sundaram asset management company ltd Directors report

REPORT OF THE DIRECTOR

Your Directors have pleasure in presenting the Eighteenth Annual Report along with the audited accounts for the year ended March 31, 2014. The summarised financial results of the Company are given below:

		(Rs in lakhs)
	For the year ended
	March 31, 2014	March 31, 2013
Gross Income	12,406.17	11,830.26
Profit / (loss) before
depreciation and tax	2,450.04	2,672.26
Less: Provision for Depreciation	187.14	187.37
Profit Before Tax	2,262.90	2,484.89
Provision for Taxation	735.80	798.41
Profit after tax	1,527.10	1,686.48
Surplus brought forward
from the previous year	4,979.38	3,999.72
Surplus available for appropriation	6,506.48	5,686.20
Less: Appropriations
Dividend Proposed (Final)	460.00	460.00
Dividend Distribution Tax	78.18	78.18
Transfer to General Reserve	152.71	168.64
Surplus carried to Balance Sheet	5,815.59	4,979.38

Your Company earned a total income of Rs. 12,406.17 lakhs for the year 2013-14, by way of investment management and advisory fees and other income during the year. This total income includes Rs. 251.79 lakhs pertaining to provision created in an earlier year that has been written back. Current year’s income represents an increase of 4.87% over the previous year’s total income of Rs. 11,830.26 lakhs. Your Company reported a profit after tax of Rs. 1,527.10 lakhs for the year compared to Rs. 1,686.48 lakhs in the previous year.

Your Directors are pleased to recommend a dividend of 30% on the paid-up capital of the Company. The dividend, together with dividend tax, amounts to Rs. 538.17 lakhs. A sum of Rs. 152.71 lakhs will be transferred to the General Reserve leaving a surplus of Rs. 5,815.59 lakhs to be retained in the profit and loss account.

Snapshot of the Mutual Fund Industry

The total assets managed by the industry comprising 45 mutual fund houses (excluding fund houses set up for launching Infrastructure Debt Funds) as at March 31, 2014 was Rs.8,24,361 Cr. from the previous year’s figure of Rs. 7,01,443 Cr., an increase of 17.52%.

Equities had a net outflow of Rs 9,269 Cr., lower than net outflow of Rs 14,587 Cr. last year. The net inflow in debt oriented schemes was Rs. 62,777 Cr.

Sundaram Mutual Fund Performance

The average Assets under Management of Sundaram Mutual Fund schemes for the year 2013-14 was Rs. 15,248.25 Cr. compared to Rs. 13,573.76 Cr. for 2012-13, an increase of 12.33%. The closing AUM of Sundaram Mutual Fund schemes was Rs. 15,193.17 Cr. as at March 31, 2014 compared to Rs. 12,873.28 Cr. as at March 31, 2013, representing a growth of 18.02 %. The closing AUM of Sundaram Mutual Fund Schemes represented a 1.84 % share of the Industry AUM. The fixed income funds and hybrid schemes contributed significantly to the inflows during the year.

Sundaram Gilt Fund, Sundaram Ultra Short Term Fund and Sundaram Select Debt Short Term Asset Plan were given 5-star ratings by Value Research. Of 600+ open ended debt schemes ranked by Morningstar, three of the top twenty schemes were those of Sundaram Mutual. Sundaram Gilt Fund was the top performer in the list.

The equity funds recorded good performance as majority of the funds have beaten the benchmark on a six-month basis ending March ‘14. Sundaram Select Mid Cap declared dividend aggregating to 20% in two tranches of 10% each. Nine of the equity schemes have declared dividend to the investors.

The portfolio of Sundaram Capex Opportunities (Dividend), Sundaram Capex Opportunities (Growth) and Sundaram Energy Opportunities were merged to form Sundaram Infrastructure Advantage Fund.

On the Portfolio Management side, as on March 31, 2014 Sundaram Portfolio Managers manage assets worth Rs. 191.85 Cr. under discretionary portfolio management services and Rs. 188.81 Cr. under advisory services.

During the year, your Company adopted ten districts in Tamilnadu as a part of District Adoption Program initiated by SEBI and AMFI. Your Company has been taking active steps including conducting financial literacy campaigns in the districts that it has adopted.

During the year, 60 Investor Awareness Programs (IAP) in 60 centres were conducted.

Your Company has a total of 44 branches as at the year-end of which 31 branches were located outside the top 15 cities as defined by SEBI.

Regulation

During the year, Securities and Exchange Board of India (SEBI) approved the long term policy for Mutual Funds to deal with the public policy objectives of achieving sustainable growth of the mutual fund industry and mobilisation of household savings for the growth of the economy

In continuation to the policy, SEBI had issued a circular requiring the Asset Management Companies (AMCs) to disclose, inter alia, contribution to Average AUM (AAUM) from Top -15 cities / Beyond Top -15 cities, Contribution to AAUM by sponsor of the Mutual Fund and its associates and State-wise/Union Territory-wise contribution to AUM.

SEBI further notified increase in the minimum net-worth requirement of the AMCs from Rs. 10 cr. to Rs.50 cr. within three-year time frame and introduced the seed capital requirement from Sponsor or AMC, at the lower of 1% of AUM as on the notification date or Rs. 50 lakhs, in the growth option of all the open-ended schemes of their Mutual Fund within one-year time frame.

Your Company satisfies the minimum net-worth requirement and other disclosure requirements prescribed by SEBI.

Outlook

The International Monetary Fund in its update on World Economic Outlook released in January 2014 revised the growth projection for the world economy slightly upwards to 3.7 per cent for the year 2014. Based on this report, the prospects for global growth are expected to improve over the near term at a steady pace from 2014 onwards. The Indian GDP growth is projected to be in the range of 5% - 6% in the year 2014-15. The Current Account deficit is expected about 2% of the GDP. Increase in forex reserves on account of inflows is further augmented by repayment by public sector oil companies. The RBIs policy will be influenced by inflation which is hovering around 8%.

The election results this month will prove to be a seminal event boosting investor confidence that a new Government with a strong mandate will initiate reform and enhance growth. Looking ahead, the economic activity during 2014-15 is expected to show good improvement over the last year, despite concerns on below normal monsoon.

Your Company continues to make investment in enhancing its research, fund management capability and customer service enhancements. New schemes will be introduced taking into consideration the long-term interest of the investors.

Subsidiary - Sundaram Asset Management Singapore Pte. Ltd.

Sundaram Asset Management Singapore Pte Ltd (SAMS), a wholly owned subsidiary of your Company has a paid up share capital of SGD 31,75,001 as on March 31, 2014 (Rs. 14.72 Cr.). During the year 2013-14 the company reported a loss of SGD 11.62 lakhs (Rs. 5.51 Cr). SAMS has renewed its FII registration with SEBI in March 2014 and has been taking active steps to initiate fund management activity in the current FY 2014-15.

As required, a statement as per section 212(1)(e) of the Companies Act, 1956 and the Financial Statements of Sundaram Asset Management Singapore Pte. Ltd. is enclosed.

Directors

The Board of Directors of Sundaram Asset Management met five times in 2013-14. Mr. S. Krishnamurthy and Mr. Harsha Viji retire at the ensuing Annual General Meeting and being eligible, offer themselves for re-election. Necessary resolutions are submitted for your approval.

Board Committees

The Board has constituted an Audit Committee, an Executive Committee, a Risk management Committee and a Remuneration Committee with specific Terms of Reference and delegated powers. The details of the committees are set out in Annexure I. In line with the requirement of Companies Act, 2013, the Board of Directors has reviewed and reconstituted the Committees as under:

1. Corporate Social Responsibility Committee has been formed.

2. The Remuneration Committee has been reconstituted as Nomination and Remuneration Committee

3. The Risk Management Committee has been merged with the Audit Committee

The Board also enlarged the scope of these committees as required.

Public Deposits

Your Company has not accepted any deposits.

Particulars regarding Conservation of Energy, Technology

Absorption and Foreign Exchange Earnings and Expenditure

(a) As the Company does not carry out any manufacturing activities, particulars required to be disclosed with respect to the conservation of energy and technology absorption in terms of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 are not applicable.

(b) During 2013-14, foreign exchange earnings amounted to Rs. 0.42 Cr. (2012-13: 0.34 Cr.) and foreign exchange expenditure was Rs. 2.54 Cr. (2012-13: 1.69 Cr.)

Personnel

Sundaram Asset Management Company Limited had 257 employees on its rolls as on March 31, 2014. During the year, your Company carried out various employee engagement activities and welfare measures. Your Board of Directors place on record their acknowledgement for the support, dedication and unswerving commitment displayed by the employees of the Company.

Particulars of Employee Remuneration

As required by the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, details are set out in the Annexure to the Directors’ Report. Any shareholder interested in obtaining a copy of the said annexure may write to the Company Secretary at the registered office of the Company.

Directors’ Responsibility Statement pursuant to Section 217(2AA) of Companies Act, 1956

The Directors confirm:

1. That in the preparation of the annual accounts, the applicable accounting standards have been followed;

2. That they 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 at the end of the financial year and the profit or loss for that period;

3. That they have taken proper and sufficient care for the maintenance of adequate accounting records, in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

4. That they have prepared the annual accounts on a going concern basis.

Auditors

M/s. Brahmayya & Co., firm of Chartered Accountants, retires at the ensuing Annual General Meeting and are eligible for reappointment. The Company has received a certificate from them in accordance with Section 139 and 141 of the Companies Act, 2013 and rules issued thereunder.

Acknowledgement

Your Directors wish to place on record their deep appreciation of the professional support and guidance received from the Trustees of Sundaram Mutual Fund and the Sponsors -Sundaram Finance Limited.

Your Board of Directors also thanks the Securities and Exchange Board of India, Monetary Authority of Singapore, Association of Mutual Funds of India, the Company’s bankers and other intermediaries for their unstinting support.

Your Directors place on record their deep appreciation for the dedication and commitment displayed by the employees of your Company

	For and on behalf of the Board
Place: Chennai	D N Ghosh
Date: May 07, 2014	Chairman

Annexure to the Directors Report

Annexure I

Name of the Committee	Members of the Committee	No. of meetings held during 2013-14
	Mr. S. Krishnamurthy
Audit Committee	Mr. T.Anantha Narayanan	Five
	Mr. Harsha Viji
	Mr. T T Srinivasaraghavan
	Mr. Ashoke Bijapurkar
Executive Committee	Mr. T.Anantha Narayanan	Two
	Mr. T P Raman
	Mr. Harsha Viji
	Mr. T.Anantha Narayanan
Risk Management Committee	Mr. Rishikesha T Krishnan	One
	Mr. Harsha Viji
	Mr D N Ghosh
	Mr. T P Raman
Remuneration Committee	Mr. T T Srinivasaraghavan	One
	Mr. Ashoke Bijapurkar
	Mr. Harsha Viji

For and on behalf of the Board

Place: Chennai	D N Ghosh
Date: May 07, 2014	Chairman

Annexure – II

Sl.No	Name of the Schemes	Closing AUM
		as on 31-03-14
		(Rs. in Crore)
	Equity Schemes
1	Sundaram Select Mid Cap	1,787.74
2	Sundaram Tax Saver	1,137.13
3	Sundaram Select Focus	445.25
4	Sundaram Select Thematic Funds – Energy Opportunities	441.00
5	Sundaram S.M.I.L.E Fund	275.38
6	Sundaram Growth Fund	176.06
7	Sundaram Select Micro Cap (4 schemes)	166.72
8	Sundaram Select Thematic Funds – Capex Opportunities (Growth)	138.63
9	Sundaram Financial Services Opportunities Fund	137.48
10	Sundaram Select Thematic Funds – PSU Opportunities	121.27
11	Sundaram Select Thematic Funds – Rural India Fund	116.89
12	Sundaram Equity Multiplier	110.49
13	Sundaram Select Thematic Funds – Capex Opportunities (Dividend)	108.69
14	Sundaram Equity Plus	83.61
15	Sundaram Global Advantage – Fund of Funds	37.56
16	Sundaram Balanced Fund	33.85
17	Sundaram Entertainment Opportunities Fund	28.45
	Total AUM – Equity Schemes – (A)	5,346.20
	Debt & Liquid Schemes
18	Sundaram Fixed Term Plans (including Interval Funds) (28 schemes)	2,349.10
19	Sundaram Money Fund	1,941.05
20	Sundaram Flexible Fund – Short Term Plan	1,782.47
21	Sundaram Ultra Short Term Fund	1,161.73
22	Sundaram Select Debt – Short Term Asset Plan	830.81
23	Sundaram Capital Protection Oriented Schemes (Closed-end Scheme) (9 schemes)	762.48
24	Sundaram Flexible Fund – Flexible Income Plan	372.57
25	Sundaram Bond Saver	363.15
26	Sundaram Monthly Income Plan (Not an assured Income Scheme) – Moderate Plan	122.48
27	Sundaram Hybrid Funds (3 schemes)	99.20
28	Sundaram Gilt Fund	35.39
29	Sundaram Monthly Income Plan (Not an assured Income Scheme) – Aggressive Plan	19.54
30	Sundaram Monthly Income Plan (Not an assured Income Scheme) – Conservative Plan	5.54
31	Sundaram Income Plus	1.45
	TOTAL AUM – Debt & Liquid Schemes – (B)	9,846.97
	GRAND TOTAL – (A) + (B)	15,193.17

For and on behalf of the Board

Place: Chennai	D N Ghosh
Date: May 07, 2014	Chairman