f. 1^st July 2022.

Mrs. Vishakha Mulye, CEO, Mrs. Pinky Mehta, Chief Financial Officer (CFO) and Mr. Amber Gupta, Company Secretary and Compliance Officer are the Key Managerial Personnel of the Company as on

31^st March 2023 in terms of the provisions of Sections 2(51) and 203 of the Act, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Fit and Proper Criteria

All the Directors meet the fit and proper criteria stipulated under the RBI Master Directions, as amended.

ANNUAL PERFORMANCE EVALUATION

The evaluation framework for assessing the performance of the Directors of the Company comprises contributions at the Meeting(s) and strategic perspective or inputs regarding the growth and performance of the Company provided by them, amongst others.

Pursuant to the provisions of the Act and SEBI Listing Regulations and in terms of the Framework of the Board Performance Evaluation, the Nomination, Remuneration and Compensation Committee and the Board of Directors have carried out an annual performance evaluation of the Board, performance of various Committees of the Board, Individual Directors, and the Chairman. The manner in which the evaluation has been carried out has been set out in the Corporate Governance Report, which forms part of this Annual Report.

Outcome of the Evaluation

The Board of the Company was satisfied with the functioning of the Board and its Committees. The Committees are functioning well and besides covering the Committees terms of reference, as mandated by applicable laws, important issues are brought up and discussed in the Committee Meetings. The Board was also satisfied with the contribution of Directors in their individual capacities. The Board has full faith in the Chairman leading the Board effectively and ensuring participation and contribution from all the Board Members.

MEETINGS OF THE BOARD AND ITS COMMITTEES

The Board meets at regular intervals to discuss and decide on the Companys performance and strategies. During the financial year under review, the Board met 10 (Ten) times on 23^rd April 2022, 6^th May 2022, 12^th May 2022, 6^th June 2022, 3^rd August 2022, 11^th August 2022, 8^th September 2022, 7^th November 2022, 2^nd February 2023 and 27^th March 2023.

Further details on the Board, its Meetings, composition and attendance are provided in the Corporate Governance Report, which forms part of this Annual Report.

Audit Committee

The Company has constituted an Audit Committee with its composition, quorum, powers, role and scope in line with the applicable provisions of the Act, SEBI Listing Regulations and RBI Master Directions.

During the financial year under review, the Audit Committee reviewed the internal controls put in place to ensure that the accounts of the Company are properly maintained and that the accounting transactions are in accordance with prevailing laws and regulations. In conducting such reviews, the Committee found no material discrepancy or weakness in the internal control system of the Company.

Further details on the Audit Committee, its Meetings, composition and attendance are provided in the Corporate Governance Report, which forms part of this Annual Report. During the financial year under review, all recommendations made by the Audit Committee were accepted by the Board.

Nomination, Remuneration and Compensation Committee

The Company has constituted a Nomination, Remuneration and Compensation Committee ("NRC"), with its composition, quorum, powers, role and scope in line with the applicable provisions of the Act, SEBI Listing Regulations and directions/ guidelines/ framework issued by RBI.

Further details on the NRC, its Meetings, composition and attendance are provided in the Corporate Governance Report, which forms part of this Annual Report.

During the year under review, RBI has issued Guidelines on Compensation of Key Managerial Personnel (KMP) and Senior Management in NBFCs which came into effect from 1^st_April 2023. The Executive Remuneration Philosophy/ Policy of the Company which was formulated under the provisions of Section 178(3) of the Act and SEBI Listing Regulations, was amended with effect from 1^st April 2023 to align with the directions/ guidelines/ framework issued by RBI as applicable. The said Policy is attached as Annexure III to the Boards Report and the same is uploaded on the website of the Company at https://www.adityabirlacapital.com/investor-relations/ policies-and-code.

Other Committees

The Board of Directors has also constituted the following Committees:

• Corporate Social Responsibility Committee

• Stakeholders Relationship Committee

• Risk Management Committee

• PIT Regulations Committee

• IT Strategy Committee

• Asset Liability Management Committee

More information on all of the above Committees including details of their Meetings, composition and attendance are provided in the Corporate Governance Report, which forms part of this Annual Report.

ANNUAL RETURN

Pursuant to the provisions of Section 134(3)(a) of the Act, the Annual Return in Form MGT-7 of the Company for the financial year 2022-23 is available on the Companys website at https:// www.adityabirlacapital.com/investor-relations/financial-reports.

AUDITORS

Statutory Auditors, their Report and Notes to Financial Statements

Pursuant to the provisions of Section 139 of the Act and the Companies (Audit and Auditors) Rules, 2014, SEBI (Listing Regulations) and Circular no. RBI/2021-22/25 Ref. No. DoS. CD.ARG/SEC.01/08.91.001/2021-22 dated 27^th April 2021 issued by RBI on Guidelines for appointment of Statutory Auditors ("RBI Circular") as amended, B S R & Co. LLP, Chartered Accountants (Firm Registration No. 101248W/W-100022) were appointed as Statutory Auditors of the Company for a term of 3 (Three) years from the conclusion of 14^th (Fourteenth) AGM till the conclusion of 17^th (Seventeenth) AGM of the Company. B S R & Co. LLP have confirmed that they are not disqualified from continuing to act as Statutory Auditors of the Company and that they comply with the eligibility criteria/ requirements specified under the RBI Circular for FY 2023-24.

The observation(s) made in the Auditors Report are self- explanatory and therefore, do not call for any further comments under Section 134(3)(f) of the Act.

The Auditors Report does not contain any qualifications, reservations, adverse remarks or disclaimer.

Secretarial Audit and Secretarial Compliance Report

Pursuant to the requirements of Section 204(1) of the Act read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed M/s. Makarand M. Joshi & Co., Practising Company Secretaries, to conduct the Secretarial Audit for the financial year under review. The Secretarial Audit Report in Form MR-3 for the financial year under review, as received from M/s. Makarand M. Joshi & Co., Company Secretaries, is attached as Annexure IV to the Boards Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. Pursuant to Regulation 24A of the SEBI Listing Regulations, the Annual Secretarial Compliance Report for the financial year under review will be submitted to the Stock Exchanges and uploaded on the website of the Company at https://www.adityabirlacapital. com/investor-relations/announcements-and-updates.

Cost Records and Auditors

The provisions of Cost Records and Cost Audit as prescribed under Section 148 of the Act are not applicable to the Company.

Reporting of Frauds by Auditors

None of the Auditors of your Company, i.e, the Statutory Auditors and Secretarial Auditors has reported any incident of fraud to the Audit Committee or the Board of Directors under Section 143(12) of the Act during the financial year under review.

CORPORATE SOCIAL RESPONSIBILITY

In accordance with Section 135 of the Act, the Company has constituted a Corporate Social Responsibility ("CSR") Committee.

The CSR Committee has formulated and recommended to the Board, a Corporate Social Responsibility Policy ("CSR Policy") indicating the activities to be undertaken by the Company, which has been approved by the Board. The CSR Policy is available on the Companys website at https://www.adityabirlacapital.com/ investor-relations/policies-and-code.

During the financial year under review, the Company was not required to make any expenditure towards CSR projects, in absence of average net profit for three immediately preceding financial years calculated in accordance with the provisions of Section 198 of the Act. Accordingly, no CSR activity was undertaken by the Company. Considering that the Company was not required to contribute any amount towards CSR activities, report on activities as required under Companies (Corporate Social Responsibility Policy) Rules, 2014 has not been furnished.

Further details on the CSR Committee are provided in the Corporate Governance Report, which forms part of this Annual Report.

WHISTLE BLOWER POLICY/ VIGIL MECHANISM

In compliance with the provisions of Section 177(9) of the Act read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 and Regulation 22 of the SEBI Listing Regulations, the Company has formulated a Whistle blower policy/ vigil mechanism for Directors and Employees to report concerns, details of which are covered in the Corporate Governance Report, which forms part of this Annual Report. The said policy is available on the Companys website at https://www.adityabirlacapital.com/investor-relations/ policies-and-codes.

POLICY ON PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

The Company has in place a policy which is in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013. An Internal Committee has been set up to redress complaints, if any, received regarding sexual harassment of women employees. The Company has complied with the provisions relating to the constitution of Internal Committee under the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013. All employees (permanent, contractual, temporary, trainees) are covered under this policy. During the financial year under review, there were no complaints received under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

The Company has complied with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

RBI REGULATIONS

The Company has complied with all the regulations of RBI to the extent applicable as a CIC-ND-SI.

RBI has issued guidelines on ‘Scale Based Regulation (SBR): A Revised Regulatory Framework for NBFCs vide its Circular No.

RBI/2021-22/112 Ref.DOR.CRE. REC.No.60/03.10.001/2021-22 dated 22^nd October 2021 ("SBR Framework"), which came into effect from 1^st October 2022. As per the SBR Framework, the Company being a Core Investment Company has been classified under Middle Layer.

HUMAN RESOURCES

The Company along with its Subsidiaries and Associate(s) has always aspired to be an organization and a workplace which attracts, retains and provides a canvas for talent to operate. Its vision of being a leader and a role model in a broad based and integrated financial services business and a culture that is purpose driven gives meaning to our people.

We believe that meaning at work is created when people relate to the purpose of the organisation, feel connected to their leaders and have a sense of belonging. Our focus stays strong on providing our people a work environment that welcomes diversity, nurtures positive relationships, provides challenging work assignments and opportunities based on meritocracy for people to grow and build their careers with us in line with their aspirations.

As on 31^st March 2023, the employee strength of the Company was 27 and along with the Subsidiaries and Associate(s) it had 34,000+ employees.

The workforce along with Subsidiaries and Associate(s) comprises of more than 69% millennials and 29% women as on 31^st_March 2023.

Talent Management

Building a strong future ready talent pool and robust leadership succession pipeline continue to be priority areas for us in Talent Management. We focus on creating well rounded leaders who are passionate about value creation for customers and execution excellence.

In the last 2 years:

• More than 55 leaders have undergone a bespoke comprehensive leadership development journey curated in partnership with Harvard Business Publishing.

• 70 members from our talent pool in middle management were covered in our flagship leadership development program preparing them to take on larger roles.

• 570+ employees across levels moved into new / larger roles helping them advance in their career

Additionally, focus on building future ready skills in the areas of Digital, Technology, Risk and Analytics has been ongoing during the year. Through various initiatives and partnerships with global organizations, we have continued our focus on building skills in these areas.

Employee Wellness and Engagement

Our endeavor to provide a happy, vibrant and engaging work environment continued during the year.

Revitalizing a culture of connect and camaraderie has been an area of significant attention for us. Bringing people together through events, townhalls, leadership connect sessions and celebration of milestones enabled this.

At Aditya Birla Capital (ABC), we consider employee health and wellbeing to be a non-negotiable proposition. We believe that focusing on employee health and wellbeing results in a happier workforce which further creates a positive impact on customer satisfaction and retention. Being in a people-oriented business, we consider employee well-being a strategic imperative. We proactively design and implement various wellness solutions across our business units and workforce group year on year.

Our framework focuses on Integrated and Holistic Wellbeing covering not just the Physical Wellbeing of employees but also Emotional or Mental Wellbeing, Financial Wellbeing, Intellectual Wellbeing and Social Wellbeing. Close to 5,000 employees are active on the wellness app and benefit from the holistic digital wellness support. We have also empaneled with doctors and counsellors to provide preliminary medical consultations in our corporate offices and on-call consultations for our employees and their families in emergency cases. Enabling our employees to regularly check their health and wellness levels we have organized multiple health camps covering Bone density check-ups, Body composition analysis, Yoga sessions at work, Nutritional counselling, Breast Health check-ups and awareness drives and many more. During the year alone close to 10,000 employees participated in our wellbeing programs. Lastly, Preventive annual health check-ups are our way of monitoring and ensuring a physically fit workforce. We have partnered with close to 300 diagnostic centers across the country that enable a seamless experience for our employees.

Learning

Our Companys philosophy is to provide every employee with continuous opportunities to learn & grow. Our learning interventions create an organization wide impact as these are focused on enabling employees to do better at work.

An AI enabled learning app provides employees easy access to super personalized content that meets their unique individual requirements. 31,000+ relevant courses, videos & webinars were hosted on Gyanodaya Virtual Campus (GVC) which is Aditya Birla Groups e-Learning platform for employees. Employees leveraged these resources to enhance their skills and knowledge.

Additionally, with 3,000+ E Learning courses, 25,000+ video-based modules and 2,000+ micro-learning modules and 1,400+ Sustainability courses our employees have the flexibility to learn anytime and from anywhere.

For our large frontline sales force distribution teams, our ABcapital app learning library offers courses on induction and regulatory training, ensuring that all new hires receive the necessary foundation to be successful in their roles, 350+ functional courses are available, enabling the frontline distribution force to deepen their expertise.

SUSTAINABILITY

Sustainability is one of the key focus areas for us and being a CIC, the Company drives the sustainability practices in its Subsidiaries and Associate(s), centrally. The sustainability efforts are aligned with Aditya Birla Groups sustainability strategy and purpose statement. The Company has identified three main categories to implement sustainability across its Subsidiaries and Associate(s) namely, Environment, Social and Governance. We have introduced 25 industry specific ESG score cards based on UNs Equator Principles in the infrastructure lending business. One of our subsidiaries had raised 1,000 Crore in green loan from International Finance Corporation to finance renewable energy projects. Through its Subsidiary, Aditya Birla Sun Life AMC Limited, the Company has also launched an ESG focused equity fund with an AUM of more than 798 crores as of 31^st March, 2023. Financial inclusion and serving the under banked has been a key focus area for our Subsidiaries which are engaged in lending to SMEs, supply chain finance for small vendors, affordable housing, rural insurance and micro-SIPs with our portfolio expanding to urban, semi urban and rural parts of India. Enterprise Risk Management function plays an integral part in managing sustainability risk across all businesses. The Chief Risk Officer (CRO) guides and governs the sustainability strategy across the businesses. The detailed Sustainability Report will be made available on the website of the Company at https://www.adityabirlacapital. com/investor-relations/sustainability-reports.

SECRETARIAL STANDARDS OF INSTITUTE OF COMPANY SECRETARIES OF INDIA

The Company is in compliance with the Secretarial Standards specified by the Institute of Company Secretaries of India ("ICSI") on Meetings of the Board of Directors (SS-1) and General Meetings (SS-2).

CODE FOR PROHIBITION OF INSIDER TRADING

Pursuant to SEBI (Prohibition of Insider Trading) Regulation 2015, as amended, the Company has a Board approved code of conduct to regulate, monitor and report trading by Insiders and a Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information.

Further details on the same are covered in the Corporate Governance Report, which forms part of this Annual Report.

AWARDS AND RECOGNITIONS

During the financial year under review, the Company and its Subsidiaries and Associate(s) have been felicitated with awards and recognitions across various functional areas which has been elaborated under Awards and Recognitions section in this Annual Report.

OTHER DISCLOSURES

In terms of applicable provisions of the Act and SEBI Listing Regulations, the Company discloses that during the financial year under review:

i. there was no issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except under Employee Stock Option Scheme referred to in this Report.

ii. there was no Scheme for provision of money for the purchase of its own shares by employees or by trustees for the benefit of employees.

iii. there was no public issue, rights issue, bonus issue or preferential issue, etc. iv. there was no issue of shares with differential rights.

v. there was no transfer of unpaid or unclaimed amount to Investor Education and Protection Fund (IEPF).

vi. no significant or material orders were passed by the Regulators or Honble Courts or Tribunals which impact the going concern status and Companys operations in future.

vii. there were no proceedings for Corporate Insolvency Resolution Process initiated under the Insolvency and Bankruptcy Code, 2016.

viii. there was no failure to implement any Corporate Action.

ix. there were no borrowings from Banks or Financial Institution and no instance of one-time settlement with any Bank or Financial Institution.

ACKNOWLEDGEMENTS

The Board takes this opportunity to express its appreciation for the support and co-operation extended by our various partners and other business associates. The Board gratefully acknowledges the ongoing co-operation and support provided by all Statutory and Regulatory Authorities.

The Board also acknowledges the support and contribution of Companys bankers, Stock Exchanges, Registrar of Companies, Depositories, the Reserve Bank of India, Securities and Exchange Board of India, Central and State Governments and other regulatory bodies and the shareholders who have always supported and helped the Company to achieve our objectives. The Board places on record its appreciation for the exemplary contribution made by the employees of the Company and its Subsidiaries and Associate(s) at all levels. Their dedicated efforts and enthusiasm have been pivotal to the Companys and its Subsidiaries and Associate(s) growth.

	By Order of the Board of Directors
	For Aditya Birla Capital Limited
	Kumar Mangalam Birla
Date: 11th May 2023	Chairman
Place: Mumbai	DIN: 00012813