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The Board of Directors of Aditya Birla Capital Limited (formerly known as Aditya Birla Financial Services Limited)
("your Company" or "the Company" or "ABCL") are pleased to present the Eleventh Annual Report and the Audited Financial Statements (Consolidated and Standalone) of your Company for the financial year ended 31st March, 2018 ("financial year under review").
The Companys financial performance (Consolidated and Standalone) for the financial year ended 31st March, 2018 as compared to the previous financial year ended 31st March, 2017 is summarised below:
Consolidated and Standalone Financial Results
( Rs. in Crore)
|Revenue from Operations||13,427.76||5,823.01||174.79||34.99|
|Profit before tax||1,553.61||1,065.74||61.49||4.24|
|Profit after tax||1,003.73||691.15||61.49||4.24|
|Profit after Minority Interest||824.25||530.00||-||-|
* Aditya Birla Sun Life insurance Company Limited became a Subsidiary of the Company with effect from 22fd March, 2017 and hence the figures for the previous year financial ended 31st March, 2017 are not comparable to that extent.
The above figures are extracted from the Consolidated and Standalone Financial Statements prepared in accordance with accounting principles generally accepted in India as specified 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.
The Consolidated Financial Statements presented by the Company include the Financial Statements of its Subsidiary Companies.
The Financial Statements as stated above are available on the Companys website at:
COMPOSITE SCHEME OF ARRANGEMENT
The Board of Directors of the Company at its Meeting held on 11th August, 2016 approved a Composite Scheme of Arrangement between (erstwhile) Aditya Birla Nuvo Limited ("ABNL"), Grasim Industries Limited ("Grasim") and the Company and their respective Shareholders and Creditors ("the Composite Scheme").
The Honble National Company Law Tribunal, Bench at Ahmedabad sanctioned the Composite Scheme on 1st June, 2017 and the certified true copy of the Scheme as received on 6th June, 2017 was filed with the Registrar of Companies (ROC) on 4th July, 2017, being the effective date.
The Demerger Committee of the Company fixed 20th July, 2017 as the record date for allotment of Equity Shares as per the Share Entitlement ratio pursuant to the Composite Scheme.
Allotment of Equity Shares of the Company to each eligible Shareholder of Grasim Industries Limited, whose names were recorded in the register of Members of Grasim as on the record date i.e. 20th July, 2017 was made on 14th August, 2017, as per the Share Entitlement ratio pursuant to the Composite Scheme.
The Equity Shares of the Company were listed on BSE Limited ("BSE") and National Stock Exchange of India Limited ("NSE") (BSE and NSE shall together be collectively hereinafter referred to as "the Indian Stock Exchanges") and were admitted to trading on the Indian Stock Exchanges with effect from 1stSeptember, 2017.
The Global Depositary Shares ("GDSs") issued pursuant to the Composite Scheme were listed on the official list of the Luxembourg Stock Exchange ("LSE") and admitted to trading on the Euro MTF market of LSE with effect from 11th October, 2017.
Pursuant to the Composite Scheme, in order to compensate the Stock Options/ Restricted Stock Unit holders of Grasim as on the record date i.e. 20th July, 2017 of the Composite Scheme, an Employee Stock Option Scheme viz. Aditya Birla Capital Limited Incentive Scheme for Stock Options and Restricted Stock Units-2017 ("ABCL Incentive Scheme") was adopted by the Company on 15th January, 2018.
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 16th October, 2015, under Section 45-IA of the Reserve Bank of India Act, 1934 ("RBI Act"). During the financial year under review, the Company complied with all the applicable regulations of the Reserve Bank of India.
During the financial year under review, pursuant to the change in name of the Company, RBI issued a fresh Certificate of Registration dated 6th July, 2017 in the name of "Aditya Birla Capital Limited".
1. Please note that RBI does not accept any responsibility or guarantee of the present position as to the financial soundness of the Company or the correctness of any of the statements or representations made or opinions expressed by the Company and for repayment of deposits/ discharge of liabilities by the Company.
TRANSFER TO RESERVES
The Company has transferred Rs. 13.14 Crore to Special Reserve in terms of Section 45-IC of the Reserve Bank of India Act, 1934.
Your Directors do not recommend any dividend for the financial year under review.
In terms of the provisions of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations"), your Company has formulated and adopted a Dividend Distribution Policy. The policy is attached as Annexure I to the Boards Report and is available on your Companys website at: https://www.aditvabirlacapital.com/ investor-relations/policies-and-codes,
The Companys paid-up Equity Share Capital as on 31st March, 2018 was Rs. 2,201.04 Crore as compared to Rs. 1,232.24 Crore as on 31st March, 2017.
During the financial year under review, the Company issued and allotted:
i. 4.84 Crore Equity Shares of Rs. 10/- each to
PI Opportunities Fund I on 30th June, 2017 on a Private Placement basis;
ii. 92.03 Crore Equity Shares of Rs. 10/- each to the eligible Shareholders of Grasim Industries Limited (Grasim) on 14th August, 2017, whose names were recorded in the register of Members of Grasim as on the record date i.e. 20th July, 2017, as per the Share Entitlement ratio pursuant to the Composite Scheme; and
iii. 0.01 Crore Equity Shares of Rs. 10/- each, upon exercise of Stock Options and Restricted Stock Units by the eligible employees of Grasim under the ABCL Incentive Scheme of the Company. Additional details are provided in the Employee Stock Option section of the Boards Report.
The Company enjoys a good reputation for its sound financial management and the ability to meet its financial obligations. ICRA Limited has assigned a rating of "[ICRA] A1+" and CRISIL Ratings has assigned "CRISIL A1+" for the Commercial Paper Programme of the Company for an amount of Rs. 1,000 Crore.
The Company being a Non-Deposit taking Systemically Important Core Investment Company 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 rules framed thereunder.
PARTICULARS OF LOANS GIVEN, INVESTMENT MADE, GUARANTEES GIVEN OR SECURITY PROVIDED
The particulars of loans, guarantees and investments made under provisions of Section 186 of the Act read with the Companies (Meetings of Board and its Powers) Rules, 2014 are given under notes to the Financial Statements, which forms part of this Annual Report.
CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION
Considering the Companys activities as a Core Investment Company carrying out its activities through its Subsidiaries, particulars with respect to the 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 the Company.
FOREIGN EXCHANGE EARNINGS AND EXPENDITURE
There were no foreign exchange earnings during the financial year under review as well as during the previous financial year. However, the foreign exchange outgo during the financial year under review was Rs. 1.01 Crore as compared to Rs. 1.67 Crore, during the previous financial year. The expenditure incurred during the financial year was towards business promotion and expenses related to listing of Global Depositary Shares of the Company on the Luxembourg Stock Exchange.
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, is attached as Annexure II of the Boards 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 Report and Accounts, as set out therein, are being sent to all the Members of your Company, excluding the aforesaid Annexure which is available for inspection by the Members at the Registered Office of the Company during business hours on all working days of the Company upto the date of the Annual General Meeting. If any Member is interested in obtaining
a copy thereof, such Member may write to the Company Secretary at the Registered Office of your Company in this regard.
BUSINESS RESPONSIBILITY REPORT
Regulation 34(2) of the SEBI Listing Regulations, inter alia, provides that the Annual Report of the top 500 listed entities based on market capitalisation (calculated as on 31st March of every financial year), shall include a Business Responsibility Report. As your Company forms part of the top 500 listed entities on BSE and NSE as on 31st March, 2018. Business Responsibility Report has been enclosed as a separate Section in this Annual Report, describing the initiatives taken by the Company from environmental, social and governance perspective and is also available on your Companys website i.e. www.aditvabirlacapital.com .
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY
There were no material changes and commitments, affecting the financial position of the Company from end of the financial year upto the date of this Boards 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
Employee Stock Options have been recognised as an effective instrument to attract talent and align the interest of employees with that of the Company, thereby providing an opportunity to the employees to share in the growth of the Company and to create long term wealth in the hands of employees, thereby, acting as a retention tool.
Aditya Birla Capital Limited Employee Stock Option Scheme 2017
In view of the above, your Company has formulated "Aditya Birla Capital Limited Employee Stock Option Scheme 2017" ("Scheme 2017") for the employees of the Company and its Subsidiaries, which has been approved by the Board of Directors and Members of the Company and its Subsidiaries at their respective Meetings.
The Nomination, Remuneration and Compensation Committee ("NRC") of the Company, granted 2,40,62,864 Stock Options and 57,42,636 Restricted Stock Units ("RSUs") to the eligible employees of your Company and its Subsidiaries.
ABCL Incentive Scheme for Stock Options and Restricted Stock Units - 2017
Pursuant to the Composite Scheme, Grasim Industries Limiteds ("Grasim") financial services business demerged from Grasim and was transferred to the Company with effect from 4th July, 2017. On account of reduction in intrinsic value of Grasim pursuant to the demerger, Part III of the Composite Scheme stipulated that the Board of Grasim and the Company shall together decide the manner in which the difference in the intrinsic value created pursuant to the demerger of the Demerged Undertaking (i.e. the financial services business) is to be compensated to the Grasim Existing Option holders. The Composite Scheme stipulated that such compensation can be either by issue of new Options or Restricted Stock Units by the Demerged Company (i.e. Grasim) to the Grasim Existing Option holders or by the Resulting Company (i.e. Aditya Birla Capital Limited) by adopting a new incentive plan. Accordingly, the Nomination, Remuneration and Compensation Committee of the Board of Directors of the Company at its Meeting held on 15th January, 2018 approved the ABCL Incentive Scheme for Stock Options and Restricted Stock Units and granted 14,65,927 Stock Options and 2,52,310 Restricted Stock Units to the eligible grantees of Grasim as on the record date i.e. 20th July, 2017. During the financial year under reivew, 12,84,633 Stock Options and 1,92,539 RSUs have vested in the eligible grantees. The Nomination, Remuneration and Compensation Committee ("NRC") allotted 1,32,397 Equity Shares of Rs. 10/- each of your Company upon exercise of Stock Options and Restricted Stock Units by the eligible grantees of Grasim.
The details/disclosure(s) on the aforesaid Employee Stock Option Schemes as required to be disclosed under SEBI (Share Based Employee Benefits) Regulations, 2014 are available on the Companys website i.e. www.aditvabirlacapital.com .
Certificates from the Statutory Auditors on the implementation of your Companys Employee Stock Option Scheme(s) will be placed at the ensuing Annual General Meeting of the Company for inspection by the Members.
MANAGEMENT DISCUSSION AND ANALYSIS
Pursuant to Regulation 34 of SEBI Listing Regulations, the Management Discussion and Analysis Report for the financial year under review, is presented as a separate section forming part of this Annual Report.
The Company is committed in maintaining the highest standards of Corporate Governance and adhering to the Corporate Governance requirements set out by the Securities and Exchange Board of India (SEBI). Corporate Governance principles form an integral part of the core values of the Company. The Corporate Governance Report as stipulated under Regulation 34(3) read with Schedule V of the SEBI
Listing Regulations forms an integral part of this Annual Report. The requisite certificate from the Statutory Auditors of the Company confirming compliance with the conditions of Corporate Governance is attached as Annexure III of the Boards Report.
All Board Members and Senior Management have affirmed compliance with the Code of Conduct for the financial year under review. A declaration to this effect signed by the Chief Executive Officer of the Company forms part of the Corporate Governance Report.
The Chief Executive Officer and Chief Financial Officer have certified to the Board with regard to the Financial Statements and other matters as required under Regulation 17(8) of the SEBI Listing Regulations which forms part of the Corporate Governance Report.
HOLDING AND SUBSIDIARIES/jOINT VENTURES/ ASSOCIATES
During the financial year under review, a Composite Scheme of Arrangement between (erstwhile) Aditya Birla Nuvo Limited ("ABNL"), Grasim Industries Limited ("Grasim") and the Company and their respective Shareholders and Creditors ("the Composite Scheme") was approved by the Honble National Company Law Tribunal, bench at Ahmedabad on 1st June, 2017. Consequently, ABNL has been amalgamated with Grasim with effect from 1st July, 2017 and accordingly, Grasim became the Holding Company of the Company.
The Company conducts its business through its Subsidiaries for the various business segments in which it operates. As of 31st March, 2018, the Company had 19 Indian Subsidiaries and 7 Foreign Subsidiaries (including step down Subsidiaries).
During the financial year under review, no new Company became Subsidiary/Joint Venture/Associate of the Company.
As required under Regulations 16(l)(c) and 46 of the SEBI Listing Regulations, the Board of Directors have approved the Policy for determining Material Subsidiaries. The details of the Policy are available on the Companys website at: https://www.aditvabirlacapital.com/lnvestor-Relations/ Policies-and-Codes,
The Companys Equity Shares are tradable in electronic mode. As on 31st March, 2018, out of the Companys total equity paid-up share capital comprising of 2,20,10,39,348 Equity Shares, 2,16,66,04,333 Equity Shares were held in dematerialised mode.
In view of the numerous advantages offered by the Depository System, the Members holding shares in physical mode are advised to avail the facility of dematerialisation.
STATEMENT CONTAINING SALIENT FEATURES OF FINANCIAL STATEMENTS OF SUBSIDIARIES
A report on the performance and financial position of each of the Companys Subsidiaries, Joint Ventures and Associates as per the Section 129(3) of the Act and the rules made thereunder in the prescribed Form AOC-1 is attached as Annexure IV of the Boards Report.
The Audited Financial Statements including the Consolidated Financial Statements of the Company and all other documents required to be attached thereto are available on the Companys website at:
The Financial Statements of each of the Subsidiaries are available on the Companys website at: https://www.aditvabiriacapitai.com/lnvestor-Reiations/ Financial-Reports.
A copy of the Audited Financial Statements for each of the Subsidiary Companies will be made available to the Members of the Company seeking such information.
These documents will also be available for inspection on all working days, i.e. except Saturdays, Sundays and Public Holidays at the Registered Office of the Company.
The Company is a Core Investment Company ("ClC") and its operations are limited to being a CIC. The risks therefore relate to investments made in its Subsidiaries. The operations of each of the Subsidiaries, the risks faced by them and the risk mitigation tools used to manage them are reviewed periodically by the Committees of the Board and the Board of the respective Subsidiaries. The same are considered by the Board of the Company, as well. Details of the same are covered in the Management Discussion and Analysis Report, which forms part of this Annual Report.
CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES
During the financial year under review, all contracts / arrangements / transactions entered into by the Company with related parties were in ordinary course of business and on an arms length basis and were not considered material as per the provision of Section 188 of the Act read with the Companies (Meetings of Board and its Powers) Rules, 2014 and Regulation 23 of the SEBI Listing Regulations. Hence, disclosure in form AOC-2 under Section 134(3)(h) of the Act, read with the Rule 8 of Companies (Accounts of Companies) Rules, 2014, is not applicable
All related party transactions have been approved by the Audit Committee of the Board of Directors of your Company and are reviewed on a periodic basis.
The details of contracts and arrangements with related parties of your Company for the financial year under review, are given in notes to the Standalone Financial Statements, forming part of this Annual Report. The Policy on Related Party Transactions, as approved by the Board, is available on your Companys website at:
INTERNAL FINANCIAL CONTROLS
Your Company has in place an adequate internal control system commensurate with the size of its operations.
The Internal control system comprising of policies and procedures is designed to ensure sound management of your Companys operations, safekeeping of its assets, optimal utilisation of resources, reliability of its financial information and compliance. Clearly defined roles and responsibilities have been institutionalised. Systems and procedures are periodically reviewed to keep pace with the growing size and complexity of your Companys operations.
During the financial year under review, no material or serious observation has been received from the Statutory Auditors and the Internal Auditors of the Company on such controls.
The Company has in place an adequate 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, objective and reasonable assurance on the adequacy and effectiveness of the organisations risk management, control and governance processes.
The framework is commensurate with the nature of the business and the size of its operations. Internal auditing at the Company involves the utilisation of a systematic methodology for analysing business processes or organisational problems and recommending solutions to add value and improve the organisations operations.
The audit approach verifies compliance with the regulatory, operational and system related procedures and controls.
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, your Directors make the following statement and confirm that:-
i) in the preparation of the Annual Accounts for the financial year ended 31st March, 2018, the applicable accounting standards have been followed and there are no material departures from the same;
ii) the Directors have 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 31st March, 2018 and of the profit of the Company for financial year ended on that date;
iii) the Directors have 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 have prepared the Annual Accounts on a going concern basis;
v) the Directors have laid down Internal Financial Controls and that such Internal Financial Controls are adequate and are operating effectively; and
vi) the Directors have 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 CHANGES IN COMPOSITION OF THE BOARD
Appointment of Directors
As on 31st March, 2018, your Board comprised of 7 (Seven) Directors which included 3 (Three) Non-Executive Directors and 4 (Four) Independent Directors. Your Directors on the Board possess experience, competency and are renowned in their respective fields. All Directors are liable to retire by rotation except Independent Directors whose term of 5 consecutive years was approved by the Members of the Company at the previous Annual General Meeting (AGM) of the Company held on 19th July, 2017.
During the financial year under review, your Company appointed Mrs. Vijayalakshmi Iyer (DIN: 05242960),
Mr. Arun Adhikari (DIN: 00591057) and Mr. P H Ravikumar
(DIN: 00280010) as Additional (Independent) Directors of the Company with effect from 26th June, 2017, which was subsequently approved by the Members at the previous AGM of the Company held on 19th July, 2017.
During the financial year under review, Mrs. Pinky Mehta, Non-Executive Director (DIN: 00020429) was appointed as a Whole-time Director and Chief Financial Officer of the Company with effect from 1st July, 2017. Thereafter,
Mrs. Pinky Mehta relinquished the position of Whole-time Director with effect from 26th October, 2017. However, she continues to act as a Chief Financial Officer (Key Managerial Personnel) as per the provisions of the Act.
During the financial year under review, Mr. Kumar Mangalam Birla (DIN: 00012813), Dr. Santrupt Misra (DIN: 00013625) and Mr. Sushil Agarwal (DIN: 00060017) were appointed as the Additional Non-Executive Directors on the Board of the Company with effect from 26th October, 2017.
Resignation of Directors
Mr. D P Rathi -Independent Director (DIN: 01491926) and Mr. Shriram Jagetiya - Non-Executive Director (DIN: 01638250) of the Company resigned from the Board with effect from 23rd June, 2017 and 26th October, 2017, respectively. The Board places on record its appreciation and gratitude for the valuable contribution and advice offered by Mr. Rathi and Mr. Jagetiya during their tenure as Director(s) of the Company.
Retirement by Rotation
In accordance with the provisions of the Act and the Articles of Association of the Company, none of the Director(s) of the Company are eligible to retire by rotation at the ensuing Annual General Meeting (AGM).
DECLARATION BY INDEPENDENT DIRECTORS
Pursuant to Section 149(7) of the Act read with the Companies (Appointment and Qualifications of Directors) Rules, 2014, the Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of Independence as prescribed under Section 149(6) of the Act and have submitted their respective declarations as required under Section 149(7) of the Act and Regulation 16(1) of SEBI Listing Regulations.
KEY MANAGERIAL PERSONNEL
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, Mr. Ajay Srinivasan, Chief Executive Officer (CEO), Mrs. Pinky Mehta- Chief Financial Officer (CFO) and Mr. Sailesh Daga, Company
Secretary (CS), are the Key Managerial Personnel of your Company.
During the financial year under review, Mrs. Anjali Makhija resigned as the CFO of the Company with effect from 23rd June, 2017. The Board places on record its appreciation and gratitude for the valuable contribution and advice offered by Mrs. Makhija during her tenure as the CFO of the Company.
ANNUAL PERFORMANCE EVALUATION
The evaluation framework for assessing the performance of the Directors of your Company comprises of contributions at the Meeting(s) and strategic perspective or inputs regarding the growth and performance of your Company, 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 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 an integral part of this Annual Report. The details of the programme for familiarisation of the Independent Directors of your Company are available on your Companys website at: https://www , aditvabiriacapitai.com/about-us/board-of-Directors.
MEETINGS OF THE BOARD AND ITS COMMITTEES BOARD
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.
The Meetings of the Board were held on 25th April, 2017, 9th May, 2017, 26th June, 2017, 29th June, 2017, 18th July, 2017, 24th July, 2017, 11th August, 2017, 25th October, 2017, 7th November, 2017 and 9th February, 2018.
Further details on the Board Meetings are provided in the Corporate Governance Report, forming part of this Annual Report.
During the financial year under review, the Audit Committee reviewed the internal controls put in place to ensure that the accounts of your 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 your Company. The Committee has also reviewed the procedures laid down by your Company for assessing and managing the risks.
Further details on the Audit Committee are provided in the Corporate Governance Report, forming 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
During the financial year under review, the nomenclature of the Nomination and Remuneration Committee was changed to Nomination, Remuneration and Compensation Committee.
Further details on the Nomination, Remuneration and Compensation Committee are provided in the Corporate Governance Report, forming part of this Annual Report.
The Nomination, Remuneration and Compensation Committee has formulated a policy on remuneration under the provisions of Section 178(3) of the Act and the same is attached as Annexure V of the Boards Report.
Details of all the other Committees of the Board are provided in the Corporate Governance Report, which forms part of this Annual Report.
EXTRACT OF ANNUAL RETURN
Pursuant to the provisions of Section 134(3)(a) of the Act, the extract of annual return for the financial year ended 31st March, 2018 in Form MGT-9 under the provisions of 92(3) of the Act is attached as Annexure VI of the Boards Report.
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, as amended, M/s. Deloitte Haskins & Sells, LLP, Chartered Accountants (Firm Registration No.:117366W/W-100018, LLP Identification No: AAB-8737) had been appointed as Statutory Auditors of the Company for a term of 5 (Five) years
i.e. from the Tenth Annual General Meeting till the conclusion of Fifteenth Annual General Meeting of the Company.
The Company had received certificate from the Statutory Auditors confirming their eligibility and willingness for their appointment pursuant to Section 139(1) of the Act.
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. The Statutory Auditors have not 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.
Pursuant to the requirements of Section 204(1) of the Act read with Rule 9 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. BNP & Associates, 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. BNP & Associates, Company Secretaries, is attached as Annexure VII of the Boards Report.
The Secretarial Audit Report does not contain any qualifications, reservations or adverse remarks.
The provisions of Cost Audit as prescribed under Section 148 of the Act, are not applicable to the Company.
CORPORATE SOCIAL RESPONSIBILITY
In accordance with Section 135 of the Act, your Company has a Corporate Social Responsibility (CSR) Committee.
The Corporate Social Responsibility 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.aditvabirlacapital.com/investor-relations/ policies-and-codes.
In view of losses in the previous years, your Company was not required to spend any amount towards CSR during the financial year under review. Accordingly, no CSR activity was undertaken by the Company.
Further details on the CSR Committee are provided in the Corporate Governance Report, forming 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 vigil mechanism for Directors and Employees to report concerns, details of which are covered in the Corporate Governance Report which forms part of the Annual Report. Whistle Blower Policy is available on the Companys website at: https://www , aditvabirlacapital.com/investor-relations/policies-and-codes.
POLICY ON PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE
Your Company has in place an appropriate policy which is in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013. An Internal Complaints Committee has been set up to redress complaints, if any, received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. We further state that during the financial year under review, there were no complaints received/cases filed under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
Your Company believes that human resources are at the core of sustaining and building our organisation. Over the last one year, the Human Resource team has contributed significantly in reducing attrition and improving productivity and supporting the business in identifying and grooming leaders across all business units of the Company. A majority of leadership positions in the business units of the Company are today being filled internally which in turn is helping our newer businesses scale up faster. With an unswerving focus on nurturing and retaining talent, your Company provides avenues for learning and development through functional, behavioral and leadership training programs as well as on the job training to enable the employees to constantly upgrade their skills. Due to all these initiatives your Company was ranked as the 12th Best Employer to work for in India in a survey conducted by Business Today and People Strong.
SECRETARIAL STANDARDS OF ICSI
Your Company is in compliance with all the applicable Secretarial Standards as specified by the Institute of Company Secretaries of India.
In terms of applicable provisions of the Act and SEBI Listing Regulations, your Company discloses that during the financial year under review:
1. Your Company has not issued shares (including sweat equity shares) to employees of the Company under any scheme save and except Employee Stock Option Schemes referred to in this Report.
2. Your Company has not made any Scheme for provision of money for the purchase of its own shares by employees or by trustees for the benefit of employees.
3. No fraud was reported by the Auditors to the Audit Committee or the Board of Directors.
4. 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.
Your Directors take this opportunity to express their appreciation for the support and co-operation extended by the Members and other business associates. Your Directors gratefully acknowledge the ongoing co-operation and support provided by the Central and State Governments and all Regulatory bodies.
Your Directors place on record their appreciation for the exemplary contribution made by the employees of the Company at all levels. Their dedicated efforts and enthusiasm have been pivotal to your Companys growth.
For and on behalf of the Board of Directors Aditya Birla Capital Limited (Formerly known as Aditya Birla Financial Services Limited)
|Kumar Mangalam Birla|
|Date: 8th May, 2018||Chairman|
|Place: Mumbai||DIN: 00012813|
Dividend Distribution Policy
1.1 As per the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended, the Company has decided to formulate and disclose
its Dividend Distribution Policy. Accordingly, the Board of Directors of the Company (the Board) has approved this Dividend Distribution Policy for the Company at its meeting held on 8th May, 2018.
1.2 The objective of this policy is to provide the dividend distribution framework to the stakeholders of the Company. The Board of Directors shall recommend dividend in compliance with this policy, the provisions of the Companies Act, 2013 and Rules made thereunder and other applicable legal provisions.
2. TARGET DIVIDEND PAYOUT
2.1 Dividend will be declared out of the current years Profit after Tax of the Company on a Standalone basis.
2.2 Only in exceptional circumstances including but not limited to loss after tax in any particular financial year, the Board may consider utilising retained earnings for declaration of dividends, subject to applicable legal provisions.
2.3 Other Comprehensive Income (as per applicable Accounting Standards) which mainly comprises of unrealised gains/losses, will not be considered for the purpose of declaration of dividend.
2.4 Dividend payout is an important decision as it determines the amount of profits to be distributed amongst the shareholders and to be ploughed back into the businesses for future growth. It is therefore necessary to have an optimal dividend payout policy that achieves sustainable growth in the Company and therefore enhances long-term shareholder value.
2.5 Considering the inherent nature of the market and business environment, and various subsidiaries of the Company being at different stages of growth and requirement of capital, while it is difficult to pre-determine the dividend payout as a percentage of earnings, the Company will, subject to applicable laws and relevant rules and regulations in this regard, endeavour to pay dividend to shareholders in the most efficient way and gradually increase it without compromising growth of the Company.
3. FACTORS TO BE CONSIDERED FOR DIVIDEND PAYOUT
The Board will consider various internal and external factors, including but not limited to the following before making any recommendation for dividends:
Stability of earnings
Cash flow from operations
Future organic and inorganic growth plans and reinvestment opportunities (including investment requirements for the Company in its subsidiaries and associate companies)
Dividend policy followed by the investee companies, as a substantial portion of the Companys income is earned by way of dividends from its subsidiaries
Industry outlook and stage of business cycle for underlying businesses
Compliance with covenants contained in any agreement entered into by the Company with its lenders
Funding and liquidity considerations
Overall economic environment, changes in government policies, industry rulings & regulatory provisions
Absorbing unfavourable market condition, meeting unforeseen contingent liabilities and other circumstances
Cost of external financing
Past dividend trends
Buyback of shares or any such alternate profit distribution measure
Any other contingency plans
4. PARAMETERS THAT SHALL BE ADOPTED WITH REGARD TO VARIOUS CLASSES OF SHARES
The Company has issued only one class of shares viz. equity shares. Parameters for dividend payments in respect of any other class of shares will be as per the respective terms of issue and in accordance with the applicable regulations and will be determined, if and when the Company decides to issue other classes of shares.
5.1 Retained earnings will be used for the Companys growth plans, expected capital adequacy/ liquidity requirements, debt repayments and other contingencies.
5.2 If the Board decides to deviate from this policy, the rationale for the same will be suitably disclosed.
Details pertaining to remuneration as required under section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014
i. Sitting fees are not paid to Non Executive and Non- Independent Directors of the Company. At present, only the Independent Directors are paid sitting fees for attending the Meetings of the Board of Directors and of the Committees of which they are Members.
This remuneration, by way of fees, is not related to the performance or profit of the Company. In view of this, the ratio of remuneration of each Director to the median employees remuneration is not computed.
ii. Percentage increase in remuneration of Chief Executive Officer, Chief Financial Officer and Company Secretary of the Company during the financial year 2017-18.
|Name||Designation||% increase in remuneration in financial year 2017-18|
|Mr. Ajay Srinivasan||Chief Executive Officer||15.29*|
|Mrs. Pinky Mehta1||Chief Financial Officer||-|
|Mrs. Anjali Makhija2||Chief Financial Officer||-|
|Mr. Sailesh Daga3||Company Secretary||-|
* payment towards Long term incentive plan (LTIP) made in the financial year 2017-18 has been excluded.
1. Mrs. Pinky Mehta, Non-Executive Director of the Company was appointed as the Whole-time Director and Chief Financial
Officer of the Company with effect from 1st July, 2017. Thereafter, Mrs. Pinky Mehta relinquished the position of Whole-time Director with effect from 26th October 2017.
However, she continues to act as a Chief Financial Officer (Key Managerial Personnel) of the Company.
2. Mrs. Anjali Makhija was appointed as the Chief Financial Officer of the Company for the period 1st May, 2016 to
23rd June, 2017. The remuneration paid was for part of the year and hence, it is not comparable.
3. Mr. Sailesh Daga was paid remuneration for part of the year i.e. from 1st October, 2017 and hence, it is not comparable.
iii. In the financial year 2017-18, there was an increase of 8.30% in the median remuneration of employees.
iv. As at 31st March, 2018, there were 35 permanent employees of the Company.
v. Average percentile increase made in the salaries of employees other than the managerial personnel in the last financial year i.e. 2017-18 was 15.18% which is in line with the industry benchmark and cost of living index whereas the increase in the managerial remuneration for the same financial year was 15.29% due to better performance of the Company.
vi. It is hereby affirmed that the remuneration paid is as per the Executive Remuneration Philosophy/Policy of the Company.
Note: The calculation of percentage Increase in the median remuneration and average percentile increase is based on the comparable employees.
TO THE MEMBERS OF ADITYA BIRLA CAPITAL LIMITED
INDEPENDENT AUDITORS CERTIFICATE ON CORPORATE
1. This certificate is issued in accordance with the terms of our engagement letter reference no. MJ/2017-18/73 dated 28th July, 2017.
2. We, Deloitte Haskins & Sells LLP, Chartered Accountants, the Statutory Auditors of Aditya Birla Capital Limited (the "Company"), have examined the compliance of conditions of Corporate Governance by the Company, for the year ended on 31st March, 2018, as stipulated in regulations 17 to 27 and clauses (b) to (i) of regulation 46(2) and para C and D of Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the "Listing Regulations").
3. The compliance of conditions of Corporate Governance is the responsibility of the Management. This responsibility includes the design, implementation and maintenance of internal control and procedures
to ensure the compliance with the conditions of the Corporate Governance stipulated in Listing Regulations.
4. Our responsibility is limited to examining the procedures and implementation thereof, adopted by the Company for ensuring compliance with the conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.
5. We have examined the books of account and other relevant records and documents maintained by the Company for the purposes of providing reasonable assurance on the compliance with Corporate Governance requirements by the Company.
6. We have carried out an examination of the relevant records of the Company in accordance with the Guidance Note on Certification of Corporate Governance issued by the Institute of the Chartered Accountants of India (the "ICAI"), the Standards on Auditing specified under Section 143(10) of the Companies Act 2013, in so far as applicable for the purpose of this certificate and as per the Guidance Note on Reports or Certificates for Special Purposes issued by the ICAI which requires that we comply with the ethical requirements of the Code of Ethics issued by the ICAI.
7. We have complied with the relevant applicable requirements of the Standard on Quality Control (SQC)
1, Quality Control for Firms that Perform Audits and Reviews of Historical Financial Information, and Other Assurance and Related Services Engagements.
8. Based on our examination of the relevant records and according to the information and explanations provided to us and the representations provided by the Management, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in regulations 17 to 27 and clauses (b) to (i) of regulation 46(2) and para C and D of Schedule V of the Listing Regulations during the period ended
31st March, 2018 (From the date of listing i.e. 1st September, 2017 to 31st March, 2018).
9. We state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the Management has conducted the affairs of the Company.
For Deloitte Haskins & Sells LLP Chartered Accountants (Firms Registration No. 117366W / W-100018)
|Sanjiv V. Pilgaonkar|
|Date: 8th May, 2018||Partner|
|Place: Mumbai||Membership No. 039826|