Mar 31, 2019
1. GENERAL INFORMATION
M/s. Aditya Birla Money Limited (''ABML'' or ''the Company'') is a public company domiciled in India and is incorporated on July 04, 1995 in Chennai, Tamil Nadu under the provisions of erstwhile Companies Act, 1956 (now Companies Act, 2013).
Company''s shares are listed in two recognized stock exchanges in India. The Company is a stock broking and capital market products distributor, offering Equity and Derivative trading through NSE and BSE and Currency Derivative on MCX-SX and Commodities Trading through MCX and NCDEX. It is registered as a Depository Participant with both NSDL and CDSL in terms of the Securities and Exchange Board of India (Depository Participants) Regulations, 1996. It also provides Portfolio Management Services and involved in trading in securities.
Aditya Birla Commodities Broking limited (a wholly owned subsidiary of ABML) a member of MCX, NCDEX and offering commodity broking services got amalgamated with ABML on the appointed date of 1st April 2018 pursuant to the National Company Law Tribunal (âNCLT") order dated 14th November 2018 approving the Scheme of Amalgamation of Aditya Birla Commodities Broking Limited (ABCBL).
^ Trade receivables includes pass through amounts representing dues from clients and exchanges towards transactions not fully settled as at the reporting date.
^ Trade receivables includes amount receivable from customers pertaining to amount funded to them for settlement of trade as part of normal business activity.
There are no Micro, Small & Medium Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days as at 31st March, 2019 and no interest payment made during the year to any Micro, Small & Medium Enterprises. (Previous year MSME/Interest: Nil).This information as required to be disclosed under the Micro, Small & Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company.
* Commercial Papers are shown net of unamortized discounting charges
A Repayable in 27 to 91 days from the date of draw down. The interest on this loan ranges from 7.35% to 9.15% and interest on this loan in the previous year ranged from 6.90 % to 8.32 %
Terms/Rights attached to Preference Shares
Preference shares carry a non-cumulative dividend of 8% per annum. Dividend amounts, declared if any, will be paid in Indian Rupees.
On March 31, 2011, the Company had issued 800,000 8% Redeemable Non-Convertible Non-Cumulative Preference Shares of Rs.100/ - each, fully paid-up at a premium of Rs.150/ - per share to Aditya Birla Capital Limited (Formerly known as Aditya Birla Financial Services Limited), the Holding Company. The Preference Shares were redeemable at the end of 5 years from the date of issue at a price of Rs.320/ - per share. With the consent of the preference share holder, the period of redemption was extended by 39 months from March 2016 to June 2019 and the redemption price was varied from Rs.320/- to Rs.411/-(Face value Rs.100/- and Premium of Rs.311/- per share). The period of redemption was again extended by 42 months from June 2019 to December, 2022 with the written consent of the preference share holder and the redemption price was varied from Rs.411/- to Rs.533.75 (Face value Rs.100/ - and Premium of Rs.433.75 per share).
During the year ended 31st March, 2014, the Company had issued 200,000 8% Redeemable Non-Convertible Non-Cumulative Preference Shares of Rs.100/- each, fully paid-up at a premium of Rs.400/- per share to Aditya Birla Capital Limited (formerly known as Aditya Birla Financial Services Limited), the Holding Company. The Preference Shares were redeemable at the end of 5 years from the date of issue at a price of Rs.725/- per share. With the consent of the preference share holder, the period of redemption was extended by 42 months from September 2018 to March 2022 and from March 2019 to September, 2022 for 100,000 each 8% Redeemable Non-Convertible Non-Cumulative Preference Shares originally issued on September 30, 2013 and March 29, 2014 respectively and the redemption price was varied from Rs.725/- to Rs.941/- (Face value Rs.100/- and Premium of Rs.841/- per share).
Shares held by Holding Company
10,00,000 (Previous Year : 10,00,000) 8% Redeemable Non-Convertible Non-Cumulative Preference shares of Rs.100/-each fully paid-up are held by Aditya Birla Capital Limited (Formerly known as Aditya Birla Financial Services Limited), the Holding Company.
2) Term/Right Attached to Equity Shares
The Company has only one class of equity shares having a par value of Re.1/- per share. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors, if any, is subject to the approval of the shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution to all preferential holders. The distribution will be in proportion to the number of the equity shares held by the shareholders.
3) Shares held by Holding Company
4,15,50,000 (Previous Year: 4,15,50,000) Equity Shares of Re.1/- each fully paid-up are held by Aditya Birla Capital Limited (Formerly known as Aditya Birla Financial Services Limited), the Holding Company.
2. FINANCIAL INSTRUMENTS-ACCOUNTING CLASSIFICATIONS AND FAIR VALUE MEASUREMENTS
Set out below is a comparison by class of the carrying amount and fair value of the Company''s financial instruments other than those with carrying amounts that are reasonable approximations of fair value:
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair value:
Long-term fixed-rate and variable-rate receivables/borrowings are evaluated by the Group based on the parameters such as interest rates.
Fair value of the Deposits & Advances is measured using the DCF (discounting cash flow) model.
The fair value measurement of the financial liability of the Company being Commercial papers is done by transaction cost incurred in initial recognition is included in the initial recognition amount of the financial liability and charged to profit or loss using effective interest method. The own non-performance risk as at 31st March, 2019 is assessed to be insignificant.
The management assessed that cash and cash equivalents, trade receivables, margin with exchanges, trade payables, bank balances and other current liabilities approximate their carrying amount largely due to the short-term maturities of these instruments.
Financial Risk:
Following table provides the Liquidity Risk of Company''s Liabilities as on 31st March, 2019, 31st March, 2018 & 1st April, 2017 and the liquidity risk of Company''s financial assets are analyzed and disclosed under Note No.34 of maturity analysis Assets.
3. STAMP DUTY
Hitherto, the Company had been collecting and remitting stamp duties with respect to states wherein the manner of payment of the same has been prescribed by the respective state governments. From July 2011, the Company had started collecting stamp duty on contract notes for all states, including the states wherein the manner of payment has not yet been notified. The Company is evaluating various options of remitting the same, including remitting those amounts in the State of Tamil Nadu, as all the contract notes are executed at Tamil Nadu. Pending, the final determination of the manner of remittance, amount of Rs.1,42,79,356/- (Previous Year: Rs.1,35,28,853/-) collected till March 31, 2019 has been disclosed under Statutory dues in other Non Financial liabilities.
4. BUSINESS COMBINATION SCHEME OF AMALGAMATION OF ADITYA BIRLA COMMODITIES BROKING LTD. (ABCBL) WITH THE COMPANY (ABML)
During the year, the National Company Law Tribunal (âNCLT") - Ahmedabad bench vide its Order dated 14th November, 2018 has approved the Scheme of Amalgamation of Aditya Birla Commodities Broking Limited (ABCBL), a wholly owned subsidiary of Aditya Birla Money Limited, with the Company.
The Scheme was approved by the Board of Directors on 24th January, 2018. Consequent to the said Order and filing of the final certified Orders with the Registrar of the Companies, Gujarat on 14th December, 2018, the Scheme has become effective upon the completion of the filing with effect from the Appointed Date of 1st April, 2018. Upon coming into effect of the Scheme, the undertaking of ABCBL stands transferred to and vested in the Company with effect from the Appointed Date.
As this is a business combination of entity under common control, the amalgamation has been accounted using the ''pooling of interest'' method (in accordance with the approved Scheme).
All the assets and liabilities have been accounted for in the books of account of the Company at the value appearing in the books of account of ABCBL as on 1st April, 2018, the appointed date, under the âPooling of Interest" method as per the Court approved Scheme of Amalgamation.
The figures for the previous periods have been recast as if the amalgamation had occurred from the beginning of the preceding period to harmonize the accounting for the Scheme with the requirements of Appendix C of Ind AS 103 on Business Combinations.
All equity shares of ABCBL held by the Company were cancelled without any further application, act or deed. Accordingly, the investment held by the Company in ABCBL aggregating to Rs.5,50,00,000/- has been eliminated and the reserves and surplus of ABCBL aggregating to Rs.(63,31,642)/- as on the appointed date is added on line by line basis with the respective assets, liability, income , expense and reserves of the Company after considering the impact as per the difference of accounting policies.
This amalgamation did not involve any cash outflow (except for the transaction costs which was expensed out) as ABCBL was a wholly owned subsidiary and the amalgamation has been accounted using the ''pooling of interest'' method.
5. CONTINGENT LIABILITIES
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation.
A present obligation that arises from past events, where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made, is disclosed as a contingent liability. Claims against the Company, where the possibility of any outflow of resources in settlement is remote, are not disclosed as contingent liabilities.
The Company does not recognize a contingent liability in the financial statements except when the management decides to recognize basis the probability of the contingent liability devolving on the Company.
Contingent assets are not recognized in the financial statements since this may result in the recognition of income that may never be realized. However, when the realization of income is virtually certain, then the related asset is not a contingent asset and is recognized.
The Hon''ble Supreme Court of India (âSC") by their order dated Februay 28, 2019, in the case of M/s. Suya Roshani Limited & others v/s EPFO, set out the principles based on which allowances paid to the employees should be identified for inclusion in basic wages for the purposes of computation of Provident Fund contribution. Subsequently, a review petition against this decision has been filed and is pending before the SC for disposal. Pending decision on the subject review petition and directions from the EPFO, the impact, if any, is not ascertainable and consequently no effect has been given in the accounts.
6. MANAGERIAL REMUNERATION
During an earlier year the Company had made an application to the Central Government under Section 309 (5B) of the Companies Act, 1956 for seeking waiver of excess managerial remuneration amounting to Rs.30,94,634/-(Previous Year : Rs.30,94,634/-) (excluding Statutory contribution to provident fund, gratuity and leave encashment which are exempted under Schedule VI) paid to Mr. P.B. Subramaniyan, the erstwhile whole-time director (''Erstwhile Director'') of the Company for the period from April 01, 2008 to March 06, 2009.
During the earlier years, the Company has received an order from the Central Government (CG) whereby the CG has rejected excess remuneration of Rs.16,26,614/- (Previous Year : Rs.16,26,614/-) and directed the Company to collect the same from the Erstwhile Director. Further the Company has filed a Civil Suit in the High Court of Judicature at Madras vide C.S. No. 53/2016 seeking recovery of the excess remuneration paid to Mr. P.B. Subramaniyan. Pending the recovery of the same, it has been shown as advances recoverable by the Company in the Balance Sheet.
7. INCOME TAX
The Company offsets tax assets and liabilities if it has legally enforceable right to set off current taxes assets and current taxed liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.
Deferred Tax:
IND AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base.
In addition, the various transitional adjustments lead to temporary differences. According to the accounting policies, the Company has to account for such differences. Deferred tax adjustments are recognized in correlation to the underlying transaction either in retained earnings or a separate component of equity.
8. FOREIGN CURRENCY TRANSACTIONS
The Company did not enter into any foreign currency transactions in the current year and previous year.
9. CAPITAL MANAGEMENT
For the purpose of the Company''s Capital management, Capital includes issued equity capital, Long- term borrowings and other equity reserves attributable to the equity holders of the parent. The primary objective of the Company''s capital management is to maximize the shareholder value, comply to the regulatory requirements and maintain an optimal capital structure to reduce the cost of capital to the company. The Company makes adjustments in light of changes in economic conditions and the requirements of the applicable financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.
The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company includes within net debt, interest bearing loans and borrowings, trade and other payables, less cash and cash equivalents.
In order to achieve the overall objective, the Company''s Capital Management amongst other things, aims to ensure that it meets financial covenants attached to the interest bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowings in the current period.
10. CREDIT RISK
Credit risk is the risk that the counterparty will not meet its obligation under a financial instrument or customer contract leading to a financial loss. The Company''s exposure to credit risk is vey minimal as the trade receivables are covered by collateral.
Trade receivables are consisting of a large number of customers. The Company has credit evaluation policy for each customer and based on the evaluation, credit limit of each customer is defined. Wherever the Company assesses the credit risk as high, the exposure is backed by either stocks comfort or margin money.
Total Trade Receivables as on 31st March, 2019 is Rs.112,65,71,684/- (31st March, 2018: Rs.133,47,23,006/-, 1st April, 2017: Rs.148,03,65,058/-).
As per simplified approach, the Company makes provision of expected credit losses on trade receivables using a provision matrix to mitigate the risk of default in payments and makes appropriate provision at each reporting date wherever outstanding is for longer period and involves higher risk.
11. LEASE DISCLOSURES
11.1 OPERATING LEASES FOR PREMISES
Lease rentals in respect of premises taken on operating lease during the year ended March 31, 2019 amounts to Rs.5,02,39,197/- (Previous Year : Rs.5,01,93,705/-).
Future obligations towards lease rentals under non-cancellable lease agreements as on March 31, 2019 amounts to Rs.15,09,72,108/- (Previous Year : Rs.18,17,16,115/-). Details of Lease Rentals payable within one year and thereafter are as under:
The company has entered into lease / license agreements in respect of immovable properties with different parties. Some of the agreements contain escalation clause related to lease rentals / license fees from 5% to 15% p.a.
11.2 OPERATING LEASES FOR COMPUTERS
The company has entered into commercial leases on computer desktops. These leases have an average life of three years with renewal option included in the contracts.
Lease rentals in respect of computers taken on operating lease during the year ended March 31, 2019 amounts to Rs.10,90,604/- (Previous Year : Rs.17,92,250/-).
Future obligations towards lease rentals under non-cancellable lease agreements as on March 31, 2019 amounts to Rs.9,75,225/- (Previous Year : Rs.7,07,057/-). Details of Lease Rentals payable within one year and thereafter are as under:
12. EMPLOYMENT BENEFIT DISCLOSURES
Defined Contribution Plan
The amounts charged to the Statement of Profit and Loss during the year for Provident fund contribution aggregates to Rs.1,90,14,378/- (Previous year : Rs.1,77,73,694/-), NPS contribution fund contribution aggregates to Rs.4,32,154/- (Previous year : Rs.4,20,008/-) and employees'' state insurance contribution aggregates to Rs.9,73,447/- (Previous year : Rs.14,63,965/-).
Defined Benefit Plan General Description of the plan:
The Company operates gratuity plan through a trust wherein every employee is entitled to the benefit equivalent to fifteen days salary last drawn for each completed year of service. The same is payable on termination of service or retirement, whichever is earlier. The benefit vests after five years of continuous service. In case of some employees, the Company''s scheme is more favorable as compared to the obligation under Payment of Gratuity Act, 1972.
Nature of Benefits:
The Company operates a defined benefit final salary gratuity plan which is open to new entrants. The gratuity benefits payable to the employees are based on the employee''s service and last drawn salary at the time of leaving. The employees do not contribute towards this plan and the full cost of providing these benefits are met by the Company.
Regulatory Framework:
There are no minimum funding requirements for a gratuity plan in India. The trustees of the gratuity fund have a fiduciary responsibility to act according to the provisions of the trust deed and rules. Since the fund is income tax approved, the Company and the trustees have to ensure that they are at all times fully compliant with the relevant provisions of the income tax and rules. Besides this if the Company is covered by the Payment of Gratuity Act, 1972 then the Company is bound to pay the Statutory minimum gratuity as prescribed under this Act.
Governance of the Plan:
The Company has set up an income tax approved irrevocable trust fund to finance the plan liability. The trustees of the trust fund are responsible for the overall governance of the plan.
Inherent Risks:
The plan is of a final salary defined benefit in nature which is sponsored by the Company and hence it underwrites all the risks pertaining to the plan. In particular, there is a risk for the Company that any adverse salary growth or demographic experience or inadequate returns on underlying plan assets can result in an increase in cost of providing these benefits to employees in future. Since the benefits are lump sum in nature the plan is not subject to any longevity risks.
The following tables summarize the components of net benefit expense recognized in the statement of profit and loss and the funded status and amounts recognized in the balance sheet for the gratuity plan of ABML.
* It includes Gratuity expense of ABCBL''s Employees amounting to Rs.1,56,472/- (Previous year : Rs.2,08,254/-).
Pursuant to the merger of ABCBL with the Company with the appointed date as 1st April, 2018, the present value of the retirement benefit obligation (gratuity) pertaining to ABCBL is considered in the liability transfer from ABCBL to the Company during the year.
The above note is a disclosure that covers both the obligation value & employee benefit expense debited to P&L.
Funding Arrangement and Policy
The money contributed by the Company to the fund to finance the liabilities of the plan has to be invested.
The trustees of the plan are required to invest the funds as per the prescribed pattern of investments laid out in the income tax rules for such approved schemes. Due to the restrictions in the type of investments that can be held by the fund, it is not possible to explicitly follow an asset-liability matching strategy to manage risk actively.
There is no compulsion on the part of the Company to fully pre fund the liability of the Plan. The Company''s philosophy is to fund the benefits based on its own liquidity and tax position as well as level of under funding of the plan.
Effect of Plan on Entity''s Future Cash Flows:
a) Expected Contribution during the next annual reporting period The Company''s best estimate of Contribution during the next year - Nil
b) Maturity Profile of Defined Benefit Obligation
Sensitivity Analysis Method
These sensitivities have been calculated to show the movement in defined benefit obligation in isolation and assuming there are no other changes in market conditions at the accounting date. There have been no changes from the previous periods in the methods and assumptions used in preparing the sensitivity analyses.
Details of Plan Assets
The plan assets represent Company''s proportionate share in the Grasim Industries Limited Employees Gratuity Trust managed by the Ultimate Parent Company for the employees of the Company. The details of plan assets are as under:
The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.
The Company does not expect to contribute additional amount to the fund in the next year.
The principal assumptions used in determining gratuity obligations for the Company''s plans are shown below:
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
13. 1. STOCK OPTIONS GRANTED
i) ABML - EMPLOYEE STOCK OPTION SCHEME - 2014
The objective of the Employee Stock Option Scheme is to attract and retain talent and align the interest of employees with the Company as well as to motivate them to contribute to its growth and profitability.
The Company adopts Senior Executive Plan in granting Stock options to its Senior Employees.
(Employee Stock Option Scheme - 2014)
During 2014 the Company had formulated the ABML Employee Stock Option Scheme - 2014 (ABML ESOP Scheme - 2014) with the approval of the shareholders at the Annual General Meeting dated September 09, 2014. The Scheme provides that the total number of options granted there under will be 27,70,000 and to follow the Market Value Method (Intrinsic Value) for valuation of the Options.
Each option, on exercise, is convertible into one equity share of the Company having face value of Re.1/- each. Subsequently, the Nomination and Remuneration Committee of the Board of Directors on December 2, 2014 has granted 25,09,341 stock options to its eligible employees under the ABML ESOP Scheme - 2014 at an exercise price of Rs.34.25/-. The Exercise Price was based on the latest available closing price, prior to the December 2, 2014 (the date of grant by the Nomination & Remuneration Committee) on the recognized stock exchanges on which the shares of the Company are listed with the highest trading volume.
The Company has granted options to the eligible employees at an exercise price of Rs.34.25 per share being the latest market price as per SEBI ESOP Regulations. In view of this, there being no intrinsic value (being the excess of the market price of share under ESOP over the exercise price of the option), on the date of grant, the Company is not required to account the accounting value of option as per SEBI ESOP Regulations.
ii) ABCL - Employee Stock Option Scheme - 2017
Pursuant to ESOP Plan being established by the holding company (i.e. Aditya Birla Capital Limited), stock options were granted to the employees of the Company during the financial year. Total cost incurred by the holding company till date is being recovered from the Company over the period of vesting. Accordingly, a sum of Rs.1,92,85,906/-has been recovered from the Company during the year, which has been charged to the Statement of Profit and Loss.
13.1.1. FAIR VALUATION
The fair value of the options on the date of grant has been done by an independent valuer using Black-Scholes Formula. The key assumptions are as under:
14. The Company has a process whereby periodically all long term contracts, if any, are assessed for material foreseeable losses. As at the balance sheet date, there were no long term contracts (including derivative contracts)
15. The Company''s pending litigations comprise of claims against the Company primarily by the customers and proceedings pending with Income Tax and other Statutory authorities. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed the contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial results. Refer Note No.38 for details on contingent liabilities.
16. PORTFOLIO MANAGEMENT SCHEME
The Company manages several schemes under Portfolio Management Scheme (PMS). These accounts of the PMS clients under various schemes are held by the company under fiduciary capacity and all services are rendered in compliance with PMS Guidelines issued by the Securities & Exchange Board of India (SEBI). PMS services generate fee income to the Company. The PMS Account of the client is maintained by the company and is annually audited by an independent Chartered Accountant. Since the company renders PMS services under fiduciary capacity, the financials of PMS clients does not form part of the financials of the Company. This has been done based on the opinion obtained from the Expert Advisory Committee of the Institute of Chartered Accountants of India (ICAI). A brief summary of the aggregated quantum of the funds received, AUM of the Fund are produced below.
17. Segment reporting
The Company''s business is to provide brokerage service, trading in securities and portfolio management services (''PMS'') to its clients in the capital markets within India. All other activities of the Company revolve around these activities.
Mar 31, 2018
1. Nature of operations
Aditya Birla Money Limited (âABMLâ or âthe Companyâ) was incorporated on July 04, 1995 in Chennai, Tamil Nadu. ABML is a broking and distribution player, offering Equity and Derivative trading through NSE and BSE and Currency Derivative on MCX-SX. It is registered as a Depositor Participant with both NSDL and CDSL in terms of the Securities and Exchange Board of India (Depositor Participants) Regulations, 1996 and also provides Portfolio Management Services.
2 Terms/Rights attached to Equity Shares
The Company has only one class of Equity shares having at par value of Re.1/- each per share. Each holder of Equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors, if any, is subject to the approval of the shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holders of Equity shares will receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of the Equity shares held by the shareholders.
3 Terms/Rights attached to Preference Shares
3.1 Preference shares cary a non-cumulative dividend of 8% per annum. Dividend amounts, declared if any, will be paid in Indian rupees. In the year ended 31st March, 2011, the Company had allotted 800,000 8% Redeemable Non-Convertible Non-Cumulative Preference Shares of Rs.100/- each, fully paid-up at a premium of Rs.150/-per share to Aditya Birla Capital Limited (Formerly known as Aditya Birla Financial Services Limited), the Holding Company. These Preference Shares are redeemable at the end of 5 years from the date of issue at a price of Rs.320/- per share.However, basis the written consent of preference shareholders, the period of redemption extended by 39 months from March 2016 to June 2019 and the redemption price of Redeemable NonConvertible Non-Cumulative Preference Shares shall be varied from Rs.320/ - (Face value Rs.100/ - and Premium of Rs.220/- per share) to Rs.411/- (Face value Rs.100/- and Premium of Rs.311/- per share).
3.2 During the year ended 31st March, 2014, the Company had allotted 200,000 8% Redeemable NonConvertible Non-Cumulative Preference Shares of Rs.100/- each, fully paid-up at a premium of Rs.400/- per share to Aditya Birla Financial Services Limited, the Holding Company. These Preference Shares are redeemable at the end of 5 years from the date of issue at a price of Rs.725/- per share.
4 Shares held by Holding Company
41,550,000 (Previous Year: 41,550,000) Equity Shares of Re.1/- each fully paid-up and 1,000,000 (Previous Year : 1,000,000) 8% Redeemable Non-Convertible Non-Cumulative Preference Shares Rs.100/- each fully paid-up are held by Aditya Birla Capital Limited (Formerly known as Aditya Birla Financial Services Limited), the Holding Company.
A Repayable in 27 to 91 days from the date of draw down. The interest on this loan ranges from 6.90 % to 8.32 % and interest on this loan in the previous year ranged from 6.85% to 9.76%
*Commercial Papers shown net of unamortised discounting charges Rs.28,642,572/- and previous year Rs. 2,922,937/-
There are no Micro, Small & Medium Enterprises, to whom the Company owes dues, which, are outstanding for more than 45 days as at 31st March, 2018 and no interest payment made during the year to any Micro, Small & Medium Enterprises. (Previous year MSME/Interest: Nil). This information as required to be disclosed under the Micro, Small & Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company.
5) Other Significant Notes - SPA Claims
Pursuant to a Share Purchase agreement (âSPAâ) between Aditya Birla Nuvo Limited (âABNLâ or âthe Purchaserâ), ultimate holding company and Mr. Prataph C Reddy and others (âErstwhile Promotersâ) dated August 28, 2008, ABNL had agreed to acquire 31 million equity shares in Aditya Birla Money Limited (âthe Companyâ). The transaction was completed on March 06, 2009.
As per the SPA, the Erstwhile Promoters had agreed to indemnify and hold harm less the Purchaser to the extent of any Losses, resulting from or consequent upon or relating to such breach of representations or warranties, covenants or agreement including but not limited to the recoveries of receivables and other assets in the books of the Company, contingencies on tax and related matters etc.
Subsequent to the completion of the above transaction, the Purchaser noted several breaches of representations and warranties including but not limited to non-recovey of debtors, irrecoverable advances, missing fixed assets etc. Accordingly, ABNL based on its internal assessment of the recoverability of receivables, fixed assets, other assets and matters relating to tax and other contingencies arrived at an amount of Rs.163,882,296/- as Losses incurred on account of breach of representation / warranties in the SPA. Further, ABNL vide its letter dated March 05, 2011 made a separate claim of Rs.5,169,379/- for amounts becoming due and payable on accounts of various cases initiated by the customers of the Company. ABNL invoked the arbitration mechanism and filed their Statement of Claim on Februay 26, 2011 with the Arbitration Tribunal.
Pending the final outcome of the arbitration proceedings, the Company has identified all such receivables, assets etc. which are have not been recovered and other items which are the subject matter of the claim to the extent they are in the books of accounts of the Company as at March 31, 2017 aggregating Rs.18,40,50,594/- and disclosed the same in Short Term Loans & Advances under Note 11B of the Balance Sheet, as these amounts would be paid directly to the Company by the Erstwhile Promoters at the direction of ABNL as and when the settlement happens.
Both parties completed filing of documents. On July 04, 2012, a hearing was held and M/s. Delloitte Haskins & Sells were asked to act as Auditors by the Arbitrators with a mandate to submit a report on whether from an accounting perspective, including the accounting treatment that has been given to the items set out in the Statement of Claim, the amounts as claimed are correct as per accounting practice.
The Arbitral Tribunal then directed the Claimants and Respondents to file their objections if any to the audit report submitted by Professional Accounting firm and had also directed the Respondent to file their list of witnesses (if any) by the end of April 2013. The Respondents filed their objections to the audit report and ABNL had also filed its reply to the said objections.
Arguments in rebuttal by the Claimant was completed on October 25, 2013 and written submissions were filed by October 29, 2013. The tribunal has reserved the award.
During FY 2014-15, Arbitral Tribunal has passed an award, allowing claim of Rs.99,190,697/-, which excluded premature claims pertaining to income tax, service tax, etc. Further, such award directed the Erstwhile Promoters to pay a sum of Rs.55,546,790/- (being 56% of Rs.99,190,697/-, as ABNL has purchased only 56% of shares), along with interest @ 14% from the date of award. This award was received by ABNL on May 27, 2014
Subsequently, both parties have filed petitions under Section 34 of the Arbitration and Conciliation Act, 1996 seeking to set aside the award and the same are admitted and pending on the file of the High Court of Madras.
In respect of such receivables, which exclude premature claims pertaining to income tax, service tax, etc., the Company has created adequate provision, which also includes claims not awarded by the Arbitral Tribunal to the extent of 44%. In respect of tax claims, the company has obtained favorable order for certain assessment years & is confident of recovering such amount in due course. Such amounts are fully recoverable from the income tax department.
Further in the month of October 2015, Supreme Court dismissed the appeal filed by the Company against SAT order directing the company to pay a sum of Rs.16,596,652/- together with interest thereon. Consequently SEBI served a notice of demand on the Company seeking payment of a sum of Rs.16,596,652/- towards turnover fee and a sum of Rs.37,638,304/- and in the month of October 2016, Rs.1,129,149/- towards interest thereon from the respective due dates of payment of the said Turnover Fee.
As the erstwhile promoters have agreed to indemnify ABNL to the extent of any losses resulting from or consequent upon the civil appeal pending before Supreme Court vide Civil Appeal No. 3441/2007 in the SPA, the demand was communicated to the erstwhile promoters and the erstwhile promoters have paid the total turnover fee of Rs.16,596,652/- to the Company against the payment made by the Company to SEBI.
The request of the Company to SEBI seeking waiver of the interest was not considered favourably and the review petition filed by the Company in Supreme Court was also dismissed. In the meanwhile SEBI issued a Recovey Certificate dated 12.01.2016 seeking to recover the interest amount and the Company remitted the above mentioned interest amount with SEBI under intimation to erstwhile promoters.
During the current financial year all the parties to the agreement have agreed to settle the dispute for a full and final settlement amount of Rs.147,307,418/-. The Company received the settlement amount. Out of this Rs.44,600,000/- has been kept aside by the company towards tax matters relating to period prior to acquisition. All the parties to the dispute have agreed to file the settlement petition with High Court.
6) Stamp Duty
Hitherto, the Company had been collecting and remitting stamp duties with respect to states wherein the manner of payment of the same has been prescribed by the respective state governments. From July 2011, the Company had started collecting stamp duty on contract notes for all states, including the states wherein the manner of payment has not yet been notified. The Company is evaluating various options of remitting the same, including remitting those amounts in the State of Tamil Nadu, as all the contract notes are executed at Tamil Nadu. Pending, the final determination of the manner of remittance, amount of Rs.12,481,598/- (Previous year: Rs.10,572,030/-) collected till March 31, 2018 has been disclosed under Statutoy Dues under Other Current Liabilities.
7) Capital and Other Commitment
a) Estimated amount of contracts remaining to be executed on capital account, net of advances and not provided for is Nil (Previous year - Nil).
b) For commitments relating to lease arrangements, please refer Note 30.
8) Managerial Remuneration
During an earlier year the Company had made an application to the Central Government under Section 309 (5B) of the Companies Act, 1956 for seeking waiver of excess managerial remuneration amounting to Rs.3,094,634/-(Previous year: Rs.3,094,634/-) (excluding statutoy contribution to provident fund, gratuity and leave encashment which are exempted under Schedule VI) paid to Mr. P.B. Subramaniyan, the erstwhile whole time director (âErstwhile Directorâ) of the Company for the period from April 01, 2008 to March 06, 2009.
During earlier year, the Company has received an order from the Central Government (CG) whereby the CG has rejected excess remuneration of Rs.1,626,614/ - (Previous year: Rs.1,626,614/-) and directed the Company to collect the same from the Erstwhile Director. Further the Company has filed a civil suit in the High Court of Judicature at Madras vide C.S. No. 53/2016 seeking recovey of the excess remuneration paid to Mr. P.B. Subramaniyan. Pending the recovey of the same, it has been shown as advances recoverable by the Company in the Balance Sheet.
9) Lease Disclosures Operating Leases for Premises:
Lease rentals in respect of premises taken on operating lease during the year ended March 31, 2018 amounts to Rs.45,532,262/- (Previous Year Rs.49,361,872/-).
Future obligations towards lease rentals under non-cancellable lease agreements as on March 31, 2018 amounts to Rs.181,716,115/- (Previous Year Rs.206,783,838/-). Details of Lease Rentals payable within one year and thereafter are as under:
The company has entered into lease / license agreements in respect of immovable properties with different parties. Some of the agreements contain escalation clause related to lease rentals / license fees from 5% to 15% p.a.
Operating Leases for Computers:
The company has entered into commercial leases on computer desktops. These leases have an average life of three years with renewal option included in the contracts.
Lease rentals in respect of computers taken on operating lease during the year ended March 31, 2018 amounts to Rs.1,792,250/- (Previous Year Rs.2,795,464/-).
Future obligations towards lease rentals under non-cancellable lease agreements as on March 31, 2018 amounts to Rs.707,057/- (Previous Year Rs. 2,500,954/-). Details of Lease Rentals payable within one year and thereafter are as under:
10) Employment Benefit disclosures
The amounts charged to the Statement of profit and loss during the year for Provident fund contribution aggregates to Rs.16,568,304/- (Previous year: Rs.19,066,935/-) and employeesâ state insurance contribution aggregates to Rs.1,367,939/- (Previous year: Rs.731,827/-).
The Company has a defined benefit gratuity plan. Evey employee who has completed five years or more of service gets a gratuity on departure at 15 days salay (last drawn salay) for each completed year of service. The scheme is funded with Aditya Birla NUVO Employee Gratuity Fund.
The following tables summaries the components of net benefit expense recognized in the Statement of Profit and Loss and the funded status and amounts recognized in the balance sheet for the gratuity plan.
11) Foreign Currency Transactions
The Company did not enter into any foreign currency transactions in the current year and previous year.
12) Stock Options Granted
The objective of the Employee Stock Option Scheme is to attract and retain talent and align the interest of employees with the Company as well as to motivate them to contribute to its growth and profitability.
In accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, as amended by Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (hereinafter referred to as âSEBI ESOP Regulationsâ) and the Guidance Note on Accounting for Employee Share-based Payments, the cost of equity-settled transactions is measured using the intrinsic value method. The cumulative expense to be recognized for equity-settled transactions at each reporting date until the vesting date will reflect the extent to which the vesting period has expired and the companyâs best estimate of the number of equity instruments that will ultimately vest. The expense or credit to be recognized in the statement of profit and loss for a period to represent the movement in cumulative expense recognized as at the beginning and end of that period and is to be recognized in employee benefits expense.
i) ABML - Employee Stock Option Scheme - 2014
The Company had formulated the ABML Employee Stock Option Scheme - 2014 (ABML ESOP Scheme - 2014) with the approval of the shareholders at the Annual General Meeting dated September 09, 2014. The Scheme provides that the total number of options granted there under will be 27,70,000 and to follow the Market Value Method (Intrinsic Value) for valuation of the Options. Each option, on exercise, is convertible into one equity share of the Company having face value of Re.1 each. Subsequently, the Nomination and Remuneration Committee of the Board of Directors on December 02, 2014 has granted 25,09,341 stock options to its eligible employees under the ABML ESOP Scheme - 2014 at an exercise price of Rs.34.25/-. The Exercise Price was based on the latest available closing price, prior to the December 02, 2014 (the date of grant by the Nomination & Remuneration Committee) on the recognized stock exchanges on which the shares of the Company are listed with the highest trading volume.
The Company has granted options to the eligible employees at an exercise price of Rs.34.25/- per share being the market price as per SEBI ESOP Regulations. In view of this, there being no intrinsic value (being the excess of the market price of share under ESOP over the exercise price of the option), on the date of grant, the Company is not required to account the accounting value of option as per SEBI ESOP Regulations.
Fair Valuation:
The fair value of the options on the date of grant has been done by an independent valuer using Black-Scholes Formula.
Had the company used the fair value model to determine compensation, its profit after tax and earnings per share as reported would have changed to the amounts indicated below:
ii) ABCL - Employee Stock Option Scheme - 2017
Pursuant to ESOP Plan being established by the holding company (i.e. Aditya Birla Capital Limited), stock options were granted to the employees of the Company during the financial year. Total cost incurred by the holding company till date is being recovered from the Company over the period of vesting. Accordingly, a sum of Rs.14,862,522/- has been recovered from the Company during the year, which has been charged to the Statement of Profit and Loss.
13) i) The Company has a process whereby periodically all long term contracts, if any, are assessed for material foreseeable losses. As at the balance sheet date, there were no long term contracts (including derivative contracts) (Previous Year: Nil)
ii) The Companyâs pending litigations comprise of claims against the Company primarily by the customers and proceedings pending with Income Tax and other statutoy authorities. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed the contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial results. Refer Note 26 for details on contingent liabilities.
14) Portfolio Management Scheme
The Company holds several accounts under Portfolio Management Scheme (PMS). These accounts are held by the company under fiduciay capacity and all services are rendered as per PMS Guidelines issued by the Security & Exchange Board of India (SEBI). In return for PMS services the Company is entitled to professional fee. The accounts of each PMS client is maintained by the company and is annually audited by an independent Chartered Accountant. Since the company renders PMS services under fiduciay capacity, the financials of each PMS clients does not form part of the financials of the Company. This has been done based on the opinion obtained from the Expert Advisoy Committee of the Institute of Chartered Accountants of India (ICAI). A brief summay of the aggregated quantum of the funds received, funds invested, services fee charged and the balance available in the PMS accounts are produced below.
15) Segment Reporting:
The Companyâs business is to provide brokerage service, trading in securities and portfolio management services (âPMSâ) to its clients in the capital markets within India. All other activities of the Company revolve around these activities.
16) Previous Year Figures
Previous year figures have been regrouped / reclassified, where necessaiy, to conform to this yearâs classification.
Mar 31, 2017
1 Terms/right attached to Preference Shares
Preference shares carry a non-cumulative dividend of 8% per annum. Dividend amounts, declared if any, will be paid in Indian rupee.
In the year ended 31st March, 2011, the Company had allotted 800,000 8% Redeemable Non-Convertible Non-Cumulative Preference Shares of Rs.100/- each, fully paid-up at a premium of Rs.150/- per share to Aditya Birla Financial Services Limited, the Holding Company. These Preference Shares are redeemable at the end of 5 years from the date of issue at a price of Rs.320/- per share.
The rights attached to the 800,000 8% Redeemable Non-Convertible Non-Cumulative Preference Shares of Rs.100/-each were varied to the extent and manner given below with the written consent of the Preference shareholders on 30th March 2015:
1. The period of redemption was extended by 39 months from March 2016 to June 2019 and
2. The redemption price of Redeemable Non-Convertible Non-Cumulative Preference Shares shall be varied from Rs.320/- (Face value Rs.100/- and Premium of Rs.220/- per share) to Rs.411/- (Face value Rs.100/- and Premium of Rs.311/- per share)
3. Same as what is mentioned herein above, all other terms and conditions of the said Preference shares remain the same.
During the year ended 31st March, 2014, the Company had allotted 200,000 8% Redeemable Non-Convertible Non-Cumulative Preference Shares of Rs.100/- each, fully paid-up at a premium of Rs.400/-per share to Aditya Birla Financial Services Limited, the Holding Company. These Preference Shares are redeemable at the end of 5 years from the date of issue at a price of Rs.725/- per share.
4 Shares held by Holding Company
41,550,000 (Previous Year : 41,550,000) equity shares of Re.1/- each fully paid and 1,000,000 (Previous Year :
1,000,000) 8% Redeemable Non Convertible Non Cumulative Preference Shares Rs.100/- each fully paid-up are held by Aditya Birla Financial Services Limited, the Holding Company.
Pursuant to a Share Purchase agreement (''SPA'') between Aditya Birla Nuvo Limited (''ABNL'' or ''the Purchaser''), ultimate holding company and Mr. Prataph C Reddy and others ("Erstwhile Promoters") dated August 28, 2008, ABNL had agreed to acquire 31 million equity shares in Aditya Birla Money Limited ("the Company"). The transaction was completed on March 6, 2009.
As per the SPA, the Erstwhile Promoters had agreed to indemnify and hold harm less the Purchaser to the extent of any Losses, resulting from or consequent upon or relating to such breach of representations or warranties, covenants or agreement including but not limited to the recoveries of receivables and other assets in the books of the Company, contingencies on tax and related matters etc.
Subsequent to the completion of the above transaction, the Purchaser noted several breaches of representations and warranties including but not limited to non-recovery of debtors, irrecoverable advances, missing fixed assets etc. Accordingly, ABNL based on its internal assessment of the recoverability of receivables, fixed assets, other assets and matters relating to tax and other contingencies arrived at an amount of Rs.163,882,296 as Losses incurred on account of breach of representation / warranties in the SPA. Further, ABNL vide its letter dated March 5, 2011 made a separate claim of Rs.5,169,379 for amounts becoming due and payable on accounts of various cases initiated by the customers of the Company. ABNL invoked the arbitration mechanism and filed their Statement of Claim on February 26, 2011 with the Arbitration Tribunal.
Pending the final outcome of the arbitration proceedings, the Company has identified all such receivables, assets etc which are have not been recovered and other items which are the subject matter of the claim to the extent they are in the books of accounts of the Company as at March 31, 2017 aggregating Rs.184,367,355/- (previous year: Rs.183,368,483/-) and disclosed the same in Short Term Loans & Advances under Note 11B of the Balance Sheet, as these amounts would be paid directly to the Company by the Erstwhile Promoters at the direction of ABNL as and when the settlement happens.
Both parties completed filing of documents. On 04th July 2012, a hearing was held and M/s. Delloitte Haskins & Sells were asked to act as auditors by the Arbitrators with a mandate to submit a report on whether from an accounting perspective, including the accounting treatment that has been given to the items set out in the Statement of Claim, the amounts as claimed are correct as per accounting practice.
The arbitral tribunal then directed the Claimants and Respondents to file their objections if any to the audit report submitted by Professional Accounting firm and had also directed the Respondent to file their list of witnesses (if any) by the end of April 2013. The Respondents filed their objections to the audit report and ABNL had also filed its reply to the said objections.
Arguments in rebuttal by the Claimant was completed on 25th October 2013 and written submissions were filed by 29th October 2013. The tribunal has reserved the award.
During FY 2014-15, Arbitral Tribunal has passed an award, allowing claim of Rs.99,190,697/-, which excluded premature claims pertaining to income tax, service tax, etc. Further, such award directed the Erstwhile Promoters to pay a sum of Rs.55,546,790/- (being 56% of Rs.99,190,697/-, as ABNL has purchased only 56% of shares), along with interest @ 14% from the date of award. This award was received by ABNL on 27th May 2014.
Subsequently, both the parties have filed petitions under Sec.34 of the Arbitration and Conciliation Act, 1996 seeking to set aside the award and the same were admitted and pending on the file of the High Court of Madras.
In respect of such receivables, which exclude premature claims pertaining to income tax, service tax, etc., the Company has created adequate provision, which also includes claims not awarded by the Arbitral Tribunal to the extent of 44%. In respect of tax claims, the Company has obtained favorable orders for certain assessment years & is confident of recovering such amount in due course. Such amounts are fully recoverable from the income tax department.
Further in the month of October 2015, Supreme Court dismissed the appeal filed by the Company against SAT order directing the company to pay a sum of Rs.16,596,652/- together with interest thereon. Consequently SEBI served a notice of demand on the Company seeking payment of a sum of Rs.16,596,652/- towards turnover fee and a sum of Rs.37,638,304/- and in the month of October 2016, Rs.1,129,149/- towards interest thereon from the respective due dates of payment of the said Turnover Fee.
As the erstwhile promoters have agreed to indemnify ABNL to the extent of any losses resulting from or consequent upon the civil appeal pending before Supreme Court vide Civil Appeal No. 3441/2007 in the SPA, the demand was communicated to the erstwhile promoters and the erstwhile promoters have paid the total turnover fee of Rs.16,596,652/- to the Company against the payment made by the Company to SEBI.
The request of the Company to SEBI seeking waiver of the interest was not considered favorably and the review petition filed by the Company in Supreme Court was also dismissed. In the meanwhile SEBI issued a Recovery Certificate dated 12.01.2016 seeking to recover the interest amount and the Company remitted the above mentioned interest amount with SEBI under intimation to erstwhile promoters.
Based on legal opinion received by the Company in earlier year and internal assessment, the ultimate Company is confident of recovering the allowed claim through the legal process. Further, we conform that ABNL has committed to transfer any funds received on settlement of arbitration order to the company. Accordingly, in our opinion there is no uncertainty in recovery of such amounts and no additional provision is necessary.
5) Stamp duty
Hitherto, the Company had been collecting and remitting stamp duties with respect to states wherein the manner of payment of the same has been prescribed by the respective State Governments. From July 2011, the Company had started collecting stamp duty on contract notes for all states, including the states wherein the manner of payment has not yet been notified. The Company is evaluating various options of remitting the same, including remitting those amounts in the State of Tamil Nadu, as all the contract notes are executed at Tamil Nadu. Pending, the final determination of the manner of remittance, amount of Rs.10,572,030/- (Previous year: Rs.7,916,843/-) collected till March 31, 2017 has been disclosed under "Statutory Dues" under "Other Current Liabilities".
6) Capital and other commitment
a) Estimated amount of contracts remaining to be executed on capital account, net of advances and not provided for is Nil (Previous year - Nil).
b) For commitments relating to lease arrangements, please refer note 28.
* Represents claims made on the Company by various customers alleging unauthorized trades, loss of profits etc. The Company has been advised by its legal counsel that it is possible, but not probable, the action will succeed and accordingly no provision for any liability has been made in these financial statements.
7) Managerial Remuneration
During an earlier year the Company had made an application to the Central Government under Section 309 (5B) of the Companies Act, 1956 for seeking waiver of excess managerial remuneration amounting to Rs.3,094,634/- (Previous year: Rs.3,094,634/-) (excluding statutory contribution to provident fund, gratuity and leave encashment which are exempted under Schedule VI) paid to Mr. P.B. Subramaniyan, the erstwhile whole time director (''Erstwhile Director'') of the Company for the period from April 1, 2008 to March 6, 2009.
During the earlier year, the Company has received an order from the Central Government (CG) whereby the CG has rejected excess remuneration of Rs.1,626,614/- (Previous year: Rs.1,626,614/-) and directed the Company to collect the same from the erstwhile Director. Further the Company has filed a civil suit in the High Court of Judicature at Madras vide C.S. No. 53/2016 seeking recovery of the excess remuneration paid to Mr. P.B. Subramaniyan. Pending the recovery of the same, it has been shown as advances recoverable by the Company in the Balance Sheet.
8) Lease disclosures
Operating leases for premises:
Lease rentals in respect of premises taken on operating lease during the year ended March 31, 2017 amounts to Rs.49,361,872/- (Previous Year Rs.54,988,785/-).
Future obligations towards lease rentals under non-cancellable lease agreements as on March 31, 2017 amounts to Rs.206,783,838/- (Previous Year Rs.195,563,389/-. Details of Lease Rentals payable within one year and thereafter are as under:
The company has entered into lease / license agreements in respect of immovable properties with different parties. Some of the agreements contain escalation clause related to lease rentals / license fees from 5% to 15% p.a.
Operating leases for computers:
The company has entered into commercial leases on computer desktops. These leases have an average life of three years with renewal option included in the contracts.
Lease rentals in respect of computers taken on operating lease during the year ended March 31, 2017 amounts to Rs.2,795,464/- (Previous Year Rs.3,854,039/-).
Future obligations towards lease rentals under non-cancellable lease agreements as on March 31, 2017 amounts to Rs.2,500,954/- (Previous Year Rs.5,128,016/-). Details of Lease Rentals payable within one year and thereafter are as under:
9) Employment Benefit disclosures
The amounts charged to the Statement of Profit and Loss during the year for Provident Fund contribution aggregates to Rs.19,066,935/- (Previous year: Rs.20,903,826/-) and Employees'' State Insurance contribution aggregates to Rs.731,827/- (Previous year: Rs.795,644/-).
The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with Aditya Birla NUVO Employee Gratuity Fund.
The following tables summaries the components of net benefit expense recognized in the Statement of Profit and Loss and the funded status and amounts recognized in the Balance Sheet for the gratuity plan.
10) Related Party Transactions List of Related Parties
Ultimate Holding Company Aditya Birla Nuvo Limited
Holding Company Aditya Birla Financial Services Limited
Subsidiary Company Aditya Birla Commodities Broking Limited
Related parties under AS 18 with whom transactions have taken place during the year
Aditya Birla Finance Limited Aditya Birla Finance Limited (Wealth)
Aditya Birla Financial Shared Services Limited Birla Sun Life Insurance Company Limited Aditya Birla Customer Services Limited Fellow Subsidiaries Aditya Birla Insurance Brokers Limited
Aditya Birla Housing Finance Limited
Aditya Birla Idea Payment Bank Limited
Aditya Birla Health Insurance Company Limited
Aditya Birla Money Insurance Advisory Services Limited
Mr. Murali Krishnan L.R., Manager (Appointed as Manager with effect from 06.05.2016)
Ms. Sumathy Ravichandran, Chief Financial Officer (Appointed as Chief Financial Officer on 06.05.2016 and ceased to be Key Management Personnel the Chief Financial Officer with effect from 31.07.2016)
Mr. Pradeep Sharma, Chief Financial Officer
(Appointed as Chief Financial Officer with effect from 01.08.2016 )
Mr. Vikashh K Agarwal, Company Secretary
11) Foreign currency transactions
The Company did not enter into any foreign currency transactions in the current year and previous year.
12) Stock options granted under ABML - Employee Stock Option Scheme - 2014
The objective of the Employee Stock Option Scheme is to attract and retain talent and align the interest of employees with the Company as well as to motivate them to contribute to its growth and profitability.
In accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, as amended by Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (hereinafter referred to as ''SEBI ESOP Regulations'') and the Guidance Note on Accounting for Employee Share-based Payments, the cost of equity-settled transactions is measured using the intrinsic value method. The cumulative expense to be recognized for equity-settled transactions at each reporting date until the vesting date will reflect the extent to which the vesting period has expired and the company''s best estimate of the number of equity instruments that will ultimately vest. The expense or credit to be recognized in the Statement of Profit and Loss for a period to represent the movement in cumulative expense recognized as at the beginning and end of that period and is to be recognized in employee benefits expense. However, there is no expense that is incurred during the year by the Company for this purpose since the exercise price at which the options have been granted by the Company to eligible employees are at the market price of the Company and the market price of the shares under ESOP being more than the exercise price of the option. As per the ABML ESOP Scheme - 2014, 25% of the stock option granted got vested at the end of 12 months from the date of grant of option but none of the employees exercised the vested option till 31st March 2017.
Stock options granted under ABML - Employee Stock Option Scheme - 2014
In the earlier year, the Company had formulated the ABML Employee Stock Option Scheme - 2014 (ABML ESOP Scheme - 2014) with the approval of the shareholders at the Annual General Meeting dated September 09, 2014. The Scheme provides that the total number of options granted there under will be 27,70,000 and to follow the Market Value Method (Intrinsic Value) for valuation of the Options. Each option, on exercise, is convertible into one equity share of the Company having face value of Rs.1 each. Subsequently, the Nomination and Remuneration Committee of the Board of Directors on December 2, 2014 has granted 25,09,341 stock options to its eligible employees under the ABML ESOP Scheme - 2014 at an exercise price of Rs.34.25/-. The Exercise Price was based on the latest available closing price, prior to the December 2, 2014 (the date of grant by the Nomination & Remuneration Committee) on the recognized stock exchanges on which the shares of the Company are listed with the highest trading volume.
None of the employees have exercised the vested options.
The Company has granted options to the eligible employees at an exercise price of Rs.34.25 per share being the latest market price as per SEBI ESOP Regulations. In view of this, there being no intrinsic value (being the excess of the market price of share under ESOP over the exercise price of the option), on the date of grant, the Company is not required to account the accounting value of option as per SEBI ESOP Regulations.
Fair Valuation:
The fair value of the options on the date of grant has been done by an independent valuer using Black-Scholes Formula.
13) i) The Company has a process whereby periodically all long term contracts, if any, are assessed for material
foreseeable losses. As at the Balance Sheet date, there were no long term contracts (including derivative contracts).
ii) The Company''s pending litigations comprise of claims against the Company primarily by the customers and proceedings pending with Income Tax and other statutory authorities. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed the contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial results. Refer note 24 for details on contingent liabilities.
14) Portfolio Management Scheme
The Company holds several accounts under Portfolio Management Scheme (PMS). These accounts are held by the Company under fiduciary capacity and all services are rendered as per PMS Guidelines issued by the Security & Exchange Board of India (SEBI). In return for PMS services the Company is entitled to professional fee. The accounts of each PMS client is maintained by the company and is annually audited by an independent Chartered Accountant. Since the Company renders PMS services under fiduciary capacity, the financials of each PMS clients does not form part of the financials of the Company. This has been done based on the opinion obtained from the Expert Advisory Committee of the Institute of Chartered Accountants of India (ICAI). A brief summary of the aggregated quantum of the funds received, funds invested, services fee charged and the balance available in the PMS accounts are produced below.
The loans have been utilized by ABCBL for meeting their working capital requirements & which were subsequently repaid.
15) Specified Bank Notes:
In exercise of the powers conferred by sub-section (1) of Section 467 of the Companies Act, 2013 (18 of 2013) the Central Government has made Amendments to the Schedule III of the said Act. ,and in pursuant to the same, the below disclosure on details of Specified Bank Notes (SBN) held and transacted during the period from 8th November 2016 to 30th December 2016 is given.
Explanation : For the purposes of this clause, the term ''Specified Bank Notes'' shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407(E), dated the 8th November, 2016.
16) Previous year figures
Previous year figures have been regrouped / reclassified, where necessary, to conform to this year''s classification.
Mar 31, 2016
1 Term / right attached to Equity Shares
The Company has only one class of Equity shares having at par value of Re.1/- each per share. Each holder of Equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors, if any, is subject to the approval of the shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holders of Equity shares will receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of the Equity shares held by the shareholders.
2 Term / right attached to Preference Shares
Preference shares carry a non-cumulative dividend of 8% per annum. Dividend amounts, declared if any, will be paid in Indian rupees.
In the year ended 31st March, 2011, the Company had allotted 800,000 8% Redeemable Non-Convertible Non-Cumulative Preference Shares of Rs.100/- each, fully paid-up at a premium of Rs.150/- per share to Aditya Birla Financial Services Limited, the Holding Company. These Preference Shares are redeemable at the end of 5 years from the date of issue at a price of Rs.320/- per share.
The rights attached to the 800,000 8% Redeemable Non-Convertible Non-Cumulative Preference Shares of Rs.100/- each were varied to the extent and manner given below with the written consent of the Preference shareholders on 30th March 2015:
3 The period of redemption extended by 39 months from March 2016 to June 2019 and
4 The redemption price of Redeemable Non-Convertible Non-Cumulative Preference Shares shall be varied from Rs.320/-(Face value Rs.100/- and Premium of Rs.220/- per share) to Rs.411/- (Face value Rs.100/- and Premium of Rs.311/- per share)
5 Same as what is mentioned hereinabove, all other terms and conditions of the said Preference shares remain the same.
During the year ended 31st March, 2014, the Company had allotted 200,000 8% Redeemable Non-Convertible Non-Cumulative Preference Shares of Rs.100/- each, fully paid-up at a premium of Rs.400/- per share to Aditya Birla Financial Services Limited, the Holding Company. These Preference Shares are redeemable at the end of 5 years from the date of issue at a price of Rs.725/- per share.
6 Shares held by Holding Company
41,550,000 (Previous Year : 41,550,000) equity shares of Re.1/- each fully paid and 1,000,000 (Previous Year : 1,000,000) 8% Redeemable Non Convertible Non Cumulative Preference Shares Rs.100/-each fully paid are held by Aditya Birla Financial Services Limited, the Holding Company.
NOTE: 7
SHORT-TERM BORROWINGS SECURED
A Repayable in 30 to 90 days from the date of draw down. The interest on this loan ranges from 7.6% to 10.70%.
# The bank borrowing is secured against pledge of fixed deposits.
NOTE: 8
TRADE PAYABLES
There are no Micro and Small Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days as at 31st March, 2016. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company.
9) Assets forming part of claims made by the Ultimate Parent Company
Pursuant to a Share Purchase agreement (''SPA'') between Aditya Birla Nuvo Limited (''ABNL'' or ''the Purchaser''), ultimate holding company and Mr.Prataph C Reddy and others ("Erstwhile Promoters") dated August 28, 2008, ABNL had agreed to acquire 31 million equity shares in Aditya Birla Money Limited ("the Company"). The transaction was completed on March 6, 2009.
As per the SPA, the Erstwhile Promoters had agreed to indemnify and hold harm less the Purchaser to the extent of any Losses, resulting from or consequent upon or relating to such breach of representations or warranties, covenants or agreement including but not limited to the recoveries of receivables and other assets in the books of the Company, contingencies on tax and related matters etc.
Subsequent to the completion of the above transaction, the Purchaser noted several breaches of representations and warranties including but not limited to non-recovery of debtors, irrecoverable advances, missing fixed assets etc. Accordingly, ABNL based on its internal assessment of the recoverability of receivables, fixed assets, other assets and matters relating to tax and other contingencies arrived at an amount of Rs 163,882,296 as Losses incurred on account of breach of representation / warranties in the SPA. Further, ABNL vide its letter dated March 5, 2011 made a separate claim of Rs. 5,169,379 for amounts becoming due and payable on accounts of various cases initiated by the customers of the Company. ABNL invoked the arbitration mechanism and filed their Statement of Claim on February 26, 2011 with the Arbitration Tribunal.
Pending the final outcome of the arbitration proceedings, the Company has identified all such receivables, assets etc which are have not been recovered and other items which are the subject matter of the claim to the extent they are in the books of accounts of the Company as at March 31, 2016 aggregating Rs. 183,368,483(previous year: Rs145,730,179) and disclosed the same in Short Term Loans & Advances under Note 11B of the Balance Sheet, as these amounts would be paid directly to the Company by the Erstwhile Promoters at the direction of ABNL as and when the settlement happens.
Both parties completed filing of documents. On 04 July 2012, a hearing was held and M/s. Delloitte Haskins & Sells were asked to act as auditors by the Arbitrators with a mandate to submit a report on whether from an accounting perspective, including the accounting treatment that has been given to the items set out in the Statement of Claim, the amounts as claimed are correct as per accounting practice.
The arbitral tribunal then directed the Claimants and Respondents to file their objections if any to the audit report submitted by Professional Accounting firm and had also directed the Respondent to file their list of witnesses (if any) by the end of April 2013. The Respondents filed their objections to the audit report and ABNL had also filed its reply to the said objections.
Arguments in rebuttal by the Claimant was completed on 25 October 2013 and written submissions were filed by 29 October 2013. The tribunal has reserved the award.
During FY 2014-15, Arbitral Tribunal has passed an award, allowing claim of Rs.99,190,697/-, which excluded premature claims pertaining to income tax, service tax, etc. Further, such award directed the Erstwhile Promoters to pay a sum of Rs. 55,546,790/- (being 56% of Rs.99,190,697/-, as ABNL has purchased only 56% of shares), along with interest @ 14% from the date of award. This award was received by ABNL on 27th May 2014.
In respect of such receivables, which exclude premature claims pertaining to income tax, service tax, etc., the Company has created adequate provision, which also includes claims not awarded by the Arbitral Tribunal to the extent of 44%. In respect of tax claims, the company has obtained favorable order for certain assessment years & is confident of recovering such amount in due course. Such amounts are fully recoverable from the income tax department.
Further in the month of October 2015, Supreme Court dismissed the appeal filed by the Company against SAT order directing the company to pay a sum of Rs.1,65,96,652/- together with interest thereon. Consequently SEBI served a notice of demand on the Company seeking payment of a sum of Rs.1,65,96,652/- towards turnover fee and a sum of Rs.3,76,38,304/- towards interest thereon from the respective due dates of payment of the said Turnover Fee.
As the erstwhile promoters have agreed to indemnify ABNL to the extent of any losses resulting from or consequent upon the civil appeal pending before Supreme Court vide Civil Appeal No. 3441/2007 in the SPA, the demand was communicated to the erstwhile promoters and the erstwhile promoters have paid the total turnover fee of Rs.1,65,96,652/- to the Company against the payment made by the Company to SEBI.
The request of the Company to SEBI seeking waiver of the interest was not considered favourably and the review petition filed by the Company in Supreme Court was also dismissed. In the meanwhile SEBI issued a Recovery Certificate dated 12.01.2016 seeking to recover the interest amount and the Company remitted the above mentioned interest amount with SEBI under intimation to erstwhile promoters.
Based on legal opinion received by the company in previous year and internal assessment, the ultimate company is confident of recovering the allowed claim through the legal process. Further, we conform that ABNL has committed to transfer any funds received on settlement of arbitration order to the company. Accordingly in our opinion there is no uncertainty in recovery of such amounts and no additional provision is necessary.
10) Stamp duty
Hitherto, the Company had been collecting and remitting stamp duties with respect to states wherein the manner of payment of the same has been prescribed by the respective state governments. From July 2011, the Company had started collecting stamp duty on contract notes for all states, including the states wherein the manner of payment has not yet been notified. The Company is evaluating various options of remitting the same, including remitting those amounts in the State of Tamil Nadu, as all the contract notes are executed at Tamil Nadu. Pending, the final determination of the manner of remittance, amount of Rs.7,916,843/-(Previous year: Rs.5,171,148/-)collected till March 31, 2016 has been disclosed under Statutory Dues under Other Current Liabilities.
11) Capital and other commitment
a) Estimated amount of contracts remaining to be executed on capital account, net of advances and not provided for is Nil/- (Previous year - 784,500/-).
b) For commitments relating to lease arrangements, please refer note 28.
* Represents claims made on the Company by various customers alleging unauthorized trades, loss of profits etc. The Company has been advised by its legal counsel that it is possible, but not probable, the action will succeed and accordingly no provision for any liability has been made in these financial statements.
12) Managerial Remuneration
During an earlier year the Company had made an application to the Central Government under Section 309 (5B) of the Companies Act, 1956 for seeking waiver of excess managerial remuneration amounting to Rs.3,094,634 (Previous year: Rs.3,094,634) (excluding statutory contribution to provident fund, gratuity and leave encashment which are exempted under Schedule VI) paid to Mr. P.B. Subramaniyan, the erstwhile whole time director (''Erstwhile Director'') of the Company for the period from April 1, 2008 to March 6, 2009.
During the previous year, the Company has received an order from the Central Government (CG) whereby the CG has rejected excess remuneration of Rs 1,626,614/-(Previous year: Rs.1,626,614/-) and directed the Company to collect the same from the Erstwhile Director.
During the year the Company has filed a civil suit in the High Court of Judicature at Madras vide C.S. No. 53/2016 seeking recovery of the excess remuneration paid to Mr. P.B. Subramaniyan. Pending the recovery of the same, it has been shown as advances recoverable by the Company in the Balance Sheet.
Operating leases for premises:
Lease rentals in respect of premises taken on operating lease during the year ended March 31, 2016 amounts to Rs.5,49,88,785/-(Previous Year Rs.46,787,739).
Future obligations towards lease rentals under non-cancellable lease agreements as on March 31, 2016 amounts to Rs.195,563,389/-(Previous Year Rs. 199,862,731). Details of Lease Rentals payable within one year and thereafter are as under:
The company has entered into lease / license agreements in respect of immovable properties with different parties. Some of the agreements contain escalation clause related to lease rentals / license fees from 5% to 15% p.a.
Operating leases for computers:
The company has entered into commercial leases on computer desktops. These leases have an average life of three years with renewal option included in the contracts.
Lease rentals in respect of computers taken on operating lease during the year ended March 31, 2016 amounts to Rs.3,854,039 (Previous Year Rs.4,363,471).
The amounts charged to the Statement of profit and loss during the year for Provident fund contribution aggregates to Rs.20,903,826 (Previous year - Rs.16,147,817) and employees'' state insurance contribution aggregates to Rs.795,644 (Previous year - Rs.1,038,349).
The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with Aditya Birla Nuvo Employee Gratuity Fund.
The following tables summaries the components of net benefit expense recognized in the Statement of Profit and Loss and the funded status and amounts recognized in the balance sheet for the gratuity plan.
13) Foreign currency transactions
The Company did not enter into any foreign currency transactions in the current year and previous year.
14) Stock options granted under ABML - Employee Stock Option Scheme - 2014
The objective of the Employee Stock Option Scheme is to attract and retain talent and align the interest of employees with the Company as well as to motivate them to contribute to its growth and profitability.
In accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, as amended by Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (hereinafter referred to as ''SEBI ESOP Regulations'') and the Guidance Note on Accounting for Employee Share-based Payments, the cost of equity-settled transactions is measured using the intrinsic value method. The cumulative expense to be recognized for equity-settled transactions at each reporting date until the vesting date will reflect the extent to which the vesting period has expired and the company''s best estimate of the number of equity instruments that will ultimately vest. The expense or credit to be recognized in the statement of profit and loss for a period to represent the movement in cumulative expense recognized as at the beginning and end of that period and is to be recognized in employee benefits expense. However, there is no expense that is incurred during the year by the Company for this purpose since the exercise price at which the options have been granted by the Company to eligible employees are at the market price of the Company and the market price of the shares under ESOP being more than the exercise price of the option. As per the ABML ESOP Scheme - 2014, 25% of the stock option granted got vested at the end of 12 month from the date of grand of option but none of the employees exercised the vested option till 31st March 2016.
Stock options granted under ABML - Employee Stock Option Scheme - 2014
In the previous year, the Company had formulated the ABML Employee Stock Option Scheme - 2014 (ABML ESOP Scheme - 2014) with the approval of the shareholders at the Annual General Meeting dated September 09, 2014. The Scheme provides that the total number of options granted there under will be 27,70,000 and to follow the Market Value Method (Intrinsic Value) for valuation of the Options. Each option, on exercise, is convertible into one equity share of the Company having face value of Re.1/- each. Subsequently, the Nomination and Remuneration Committee of the Board of Directors on December 2, 2014 has granted 25,09,341 stock options to its eligible employees under the ABML ESOP Scheme - 2014 at an exercise price of Rs.34.25/-. The Exercise Price was based on the latest available closing price, prior to the December 2, 2014 (the date of grant by the Nomination & Remuneration Committee) on the recognized stock exchanges on which the shares of the Company are listed with the highest trading volume.
No. of Share vested during the year on 2nd December 2015 is 612,225 and none of the employees have exercised the vested options.
The Company has granted options to the eligible employees at an exercise price of Rs. 34.25 per share being the latest market price as per SEBI ESOP Regulations. In view of this, there being no intrinsic value (being the excess of the market price of share under ESOP over the exercise price of the option), on the date of grant, the Company is not required to account the accounting value of option as per SEBI ESOP Regulations.
Fair Valuation:
The fair value of the options on the date of grant (Rs.19.28) has been done by an independent valuer using Black-Scholes Formula.
15) i)The Company has a process whereby periodically all long term contracts, if any, are assessed for material foreseeable losses. As at the balance sheet date, there were no long term contracts (including derivative contracts).
ii) The Company''s pending litigations comprise of claims against the Company primarily by the customers and proceedings pending with Income Tax and other statutory authorities. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed the contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial results. Refer note 24 for details on contingent liabilities. In respect of litigations, where the management assessment of a financial outflow is probable, the Company has made a provision of Rs.12,314,612 as at 31st March 2016.
16) Portfolio Management Scheme
The Company holds several accounts under Portfolio Management Scheme (PMS). These accounts are held by the company under fiduciary capacity and all services are rendered as per PMS Guidelines issued by the Security & Exchange Board of India (SEBI). In return for PMS services the Company is entitled to professional fee. The accounts of each PMS client is maintained by the company and is annually audited by an independent Chartered Accountant. Since the company renders PMS services under fiduciary capacity, the financials of each PMS clients does not form part of the financials of the Company. This has been done based on the opinion obtained from the Expert Advisory Committee of the Institute of Chartered Accountants of India (ICAI). A brief summary of the aggregated quantum of the funds received, funds invested, services fee charged and the balance available in the PMS accounts are produced below.
The loans have been utilized by ABCBL for meeting their working capital requirements & which was subsequently repaid.
Previous year figures have been regrouped / reclassified, where necessary, to conform to this year''s classification.
Mar 31, 2015
1. Term / right attached to Equity Shares
The Company has only one class of Equity Shares having a par value of
Re.1/- per share. Each holder of Equity Shares is entitled to one vote
per share. The Company declares and pays dividend in Indian rupees. The
dividend proposed by the Board of Directors is subject to the approval
of the Shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holders of Equity
Shares will receive remaining assets of the Company, after distribution
of all preferential amounts. The distribution will be in proportion to
the number of the Equity Shares held by the shareholders.
2. Term / right attached to Preference Shares
Preference Share carry non cumulative dividend of 8% per annum. The
company declares and pays dividends in Indian rupees.
In the year ended 31st March, 2011, the Company had allotted 800,000 8%
Redeemable Non Convertible Non Cumulative Preference Shares of Rs.100/-
each, fully paid up at a premium of Rs.150/- per share to Aditya Birla
Financial Services Limited, the holding Company. These Preference
Shares are redeemable at the end of 5 years from the date of issue at a
price of Rs.320/- per share.
In the year ended 31st March, 2014, the Company had allotted 200,000 8%
Redeemable Non Convertible Non Cumulative Preference Shares of Rs.100/-
each, fully paid up at a premium of Rs.400/- per share to Aditya Birla
Financial Services Limited, the holding Company. These Preference
Shares are redeemable at the end of 5 years from the date of issue at a
price of Rs.725/- per share.
During the year, the rights attached to the 800,000 8% Redeemable Non
Convertible Non Cumulative Preference Shares of Rs. 100/- each were
varied to the extent and manner given below with the written consent of
the preference shareholders dated 30th March 2015:
1. The period of redemption extended by 39 months from March 2016 to
June 2019 and
2. The redemption price of Redeemable Non Convertible Non Cumulative
Preference Shares shall be varied from Rs.320/- (Face value Rs.100/-
and Premium of Rs.220/- per share) to Rs.411/- (Face value Rs.100/- and
Premium of Rs.311/- per share)
3. Same as what is mentioned here in above, all other terms and
conditions of the said Preference Shares remain the same.
3. Shares held by Holding Company
41,550,000 (Previous Year : 41,550,000) equity shares of Re.1/- each
fully paid and 1,000,000 (Previous Year : 1,000,000) 8% Redeemable Non
Convertible Non Cumulative Preference Shares Rs.100/-each fully paid
are held by Aditya Birla Financial Services Limited, the Holding
Company.
4. Assets forming part of claims made by the Ultimate Parent Company
Pursuant to a Share Purchase agreement ('SPA') between Aditya Birla
Nuvo Limited ('ABNL' or 'the Purchaser'), ultimate Holding Company and
Mr.Prataph C Reddy and others ("Erstwhile Promoters") dated August 28,
2008, ABNL had agreed to acquire 31 million Equity Shares in Aditya
Birla Money Limited ("the Company"). The transaction was completed on
March 6, 2009.
As per the SPA, the Erstwhile Promoters had agreed to indemnify and
hold harm less the Purchaser to the extent of any Losses, resulting
from or consequent upon or relating to such breach of representations
or warranties, covenants or agreement including but not limited to the
recoveries of receivables and other assets in the books of the Company,
contingencies on tax and related matters etc.
Subsequent to the completion of the above transaction, the Purchaser
noted several breaches of representations and warranties including but
not limited to non-recovery of debtors, irrecoverable advances, missing
fixed assets etc. Accordingly, ABNL based on its internal assessment
of the recoverability of receivables, fixed assets, other assets and
matters relating to tax and other contingencies arrived at an amount of
Rs.163,882,296 as Losses incurred on account of breach of
representation / warranties in the SPA. Further, ABNL vide its letter
dated March 5, 2011 made a separate claim of Rs.5,169,379 for amounts
becoming due and payable on accounts of various cases initiated by the
customers of the Company. ABNL invoked the arbitration mechanism and
filed their Statement of Claim on February 26, 2011 with the
Arbitration Tribunal.
Pending the final outcome of the arbitration proceedings, the Company
has identified all such receivables, assets etc which are have not been
recovered and other items which are the subject matter of the claim to
the extent they are in the books of accounts of the Company as at March
31,2015 aggregating Rs.145,730,179 (previous year: Rs.145,779,681) and
disclosed the same in Short Term Loans & Advances under Note 11B of the
Balance Sheet, as these amounts would be paid directly to the Company
by the Erstwhile Promoters at the direction of ABNL as and when the
settlement happens.
Both parties completed filing of documents. On 04 July 2012, a hearing
was held and M/s. Deloitte Haskins & Sells were asked to act as
auditors by the Arbitrators with a mandate to submit a report on
whether from an accounting perspective, including the accounting
treatment that has been given to the items set out in the Statement of
Claim, the amounts as claimed are correct as per accounting practice.
The arbitral tribunal then directed the Claimants and Respondents to
file their objections if any to the audit report submitted by
Professional Accounting firm and had also directed the Respondent to
file their list of witnesses (if any) by the end of April 2013. The
Respondents filed their objections to the audit report and ABNL had
also filed its reply to the said objections.
Arguments in rebuttal by the Claimant was completed on 25 October 2013
and written submissions were filed by 29 October 2013. The tribunal has
reserved the award.
During the current year, Arbitral Tribunal has passed an award,
allowing claim of Rs.99,190,697, which excluded premature claims
pertaining to income tax, service tax, etc. Further, such award
directed the Erstwhile Promoters to pay a sum of Rs.55,546,790 (being
56% of Rs.99,190,697, as ABNL has purchased only 56% of shares), along
with interest @ 14% from the date of award. This award was received by
ABNL on 27th May 2014.
Subsequently, during the year both parties have filed petitions under
Section 34 of the Arbitration and Conciliation Act, 1996 seeking to set
aside the award and the same are admitted and pending on the file of
the High Court of Madras.
In respect of such receivables, which exclude premature claims
pertaining to income tax, service tax, etc., the Company has created
adequate provision, which also includes claims not awarded by the
Arbitral Tribunal to the extent of 44%. In respect of tax claims, the
company has obtained favorable order for certain assessment years & is
confident of recovering such amount in due course. Such amounts are
fully recoverable from the income tax department.
Based on legal opinion received by the company in previous year and
internal assessment, the ultimate company is confident of recovering
the allowed claim through the legal process. Further, we conform that
ABNL has committed to transfer any funds received on settlement of
arbitration order to the company. Accordingly in our opinion there is
no uncertainty in recovery of such amounts and no additional provision
is necessary.
5.) Stamp Duty
Hitherto, the Company had been collecting and remitting stamp duties
with respect to states wherein the manner of payment of the same has
been prescribed by the respective state governments. From July 2011,
the Company had started collecting stamp duty on contract notes for all
states, including the states wherein the manner of payment has not yet
been notified. The Company is evaluating various options of remitting
the same, including remitting those amounts in the State of Tamil Nadu,
as all the contract notes are executed at Tamil Nadu. Pending, the
final determination of the manner of remittance, amount of Rs.5,171,148
(Previous year: Rs.2,085,659) collected till March 31, 2015 has been
disclosed under Statutory Dues under Other Current Liabilities.
6. Capital and other commitment
a) Estimated amount of contracts remaining to be executed on capital
account, net of advances and not provided for is Rs.784,500 (Previous
year - NIL).
b) For commitments relating to lease arrangements, please refer Note
28.
7. Contingent Liabilities
Particulars March 31, 2015 March 31, 2014
Disputed tax and other statutory
liabilities not provided for:
(a) Income tax & Interest on Tax -
for various assessment years in 45,545,425 45,545,425
respect of which Company has gone
on appeal. (Based on judicial
pronouncements, the claim of the
Company is likely to be accepted
by the judicial authorities).
(b) Service tax - for various
assessment years in respect of
which Company has 7,957,873 7,957,873
gone on appeal. (Based on judicial
pronouncements, the claim of the
Company is likely to be accepted
by the judicial authorities).
(c) Provident fund - for the period
from March 2009 to May 2011 for non- 14,036,578 14,036,578
inclusion of certain components like
allowances etc. while computing and
remitting the employer and employees'
contribution to provident fund. (Based
on judicial pronouncements, the claim
of the Company is likely to be accepted
by the judicial authorities).
(d) Karnataka Stamp duty for the period
from 2003 - 2008. Based on judicial 9,060,000 9,060,000
pronouncements, the claim of the
Company is likely to be accepted by the
judicial authorities
Contingent liability not provided for
on account of:
(a) Disputed claim of SEBI towards
turnover fees contested by the Company at 27,656,667 27,656,667
Ho'nble Supreme Court. The Company has
been advised by its legal counsel
that it is possible, but not probable,
the action will succeed and accordingly no
provision for any liability has been made
in these financial statements.
(b) Claims against the Company not
acknowledged as debts* 83,122,581 38,865,918
* Represents claims made on the Company by various customers alleging
unauthorized trades, loss of profits etc. The Company has been advised
by its legal counsel that it is possible, but not probable, the action
will succeed and accordingly no provision for any liability has been
made in these financial statements.
8. Managerial Remuneration
During an earlier year the Company had made an application to the
Central Government under Section 309 (5B) of the Companies Act, 1956 for
seeking waiver of excess managerial remuneration amounting to
Rs.3,094,634 (Previous year:Rs.3,094,634) (excluding statutory
contribution to provident fund, gratuity and leave encashment which are
exempted under Schedule VI) paid to Mr. PB. Subramaniyan, the erstwhile
whole time director ('Erstwhile Director') of the Company for the period
from April 1,2008 to March 6, 2009.
During the previous year, the Company has received an order from the
Central Government (CG) whereby the CG has rejected excess remuneration
of Rs.1,626,614/-(Previous year: Rs.1,626,614/-) and directed the
Company to collect the same from the Erstwhile Director.
The Company has commenced the process of recovery from the Erstwhile
Director. Pending the recovery of the same, it has been shown as
advances recoverable by the Company in the Balance Sheet. The Company
is evaluating various alternative options including seeking a
condonation / compounding if these amounts are not recoverable from the
Erstwhile Director.
9. Operating leases for computers:
The company has entered into commercial leases on computer desktops.
These leases have an average life of three years with renewal option
included in the contracts.
Lease rentals in respect of computers taken on operating lease during
the year ended March 31, 2015 amounts to Rs.4,103,985 (Previous Year
Rs.4,559,985).
10. Employment Benefit disclosures
The amounts charged to the Statement of profit and loss during the year
for Provident fund contribution aggregates to Rs.16,147,817 (Previous
year - Rs.12,530,378) and employees' state insurance contribution
aggregates to Rs.1,038,349 (Previous year -Rs.1,249,568).
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service gets a gratuity on departure at
15 days salary (last drawn salary) for each completed year of service.
The scheme is funded with Aditya Birla Nuvo Employee Gratuity Fund.
11. Related Party Transactions List of Related Parties
Ultimate Holding Company Aditya Birla Nuvo Limited
Holding Company Aditya Birla Financial Services Limited
Subsidiary Company Aditya Birla Commodities Broking Limited
Related Parties under AS 18 with whom transactions have taken place
during the year
Aditya Birla Finance Limited
Aditya Birla Money Mart Limited
Fellow Subsidiary Aditya Birla Financial Shared Services Limited
Birla Sun Life Insurance Company Limited
Aditya Birla Customer Services Limited
Additional Related Parties as per Companies Act 2013 with whom
transactions have taken place during the year
Mr. Sudhakar Ramasubramanian, Managing
Director
Key Management Personnel Mr. Srinivas Subudhi, Chief Financial
Officer (w.e.f. 15-5-2014)
Mr. Vikashh K Agarwal, Company Secretary
(w.e.f. 28-1-2015)
12. Foreign currency transactions
The Company did not enter into any foreign currency transactions in the
current year and previous year.
13. Stock options granted under ABML - Employee Stock Option Scheme -
2014
The objective of the Employee Stock Option Scheme is to attract and
retain talent and align the interest of employees with the Company as
well as to motivate them to contribute to its growth and profitability.
In accordance with the Securities and Exchange Board of India (Employee
Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines,
1999, as amended by Securities and Exchange Board of India (Share Based
Employee Benefits) Regulations, 2014 (hereinafter referred to as 'SEBI
ESOP Regulations') and the Guidance Note on Accounting for Employee
Share-based Payments, the cost of equity-settled transactions is
measured using the intrinsic value method. The cumulative expense to be
recognized for equity-settled transactions at each reporting date until
the vesting date will reflect the extent to which the vesting period
has expired and the company's best estimate of the number of equity
instruments that will ultimately vest. The expense or credit to be
recognized in the statement of profit and loss for a period to
represent the movement in cumulative expense recognized as at the
beginning and end of that period and is to be recognized in employee
benefits expense. However, there is no expense that is incurred during
the year by the Company for this purpose since the exercise price at
which the options have been granted by the Company to eligible
employees are at the market price of the Company and further, the
vesting of options is due only in the upcoming years.
Stock options granted under ABML - Employee Stock Option Scheme - 2014
During the year, the Company had formulated the ABML Employee Stock
Option Scheme - 2014 (ABML ESOP Scheme - 2014) with the approval of the
shareholders at the Annual General Meeting dated September 09, 2014.
The Scheme provides that the total number of options granted there
under will be 27,70,000 and to follow the Market Value Method
(Intrinsic Value) for valuation of the Options. Each option, on
exercise, is convertible into one equity share of the Company having
face value of Rs. 1 each. Subsequently, the Nomination and Remuneration
Committee of the Board of Directors on December 2, 2014 has granted
25,09,341 stock options to its eligible employees under the ABML ESOP
Scheme - 2014 at an exercise price of Rs. 34.25. The Exercise Price was
based on the latest available closing price, prior to the December 2,
2014 (the date of grant by the Nomination & Remuneration Committee) on
the recognized stock exchanges on which the shares of the Company are
listed with the highest trading volume.
14. i) The Company has a process whereby periodically all long term
contracts, if any, are assessed for material foreseeable losses. As at
the Balance Sheet date, there were no long term contracts (including
derivative contracts)
ii) The Company's pending litigations comprise of claims against the
Company primarily by the customers and proceedings pending with Income
Tax and other statutory authorities. The Company has reviewed all its
pending litigations and proceedings and has adequately provided for
where provisions are required and disclosed the contingent liabilities
where applicable, in its Financial Statements. The Company does not
expect the outcome of these proceedings to have a materially adverse
effect on its financial results. Refer note 24 for details on
contingent liabilities. In respect of litigations, where the management
assessment of a financial outflow is probable, the Company has made a
provision of Rs.12,314,612 as at 31st March 2015.
15. Previous year figures
Previous year figures have been regrouped / reclassified, where
necessary, to conform to this year's classification.
Mar 31, 2014
NOTE: 1. Basis of preparation
The Company has prepared these financial statements to comply in all
material respects with the accounting standards notified under
Companies Accounting Standards Rules, 2006, (as amended) and the
relevant provisions of the Companies Act, 1956 read with General
Circular 15/2013 dated 13 September 2013, issued by the ministry of
corporate affairs, in respect of Section 133 of the Companies Act,
2013.
1A Reconciliation of the number of Equity shares outstanding at the
beginning and at the end of the period
Sl. Description As at March 31, 2014 As at March 31, 2013
NO. No. of Amount No. of Amount
shares Shares
1 At the beginning 55,400,000 55,400,000 55,400,000 55,400,000
of the year
2 Issued during --- --- --- ---
the year
3 Outstanding at 55,400,000 55,400,000 55,400,000 55,400,000
the end of the year
1B Reconciliation of the number of Preference shares outstanding at the
beginning and at the end of the period
Sl. Description As at March 31, 2014 As at March 31, 2013
No. No. of shares Amount No. of Shares Amount
1 At the beginning 800,000 80,000,000 800,000 80,000,000
of the year
2 Issued during 200,000 20,000,000 --- ---
the year
3 Outstanding at 1,000,000 100,000,000 800,000 80,000,000
the end of the
year
2 Term / right attached to Equity shares
The Company has only one class of equity shares having a par value of
Re. 1/- per share. Each holder of equity shares is entitled to one vote
per share. The Company declares and pays dividend in Indian rupees. The
dividend proposed by the Board of Directors is subject to the approval
of the shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holders of equity
shares will receive remaining assets of the Company, after distribution
of all preferential amounts. The distribution will be in proportion to
the number of the equity shares held by the shareholders.
3 Term / right attached to preference shares
Preference shares carry non cumulative dividend of 8% per annum. The
company declares and pays dividends in Indian rupees.
In the year ended 31st March, 2011, the Company had allotted 800,000 8%
Redeemable Non Convertible Non Cumulative Preference Shares of Rs.
100/- each, fully paid up at a premium of Rs. 150/- per share to Aditya
Birla Financial Services Private Limited, the holding Company. These
Preference Shares are redeemable at the end of 5 years from the date of
issue at a price of Rs. 320/- per share.
In the year ended 31st March, 2014, the Company had allotted 200,000 8%
Redeemable Non Convertible
Non Cumulative Preference Shares of Rs. 100/- each, fully paid up at a
premium of Rs. 400/- per share to Aditya Birla Financial Services
Private Limited, the holding Company. These Preference Shares are
redeemable at the end of 5 years from the date of issue at a price of
Rs. 725/- per share.
4 shares held by Holding company
41,550,000 (Previous Year : 41,550,000) equity shares of Re. 1/- each
fully paid and 1,000,000 (Previous Year : 800,000) 8% Redeemable Non
Convertible Non Cumulative Preference Shares Rs. 100/- each fully paid
are held by Aditya Birla Financial Services Private Limited, the
Holding Company.
5 shares in the company held by each shareholder holding more than 5
percent shares and the number of shares held are as under :
i) Equity Shares Capital
As at March 31, As at March 31,
2014 2013
Sl. Name of Share No. of % of total No. of % of total
No. Holder Shares paid-up Shares paid-up
held equity held equity
share share
capital capital
1 Aditya Birla
Financial
Services
Private
Limited 41,550,000 75.00 41,550,000 75.00
2 PCR Investments
Ltd 3,385,320 6.11 3,385,320 6.11
As per records of the company, including its register of shareholders/
members and other declarations received from shareholders regarding
beneficial interest, the above shareholding represents both legal and
beneficial ownerships of shares.
ii) preference share capital
As at March 31, As at March 31,
2014 2013
Sl. Name of Share No. of % of total No. of % of total
No. Holder Shares paid-up Shares paid-up
held equity held equity
share share
capital capital
1 Aditya Birla
Financial
Services 1,000,000 100 800,000 100
Private
Limited
5) Assets forming part of claims made by the Ultimate Parent Company
Pursuant to a Share Purchase agreement (''SPA'') between Aditya Birla
Nuvo Limited (''ABNL'' or ''the Purchaser''), ultimate holding company and
Mr. Prataph C Reddy and others ("Erstwhile Promoters") dated August 28,
2008, ABNL had agreed to acquire 31 million equity shares in Aditya
Birla Money Limited ("the Company"). The transaction was completed on
March 6, 2009.
As per the SPA, the Erstwhile Promoters had agreed to indemnify and
hold harm less the Purchaser to the extent of any Losses, resulting
from or consequent upon or relating to such breach of representations
or warranties, covenants or agreement including but not limited to the
recoveries of receivables and other assets in the books of the Company,
contingencies on tax and related matters etc.
Subsequent to the completion of the above transaction, the Purchaser
noted several breaches of representations and warranties including but
not limited to non-recovery of debtors, irrecoverable advances, missing
fixed assets etc. Accordingly, ABNL based on its internal assessment of
the recoverability of receivables, fixed assets, other assets and
matters relating to tax and other contingencies arrived at an amount of
Rs.163,882,296 as Losses incurred on account of breach of
representation / warranties in the SPA. Further, ABNL vide its letter
dated March 5, 2011 made a separate claim of Rs.5,169,379 for amounts
becoming due and payable on accounts of various cases initiated by the
customers of the Company. ABNL invoked the arbitration mechanism and
filed their Statement of Claim on February 26, 2011 with the
Arbitration Tribunal.
Pending the final outcome of the arbitration proceedings, the Company
has identified all such receivables, assets etc which are have not been
recovered and other items which are the subject matter of the claim to
the extent they are in the books of accounts of the Company as at March
31, 2014 aggregating Rs.145,779,681 (previous year: Rs.145,779,681) and
disclosed the same in Short Term Loans & Advances under Note 11B of the
Balance Sheet, as these amounts would be paid directly to the Company
by the Erstwhile Promoters at the direction of ABNL as and when the
settlement happens.
Both parties completed filing of documents. On July 04, 2012, a hearing
was held and Professional Accounting firm were asked to act as auditors
by the Arbitrators with a mandate to submit a report on whether from an
accounting perspective, including the accounting treatment that has
been given to the items set out in the Statement of Claim, the amounts
as claimed are correct as per accounting practice.
The arbitral tribunal then directed the Claimants and Respondents to
file their objections if any to the audit report submitted by
Professional Accounting firm and had also directed the Respondent to
file their list of witnesses (if any) by the end of April 2013. The
Respondents filed their objections to the audit report and ABNL had
also filed its reply to the said objections.
Arguments in rebuttal by the Claimant was completed on October 25, 2013
and written submissions were filed by October 29, 2013. The tribunal
has reserved the award.
Based on legal opinion received and internal assessment, ABNL is
confident of recovering the entire dues through the arbitration process
and passing the benefit thereof to the Company against which these loss
assets can be set-off in the future. Accordingly, the Company is of
strong view that these amounts are recoverable.
6) Stamp duty
Hitherto, the Company had been collecting and remitting stamp duties
with respect to states wherein the manner of payment of the same has
been prescribed by the respective state governments. From July 2011,
the Company had started collecting stamp duty on contract notes for all
states, including the states wherein the manner of payment has not yet
been notified. The Company is evaluating various options of remitting
the same, including remitting those amounts in the State of Tamil Nadu,
as all the contract notes are executed at Tamil Nadu. Pending, the
final determination of the manner of remittance, amount of
Rs.4,741,664/- (Previous year: Rs.4,560,042/-) collected till March 31,
2014 has been disclosed under Statutory Dues under Other Current
Liabilities.
7) Capital and other commitment
a) Estimated amount of contracts remaining to be executed on capital
account, net of advances and not provided for is NIL (Previous year:
Rs.2,709,050).
b) For commitments relating to lease arrangements, please refer Note
28.
8) Contingent Liabilities
Particulars March 31, 2014 March 31, 2013
Disputed tax and other
statutory liabilities
not provided for:
(a) Income tax & Interest 45,545,425 45,158,745
on Tax - for various assessment
years in respect of which
Company has gone on appeal.
(Based on judicial
pronouncements, the claim of the
Company is likely to be accepted
by the judicial authorities).
(b) Service tax - for various 7,957,873 7,957,873
assessment years in respect
of which Company has gone
on appeal. (Based on judicial
pronouncements, the claim of
the Company is likely to be
accepted by the judicial
authorities).
(c) Provident fund - for the 14,036,578 14,036,578
period from March 2009 to May
2011 for non inclusion of
certain components like allowances
etc. while computing and
remitting the employer and
employees'' contribution to
provident fund. (Based on judicial
pronouncements, the claim of the
Company is likely to be accepted
by the judicial authorities).
(d) Karnataka Stamp duty for 9,060,000 9,060,000
the period from 2003-2008.
Based on judicial pronouncements,
the claim of the
Company is likely to be accepted
by the judicial authorities
Contingent liability not provided for on account of:
(a) Disputed claim of SEBI towards 27,656,667 27,656,667
turnover fees contested
by the Company at Ho''nble
Supreme Court. The Company
has been advised by its legal
counsel that it is possible, but
not probable, the action will
succeed and accordingly no
provision for any liability
has been made in these
financial statements.
(b) Claims against the Company 38,865,918 35,883,562
not acknowledged as debts*
* Represents claims made on the Company by various customers alleging
unauthorized trades, loss of profits etc. The Company has been advised
by its legal counsel that it is possible, but not probable, the action
will succeed and accordingly no provision for any liability has been
made in these financial statements.
9) Managerial Remuneration
During an earlier year the Company had made an application to the
Central Government under Section 309 (5B) of the Companies Act, 1956
for seeking waiver of excess managerial remuneration amounting to
Rs.3,094,634 (Previous year: Rs.3,094,634) (excluding statutory
contribution to provident fund, gratuity and leave encashment which are
exempted under Schedule VI) paid to Mr. P.B. Subramaniyan, the
erstwhile whole time director (''Erstwhile Director'') of the Company for
the period from April 1, 2008 to March 6, 2009.
During the previous year, the Company has received an order from the
Central Government (CG) whereby the CG has rejected excess remuneration
of Rs.1,534,634 (Previous year: Rs.1,534,634) and directed the Company
to collect the same from the Erstwhile Director.
The Company has commenced the process of recovery from the Erstwhile
Director. Pending the recovery of the same, it has been shown as
advances recoverable by the Company in the Balance Sheet. The Company
is evaluating various alternative options including seeking a
condonation / compounding if these amounts are not recoverable from the
Erstwhile Director.
10) Earnings Per share
Particulars March 31, 2014 March 31, 2013
Net Profit / (loss) as
per Statement of profit and A (82,041,851) (126,655,904)
Weighted average number of
equity shares B 55,400,000 55,400,000
Earnings / (loss) per share-
Basic and Diluted A/B (1.48) (2.29)
Nominal value of Equity
Share (in Rs.) Re 1/- Re 1/-
11) Lease disclosures
Operating leases for premises
Lease rentals in respect of premises taken on operating lease during
the year ended March 31, 2014 amounts to Rs.35,078,962 (Previous Year:
Rs.35,606,663).
Future obligations towards lease rentals under non-cancellable lease
agreements as on March 31, 2014 amounts to Rs.198,687,177/- (Previous
Year: Rs.182,036,682). Details of Lease Rentals payable within one year
and thereafter are as under:
The company has entered into lease / license agreements in respect of
immovable properties with different parties. Some of the agreements
contain escalation clause related to lease rentals / license fees from
5% to 15% p.a.
Operating Leases for computers
The company has entered into commercial leases on computer desktops.
These leases have an average life of three years with renewal option
included in the contracts.
Lease rentals in respect of computers taken on operating lease during
the year ended March 31, 2014 amounts to Rs.4,559,985 (Previous Year:
Rs.4,559,985).
Future obligations towards lease rentals under non-cancellable lease
agreements as on March 31, 2014 amounts to Rs.2,112,280. Details of
Lease Rentals payable within one year and thereafter are as under:
12) Employment Benefit disclosures
The amounts charged to the Statement of profit and loss during the year
for Provident fund contribution aggregates to Rs.12,530,378 (Previous
year: Rs.13,497,945) and employees'' state insurance contribution
aggregates to Rs.1,249,568 (Previous year: Rs.2,511,222).
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service gets a gratuity on departure at
15 days salary (last drawn salary) for each completed year of service.
The scheme is funded with Aditya Birla Nuvo Employee Gratuity Fund.
The following table summarises the components of net benefit expense
recognized in the Statement of profit and loss and the funded status
and amounts recognized in the balance sheet for gratuity plan.
13) Foreign currency transactions
The Company did not enter into any foreign currency transactions in the
current year and previous year.
14) Additional information pursuant to provisions of paragraphs
5(ii)(a), 5(ii)(b) and paragraphs 5(viii) (a) and 5(viii) (c) Part II
of the Revised Schedule VI to the Companies Act, 1956 has not been
provided as these are not relevant having regard to the nature of the
business of the Company.
15) Previous year figures
Previous year figures have been regrouped / reclassified, where
necessary, to conform to this year''s classification.
Mar 31, 2013
1. Basis of preparation
The financial statements have been prepared in accordance with
generally accepted accounting principles in India. The Company has
prepared these financial statements to comply in all material respects
with the accounting standards notified under Companies Accounting
Standards Rules, 2006, (as amended) the relevant provisions of the
Companies Act, 1956. The financial statements have been prepared under
the historical cost convention and on an accrual basis. The accounting
policies have been consistently applied by the Company and are
consistent with those used in the previous year.
2) Assets forming part of claims made by the Ultimate Parent Company
Pursuant to a Share Purchase agreement (''SPA'') between Aditya Birla
Nuvo Limited (''ABNL'' or ''the Purchaser''), ultimate holding company and
Mr. Prataph C Reddy and others ("Erstwhile Promoters") dated August 28,
2008, ABNL had agreed to acquire 31 million equity shares in Aditya
Birla Money Limited ("the Company"). The transaction was completed on
March 6, 2009.
As per the SPA, the Erstwhile Promoters had agreed to indemnify and
hold harm less the Purchaser to the extent of any Losses, resulting
from or consequent upon or relating to such breach of representations
or warranties, covenants or agreement including but not limited to the
recoveries of receivables and other assets in the books of the Company,
contingencies on tax and related matters etc.
Subsequent to the completion of the above transaction, the Purchaser
noted several breaches of representations and warranties including but
not limited to non-recovery of debtors, irrecoverable advances, missing
fixed assets etc. Accordingly, ABNL based on its internal assessment of
the recoverability of receivables, fixed assets, other assets and
matters relating to tax and other contingencies arrived at an amount of
Rs. 163,882,296 as Losses incurred on account of breach of
representation / warranties in the SPA. Further, ABNL vide its letter
dated March 5, 2011 made a separate claim of Rs.5,169,379 for amounts
becoming due and payable on accounts of various cases initiated by the
customers of the Company. ABNL invoked the arbitration mechanism and
filed their Statement of Claim on February 26, 2011 with the
Arbitration Tribunal.
Pending the final outcome of the arbitration proceedings, the Company
has identified all such receivables, assets etc which are have not been
recovered and other items which are the subject matter of the claim to
the extent they are in the books of accounts of the Company as at March
31, 2013 aggregating Rs.145,779,681 (previous year: Rs.147,092,501) and
disclosed the same in Short Term Loans & Advances under Note 11B of the
Balance Sheet, as these amounts would be paid directly to the Company
by the Erstwhile Promoters at the direction of ABNL as and when the
settlement happens.
Both parties have completed filing of documents and draft issues have
been submitted and approved. On 04th July 2012, a hearing was held and
M/s. Deloitte Haskins & Sells were asked to act as auditors by the
Arbitrators with a mandate to submit a report on whether from an
accounting perspective; including the accounting treatment that has
been given to the items set out in the Statement of Claim, the amounts
as claimed are correct as per accounting practice.
The arbitral tribunal had directed the Claimants and Respondents to
file their objections if any to the audit report submitted by M/s.
Deloitte Haskins & Sells and had also directed the Respondent to file
their list of witnesses (if any) by the end of April 2013 and has
posted the next hearing to 06th June 2013. The Respondents filed their
objections to the audit report and ABNL had also filed its reply to the
said objections.
Based on legal opinion received and internal assessment, ABNL is
confident of recovering the entire dues through the arbitration process
and passing the benefit thereof to the Company against which these loss
assets can be set-off in the future. Accordingly, the Company is of
strong view that these amounts are recoverable.
3) Stamp duty
Hitherto, the Company had been collecting and remitting stamp duties
with respect to states wherein the manner of payment of the same has
been prescribed by the respective State Governments. From July 2011,
the Company had started collecting stamp duty on contract notes for all
states, including the states wherein the manner of payment has not yet
been notified. The Company is evaluating various options of remitting
the same, including remitting those amounts in the State of Tamil Nadu,
as all the contract notes are executed at Tamil Nadu. Pending, the
final determination of the manner of remittance, amount of Rs.4,560,042
(Previous year - Rs.4,738,697) collected till March 31, 2013 has been
disclosed under Statutory Dues under Other Current Liabilities.
4) Capital and other commitment
a) Estimated amount of contracts remaining to be executed on capital
account, net of advances and not provided for is Rs 2,709,050 (Previous
year - Rs 745,801).
b) For commitments relating to lease arrangements, please refer note
28.
5) Managerial Remuneration
During an earlier year the Company had made an application to the
Central Government under Section 309 (5B) of the Companies Act, 1956
for seeking waiver of excess managerial remuneration amounting to
Rs.3,094,634 (Previous year - Rs.3,094,634) (excluding statutory
contribution to provident fund, gratuity and leave encashment which are
exempted under Schedule VI) paid to Mr. P.B. Subramaniyan, the
erstwhile whole-time director (''Erstwhile Director'') of the Company for
the period from April 1, 2008 to March 6, 2009.
During the previous year, the Company has received an order from the
Central Government (CG) whereby the CG has rejected excess remuneration
of Rs.1,534,634 (Previous year - Rs.1,534,634) and directed the Company
to collect the same from the Erstwhile Director.
The Company has commenced the process of recovery from the Erstwhile
Director. Pending the recovery of the same, it has been shown as
advances recoverable by the Company in the Balance Sheet. The Company
is evaluating various alternative options including seeking a
condonation / compounding if these amounts are not recoverable from the
Erstwhile Director.
6) Lease Disclosures
Operating Leases for Premises:
Lease rentals in respect of premises taken on operating lease during
the year ended March 31, 2013 amounts to Rs.35,606,663 (Previous Year -
Rs.46,569,848).
Future obligations towards lease rentals under non-cancellable lease
agreements as on March 31, 2013 amounts to Rs.182,036,682 (Previous
Year - Rs. 115,442,089). Details of Lease Rentals payable within one
year and thereafter are as under:
Operating Leases for Computers:
The company has entered into commercial leases on computer desktops.
These leases have an average life of three years with renewal option
included in the contracts.
Lease rentals in respect of computers taken on operating lease during
the year ended March 31, 2013 amounts to Rs.4,559,985 (Previous Year -
Rs.2,447,705).
7) Employment Benefit Disclosures
The amounts charged to the Statement of profit and loss during the year
for Provident fund contribution aggregates to Rs.13,497,945 (Previous
Year - Rs.15,537,797) and employees'' state insurance contribution
aggregates to Rs.2,511,222 (Previous Year - Rs.2,584,475).
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service gets a gratuity on departure at
15 days salary (last drawn salary) for each completed year of service.
The scheme is funded with Aditya Birla NUVO Employee Gratuity Fund.
The following tables summaries the components of net benefit expense
recognized in the Statement of profit and loss and the funded status
and amounts recognized in the balance sheet for the gratuity plan.
8) Foreign Currency Transactions
The Company did not enter into any foreign currency transactions in the
current year and previous year.
9) Additional information pursuant to provisions of paragraphs
5(ii)(a), 5(ii)(b) and paragraphs 5(viii) (a) and 5(viii) (c) Part II
of the Revised Schedule VI to the Companies Act, 1956 has not been
provided as these are not relevant having regard to the nature of the
business of the Company.
10) Previous Year Figures
Previous year figures have been regrouped / reclassified, where
necessary, to conform to this year''s classification.
Mar 31, 2012
1. Basis of preparation
The financial statements have been prepared in accordance with
generally accepted accounting principles in India. The Company has
prepared these financial statements to comply in all material respects
with the accounting standards notified under Companies Accounting
Standards Rules, 2006, (as amended) the relevant provisions of the
Companies Act, 1956. The financial statements have been prepared under
the historical cost convention and on an accrual basis. The accounting
policies have been consistently applied by the Company and are
consistent with those used in the previous year, except for change in
accounting policy explained below.
2 Term/right attached to equity shares
The company has only one class of equity shares having a par value of
Re.1/- per share. Each holder of equity shares is entitled to one vote
per share. The company declares and pays dividend in Indian rupees.
In the event of liquidation of the company, the holders of equity
shares will receive remaining assets of the company, after distribution
of all preferential amounts. The distribution will be in proportion to
the number of the equity shares held by the shareholders.
3 Term of redemption of Preference Shares
The company has allotted 800,000 8% Redeemable Non Convertible Non
Cumulative Preference Shares of Rs.100/- each, fully paid up at a
premium of Rs.150/- per share to Aditya Birla Financial Services
Private Limited, the holding company. These Preference Shares are
redeemable at the end of 5 years at Rs.320/- per share.
4 41,550,000 (Previous Year - 41,550,000) equity shares of Re.1/- each
fully paid up are held by Aditya Birla Financial Services Private
Limited, the holding Company; and 800,000 (Previous Year - 800,000) 8%
Redeemable Non Convertible Non Cumulative preference shares Rs.100/-
each fully paid are held by Aditya Birla Financial Services Private
Limited.
5 Shares in the Company held by each shareholder holding more than 5
percent shares specifying the number of shares held.
RESERVES & SURPLUS
*General Reserve : Under the Companies Act, a general reserve is
created through an annual transfer of net income at a specified
percentage in accordance with applicable regulations. The purpose of
these transfers is to ensure that if a dividend distribution in a given
year is more than 10% of the paid up capital of the company for that
year, then the total dividend distribution is less than the total
distributable results for that year.
(Note : The Company has recognized deferred tax assets on carried
forward losses and unabsorbed depreciation only to the extent of the
deferred tax liabilities which are given above, and not on the entire
amount on account of prudence.)
There are no Micro and Small Enterprises, to whom the Company owes
dues, which are outstanding for more than 45 days as at 31st March,
2012. This information as required to be disclosed under the Micro,
Small and Medium Enterprises Development Act, 2006 has been determined
to the extent such parties have been identified on the basis of
information available with the Company.
2) Assets forming part of claims made by the Ultimate Parent Company
Pursuant to a Share Purchase agreement ('SPA') between Aditya Birla
Nuvo Limited ('ABNL' or 'the Purchaser') and Mr.Prathap C Reddy and
others ("Erstwhile Promoters") dated August 28, 2008, ABNL had agreed
to acquire 31 million equity shares in Aditya Birla Money Limited ("the
Company"). The transaction was completed on March 6, 2009.
As per the SPA, the Erstwhile Promoters had agreed to indemnify and
hold harm less the Purchaser to the extent of any Losses, resulting
from or consequent upon or relating to such breach of representations
or warranties, covenants or agreement including but not limited to the
recoveries of receivables and other assets in the books of the Company,
contingencies on tax and related matters etc.
Subsequent to the completion of the above transaction, the Purchaser
noted several breaches of representations and warranties including but
not limited to non-recovery of debtors, irrecoverable advances, missing
fixed assets etc. Accordingly, ABNL based on its internal assessment of
the recoverability of receivables, fixed assets, other assets and
matters relating to tax and other contingencies arrived at an amount of
Rs.163,882,296 as Losses incurred on account of breach of
representation / warranties in the SPA. Further, ABNL vide its letter
dated March 5, 2011 made a separate claim of Rs.5,169,379 for amounts
becoming due and payable on accounts of various cases initiated by the
customers of the Company. ABNL invoked the arbitration mechanism and
filed their Statement of Claim on February 26, 2011 with the
Arbitration Tribunal.
Pending the final outcome of the arbitration proceedings, the Company
has identified all such receivables, assets etc which have not been
recovered and other items which are the subject matter of the claim to
the extent they are in the books of accounts of the Company as at March
31, 2012 aggregating Rs.147,092,501 (previous year: Rs.152,102,658) and
disclosed the same in Advances recoverable in cash or kind under
Schedule 13B of the Balance Sheet, as these amounts would be paid
directly to the Company by the Erstwhile Promoters at the direction of
ABNL as and when the settlement happens. Based on legal opinion
received and internal assessment, ABNL is confident of recovering the
entire dues through the arbitration process and passing the benefit
thereof to the Company against which these loss assets can be set-off
in the future. Accordingly, the Company is of the view that these
amounts are recoverable and hence not written off in the books of
accounts of the Company.
3) Stamp duty
Hitherto, the Company had been collecting and remitting stamp duties
with respect to states wherein the manner of payment of the same has
been prescribed by the respective state governments. From July 2011,
the Company had started collecting stamp duty on contract notes for all
states, including the states wherein the manner of payment has not yet
been notified. The Company is evaluating various options of remitting
the same, including remitting those amounts in the State of Tamil Nadu,
as all the contract notes are executed at Tamil Nadu. Pending, the
final determination of the manner of remittance, amount of Rs.4,738,697
collected till March 31, 2012 has been disclosed under Statutory Dues
under Other Current Liabilities.
4) Capital and other commitment
a) Estimated amount of contracts remaining to be executed on capital
account, net of advances and not provided for is Rs.745,801 (Previous
year - Rs.4,882,875).
b) For commitments relating to lease arrangements, please refer note
32.
5) Contingent liabilities
Particulars March 31, 2012 March 31, 2011
Disputed tax and other statutory
liabilities not provided for:
(a) Income tax & Interest Tax -
for various assessment 36,666,168 35,579,720
years in respect of which Company
has gone on appeal. Based on
judicial pronouncements, the claim
of the Company is likely to be
accepted by the judicial authorities.
(b) Service tax - for various
assessment years in respect 7,957,873 7,930,877
of which Company has gone on appeal.
Based on judicial pronouncements,
the claim of the Company is likely
to be accepted by the judicial
authorities.
(c) Provident fund à for the period
from Mar 2009 to 14,036,578 Ã
May 2011 for non inclusion of certain
components like allowances etc. while
computing and remitting the employer
and employees' contribution to
provident fund. Based on judicial
pronouncements, the claim of the
Company is likely to be accepted by
the judicial authorities
(d) Karnataka Stamp duty for the
period from 2003- 9,060,000 9,060,000
2008. Based on judicial pronouncements,
the claim of the Company is likely to
be accepted by the judicial
authorities
Contingent liability not provided for
on account of:
(a) Disputed claim of SEBI towards
turnover fees 27,656,667 27,656,667
contested by the Company at Ho'nble
Supreme Court. The Company has been
advised by its legal counsel that
it is possible, but not probable,
the action will succeed and
accordingly no provision for any
liability has been made in these
financial statements.
(b) Claims against the Company not
acknowledged as 45,710,102 23,279,527
debts*
* Represents claims made on the Company by various customers alleging
unauthorised trades, loss of profits etc. The Company has been advised
by its legal counsel that it is possible, but not probable, the action
will succeed and accordingly no provision for any liability has been
made in these financial statements.
6) Managerial Remuneration
During an earlier year the Company had made an application to the
Central Government under Section 309 (5B) of the Companies Act, 1956
for seeking waiver of excess managerial remuneration amounting to Rs
3,094,634 (excluding statutory contribution to provident fund, gratuity
and leave encashment which are exempted under Schedule VI) paid to Mr.
P.B. Subramaniyan, the erstwhile whole time director ('Erstwhile
Director') of the Company for the period from April 1, 2008 to March 6,
2009.
During the previous year, the Company has received an order from the
Central Government (CG) whereby the CG has rejected excess remuneration
of Rs 1,534,634 and directed the Company to collect the same from the
Erstwhile Director.
The Company has commenced the process of recovery from the Erstwhile
Director. Pending the recovery of the same, it has been shown as
advances recoverable by the Company in the Balance Sheet. The Company
is evaluating various alternative options including seeking a
condonation / compounding if these amounts are not recoverable from the
Erstwhile Director.
7) Change in estimated useful life of assets
During the current year, the Company has changed its estimated useful
life of batteries from 20 years to 4 years. This change in estimated
useful life has resulted in provision of additional depreciation by Rs.
1,020,080 and the profit before tax of the Company is lower by the
corresponding number.
Further, during the current year, the Company has reassessed its useful
life of furniture and fixtures fitted to the premises and changed the
same from 15 years to rates based on the lease period, taking into
account the secondary lease period. This change in estimated useful
life has resulted in provision of additional depreciation by Rs.
6,836,389 and the profit before tax of the Company is lower by the
corresponding number.
8) Lease disclosures
Operating leases for premises:
Lease rentals in respect of premises taken on operating lease during
the year ended March 31, 2012 amounts to Rs. 46,569,848 (Previous Year
Rs. 73,039,934).
Future obligations towards lease rentals under non-cancellable lease
agreements as on March 31, 2012 amounts to Rs. 115,442,089 (Previous
Year Rs. 151,127,416). Details of Lease Rentals payable within one year
and thereafter are as under:
The company has entered into lease / license agreements in respect of
immovable properties with different parties. Some of the agreements
contain escalation clause related to lease rentals / license fees from
5% to 15% p.a.
Operating leases for computers:
Lease rentals in respect of computers taken on operating lease during
the year ended March 31, 2012 amounts to Rs. 2,447,705 (Previous Year -
Nil).
Future obligations towards lease rentals under non cancellable lease
agreements as on March 31, 2012 amounts to Rs. 11,844,584 (Previous
Year - Nil). Details of Lease Rentals payable within one year and thereafter are as under:
9) Employment benefit disclosures
The amounts charged to the Profit and loss account during the year for
Provident fund contribution aggregates to Rs.15,537,797 (Previous year
à Rs.14,907,704) and employees' state insurance contribution aggregates
to Rs.2,584,475 (Previous year - 3,495,973).
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service gets a gratuity on departure at
15 days salary (last drawn salary) for each completed year of service.
The scheme is funded.
The following tables summarise the components of net benefit expense
recognised in the profit and loss account and the funded status and
amounts recognised in the balance sheet for the gratuity plan.
Details of plan assets
The plan assets represent Company's proportionate share in the Aditya
Birla Nuvo Gratuity Fund managed by the ultimate parent company for the
employees of the group. The details of plan assets are as under:
The overall expected rate of return on assets is determined based on
the market prices prevailing on that date, applicable to the period
over which the obligation is to be settled.
There is no experience adjustment for the year ended March 31, 2008.
The Company does not expect to contribute additional amount to the fund
in the next year.
The estimates of future salary increases, considered in actuarial
valuation, take account of inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market.
10) Additional information pursuant to provisions of paragraphs
5(ii)(a), 5(ii)(b) and paragraphs 5(viii) (a) to 5(viii) (c) Part II of
the Revised Schedule VI to the Companies Act, 1956 has not been
provided as these are not relevant having regard to the nature of the
business of the Company.
11) Comparatives
Till the year ended 31 March 2011, the company was using pre-revised
Schedule VI to the Companies Act 1956, for preparation and presentation
of its financial statements. During the year ended 31 March 2012, the
revised Schedule VI notified under the Companies Act 1956, has become
applicable to the company. The company has reclassified previous year
figures to conform to this year's classification.
Mar 31, 2011
A) AMOUNTS RECEIVABLE FROM ERSTWHILE PROMOTERS
Pursuant to a Share Purchase agreement (ÃSPAÃ) between Aditya Birla
Nuvo Limited (ÃABNLÃ) and Mr Prataph C Reddy and others (ÃErstwhile
PromotersÃ) dated August 28, 2008, ABNL had agreed to acquire 31 Lakhs
equity shares in Aditya Birla Money Limited (Ãthe CompanyÃ). The
transaction was completed on March 6, 2009.
As per clause 12.1 of the SPA, the Erstwhile Promoters had agreed to
indemnify and hold harmless the Purchaser to the extent of any Losses,
resulting from or consequent upon or relating to such breach of
representation or warranty, covenants or agreement including but not
limited to the recoveries of receivables and other assets in the books
of the Company, contingencies on tax and related matters etc.
In connection with the above, the Company based on its internal
assessment of the recoverability of receivables, fixed assets and
others assets and matters relating to tax and other contingencies have
arrived at a total claim of Rs 163,882,296/- and has accordingly raised
on the erstwhile promoters to remit such monies to the Company. While,
the erstwhile promoters have not accepted the claim in its entirety it
has however in respect of one particular claim relating to service tax
liabilities remitted a sum of Rs 19,047,324/- during the year. The
erstwhile promoters have not remitted nor have they denied these
amounts as due to the Company and ABNL.
In accordance with the terms of the SPA, the Company and ABNL have
served a notice to the erstwhile promoters that they are invoking the
arbitration mechanism for the resolution of the claims made. An
Arbitral Tribunal was constituted and ABNL and the Company had filed
their Statement of Claim on February 26, 2011.
In addition to the above, the Company vide its letter dated March 5,
2011 made a separate claim of Rs 5,169,379/- for amounts becoming due
and payable on accounts of various cases initiated by the customers of
the Company. Accordingly, as at March 31, 2011, the total claim made by
the Company is about Rs 169,051,665/-.
Pending the final outcome of the arbitration proceedings, the Company
has identified all such receivables, assets etc which are have not been
recovered and other items which are the subject matter of the claim to
the extent they are in the books of accounts of the Company aggregating
Rs 138,829,722/- and disclosed the same in Advances recoverable in cash
or kind under Loans and Advances in Schedule 9 of the Balance Sheet and
the balance claims relating to contingencies which have devolved on the
Company have been included under note 2(b) of Schedule 18 below on
contingencies.
Based on legal opinion received and internal assessment, management is
of the view that these amounts are recoverable from the erstwhile
promoters and the Company is confident of recovering the entire dues
through the arbitration process.
b) COMMITMENTS AND CONTINGENCIES
Commitments
Estimated amount of contracts remaining to be executed on capital
account, net of advances and not provided for is Rs 4,882,875/-
(Previous year - Rs. 11,053,000/-).
Contingent Liabilities
Particulars March 31, 2011 March 31, 2010
Bank Guarantees placed
with exchanges 150,000,000 92,000,000
Disputed Tax Liability
not provided for:
(a) Income Tax - for various
assessment years in respect 35,579,720 26,900,000
of which Company has gone
on appeal. Based on judicial
pronouncements, the claim of
the Company is likely to be
accepted by the judicial
authorities.
(b) Service Tax-for various
assessment years in respect 7,930,877 21,900,000
of which Company has gone
on appeal. Based on judicial
pronouncements, the claim of
the Company is likely to be
accepted by the judicial
authorities.
Particulars March 31, 2011 March 31, 2010
Contingent Liability not
provided for on account of:
(a) Disputed claim of SEBI
towards turnover fees 27,656,667 27,656,667
contested by the Company at
HonÃble Supreme Court.
The Company has been advised
by its legal counsel that it
is possible, but not probable,
the action will succeed and
accordingly no provision for
any liability has been made
in these financial statements.
(b) Claims against the Company
not acknowledged as debts* 23,279,527 39,400,000
* Represents claims made on the Company by various customers alleging
unauthorised trades, loss of profits etc. The Company has been advised
by its legal counsel that it is possible, but not probable, the action
will succeed and accordingly no provision for any liability has been
made in these financial statements.
c) MANAGERIAL REMUNERATION
During the previous year the Company had made an application to the
Central Government under Section 309 (5B) of the Companies Act, 1956
for seeking waiver of excess managerial remuneration amounting to Rs
3,094,634/- (excluding statutory contribution to provident fund,
gratuity and leave encashment which are exempted under Schedule VI)
paid to Mr. P.B. Subramaniyan, the Erstwhile whole time director
(ÃErstwhile DirectorÃ) of the Company for the period from April 1, 2008
to March 6, 2009.
During the current year, the Company has received an order from the
Central Government (CG) whereby the CG has rejected excess remuneration
of Rs 1,534,634/- and directed the Company to collect the same from the
Erstwhile Director.
The Company has commenced the process of recovery from the Erstwhile
Director. Pending the
recovery of the same, it has been shown as advances recoverable by the
Company in the Balance Sheet. The Company is evaluating various
alternative options including seeking a condonation / compounding if
these amounts are not recoverable from the Erstwhile Director.
d) ISSUE OF 8% REDEEMABLE NON CONVERTIBLE NON CUMULATIVE PREFERENCE
SHARES
The Company has allotted 800,000 8% Redeemable Non Convertible Non
Cumulative Preference Shares (ÃRNCNCPSÃ) of Rs 100/- each, fully paid
up at a premium of Rs 150/- per share to Aditya Birla Financial
Services Private Limited, its holding company.
The RNCNCPS are redeemable at the end of 5 years at Rs 320/- per share
(face value Rs 100/- and a premium of Rs 220/- per share)
e) EXCEPTIONAL ITEMS
The company has borne one time loss of Rs 81,548,101/-, net of
recovery, on account of certain trades of its clients which have not
been recovered from them.
j) LEASE DISCLOSURES
Operating leases
Lease rentals in respect of premises taken on operating lease during
the year ended March 31, 2011 amounts to Rs.63,728,019/- (Previous Year
Rs.Rs.42,348,809/-).
The company has entered into lease / license agreements in respect of
immovable properties with different parties. Some of the agreements
contain escalation clause related to lease rentals / license fees from
5% to 15% p.a.
k) EMPLOYMENT BENEFIT DISCLOSURES
The amounts charged to the Profit and loss account during the year for
Provident fund contribution aggregates to Rs. 14,907,704/- (Previous
year - Rs. 9,748,273/-) and employeesà state insurance contribution
aggregates to Rs. 3,495,973/- (Previous year - Rs. 2,097,698/-).
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service gets a gratuity on departure at
15 days salary (last drawn salary) for each completed year of service.
The scheme has been funded during the current year.
The following tables summarise the components of net benefit expense
recognised in the profit and loss account and the funded status and
amounts recognised in the balance sheet for the gratuity plan.
Details of plan assets
The overall expected rate of return on assets is determined based on
the market prices prevailing on that date, applicable to the period
over which the obligation is to be settled.
Experience adjustments
The estimates of future salary increases, considered in actuarial
valuation, take account of inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market.
l) RELATED PARTY TRANSACTIONS List of related parties
Ultimate holding Company Aditya Birla Nuvo Limited
Holding Company Aditya Birla Financial Services Private Limited
Subsidiary Company Aditya Birla Commodities Broking Limited
Entities under common control
Aditya Birla Finance Limited
Aditya Birla Money Mart Limited
Aditya Birla Financial Shared Services Limited
Birla Sun Life Insurance Company Limited
m) FOREIGN CURRENCY TRANSACTIONS
The Company did not enter into any foreign currency transactions in the
current year and previous year.
n) Additional information pursuant to provisions of paragraphs 3(i) to
3(iii) except paragraph 3(ii)(c) and paragraphs 4C and 4D of Part II of
the Schedule VI to the Companies Act, 1956 has not been provided as
these are not relevant having regard to the nature of the business of
the Company.
o) COMPARATIVES
Previous year figures have been audited by a firm other than S.R.
Batliboi & Associates. Further previous year figures have been
regrouped / reclassified wherever necessary to conform to current
yearÃs classification.
Mar 31, 2010
1.1 CONTINGENT LIABILITY:
(Rs.in lacs)
PARTICULARS 31-Mar-2010 31-Mar-2009
1.2 Disputed tax liability not provided for:
Income Tax 269 182
Service Tax 219 --
1.3 Contingent Liability not provided for on account of:
(a) Disputed Claim of SEBI towards turnover fees
contested before Supreme Court. 261 261
(b) Claims against the company not
acknowledged as debts 394 195
Total 1,143 638
1.4 CHANGE IN HOLDING COMPANY
During the year 2009-10, Aditya Birla Financial Services Private
Limited have on 23rd February 2010 acquired 4,15,50,000 shares of Re.1A
each fully paid up representing 75% of total Paid up Share Capital of
the Company from Aditya Birla Nuvo Limited (inter-se promoter transfer
under Regulation 3(4) of the SEBI (Substantial Acquisition of Shares
and Takeover) Regulations, 1996. Necessary disclosure under SEBI (SAST)
Regulations, 1997 and SEBI (Prohibition of Insider Trading),
Regulations, 1992 have been made on 24th February 2010 to the
Exchanges.
1.5 RELATED PARTY TRANSACTIONS
As per AS-18 on "Related Party Disclosures" issued by the ICAI, the
disclosures of transactions with the related parties of the company are
as follows:
A) LIST OF RELATED PARTIES AND THEIR RELATIONSHIP
(A) HOLDING COMPANY
ADITYA BIRLA NUVO LTD (upto February 23,2010),
ADITYA BIRLA FINANCIAL SERVICES PRIVATE LIMITED (ABFSPL) (w.e.f.
February 23, 2010)
(B) SUBSIDIARY COMPANY
Aditya Birla Commodities Broking Limited (ABCBL) (formerly known as
Apollo Sindhoori Commodities Trading Limited) (100% Subsidiary of ABML)
(w.e.f. April 2,2004)
(C) FELLOW SUSIDIARY COMPANY (W.E.F. MARCH 6, 2009)
Aditya Birla Capital Advisors Private Limited (ABCAPL) (Subsidiary of
ABFSPL) (w.e.f. November 4, 2008)
Aditya Birla Customers Services Private Limited (ABCSPL) (Subsidiary of
ABFSPL) (w.e.f. December 11,2008)
Aditya Birla Securities Private Limited (ABSPL) (Subsidiary of ABFSPL)
(w.e.f. November 4,2008 and ceased to be a subsidiary w.e.f. March
13,2009)
Aditya Birla Trustee Company Private Limited (ABTCPL) (Subsidiary of
ABFSPL) (w.e.f. November 28, 2008)
Aditya Birla Financial Shared Services Limited (ABFSSL) (Subsidiary of
ABFSPL)(w.e.f. June 19, 2008)
Aditya Birla Money Mart Limited(ABMML) (formerly known as Birla Sun
Life Distribution Company Limited) (Subsidiary of ABFSPL) (w.e.f. March
31,2009)
BSDL Insurance Advisory Services Limited (100 % Subsidiary of ABMML)
Aditya Birla Minacs Worldwide Limited.(ABMWL)
TransWorks Inc (TW Inc) (100% Subsidiary of ABMWL)
Aditya Birla Minacs Philippines Inc. (ABMPI) (100 % Subsidiary of
ABMWL)
AV TransWorks Limited. (AVTL) (100 % Subsidiary of ABMWL)
Aditya Birla Minacs Worldwide Inc. (ABMWI) (100 % Subsidiary of AVTL)
(formerly known as
Minacs Worldwide Inc.)
Compass BPO Limited, U.K. (w.e.f. March 9,2010 )
Compass BPO, Inc, U.S.A (w.e.f. March 9,2010)
Compass Business Process outsourcing Ltd, India (w.e.f. March 9,2010 )
Compass BPO FZE, U.A.E (w.e.f. March 9,2010)
Minacs Worldwide SA de CV (100 % Subsidiary of ABMWI)
Minacs Group(USA) Inc. (100% Subsidiary of ABMWI)
Minacs Limited (100 % Subsidiary of ABMWI)
Minacs Worldwide GmbH (100 % Subsidiary of Minacs Limited)
Minacs Worldwide Kft. (100 % Subsidiary of Minacs GmbH)
Aditya Vikram Global Trading House Limited (AVGTHL)
Aditya Birla Finance Limited (ABFL) (formerly known as Birla Global
Finance Company Limited (BGFCL))
Birla Insurance Advisory & Broking Services Limited. (BIABSL) (50.01%
Subsidiary of BGCFPL upto March 30, 2009 and of ABFL w.e.f March 31,
2009)
Birla Sun Life Insurance Company Limited (BSLICL)
Aditya Birla Capital Limited (ABCL) (formerly known as Laxminarayan
Investment Limited)
Madura Garments International Brand Company Limited (MGIBCL) (on
becoming Associate, ceased to be an subsidiary w.e.f. November 27,
2009)
LIL Investment Limited (w.e.f. July 27, 2009 and on becoming Associate,
ceased to be an
subsidiary w.e.f. November 27, 2009)
Madura Garments Exports Limited (MGEL) (merged with the Company w.e.f.
January 1, 2010)
Madura Garments Exports US, Inc. (ceased to be a Subsidiary from
February 09,2010)
Madura Garments Lifestyle Retail Company Limited. (MGLRCL)
MG Lifestyle Clothing Company Private Limited (MGCCPL) (merged with the
Company w.e.f. January 1,2010)
Peter England Fashions and Retail Company Limited. (PEFRL)
Aditya Birla Minacs IT Services Limited(ABMITS) (formerly known as PSI
Data Systems Limited)
Birla Technologies Limited (100 % Subsidiary of ABMITS)
(D) Key Management Personnel
Mr.Sudhakar Ramasubramanian, Executive Director (upto January 04, 2010)
Mr. Kanwar Vivek, Managing Director (w.e.f. January 04,2010)
2.0 MANAGERIAL REMUNERATION
2.1.1 The Company has made an application to Central Government under
section 309 (5B) of the Companies Act,1956 for seeking waiver of excess
managerial remuneration amounting to Rs.30,94,634/- (Excluding
statutory contribution to PF, Gratuity and leave encashment which are
exempted under schedule XIII) paid to Mr. P. B. Subramaniyan, the
erstwhile Whole-time Director (Executive Director) of the Company for
the period from 1st April 2008 to 6th March 2009.
2.1.2 The Company has appointed Mr.Sudhakar Ramasubramanian, as
Executive Director, who relinquished charge as Executive Director with
effect from 4th January 2010. Mr.Kanwar Vivek was appointed as Managing
Director for a period of 3 years, with effect from 4th January 2010. No
remuneration was payable to them.
2.2 SEGMENT REPORTING
The Company is principally engaged in the business of Stock Broking and
related activities. Accordingly, there are no reportable segments as
per Accounting Standard 17 issued by The Institute of Chartered
Accountants of India.
3. Estimated amount of capital contracts remaining to be executed on
capital account (net of advances) and not provided for is Rs.110.53
Lacs (Previous Year Rs. 15.50 Lacs)
4. FOREIGN EXCHANGE TRANSACTIONS
The company has not entered into any foreign exchange transactions
during the year.
5. Amounts shown under Sundry Debtors, Loans and Advances and Sundry
Creditors are subject to confirmation from the parties concerned.
However, in the opinion of the Board of Directors of the Company, the
current assets, loans and advances have a value on realization, not
less than the amounts at which they are stated in the Balance Sheet.
6. Information related to Micro, Small and Medium Enterprises
Development Act 2006 (Act) is disclosed hereunder. The information
given below has been determined to the extent such parties have been
identified on the basis of information available with the Company
a) (i) Principal amount remaining unpaid to any supplier at the end of
accounting year. NIL
(ii) Interest due on above. NIL
b) Amount of interest paid by the buyer in terms of section 16 of the
Act, along with amount of the payment made beyond the appointed date
during the year NIL
c) Amounts of interest accrued and remaining unpaid at the end of
financial year NIL
d) Amount of interest due and payable for the period of delay in making
payment (which have been paid but beyond the due date during the year)
but without adding the interest specified under the Act. NIL
e) Amount of further interest remaining due and payable even in the
succeeding years, until such date when the interest dues as above are
actually paid to the small enterprise, for the purpose of disallowance
as a deductable expenditure under section 23 of the Act. NIL
7. Previous years figures have been regrouped / reclassified wherever
necessary to confirm to this years classification.
8. Figures have been rounded off to the nearest rupee.