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DIRECTOR'S REPORT

Aditya Birla Capital Ltd.

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Market Cap. (₹) 23164.94 Cr. P/BV 2.45 Book Value (₹) 40.85
52 Week High/Low (₹) 116/76 FV/ML 10/1 P/E(X) 26.60
Bookclosure 27/08/2018 EPS (₹) 3.77 Div Yield (%) 0.00
Year End :2019-03 

Board's Report

Dear Members,

The Board of Directors of Aditya Birla Capital Limited (formerly known as Aditya Birla Financial Services Limited) (“your Company” or “the Company”) is pleased to present the 12th (Twelfth) Annual Report and the Audited Financial Statements (Consolidated and Standalone) of your Company for the financial year ended 31st March, 2019 (“financial year under review”).

FINANCIAL SUMMARY

The Company's financial performance (Consolidated and Standalone) for the financial year ended 31st March, 2019 as compared to the previous financial year ended 31st March, 2018 is summarized below:

(Rs, in Crore)

Particulars

Consolidated

Standalone

2018-19

2017-18

2018-19

2017-18

Revenue from operations

15,163.51

11,523.88

177.78

164.03

Profit before share of Joint Venture Companies, exceptional items and Tax

1,154.81

920.47

18.68

36.17

Share of Profit / (Loss) of Joint Venture Companies

225.84

175.37

18.68

36.17

Exceptional Items

-

-

(30.32)

-

Profit / (Loss) before Tax

1,380.65

1,095.84

(11.64)

36.17

Tax Expense

569.35

402.76

(2.04)

-

Profit / (Loss) after Tax (including Non-Controlling Interest)

811.30

693.08

(9.60)

36.17

Profit / (Loss) attributable to Non-Controlling Interest

59.64

(0.02)

-

-

Profit / (Loss) attributable to owners of the Company

870.94

693.06

(9.60)

36.17

Profit / (Loss) attributable to:

Owners of the Company

870.94

693.06

(9.60)

36.17

Non-Controlling Interest

(59.64)

0.02

-

-

Other Comprehensive Income attributable to:

Owners of the Company

2.19

(4.22)

0.03

0.53

Non-Controlling Interest

3.39

(8.94)

-

-

Total Comprehensive Income attributable to:

Owners of the Company

873.13

688.84

(9.57)

36.70

Non-Controlling Interest

(56.25)

(8.93)

-

-

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

The Audited Financial Statements including the Consolidated Financial Statements of the Company as stated above and the Financial Statements of each of the Subsidiaries and all other documents required to be attached thereto are available on the Company's website at https://www.adityabirlacapital.com/ Investor-Relations.

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

ACCOUNTING METHOD

The Ministry of Corporate Affairs vide its notification dated 30th March, 2016 notified the Companies (Indian Accounting Standards) (Amendment) Rules, 2016, including the roadmap for implementation of Ind AS for Non-Banking Financial Companies (“NBFCs”). NBFCs were required to comply with Ind AS in phased manner, from accounting period beginning on or after 1st April, 2018.

The Consolidated and Standalone Financial Statements for the financial year ended 31st March, 2019 are the first consolidated financial statements prepared in accordance with Ind AS. Up to 31st March, 2018, the Company prepared its Consolidated and Standalone financial statements in accordance with the Accounting Standards notified under Section 133 of the Act, read with the Companies (Accounts) Rules 2014, the Insurance Laws (Amendment) Act, 2015, the Insurance Regulatory and Development Authority (Preparation of Financial Statements and Auditor's Report of Insurance Companies) Regulations, 2002 (the “IRDA Financial Statements Regulations”), orders/circulars/ directions issued by the Insurance Regulatory and Development Authority of India (the “IRDAI”) in this regard and the guidelines/ Master Directions/Circulars/notifications issued by the National Housing Bank and the Reserve Bank of India (“RBI”) to the extent applicable (Previous GAAP).

Presentation of financial statements

The audited financial statements of the Company for the financial year under review have been disclosed as per Schedule III (Division III) of the Act.

MATERIAL EVENTS DURING THE YEAR

a. The Members of the Company, vide resolution passed through postal ballot on 30th June, 2018, authorized the Board of Directors of the Company for issuance of securities for an aggregate consideration of up to Rs,3,500 Crore only (Rupees Three Thousand Five Hundred Crore only).

b. The Company and Aditya Birla ARC Ltd., subsidiary of the Company, entered into a strategic joint venture with Varde Partners (“Varde”) and created a joint platform to pursue investments in stressed and distressed assets in India. Varde Partners is a global investment adviser focused on credit and value investing strategies.

c. Aditya Birla Money Ltd. (“ABML”), subsidiary of the Company and Aditya Birla Commodities Broking Ltd. (“ABCBL”), a step-down subsidiary of the Company (wholly owned subsidiary of ABML) had filed applications before the Hon'ble National Company Law Tribunal, Ahmedabad Bench (“Hon'ble NCLT”), for approval of a Scheme of Amalgamation for the Merger of ABCBL with ABML, under Sections 230-232 of the Act, which was sanctioned by the Hon'ble NCLT vide its order dated 14th November, 2018 and was made effective from 14th December, 2018.

HOLDING/ SUBSIDIARIES/ JOINT VENTURE/ ASSOCIATE COMPANY

Holding Company

Grasim Industries Ltd. is the holding Company of the Company.

Subsidiaries

The Company conducts its business through its Subsidiaries for the various business segments in which they operate. As on 31st March, 2019, the Company had 20 (Twenty) Indian Subsidiaries and 7 (Seven) Foreign Subsidiaries (including step down Subsidiaries).

During the financial year under review, the following Companies:

(a) became a Subsidiary of the Company:

(i) Aditya Birla Stressed Asset AMC Pvt. Ltd. (with effect from 22nd May, 2018);

(ii) Aditya Birla Capital Investments Pvt. Ltd. (with effect from 12th October, 2018); and

(b) ceased to be a Subsidiary of the Company:

(i) Aditya Birla Commodities Broking Ltd. (with effect from 14th December, 2018).

MATERIAL SUBSIDIARIES

As required under Regulations 16(1)(c) and 46 of the SEBI Listing Regulations, the Board has approved and adopted the Policy for determining Material Subsidiaries. The Policy has been amended effective from 1st April, 2019 in line with the amendments made to the SEBI Listing Regulations. The Policy is available on the Company's website at https://www.adityabirlacapital.com/ Investor-Relations/Policies-and-Codes.

In compliance with the amendments to the SEBI Listing Regulations, this policy shall be reviewed by the Board at least once every three years and updated accordingly.

As on 31st March, 2019, Aditya Birla Sun Life Insurance Company Ltd. and Aditya Birla Finance Ltd. were the material subsidiaries of the Company. In addition to the above, pursuant to the amendment in the definition of material subsidiary as provided under SEBI Listing Regulations, Aditya Birla Sun Life AMC Ltd. and Aditya Birla Housing Finance Ltd. have also become material subsidiaries of the Company w.e.f. 1st April, 2019.

REGISTRATION AS A CORE INVESTMENT COMPANY (“CIC")1

The Company is registered as a Non-Deposit taking Systemically Important - Core Investment Company (“CIC-ND-SI”) pursuant to the receipt of Certificate of Registration from the Reserve Bank of India dated 16th October, 2015, under Section 45-IA of the Reserve Bank of India Act, 1934 (“RBI Act”). During the financial year under review, the Company complied with all the applicable regulations notified by the Reserve Bank of India.

(1 Please note that RBI does not accept any responsibility or guarantee of the present position as to the financial soundness of the Company or the correctness of any of the statements or representations made or opinions expressed by the Company and for repayment of deposits/ discharge of liabilities by the Company.)

TRANSFER TO RESERVES

No amount was transferred to Special Reserve in terms of Section 45-IC of the RBI Act during the financial year under review.

DIVIDEND

Your Directors do not recommend any dividend for the financial year under review. In terms of the provisions of Regulation 43A of the SEBI Listing Regulations, your Company has formulated and adopted a Dividend Distribution Policy. The policy is attached as Annexure I to the Board's Report and is available on your Company's website at https://www.adityabirlacapital.com/ investor-relations/policies-and-codes.

SHARE CAPITAL

The Company's paid-up Equity Share Capital was Rs,2,201.40 Crore as on 31st March, 2019 as compared to Rs,2,201.04 Crore as on 31st March, 2018.

During the financial year under review, the Company has allotted 3,35,815 Equity Shares pursuant to exercise of Stock Options and Restricted Stock Units granted under ABCL Incentive Scheme for Stock Options and Restricted Stock Units - 2017 and 29,200 Equity Shares pursuant to exercise of Stock Options granted under Aditya Birla Capital Limited Employee Stock Option Scheme 2017.

DEPOSITORY SYSTEM

The Company's Equity Shares are tradable in electronic mode. As on 31st March, 2019, the Company's total Equity paid-up Share capital comprised of 2,20,14,04,363 Equity Shares, out of which 2,16,92,61,162 (98.54%) Equity Shares were held in dematerialised mode.

In view of the numerous advantages offered by the Depository System, the Members holding shares in physical mode are advised to avail the facility of dematerialization.

CREDIT RATING

CRISIL Ratings has assigned a rating of “CRISIL A1 ” and ICRA Ltd. has assigned a rating of “[ICRA] A1 ” for the Commercial Paper Programme of the Company for an amount of Rs,2,700 Crore (Rupees Two Thousand Seven Hundred Crore only).

During the financial year under review, ICRA Ltd. assigned a [ICRA] AAA (pronounced as ICRA triple A) (stable) rating for the proposed issue of ' 800 Crore (Rupees Eight Hundred Crore only) Non-Convertible Debenture (“NCD”) Programme of the Company. The Company was evaluating certain fund raising options and the aforesaid rating was obtained pursuant to the same. However, the Company did not raise funds through issue of NCDs during the financial year under review.

PUBLIC DEPOSITS

The Company, being a Non-Deposit taking Systemically Important Core Investment Company, has not accepted any deposits from the public during the financial year under review in accordance with Section 73 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014.

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

The details of loans, guarantees and investments made under provisions of Section 186 of the Act read with the Companies (Meetings of Board and its Powers) Rules, 2014 are given under notes to the Standalone Financial Statements, which forms part of this Annual Report.

CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION

The particulars with respect to the conservation of energy & technology absorption as required to be disclosed pursuant to provision of Section 134(3)(m) of the Act read with Rule 8(3) of the Companies (Accounts) Rules, 2014 are not applicable to the Company.

FOREIGN EXCHANGE EARNINGS AND OUTGO

There were no foreign exchange earnings during the financial year under review as well as during the previous financial year. However, the foreign exchange outgo during the financial year under review was Rs,2.57 Crore as compared to Rs,1.01 Crore, during the previous financial year.

PARTICULARS OF EMPLOYEES

Disclosures pertaining to remuneration and other details, as required under Section 197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is attached as Annexure II to the Board's Report.

Details as required under Section 197(12) of the Act, read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, with respect to information of employees of the Company will be provided upon request by a Member. In terms of the provisions of Section 136(1) of the Act, the Report and Accounts, as set out therein, are being sent to all the Members of your Company, excluding the aforesaid Annexure which is available for inspection by the Members at the Registered Office of the Company during business hours on all working days of the Company up to the date of the Annual General Meeting. If any Member is interested in obtaining a copy thereof, the Member may write to the Company Secretary at the Registered Office of the Company in this regard.

BUSINESS RESPONSIBILITY REPORT

In terms of Regulation 34(2)(f) of SEBI Listing Regulations, Business Responsibility Report has been enclosed as a separate Section in this Annual Report, describing the initiatives taken by the Company and is also available on your Company's website at https://www.adityabirlacapital.com/investor-relations/ financial-reports.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

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

CHANGE IN NATURE OF BUSINESS

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

EMPLOYEE STOCK OPTIONS

Employee Stock Options have been recognized as an effective instrument to attract talent and align the interest of employees with that of the Company, thereby providing an opportunity to the employees to share in the growth of the Company and to create long-term wealth in the hands of employees, thereby, acting as a retention tool.

In view of the above, your Company had formulated “Aditya Birla Capital Limited Employee Stock Option Scheme 2017” (“Scheme 2017") for the employees of the Company and its Subsidiaries.

Your Company had also adopted “ABCL Incentive Scheme for Stock Options and Restricted Stock Units - 2017” (“ABCL Incentive Scheme"), pursuant to the Composite Scheme of Arrangement between erstwhile Aditya Birla Nuvo Ltd. and Grasim Industries Ltd. and the Company and their respective Shareholders and Creditors.

The details/disclosure(s) on the aforesaid Employee Stock Option Scheme(s) as required to be disclosed under the SEBI (Share Based Employee Benefits) Regulations, 2014 are available on the Company's website at https://www.adityabirlacapital. com/investor-relations/financial-reports.

Certificates from the Statutory Auditors on the implementation of your Company's Employee Stock Option Scheme(s) will be placed at the ensuing Annual General Meeting (“AGM”) of the Company for inspection by the Members.

MANAGEMENT DISCUSSION AND ANALYSIS

Pursuant to Regulation 34 of SEBI Listing Regulations, the Management Discussion and Analysis Report for the financial year under review, is presented as a separate section, which forms part of this Annual Report.

CORPORATE GOVERNANCE

The Company is committed to maintaining the highest standards of Corporate Governance and adhering to the Corporate Governance requirements set out by the Securities and Exchange Board of India. Corporate Governance principles form an integral part of the core values of the Company. The Corporate Governance Report as stipulated under Regulation 34(3) read with Schedule V of the SEBI Listing Regulations forms an integral part of this Annual Report. The requisite certificate from the Statutory Auditors of the Company confirming compliance with the requirements of Corporate Governance is attached as Annexure III to the Board's Report.

STATEMENT CONTAINING SALIENT FEATURES OF FINANCIAL STATEMENTS OF SUBSIDIARIES

A report on the performance and financial position of each of the Company's Subsidiaries as per Section 129(3) of the Act read with the Companies (Accounts) Rules, 2014, in the prescribed form AOC-1 is attached as Annexure IV to the Board's Report.

RISK MANAGEMENT

The Company is a Core Investment Company (“CIC”) and its operations are limited to those of a CIC. The risks therefore largely relate to investments made in its Subsidiaries. The operations of each of the Subsidiaries, the risks faced by them and the risk mitigation tools used to manage them are reviewed periodically by the Risk Management Committee. The same are considered by the Board of the Company, as well. Details of the same are covered in the Management Discussion and Analysis Report, which forms part of this Annual Report. The Company has in place a Risk Management Policy which has been uploaded on the website of the Company at https://www.adityabirlacapital. com/investor-relations/policies-and-codes.

CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES

During the financial year under review, all transactions entered into by the Company with related parties were in ordinary course of business and on an arm's length basis and were not considered material as per the provisions of Section 188 of the Act read with the Companies (Meetings of Board and its Powers) Rules, 2014 and Regulation 23 of the SEBI Listing Regulations. Hence, disclosure in form AOC-2 under Section 134(3)(h) of the Act, read with the Rule 8 of the Companies (Accounts of Companies) Rules, 2014, is not applicable.

Prior omnibus approval is obtained for Related Party Transactions (“RPTs”) which are of a repetitive nature and entered in the ordinary course of business and at arm's length. A statement on RPTs specifying the details of the transactions, pursuant to each omnibus approval granted, is placed on a quarterly basis for review by the Audit Committee.

The details of contracts and arrangements with related parties of your Company for the financial year under review, are given in notes to the Standalone Financial Statements, which forms part of this Annual Report. The Policy on Related Party Transactions, as approved by the Board, is available on your Company's website at https://www.adityabirlacapital.com/investor-relations/ policies-and-codes.

INTERNAL FINANCIAL CONTROLS

The Board of Directors confirms that the Company has laid down a set of standards, processes and structure which enables it to implement Internal Financial Controls across the organization with reference to Financial Statements and that such controls are adequate and are operating effectively. During the financial year under review, no material or serious observation has been made regarding inefficacy or inadequacy of such controls.

Assurance on the effectiveness of Internal Financial Controls is obtained through management reviews, control self-assessment, continuous monitoring by functional experts as well as testing of the Internal Financial Control systems by the internal auditors during the course of their audits. During the financial year under review, no material or serious observations have been received from the Auditors of the Company, citing inefficacy or inadequacy of such controls.

INTERNAL AUDIT

The Company has in place an adequate internal audit framework to monitor the efficacy of internal controls with the objective of providing to the Audit Committee and the Board of Directors, an independent, objective and reasonable assurance on the adequacy and effectiveness of the organization’s risk management, control and governance processes.

The framework is commensurate with the nature of the business and the size of its operations. Internal auditing at the Company involves the utilization of a systematic methodology for analyzing business processes or organizational problems and recommending solutions to add value and improve the organization’s operations.

The audit approach verifies compliance with the regulatory, operational and system related procedures and controls.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Act and to the best of their knowledge and belief and according to the information and explanations obtained from the Management, the Directors of your Company state that:-

i. in the preparation of the Annual Accounts for the financial year ended 31st March, 2019, the applicable accounting standards have been followed and there were no material departures from the same;

ii. the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2019 and of the profit/loss of the Company for financial year ended on that date;

iii. the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. the Directors had prepared the Annual Accounts on a ‘going concern basis';

v. the Directors had laid down Internal Financial Controls and that such Internal Financial Controls were adequate and were operating effectively; and

vi. the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

As on 31st March, 2019, the Board of Directors of your Company (“the Board”) comprised of 7 (Seven) Directors including 3 (Three) Non-Executive Directors and 4 (Four) Independent Directors. Your Directors on the Board possess experience and competency and are renowned in their respective fields. All Directors are liable to retire by rotation except Independent Directors whose term of 5 consecutive years was approved by the Members of the Company.

Appointment/Resignation of Directors

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

Detailed information on the Directors is provided in the Corporate Governance Report, which forms part of this Annual Report.

Continuation of directorship of Mr. Subhash Chandra Bhargava (DIN: 00020021) as an Independent Director

At the 10th (Tenth) Annual General Meeting of the Company held on 19th July, 2017, the shareholders had appointed Mr. S. C. Bhargava as an Independent Director of the Company, for a term of 5 (Five) years, effective 1st September, 2016.

Pursuant to the provisions of the SEBI Listing Regulations, no listed entity effective 1st April, 2019, shall appoint a person or continue the directorship of any person as a Non-Executive Director who has attained the age of seventy-five years unless a Special Resolution is passed to that effect.

Mr. S. C. Bhargava is 74 years of age as on date and therefore to comply with the above amendment, a special resolution is proposed in the ensuing Annual General Meeting for continuation of Directorship of Mr. S. C. Bhargava as an Independent Director, who shall exceed the age limit of 75 years as on date of the next AGM of the Company.

Retirement by Rotation

As per the provisions of the Act and the Articles of Association of the Company, Mr. Kumar Mangalam Birla retires from the Board by rotation this year and being eligible, offers himself for re-appointment.

The information as required to be disclosed under regulation 36(3) of the SEBI Listing Regulations in case of re-appointment / continuation of term of the Directors is provided in the Notice of the ensuing Annual General Meeting.

Declaration by Independent Directors

Pursuant to Section 149(7) of the Act read with the Companies (Appointment and Qualifications of Directors) Rules, 2014, the Company had received declarations from all the Independent Directors of the Company confirming that they meet the ‘criteria of Independence' as prescribed under Section 149(6) of the Act and have submitted their respective declarations as required under Section 149(7) of the Act and Regulation 16(1) of the SEBI Listing Regulations and that they are not aware of any circumstance or situation, which exists or is anticipated, that could impair or impact their ability to discharge their duties with an independent judgment and without any external influence as required under Regulation 25 of the SEBI Listing Regulations.

Key Managerial Personnel

In terms of the provisions of Sections 2(51) and 203 of the Act, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, Mr. Ajay Srinivasan, Chief Executive Officer (CEO), Mrs. Pinky Mehta, Chief Financial Officer (CFO) and Mr. Sailesh Daga, Company Secretary (CS), are the Key Managerial Personnel of your Company.

ANNUAL PERFORMANCE EVALUATION

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

Pursuant to the provisions of the Act and SEBI Listing Regulations and in terms of the Framework of the Board Performance Evaluation, the Nomination, Remuneration and Compensation Committee and the Board of Directors have carried out an annual performance evaluation of the performance of various Committees of the Board, Individual Directors and the Chairman. The manner in which the evaluation has been carried out has been set out in the Corporate Governance Report, which forms an integral part of this Annual Report. The details of the programme for familiarization of the Independent Directors of your Company are available on your Company's website at www.adityabirlacapital.com/about-us/board-of-Directors.

MEETINGS OF THE BOARD AND ITS COMMITTEES Board

The Board meets at regular intervals to discuss and decide on the Company's performance and strategies. During the financial year under review, the Board met 6 (Six) times.

The Meetings of the Board were held on 8th April, 2018, 8th May, 2018, 10th August, 2018, 29th August, 2018, 6th November,

2018 and 5th February, 2019.

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

Audit Committee

During the financial year under review, the Audit Committee reviewed the internal controls put in place to ensure that the accounts of your Company are properly maintained and that the accounting transactions are in accordance with prevailing laws and regulations. In conducting such reviews, the Committee found no material discrepancy or weakness in the internal control system of your Company. The Committee has also reviewed the procedures laid down by your Company for assessing and managing the risks.

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

During the financial year under review, all recommendations made by the Audit Committee were accepted by the Board.

Nomination, Remuneration and Compensation Committee

Your Company has a duly constituted Nomination, Remuneration and Compensation Committee (“NRC”), with its composition, quorum, powers, role and scope in line with the applicable provisions of the Act and SEBI Listing Regulations.

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

The NRC has formulated a policy on remuneration under the provisions of Section 178(3) of the Act is attached as Annexure V to the Board's Report and the same is uploaded on the website of the Company at https://www.adityabirlacapital.com/investor-relations/policies-and-codes.

Other Committees

Details of all the other Committees of the Board are provided in the Corporate Governance Report, which forms part of this Annual Report.

EXTRACT OF ANNUAL RETURN

Pursuant to the provisions of Section 134(3)(a) of the Act as amended by the Companies (Amendment) Act, 2017, the extract of annual return for the financial year ended 31st March,

2019 in Form MGT-9 under the provisions of 92(3) of the Act has been attached as Annexure VI to the Board's Report. The Annual Return for financial year 2017-18 is also available on the Company's website at https://www.adityabirlacapital.com/ investor-relations/financial-reports.

AUDITORS

STATUTORY AUDITORS, THEIR REPORT AND NOTES TO FINANCIAL STATEMENTS

Pursuant to the provisions of Section 139 of the Act and the Companies (Audit and Auditors) Rules, 2014, as amended, M/s. Deloitte Haskins & Sells, LLP, Chartered Accountants (Firm Registration No.:117366W/W-100018, LLP Identification No.: AAB-8737) had been appointed as Statutory Auditors of the Company for a term of 5 (Five) years i.e. from the Tenth Annual General Meeting till the conclusion of Fifteenth Annual General Meeting of the Company.

The requirement to place the matter relating to appointment of the Auditors for ratification by the Members at every Annual General Meeting is done away with vide notification dated 7th May, 2018 issued by the Ministry of Corporate Affairs. Accordingly, no resolution is proposed for ratification of appointment of the Auditors, who were appointed in the Tenth Annual General Meeting of the Company. Accordingly, M/s. Deloitte Haskins & Sells, LLP, Chartered Accountants shall continue to be the Statutory Auditors for the financial year 2019-20.

The Company has received a letter from M/s. Deloitte Haskins & Sells LLP, confirming that they are not disqualified from continuing to act as Statutory Auditors of the Company.

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

The Auditor's Report does not contain any qualifications, reservations, adverse remarks or disclaimer. The Statutory Auditors have not reported any incident of fraud to the Audit Committee or the Board of Directors under Section 143(12) of the Act during the financial year under review.

SECRETARIAL AUDITORS

Pursuant to the requirements of Section 204(1) of the Act read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed M/s. BNP & Associates, Company Secretaries to conduct the Secretarial Audit for the financial year under review. The Secretarial Audit Report in Form MR-3 for the financial year under review, as received from M/s. BNP & Associates, Company Secretaries, is attached as Annexure VII to the Board's Report.

Pursuant to Regulation 34(3) and Schedule V of the SEBI Listing Regulations, the Annual Secretarial Compliance Report for the financial year under review is attached as Annexure VIII to the Board's Report.

The Secretarial Audit Report and the Annual Secretarial Compliance Report do not contain any qualifications, reservations or adverse remarks.

COST RECORDS AND COST AUDITORS

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

CORPORATE SOCIAL RESPONSIBILITY

In accordance with Section 135 of the Act, your Company has a Corporate Social Responsibility (“CSR”) Committee. The CSR Committee has formulated and recommended to the Board, a Corporate Social Responsibility Policy (“CSR Policy”) indicating the activities to be undertaken by the Company, which has been approved by the Board.

The CSR Policy is available on the Company's website at https:// www.adityabirlacapital.com/investor-relations/policies-and-codes.

In view of losses, your Company was not required to spend any amount towards CSR during the financial year under review. Accordingly, no CSR activity was undertaken by the Company.

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

WHISTLE BLOWER POLICY / VIGIL MECHANISM

In compliance with the provisions of Section 177(9) of the Act read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 and Regulation 22 of the SEBI Listing Regulations, the Company has formulated a vigil mechanism for Directors and Employees to report concerns, details of which are covered in the Corporate Governance Report, which forms part of this Annual Report.

The Company has revised the Whistle-Blower policy to insert “reporting of incidents of leak or suspected leak of Unpublished Price Sensitive Information (UPSI)” in terms of Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015, as amended from time to time and the revised policy was approved by the Audit Committee and the Board. The said policy is available on the Company's website at https://www.adityabirlacapital.com/investor-relations/policies-and-codes.

POLICY ON PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

Your Company has in place an appropriate policy which is in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013. An Internal Complaints Committee has been set up to redress complaints, if any, received regarding sexual harassment of women. All employees (permanent, contractual, temporary, trainees) are covered under this policy. We further state that during the financial year under review, there were no complaints received/cases filed under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

HUMAN RESOURCES

Your Company, in the last financial year continued its journey of developing the human resources of the firm towards the goal of increasing employee productivity and engagement with the firm. Over the last one year, the Human Resource team has contributed significantly in reducing attrition and improving productivity and supporting the business in identifying and grooming leaders across all business units of the Company. With an unswerving focus on nurturing and retaining talent, your Company provide avenues for learning and development through functional, behavioral and leadership training programmes as well as on the job training to enable the employees to constantly upgrade their skills. The Human Resources function over the last one year, has travelled a significant distance in digitalization of all employee facing process and now all human resource process are available to employees on their mobile phones. This has ensured significant ease of access for the individual employee as well as helped the Human Resource function to deliver its services to the employees in a much faster and efficient manner.

SECRETARIAL STANDARDS OF ICSI

Your Directors confirm that the applicable Secretarial Standards issued by the Institute of Company Secretaries of India, have been complied with.

OTHER DISCLOSURES

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

1. Your Company has not issued shares (including sweat equity shares) to the employees of the Company under any scheme save and except under Employee Stock Option Schemes referred to in this Report.

2. Your Company has not made any Scheme for provision of money for the purchase of its own shares by employees or by trustees for the benefit of employees.

3. No significant or material orders were passed by the Regulators or Hon'ble Courts or Tribunals which impact the going concern status and Company's operations in future.

4. No public issue, rights issue, bonus issue, preferential issue, shares issued with differential voting rights, etc. were made by the Company.

ACKNOWLEDGEMENTS

Your Directors take this opportunity to express their appreciation for the support and co-operation extended by the Members and other business associates. Your Directors gratefully acknowledge the ongoing co-operation and support provided by all Regulatory bodies.

Your Directors place on record their appreciation for the exemplary contribution made by the employees of the Company at all levels. Their dedicated efforts and enthusiasm have been pivotal to your Company's growth.

For and on behalf of the Board of Directors

Aditya Birla Capital Limited

(Formerly known as Aditya Birla Financial Services Limited)

Kumar Mangalam Birla

Date: 4th May, 2019 Chairman

Place: Mumbai DIN: 00012813

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