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 (“NCLT") 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 (“NCLT") - 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 “Pooling 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 (“SC") 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.