HSBC Asset Management (India) Private Limited Annual ......HSBC Asset Management (India) Private...

Filename: Annual Report Cover_2016-17.ai Size (cm): 13 (W) x 20.5 (H) Job No.: 17-0972

HSBC Asset Management (India) Private LimitedAnnual Report 2016 - 2017

1

DIRECTORS’ REPORT FOR THE YEAR ENDED MARCH 31, 2017

The Shareholders HSBC Asset Management (India) Private Limited

The Directors of HSBC Asset Management (India) Private Limited (the Company/AMIN) have pleasure in submitting their report along with the audited financials for the Financial Year ended March 31, 2017.

1. FINANCIAL RESULTS

The performance of the Company during the financial year 2016-17 is summarized below: (Rupees in Million)

Particulars For the year ended 31.03.2017

For the year ended 31.03.2016

Total Income 901.413 935.024

Total Expenses 742.641 690.601

Profit / (Loss) before Tax and exceptional Item

158.772 244.423

Exceptional Items - 45.000

Profit / (Loss) before Tax 158.772 289.423

Provision for Tax (including Current, Deferred and Fringe Benefit Tax)

1.445 (28.468)

Profit/(Loss) After Tax 160.217 260.955

During the year under review, the Company made a net profit of Rs. 160.217 million as against net profit of Rs. 260.955 million during the previous year.

2. APPROPRIATIONS The Company does not propose to transfer any amount to the General Reserves. An amount of Rs. 160.217 million is proposed to be retained in the Statement of Profit and Loss.

3. DIVIDEND Your directors do not recommend any dividend for the year ended March 31, 2017.

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4. OPERATIONS

a) Mutual Fund

During the year, the following schemes were launched /rolled over / matured by HSBC Mutual Fund

Details of schemes launched

Scheme Name Date of Launch

HSBC Fixed Term Series 128 April 20, 2017

HSBC Fixed Term Series 129 June 7, 2017

Details of schemes rolled-over

Scheme Name Date of roll-over

HSBC Fixed Term Series 94 October 26, 2016 HSBC Fixed Term Series 96

Details of schemes matured

Scheme Name Date of maturity

HSBC Fixed term Series 95 September 27, 2016

HSBC Fixed term Series 91 September 29, 2016




As on March 31, 2017, the Mutual Fund had asset under management of INR 9,281.15 crores under schemes of HSBC Mutual Fund and INR 20,248.15 crores under Mutual Fund advisory mandate.

b) Portfolio Management Services (PMS)

The Company launched its Portfolio Management Services (PMS) offering on 27 March 2006. PMS offers segregated mandate and advisory solutions to a wide range of institutions including institutional investors (foreign and Indian), insurance companies, pension funds, large individual investors, welfare trusts, fund of funds among others. We undertake discretionary segregated mandates and advisory mandates for the above class of investors. As on March 31, 2017, the PMS business had Assets under Management of INR 122,288.76 crores under discretionary mandate and INR 2,706.77 Crores under advisory mandate.

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5. INVESTOR SERVICES

The number of official points of acceptance of transactions is 197 locations. In addition to the offices of the Registrar & Transfer agents, the AMC has Investor Service Centres in 8 locations at its own offices - namely Mumbai, New Delhi, Kolkata, Bangalore, Pune, Ahmedabad, Hyderabad and Chennai. With a view to enhance customer convenience, the AMC has the facility of priority based servicing to key distributors through the enhancement of the Interactive Voice Reponses. AMC has a single Toll Free number which can be dialled from anywhere in India. The call center service is being managed by the Registrar and Transfer Agents.

On the distribution front, the number of empanelled distributors was 370 as on March 31, 2017. During the year, the AMC initiated tie-ups for online distribution of the Mutual Fund’s schemes with several channel partners taking the total number of such tie-ups to 40.

6. EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT 9 is annexed below as Annexure A.

7. BOARD MEETINGS

During the financial year 2016-17, five meetings of the Board of Directors of the Company were held on the following dates:

Date of Board Meeting Directors present

May 18, 2016 Ms. Kishori Udeshi Mr. S. P. Mustafa Mr. Ravi Menon Mr. Puneet Chaddha

July 14, 2016 Ms. Kishori Udeshi Mr. Dinesh Mittal Mr. S. P. Mustafa Mr. Ravi Menon

August 29, 2016 Ms. Kishori Udeshi Mr. Dinesh Mittal Mr. S. P. Mustafa Mr. Ravi Menon

October 27, 2016 Ms. Kishori Udeshi Mr. Dinesh Mittal Mr. S. P. Mustafa Mr. Ravi Menon

February 1, 2017 Ms. Kishori Udeshi Mr. S. P. Mustafa Mr. Ravi Menon

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Mr. Puneet Chaddha resigned from the directorship of the Company with effect from May 24, 2016.

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

The CSR Committee comprises Ms. Kishori Udeshi. Mr. S.P. Mustafa and Mr. Ravi Menon as its members as on 31 March 2017. During the financial year 2016-17, one meeting of the CSR Committee of the Company was held on October 27, 2016 and it was attended by Ms. Kishori Udeshi and Mr. Ravi Menon.

During the financial year 2016-17, your Company was eligible to spend 2% of net profit in CSR activities and had spent Rs 22,00,000/- (based on profits of previous three years ending on FY 2015-16) towards CSR activities in order to comply with section 135 of the Companies Act, 2013. The said amount was utilized for providing educational support and materials for SSC night school students through Masoom’s night school project.

The Annual Report on CSR activities, as prescribed under Section 135 of the Act read with Rule 9 of the Companies (Accounts) Rules, 2014 and Rule 9 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 is appended to this Report as Annexure B.

8. DIRECTORS' RESPONSIBILITY STATEMENT

The Directors of your Company confirm:

i. that the applicable accounting standards have been followed in the preparation of the annual accounts and that there are no material departures;

ii. that such accounting policies have been selected and applied consistently and judgments and estimates made are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at March 31, 2017 and of the profit of the Company for the year ended on that date;

iii. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 to safeguard the assets of the Company and to prevent and detect fraud and other irregularities;

iv. that the annual accounts have been prepared on a ‘going concern’ basis; and v. that proper systems have been devised to ensure compliance with the provisions of all

applicable laws and that such systems are adequate and operating effectively

9. LOANS OR GUARANTEES

The Company has not provided any loans or guarantees under the provisions of section 186 of the Companies Act, 2013.

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10. CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All related party transactions that were entered during the financial year were on arm’s length basis and were in ordinary course of business. Accordingly, the disclosure of related party transactions as required pursuant to provisions of Section 134(3)(h) of Companies Act 2013 in form AOC 2, prescribed in Rule 8(2) of the Companies (Accounts) Rules, 2014 is not applicable.

11. CONSERVATION OF ENERGY TECHNOLOGY ABORPTION, EXPORT & FOREIGN EARNING AND OUTGO

As the Company is the Asset Management Company to HSBC Mutual Fund and provides portfolio management services, no reporting in respect of conservation of energy and technology absorption is required.

During the year, the Company incurred expenditure of 8.82 crores [Previous year 5.87 crores] in foreign exchange and earned 33.92 crores [Previous year 36.77 crores] in foreign exchange.

12. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMAN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company is committed to creating and maintaining an atmosphere in which employees can work together, without fear of sexual harassment, exploitation and intimidation. Accordingly, your Company has in place a Policy for Prohibition, Prevention, & Redressal of Sexual Harassment of Women at the Workplace and an Internal Complaints Committee is set up to redress complaints received regarding sexual harassment. During the year under review, no complaints were received.

13. RISK MANAGEMENT FRAMEWORK

HSBC Enterprise Risk Management Framework has five main components: Culture and Values, Risk Governance, Roles and Responsibilities, Processes and Tools, and Internal Controls. Our values of being open, connected and dependable are the foundations of our risk culture and help us make the right decisions and take the appropriate risks.

The Company has adopted a risk management and internal control structure, referred to as the Three Lines of Defence, to ensure it achieves its commercial aims while meeting regulatory and legal requirements and its responsibilities to shareholders, customers and staff.

1st Line: Comprises predominantly management of Businesses who are accountable and responsible for their day to day activities and processes, their management of risks arising and the controls to mitigate those risks.

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2nd Line: Comprises predominantly the Governance Functions (e.g., Risk Teams, Regulatory Compliance and Financial Crime Compliance teams etc.) whose role is to ensure that the Group meets its risk management and internal control responsibilities in relation to the risks they are responsible for overseeing 3rd Line: is Global Internal Audit. Global Internal Audit provides independent assurance to the Group over the design and operation of HSBC's risk management, governance and internal control processes.

Risk management is an integral part of the way we do business. We have detailed risk management procedures to comply with local regulatory guidelines and internal group policies. The group has issued internal guidelines named as “Functional Instruction Manual” which are required to be complied comprehensively. These are global best practice guidelines for each functional/business area. These guidelines have been prepared based on years of experience and are in a number of cases more stringent than the local regulatory requirements.

An experienced Risk Management team monitors Investment, Liquidity and Counterparty Limits and any exceptions are deliberated in Risk Management Meeting (RMM) meetings that are held every Month. The scope and remit of the AMIN RMM extends to the entire business of AMIN and HSBC Mutual Fund including managed account portfolios and sub-advised accounts. The reporting line of the AMIN RMM is to the AMIN Board and MF Trustee Board.

The AMIN RMM is responsible for setting, within the context of AMG and Group direction, local regulations, the AMIN risk management strategy and appetite, policies and control standards for AMIN and to monitor their implementation. In this regard, the AMIN RMM will review the material risks affecting the AMIN business and is responsible for the oversight of the risk and internal control environment in AMIN.

Risk team also actively participates on various other Governance Forums like Investment Management Committee, Valuation Committee, Local Product Committee etc.

14. DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. Puneet Chaddha resigned from the directorship of the Company with effect from May 24, 2016.

As required by the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, the Board of Directors of the Company comprises 50% directors who are not associate of or associated in any manner with, the Sponsor of HSBC Mutual Fund (HSBC Securities and Capital Markets (India) Private Limited) or any of its subsidiaries or the Trustees of HSBC Mutual Fund.

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15. PARTICULARS OF EMPLOYEES

The information as required as per Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed herewith. 16. DEPOSITS

The Company has not accepted any deposits from the public or employees during the year under review.

17. SIGNIFICANT AND MATERIAL ORDERS

During the period, there were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company’s operations in future.

18. AUDITORS

M/s. Price Waterhouse LLP, Chartered Accountants (Firm Registration No. F012754N/N500016), Mumbai, had been appointed as Auditors of the Company at the Annual General Meeting (AGM) held on September 16, 2015, for a period of five years, subject to ratification by the Members at each AGM. The Auditors have confirmed that their appointment is in accordance with the Section 139 of the Companies Act, 2013 and the Rules made thereunder and that they are not disqualified in terms of section 141 of the Companies Act, 2013. The Board recommends ratification of the approval to appoint M/s. Price Waterhouse LLP, Chartered Accountants, as Auditors of the Company for financial year 2017-18 to the Members at the ensuing AGM.

19. CORPORATE PHILOSOPHY AND COMPLIANCE The Company firmly believes that strong corporate governance and compliance practices are of paramount importance to maintain the trust and confidence of its stakeholders and the reputation of the Company. To ensure transparency, fairness and objectivity in the organisation’s functioning and unquestioned integrity of all personnel involved, the Company has proactively adopted best practices with regard to corporate governance and compliance.

20. ADEQUACY OF INTERNAL FINANCIAL CONTROLS

The Board has adopted the policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of the reliable financial disclosures. This framework provides adequate financial controls with reference to financial statements commensurate with the business and operations of the Company. During the

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year, there was no adverse observations received from Statutory Auditors of the Company for inadequacy of such controls.

21. COMMENTS ON AUDITOR’S REPORT

There are no qualifications, reservations or adverse remarks made by M/s. Price Waterhouse LLP, Chartered Accountants in their report.

22. ACKNOWLEDGEMENTS The Company maintained cordial relationships with Regulatory Authorities, Financial Institutions, Banks and investors during the year under review. The Directors are grateful for the support extended by them and look forward to receiving their continued support and encouragement.

The Directors wish to place on record their appreciation to the employees of the Company for their dedication and commitment.

By authority of the Board Sd/- Sd/- Kishori Udeshi Ravi Menon Chairperson Director & Chief Executive Officer Place: Mumbai

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Annexure A EXTRACT OF ANNUAL RETURN

as on the financial year ended 31.03.2017 [Pursuant to Section 92(3) of the Companies Act, 2013, and Rule 12(1) of the

Companies (Management and Administration) Rules, 2014] FORM NO. MGT – 9

I. REGISTRATION AND OTHER DETAILS

i. CIN U74140MH2001PTC134220

ii. Registration Date December 12, 2001

iii. Name of the Company

HSBC Asset Management (India) Private Limited

iv. Category / Sub-Category of the Company

Company having Share Capital

v. Address of the Registered Office and contact details

3rd Floor, Merchantile Bank Chamber, 16, Veer Nariman Road, Fort, Mumbai- 400001 Tel: +912266145000

vi. Whether listed company

No

vii. Name, address and contact details of Registrar and Transfer Agent, if any

TSR Darashaw Limited Address: 6-10 Haji Moosa Patrawala Industrial Estate, 20 Dr. E Moses Road, Mahalaxmi. Mumbai -400011

II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY

All the Business Activities contributing 10% or more of the total turnover of the Company shall be stated:

Sr. No.

Name and Description of main Products / Services

NIC Code of the Product / Service

% to total turnover of the Company

1. Investment Management Services

66301 57.66%

2. Advisory/Sub Advisory 66309 37.63%

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III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES

Sr. No.

Name and address of the Company

CIN / GLN Holding / Subsidiary / Associate

% of shares held

Applicable Section

1. HSBC Securities and Capital Markets (India) Private Limited - 52/60, Mahatma Gandhi Road, Fort, Mumbai, Maharashtra, 400001

U67120MH1994PTC081575

Holding 100.00 2(46)

IV. SHARE HOLDING PATTERN (Equity Share Capital Breakup as percentage of

Total Equity)

(i) Category-wise Share Holding

Category of Shareholders

No. of Shares held at the beginning of the year

No. of Shares held at the end of the year

% Change during the year

Demat

Physical

Total

% of Total Shares

Demat

Physical

Total

% of Total Shares

A. Promoters

1) Indian

a) Individual / HUF

- - - - - - - - -

b) Central Govt. - - - - - - - - -

c) State Govt.(s) - - - - - - - - -

d) Bodies Corporate

6,15,909,06

2 6,15,909,08

100.00

6,15,909,06

2 6,15,909,08

100.00

-

11

e) Banks / FI - - - - - - - - -

f) Any Other…. - - - - - - - - -

Sub-Total (A)(1): 6,15,909,06

2 6,15,909,08

100.00

6,15,909,06

2 6,15,909,08

100.00

-

2) Foreign

a) NRIs – Individuals

- - - - - - - - -

b) Other – Individuals

- - - - - - - - -

c) Bodies Corporate

- - - - - - - - -

d) Banks / FI - - - - - - - - -

e) Any Other…. - - - - - - - - -

Sub-Total (A)(2): - - - - - - - - -

Total Shareholding of Promoters (A) = (A)(1)+(A)(2)

6,15,909,06

2 6,15,909,08

100.00

6,15,909,06

2 6,15,909,08

100.00

-

B. Public Shareholding

1) Institutions

a) Mutual Funds / UTI

- - - - - - - - -

b) Banks / FI - - - - - - - - -

c) Central Govt. - - - - - - - - -

d) State Govt.(s) - - - - - - - - -

e) Venture Capital Funds

- - - - - - - - -

f) Insurance Companies

- - - - - - - - -

g) FIIs - - - - - - - - -

h) Foreign Venture Capital Funds

- - - - - - - - -

i) Others (specify)

- - - - - - - - -

Sub-Total (B)(1): - - - - - - - - -

2) Non-Institutions

a) Bodies Corporate

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(i) Indian - - - - - - - - -

(ii) Overseas - - - - - - - - -

b) Individuals

(i) Individual Shareholders holding nominal share capital upto Rs. 1 lakh

- - - - - - - - -

(ii) Individual Shareholders holding nominal share capital in excess of Rs. 1 lakh

- - - - - - - - -

c) Others (specify)

i. Shares held by Pakistani citizens vested with the Custodian of Enemy Property

- - - - - - - - -

ii. Other Foreign Nationals

- - - - - - - - -

iii. Foreign Bodies

- - - - - - - - -

iv. NRI / OCBs - - - - - - - - -

v. Clearing Members / Clearing House

- - - - - - - - -

vi. Trusts - - - - - - - - -

vii. Limited Liability Partnership

- - - - - - - - -

viii. Foreign Portfolio Investor (Corporate)

- - - - - - - - -

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ix. Qualified Foreign Investor

- - - - - - - - -

Sub-Total (B)(2): - - - - - - - - -

Total Public Shareholding (B)=(B)(1)+(B)(2)

- - - - - - - - -

C. Shares held by

Custodian for GDRs & ADRs

- - - - - - - - -

Grand Total (A+B+C)

6,15,909,06

2 6,15,909,08

100.00

6,15,909,06

2 6,15,909,08

100.00

-

(ii) Shareholding of Promoters

Shareholders Name

Shareholding at the beginning of the year

Shareholding at the end of the year

% Change during the year

No. of Shares

% of total shares of the Company

% of Shares Pledged / encumbered to total shares

No. of Shares


% of Shares Pledged / encumbered to total shares

HSBC Securities and Capital Markets (India) Private Limited

6,15,909,08 100.00 Nil 6,15,909,08 100.00 Nil -

(iii) Change in Promoters’ Shareholding (Please specify, if there is no change)


Cumulative Shareholding during the year

No. of Shares

% of total shares

No. of Shares

% of total shares

14

of the Company

of the Company

At the beginning of the year No change during the year

Date wise Increase/Decrease in Promoters Shareholding during the year specifying the reasons for increase/decrease (e.g. allotment/transfer/bonus/sweat equity etc)

No change during the year

At the end of the year No change during the year

(iv) Shareholding Pattern of Top Ten Shareholders (Other than Directors,

Promoters and Holders of GDRs and ADRs)

For Each of the Top 10 Shareholders


Shareholding at the end of the year

No. of Shares


No. of Shares


NIL

(v) Shareholding of Directors and Key Managerial Personnel – Nil

V. INDEBTEDNESS

Indebtedness of the Company including interest outstanding/accrued but not due for payment

Secured Loans excluding deposits

Unsecured Loans

Deposits Total Indebtedness

Indebtedness at the beginning of the financial year

i. Principal Amount

5,813,258 - - 5,813,258

ii. Interest due but not paid

- - - -

iii. Interest accrued but not due

- - - -

Total (i+ii+iii) 5,813,258 - - 5,813,258

15

Secured Loans excluding deposits

Unsecured Loans

Deposits Total Indebtedness

Change in Indebtedness during the financial year

Addition 1,913,454 - - 1,913,454

Reduction 4,189,545 - - 4,189,545

Net Change 2,276,091 - - 2,276,091

Indebtedness at the end of the financial year

i. Principal Amount

3,537,167 - - 3,537,167

ii. Interest due but not paid

- - - -

iii. Interest accrued but not due

- - - -

Total (i+ii+iii) 3,537,167 3,537,167

Future interest payable over the lease period is not included in above presentation. VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

A. Remuneration to Managing Director, Whole-time Directors and/or Manager:

Refer Annexure C

B. Remuneration to other Directors: Not Applicable

Details of sitting fees paid to Directors are provided below Sr. No.

Particulars

Name of Director Total Amount Dinesh

Kumar Mittal S. P. Mustafa

Kishori Udeshi

1 Fee for attending Board/ Committee Meetings

90,000 150,000 170,000 410,000

2 Commission - - -

3 Others, please Specify - - -

Total 90,000 150,000 170,000 410,000

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C. REMUNERATION TO KEY MANAGERIAL PERSONNEL OTHER THAN MD/MANAGER/WTD: Not Applicable

VII. PENALTIES / PUNISHMENT / COMPOUNDING OF OFFENCES:

Type Section of the

Companies Act

Brief Description

Details of Penalty /

Punishment / Compounding

fees Imposed

Authority [RD / NCLT / COURT]

Appeal made, if

any (give

details)

A. COMPANY

Penalty Nil

Punishment

Compounding

B. DIRECTORS

Penalty Nil

Punishment

Compounding

C. OTHER OFFICERS IN DEFAULT

Penalty Nil

Punishment

Compounding

Sd/- Sd/- Kishori Udeshi Ravi Menon Chairperson Director & Chief Executive Officer Place: Mumbai


Balance Sheet (All amounts in thousands of Indian Rupees unless otherwise stated)

Note March 31, 2017 March 31, 2016

EQUITY AND LIABILITIES

Shareholders' funds

Share capital 3 615,909 615,909

Reserves and surplus 4 531,157 370,940

Non-current liabilities

Long-term borrowings 5 2,109 3,564

Deferred tax liabilities (net) 6 - -

Long-term provisions 7 20,789 20,497

Current liabilities

Trade payables 8

(a) Total outstanding dues of micro enterprises and small enterprises and - -

- -

(ii) Others 75,930 64,286 Other current liabilities 9 77,460 91,640

Short-term provisions 10 10,045 10,686

TOTAL 1,333,399 1,177,522

ASSETS

Non-current assets

Fixed assets

Property, Plant and Equipment 11 21,939 31,672

Intangible assets 3,847 4,344

Non-current investments 12 103,152 103,152

Long-term loans and advances 13 404,412 375,577

Current assets

Current investments 14 491,175 456,834

Trade receivables 15 250,433 135,880

Cash and bank balances 16 9,189 20,202

Short-term loans and advances 17 49,252 49,861

TOTAL 1,333,399 1,177,522

The accompanying notes are an integral part of the financial statements. 0

This is the Balance Sheet referred to in our report of even date.

For Price Waterhouse Chartered Accountants LLP For and on behalf of the Board of Directors of

Firm's Registration No: 012754N/N500016 HSBC Asset Management (India) Private Limited

sd/- sd/- sd/-

Vivek Prasad Kishori J Udeshi Ravi Menon

Partner Chairperson Director &

Membership No: 104941 DIN No: 01344073 Chief Executive Officer

DIN No: 00016302

sd/-

Sumesh Kumar

Company Secretary

CS No: 17520

Place : Mumbai Place : Mumbai

Date : August 31, 2017 Date : August 31, 2017

As at

(b) Total outstanding dues of creditors other than micro enterprises and small

enterprises

(i) Acceptances


Statement of Profit and Loss(All amounts in thousands of Indian Rupees unless otherwise stated)

Note March 31, 2017 March 31, 2016

REVENUE

Revenue from operations 18 869,357 876,756

Other income 19 32,056 58,268

Total revenue 901,413 935,024

EXPENSES

Employee benefits expense 20 401,270 413,717

Finance costs 21 782 1,088

Depreciation and amortisation 11 17,817 16,839

Other expenses 22 322,772 258,957

Total expenses 742,641 690,601

Profit before exceptional items and tax 158,772 244,423

Exceptional items 23 - 45,000

Profit before tax 158,772 289,423

Tax expense:

Current tax (33,884) (61,768)

Less : MAT Credit Entitlement (Current Year) 23,524 52,731

Less : MAT Credit Entitlement (Prior Year) 11,805

Net Current tax 1,445 (9,037)

Short provision for earlier years - (19,431)

Profit for the year 160,217 260,955

Earnings per equity share [Nominal value per share Rs 10 (previous year Rs.10)]

Basic and diluted 27 2.60 4.24

The accompanying notes are an integral part of the financial statements.

This is the Statement of Profit and Loss referred to in our report of even date.



sd/- sd/- sd/-




DIN No: 00016302

sd/-

Sumesh Kumar

Company Secretary

CS No: 17520



For the year ended


Cash Flow Statement (All amounts in thousands of Indian Rupees unless otherwise stated)

March 31, 2017 March 31, 2016

A Cash flow from operating activities

Profit before tax 158,772 289,423

Adjustments for

Depreciation and amortisation 17,817 16,839

Finance costs 782 1,088

Profit on sale of fixed assets (464) (237)

Unrealised foreign exchange (gain)/ loss 6,787 1,330

Gain from transfer of Non-current Investments - (7)

Gain from redemption of Current Investments (29,341) (26,105)

Operating profit before working capital changes 154,353 282,331

Adjustments for :

Increase in Long term provisions 292 1,417

Increase / (Decrease) in Trade payable 11,644 (46,254)

(Decrease) in Other current liabilities (13,359) (954)

(Decrease) / Increase in Short term provisions (641) 426

Decrease in Long-term loans and advances 1,156 2,429

(Increase) / Decrease in Trade receivables (121,338) 3,358

Decrease / (Increase) in Short-term loans and advances 609 (430)

Cash generated from operations 32,716 242,323

Taxes paid (Net off refund) (28,547) (17,945)

Net cash generated from operating activities ( A ) 4,169 224,378

B Cash flow from investing activities

Purchase of fixed assets (8,943) (30,104)

Proceeds from sale of fixed assets 1,820 1,169

Purchase of Non-current investments - (100,947)

Proceeds from redemption of Non-current Investments - 239

Purchase of Current investments (605,500) (877,000)

Proceeds from redemption of Current investments 600,500 750,400

Net cash (used) in investing activities ( B ) (12,123) (256,243)

C Cash flow from financing activities

Principal payment under finance leases (4,190) (4,136)

Proceeds from finance leases 1,913 1,597

Finance cost paid (782) (1,088)

Net cash (used) in financing activities ( C ) (3,059) (3,627)

Net (Decrease) in cash and cash equivalents (A) + (B) + (C) (11,013) (35,492)

Cash and cash equivalents at the beginning of the year 20,202 55,694

Cash and cash equivalents at the end of the year 9,189 20,202

For the year ended


Cash Flow Statement (All amounts in thousands of Indian Rupees unless otherwise stated)

Notes to Cash Flow Statement :

March 31, 2017 March 31, 2016

1. Cash and cash equivalents includes the following:

Cash on hand 10 12

Balances with scheduled banks

In current accounts 9,179 20,190

9,189 20,202

3. Figures in bracket indicate cash outflow.

This is the Cash Flow Statement referred to in our report of even date.



sd/- sd/- sd/-




DIN No: 00016302

sd/-

Sumesh Kumar

Company Secretary

CS No: 17520



2. The above Cash Flow Statement has been prepared under the "Indirect Method" as set out in Accounting Standard-3 "Cash Flow Statements"

specified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014.

For the year ended


Notes to the financial statements for the year ended March 31, 2017

(All amounts in thousands of Indian Rupees unless otherwise stated)

1. Background

2. Summary of significant accounting policies

2.1 Basis of preparation

2.2 Use of estimates

2.3 Fixed assets and depreciation

Property, Plant and Equipment :

Intangible assets:

Depreciation and amortisation:

Gains or losses arising from the retirement or disposal of an intangible asset are determined as the difference between the net disposal proceeds and the carrying

amount of the asset and recognised as income or expense in the Statement of Profit and Loss.

HSBC Asset Management (India) Private Limited ("the Company") was incorporated on December 12, 2001. The Company is a wholly owned subsidiary of

HSBC Securities and Capital Markets (India) Private Limited. Its principal activity is to act as an Investment Manager to HSBC Mutual Fund ("the Fund"). The

Company manages the Mutual Fund schemes launched by HSBC Mutual Fund and provides various administrative services to the Fund as laid down in the

Investment Management Agreement dated February 7, 2002. The Company is also a SEBI registered Portfolio Manager. The Company has received a certificate

from SEBI to act as Portfolio Manager. The said certificate is valid up to September 15, 2017 and to be renewed thereafter. It provides discretionary and

advisory Portfolio Management Services (PMS) to its clients. The Company also provides sub-advisory non binding services to its group entities.

These financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on

accrual basis pursuant to section 133 of the Companies Act, 2013 read with Rule 7 (1) of the Companies (Accounts) Rules, 2014, till the standards of accounting

or any addendum thereto are prescribed by central government in consultation and recomendation of the National Financial Reporting Authority, the Existing

Accounting Standards notified under the Companies Act, 1956 shall contine to apply. Consequently these financial statments have been prepared to comply in all

material aspects with the Accounting Standards notified under section 211 (3C) of the companies act, 1956 [Companies (Accounting Standards), Rules, 2006 as

amended] and other relevant provisions of the Companies Act, 2013.

All assets and liabilities have been classified as current or non-current as per the Company’s normal operating cycle and other criteria set out in the Schedule III

to the Companies Act, 2013. Based on the nature of services and the time between their realisation in cash and cash equivalents, the Company has ascertained its

operating cycle as 12 months for the purpose of current and non-current classification of assets and liabilities.

The preparation of financial statements in conformity with the Generally Accepted Accounting Principles requires management to make certain estimates and

assumptions that affect reported amount of assets, liabilities, revenue and expenses (including disclosure of contingent liabilities) as on the date of the financial

statements and the reported income and expenses during the reporting period. The estimates and assumptions used in the accompanying financial statements are

based on management’s evaluation of the relevant facts and circumstances as of the date of the financial statements. Actual results may differ from those

estimates. Any revisions to accounting estimates are recognised prospectively in current and future periods.

Property, Plant and Equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses.Cost comprises of the purchase price

including import duties and non-refundable taxes, and directly attributable expenses incurred to bring the asset to the location and condition necessary for it to

be capable of being operated in the manner intended by management. Subsequent costs related to an item of Property, Plant and Equipment are recognised in the

carrying amount of the item if the recognition criteria are met.

An item of Property, Plant and Equipment is derecognised on disposal or when no future economic benefits are expected from its use or disposal. The gain or

loss arising on derecognition is recognised in the Statement of Profit and Loss.

Items of Property, Plant and Equipment that have been retired from active use and are held for disposal are stated at the lower of their net carrying amount and

net realisable value and are shown separately in the financial statements under the head ‘Other current assets’. Any write-down in this regard is recognised

immediately in the Statement of Profit and Loss.

Intangible assets are stated at acquisition cost, net of accumulated amortization and accumulated impairment losses, if any. Intangible assets are amortised on a

straight line basis over their estimated useful lives. A rebuttable presumption that the useful life of an intangible asset will not exceed ten years from the date

when the asset is available for use is considered by the management. The amortisation period and the amortisation method are reviewed at least at each financial

year end. If the expected useful life of the asset is significantly different from previous estimates, the amortisation period is changed accordingly.

Depreciation has been provided on a straight line basis from the date when the asset is ready for use. The rates of depreciation prescribed in Schedule II to the

Companies Act, 2013 are considered as the minimum rates. If the management’s estimate of the asset or of the remaining useful life of fixed assets on

subsequent review is shorter than envisaged in the aforesaid schedule, depreciation is provided at a higher rate based on the management’s estimate of useful

life/ remaining useful life.

Assets, each costing Rs.5,000 or less are depreciated at 100% in the year of capitalisation.




Usefule life of the Fixed Assets is estimated as under :

2.4 Impairment of assets

2.5 Revenue Recognition

2.6

2.7 Investments

2.8 Foreign currency transactions

Initial Recognition

On initial recognition, all foreign currency transactions are recorded by applying to the foreign currency amount the exchange rate between the reporting

currency and the foreign currency at the date of the transaction.

Exchange differences on restatement of all other monetary items are recognised in the Statement of Profit and Loss.

* For these classes of assets, based on internal assessment and technical evaluation, the management believes that the useful lives as given above best represents

the period over which management expects to use these assets. Hence the useful lives for these assets are different from the useful lives as prescribed under part

C of Schedule II of the Companies Act 2013.

Category of assets Useful lives of fixed assets

Office equipment 60 Months

Computers 36 Months

Servers 36 Months*

Computer Softwares 36 Months

Furniture and Fixtures 60 Months*

Motor Cars Depreciated over lease tenure

Assessment is done at each balance sheet date as to whether there is any indication that an asset (tangible and intangible) may be impaired. If any such indication

exists, an estimate of the recoverable amount of the asset is made. Recoverable amount is higher of an asset’s net selling price and its value in use. Value in use

is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. For the

purpose of assessing impairment, the recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely

independent of those from other assets or groups of assets. An asset whose carrying value exceeds its recoverable amount is considered impaired and is written

down to its recoverable amount. Assessment is also done at each balance sheet date as to whether there is any indication that an impairment loss recognised for

an asset in prior accounting periods may no longer exist or may have decreased. An impairment loss is reversed to the extent that the asset’s carrying amount

does not exceed the carrying amount that would have been determined if no impairment loss had previously been recognised.

i) Investment management fees (excluding service tax) are recognised monthly on an accrual basis as per proportionate completion method, in accordance with

the terms of contract between the Company and the Board of Trustees of HSBC Mutual Fund based on daily net asset value (excluding investments made by the

Company in the schemes) in accordance with SEBI (Mutual Fund) regulations, 1996 as amended.

ii) Advisory fees are recognised on an accrual basis as per proportionate completion method in accordance with the respective terms of the contract with counter

parties.

iii) Portfolio management fees (excluding service tax) are recognised on an accrual basis as per proportionate completion method, based on fee structures on a

monthly basis.

Other Income

i) Interest income from bank deposits is accounted for on time proportion basis.

ii) Profit or loss on sale of investments is arrived at as excess of redemption value over weighted average cost of Investments.

iii) Dividend income is recognised when the right to receive the same is established.

Investments that are readily realisable and are intended to be held for not more than one year from the date on which such investments are made, are classified as

current investments. All other investments are classified as long term investments. Current investments are carried at cost or fair value, whichever is lower. Long-

term investments are carried at cost. However, provision for diminution is made to recognise a decline, other than temporary, in the value of long-term

investments, such reduction being determined and made for each investment individually.

Subsequent Recognition

As at the reporting date, non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate

at the date of the transaction. All monetary assets and liabilities in foreign currency are restated at the end of accounting period. All non-monetary items which

are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were

determined.




2.9 Provisions and Contingencies

2.10 Leases

a)

b) Finance Leases

i)

ii)

2.11 Taxation

2.12 Employee benefits

a) Provident Fund

b) Gratuity

c) Compensated absences

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under

operating leases are charged to the Statement of Profit and Loss on a straight-line basis over the period of the lease.

Contingent Liabilities:

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence

or non occurrence of one or more uncertain future events not wholly within the control of the company or 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.

Contribution towards provident fund is made to the regulatory authorities, where the Company has no further obligations. Such benefits are classified as Defined

Contribution Schemes as the Company does not carry any further obligations, apart from the contributions made on a monthly basis.

Each lease payment is apportioned between the finance charge and the reduction of the outstanding liability. The outstanding liability is included in other

short/long-term borrowings. The finance charge is charged to the Statement of Profit and Loss over the lease period so as to produce a constant periodic rate of

interest on the remaining balance of the liability for each period.

Provisions:

Provisions are recognised when there is a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits

will be required to settle the obligation and there is a reliable estimate of the amount of the obligation. Provisions are measured at the best estimate of the

expenditure required to settle the present obligation at the Balance sheet date and are not discounted to its present value.

Accumulated compensated absences, which are expected to be availed or encashed within 12 months from the end of the year end are treated as short term

employee benefits. The obligation towards the same is measured at the expected cost of accumulating compensated absences as the additional amount expected

to be paid as a result of the unused entitlement as at the year end.

Deferred tax is recognised for all the timing differences, subject to the consideration of prudence in respect of deferred tax assets. Deferred tax assets are

recognised and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such

deferred tax assets can be realised. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively

enacted by the Balance Sheet date. In situations, where the Company has unabsorbed depreciation or carry forward losses under tax laws, all deferred tax assets

are recognised only to the extent that there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits. At each

Balance Sheet date, the Company re-assesses unrecognised deferred tax assets, if any.

Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle

the asset and the liability on a net basis. Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set off assets against

liabilities representing current tax and where the deferred tax assets and the deferred tax liabilities relate to taxes on income levied by the same governing

taxation laws.

The Company provides for gratuity, a defined benefit plan (the “Gratuity Plan”) covering eligible employees in accordance with the Payment of Gratuity Act,

1972. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount

based on the respective employee’s salary and the tenure of employment. The Company’s liability is actuarially determined (using the Projected Unit Credit

method) at the end of each year. Actuarial losses/ gains are recognised in the Statement of Profit and Loss in the year in which they arise.

Minimum Alternate Tax credit is recognised as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax

during the specified period. Such asset is reviewed at each Balance Sheet date and the carrying amount of the MAT credit asset is written down to the extent

there is no longer a convincing evidence to the effect that the Company will pay normal income tax during the specified period.

Tax expense for the period, comprising current tax and deferred tax, are included in the determination of the net profit or loss for the period. Current tax is

measured at the amount expected to be paid to the tax authorities in accordance with the taxation laws prevailing in the respective jurisdictions.

Operating leases

The Company leases certain tangible assets and such leases where the Company has substantially all the risks and rewards of ownership are classified as finance

leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased asset and the present value of the minimum lease

payments.




2.13 Restricted Share Plan

2.14 Scheme related expenses

2.15 Earnings per share

2.16

Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of

equity shares outstanding during the period. Earnings considered in ascertaining the Company’s earnings per share is the net profit for the period after deducting

preference dividends and any attributable tax thereto for the period. The weighted average number of equity shares outstanding during the period and for all

periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares, that have changed the number of equity shares

outstanding, without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit or loss for the period

attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential

equity shares.

If the employee leaves the service during the vesting period, the shares granted are forfeited.

The total recurring expenses relating to the schemes of HSBC Mutual Fund are as per SEBI (Mutual Fund) regulations, 1996. Expenses over and above the

expense limit for each scheme or expenses which are not permissible to be borne by HSBC Mutual Fund are required to be borne by the Company and are

disclosed under the head Other expenses as 'Scheme related expenses'.

Restricted share plan represents restricted stock award, by way of shares of HSBC Holdings Plc. (the ultimate holding company), granted to eligible employees

in lieu of bonus. The value of share awards granted after April 1, 2005 is carried at cost and is amortised over the vesting period, in accordance with the

Guidance Note on Accounting for Employee Share based payments issued by the Institute of Chartered Accountants of India.

Cash and cash equivalents

Cash and cash equivalents include cash in hand, demand deposits with banks, other short-term highly liquid investments with original maturities of three months

or less.

The employees to whom the shares are granted will be entitled to receive the shares after the end of the vesting period. At the end of the vesting period the shares

awarded will be transferred to the employee provided the employee continues to be in employment.

The initial issue expenses with respect to all schemes launched have been borne by the Company in the year in which they are incurred.




March 31, 2017 March 31, 2016

3 Share capital

Authorised

62,000,000 (previous year 62,000,000) Equity shares of Rs 10 each 620,000 620,000

80,000 80,000

Total 700,000 700,000

Issued, subscribed and paid-up

61,590,908 (previous year : 61,590,908) Equity shares of Rs 10 each fully paid up 615,909 615,909

Total 615,909 615,909

3.1 (a) Reconciliation of number of shares

Equity shares

Number of shares Amount Number of shares Amount

Balance as at the beginning of the year 61,590,908 615,909 61,590,908 615,909

Add : Issued during the year - - - -

Balance as at the end of the year 61,590,908 615,909 61,590,908 615,909

3.2 (b) Rights, Preferences and Restrictions attached to shares

3.3 (c) Shares held by holding company

0 1Equity shares

No of shares Amount No of shares Amount

61,590,908 615,909 61,590,908 615,909

3.4

Name of shareholder

No of shares % Holding No of shares % Holding

Equity Shares :

61,590,908 100 61,590,908 100

March 31, 2017 March 31, 2016

4 Reserves and Surplus

Capital redemption reserve 90,000 90,000

Securities premium 15,743 15,743

Surplus in Statement of Profit and Loss

Balance as at the beginning of the year 265,197 4,242

Add : Profit for the year transferred from Statement of Profit and Loss 160,217 260,955

Balance as at the end of the year 425,414 265,197

Total 531,157 370,940

As at

8,000,000 (previous year 8,000,000) Cumulative redeemable preference shares of Rs 10 each

As at

March 31, 2017 March 31, 2016

March 31, 2017

As at

Equity Shares: The Company has one class of equity shares having a par value of Rs.10 per share. Each shareholder is eligible for one vote per share held. In the

event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in

proportion to their shareholding.

March 31, 2016

March 31, 2016

HSBC Securities and Capital Markets (India) Private Limited and its

nominees

As at

March 31, 2017

Equity shares of Rs 10 each fully paid up held by Holding Company and its

nominees

(d) Details of shares held by Shareholders holding more than 5% of the aggregate shares of the company

As at




March 31, 2017 March 31, 2016

5 Long term borrowings

Secured

Long term maturities of Finance lease obligations (Refer note 9 and note 11) 2,109 3,564

Total 2,109 3,564

March 31, 2017 March 31, 2016

2,333 4,189

224 625

2,109 3,564

The maturity profile of finance lease obligations is as follows:

March 31, 2017 March 31, 2016 March 31, 2017 March 31, 2016

1,808 2,887 1,428 2,249

2,333 4,189 2,109 3,564

- - - -

Finance lease obligations are secured against motor cars taken on lease.

March 31, 2017 March 31, 2016

6 Deferred tax Liabilities (net)

Deferred tax liability

Depreciation on fixed assets 2,306 -

Total Deferred tax liability 2,306 -

Deferred tax assets

Bonus 9,475 17,041

Carry forward of losses 98,234 153,446

Gratuity and compensated absence 9,475 1,761

Lease Rentals 214 297

Total Deferred tax asset 117,398 172,545

Net Deferred Tax Asset / Liability Nil Nil

March 31, 2017 March 31, 2016

7 Long Term Provisions

Provision for employee benefits

Provision for Gratuity (refer note 26(e)) 20,789 20,497

Total 20,789 20,497

Particulars

Present value of future minimum lease payments

Payable between 1 - 5 years

Deferred tax asset and deferred tax liability have been offset as they relate to the same governing taxation laws. Deferred tax asset is recognised to the extent of

deferred tax liability available for setoff. Deferred tax asset has not been recognised on account of prudence in view of carry forward of taxable losses.

Present value

Payable later than 5 years

Period Minimum lease payment

The Company has entered into finance lease agreements for motor cars for use by some of its employees. The period of lease is between 3 to 5 years in all cases.

These lease agreements are non-renewable and do not provide for escalation in rental values. The total future minimum lease payments at the balance sheet date,

element of interest included in such payments, and present value of these minimum lease payments are as follows:

Payable within 1 year

As at

Total future minimum lease payments

Future interest included above

As at

As at

Particulars of timing difference

As at




March 31, 2017 March 31, 2016

8 Trade payables

(a) Total outstanding dues of micro enterprises and small enterprises and - -

(b) Total outstanding dues of creditors other than micro enterprises and small enterprises

(i) Acceptances - -

(ii) Others 75,930 64,286

Total 75,930 64,286

March 31, 2017 March 31, 2016

9 Other current liabilities

Current maturities of finance lease obligations (Refer note 5 & note 11) 1,428 2,249

Employee Benefits payable 28,156 23,838

Statutory dues including provident fund and tax deducted at source 28,434 48,273

Other liabilities 19,442 17,280

Total 77,460 91,640

March 31, 2017 March 31, 2016

10 Short Term Provisions

Provision for employee benefits

Provision for Gratuity (refer note 26(e)) 3,076 3,424

Compensated absences 4,795 5,088

Other provisions

2,174 2,174

Total 10,045 10,686

11 Fixed assets -

a) Property, Plant and Equipment

Gross block

Balance as at April 1, 2016 11,717 86,705 4,063 2,426 104,911

Additions 1,913 4,355 1,054 - 7,322

Disposals (7,984) - (653) (619) (9,256)

Balance as at March 31, 2017 5,646 91,060 4,464 1,807 102,977

Depreciation


Depreciation for the year 2,621 12,712 249 117 15,699

Accumulated depreciation on disposals (6,626) - (653) (621) (7,900)


Net block

As at March 31, 2017 2,889 17,461 1,170 419 21,939

* All motor cars of the Company have been taken on finance lease.

There are no amounts due for payment to the Investor Education and Protection Fund under section 125 of the Companies Act, 2013 as at year end.

'The above information regarding micro and small enterprises has been determined to the extent such parties have been identified on the basis of information

available with the Company.

Provision for tax [net of advance tax and tax deducted at source Rs

10,523 (previous year Rs 10,523)]

Particulars

As at

Motor Cars * Computers Office

Equipments

Total Furniture and

Fixtures

As at

As at




Gross block


Additions 1,597 23,371 231 583 25,782

Disposals (2,731) (1,070) - (215) (4,016)


Depreciation


Depreciation for the year 3,429 11,747 326 50 15,552

Accumulated depreciation on disposals (1,799) (1,070) - (215) (3,084)


Net block

As at March 31, 2016 4,955 25,818 365 534 31,672

* All motor cars of the Company have been taken on finance lease.

b) Intangible assets

Gross block

Balance as at April 1, 2016 64,211

Additions 1,621

Disposals -

Balance as at March 31, 2017 65,832 -

Depreciation


Amortisation for the year 2,118

Accumulated amortisation on disposals -

Balance as at March 31, 2017 61,985

Net block

As at March 31, 2017 3,847

Intangible assets

Gross block


Additions 4,322

Disposals -


Depreciation


Amortisation for the year 1,287

Accumulated amortisation on disposals -


Net block

As at March 31, 2016 4,344

Furniture and

Fixtures

Particulars

Computer

Motor Cars *

Particulars

Particulars Computer

TotalComputers Office

Equipments




Face Value

per unit

No. of units Amount No. of units Amount

12 Non-current investments

Particulars

10 244,572.037 2,437 244,572.037 2,437

HSBC Cash Fund - Growth option Direct Plan 1,000 3,558.752 5,000 3,558.752 5,000

10 - - 225,543.221 5,000

10 206,147.313 5,000 206,147.313 5,000

10 210,860.141 5,000 210,860.141 5,000

10 789,205.091 10,000 395,920.436 5,000

HSBC Flexi Debt Fund-Growth option Direct Plan 10 254,406.317 5,000 254,406.317 5,000

10 434,786.389 5,000 434,786.389 5,000

10 377,569.065 4,804 377,569.065 4,804

10 407,381.757 5,000 407,381.757 5,000

HSBC MIP – Regular Plan - Growth option Direct Plan 10 - - 202,448.821 5,000

HSBC Monthly Income Plan – Growth option Direct Plan 10 339,032.989 10,000 170,321.192 5,000

HSBC Equity Fund- Growth option Direct Plan 10 33,261.112 5,000 33,261.112 5,000

10 76,942.845 5,000 76,942.845 5,000

HSBC Midcap Equity Fund - Growth option Direct Plan 10 129,937.630 5,000 129,937.630 5,000

10 274,726.784 5,000 274,726.784 5,000

10 187,801.892 5,000 187,801.892 5,000

10 272,756.686 4,468 272,756.686 4,468

HSBC Dynamic Fund- Growth option Direct Plan 10 360,147.516 5,000 360,147.516 5,000

10 113,484.384 1,443 113,484.384 1,443

HSBC Brazil Fund - Growth option Direct Plan 10 701,095.111 5,000 701,095.111 5,000

10 434,480.361 5,000 434,480.361 5,000

103,152 103,152

Aggregate amount of unquoted investments 103,152 103,152

The above investments pertains to seed investments as per Regulation 28(4) of SEBI (Mutual Funds) Regulations, 1996.

March 31, 2017 March 31, 2016

13 Long term loans and advances

Unsecured, considered good

Prepaid expenses 2,686 3,138

Loans to employees 732 1,436

312,934 318,272

MAT Credit Entitlement 88,060 52,731

Total 404,412 375,577

March 31, 2017

As at

HSBC Global Consumer Opportinites Fund- Benefiting

from China's Growing Consumption Power - Direct plan

Growth option

March 31, 2016

HSBC Managed Solutions India Moderate Fund Direct Plan

Growth option

HSBC Managed Solutions India Growth option Fund Direct

Plan Growth option

As at

HSBC Floating Rate Fund - Long Term Plan- Growth

option Direct plan

HSBC Income Fund – Investment Plan - Growth option

Direct Plan

HSBC Income Fund – Short Term Plan - Growth option

Direct Plan

HSBC Ultra Short Term Bond Fund-Growth option Direct

Plan

HSBC Managed Solutions India Conservative Fund Direct

Plan Growth option

Total

HSBC India Opportunities Fund-Growth option Direct Plan

HSBC Infrastructure Equity Fund - Growth option Direct

Plan

HSBC Tax Saver Equity Fund- Growth option Direct Plan

HSBC Dividend Yield Equity Fund-Growth option Direct

Plan

HSBC Emerging Markets Fund- Growth option Direct Plan

HSBC Asia Pacific Divdend Yield Fund Direct Plan Growth

option

Advance taxes and tax deducted at source [net of provision for tax Rs 588,355 (previous year Rs

554,468)]




Face Value No. of units Amount No. of units Amount

14 Current investments

Particulars

Investments in Mutual Fund - unquoted

1,000 320,366.286 491,175 314,646.829 456,834

Total 491,175 456,834

March 31, 2017 March 31, 2016

15 Trade receivables

25,375 2,040

225,058 133,840

Total 250,433 135,880

March 31, 2017 March 31, 2016

16 Cash and bank balances

Cash and cash equivalents

Cash on hand 10 12

Balance with banks

- in current accounts 9,179 20,190

Total 9,189 20,202

March 31, 2017 March 31, 2016

17 Short-term loans and advances


Security Deposits * 6,889 9,583

Loans to employees 211 457

CENVAT credit receivable 23,244 20,238

Prepaid expenses 15,259 16,080

Advance recoverable in cash or in kind 3,649 3,503

Total 49,252 49,861

* The above amounts includes Rs. 6,635 (previous year Rs.9,327) being deposits given for lease premises to the related party.

March 31, 2017 March 31, 2016

18 Revenue from operations

Investment management fees 519,790 500,536

Advisory fees 339,241 367,702

Income from PMS business / Mandates 10,326 8,518

Total 869,357 876,756

March 31, 2016

Others *

As at

As at

As at

For the year ended

HSBC Cash Fund - Growth option Direct Plan

* Out of the above the unbilled revenue as at March 31, 2017 is Rs. 65,326 (previous year Rs. 66,764) which has been raised subsequent to year end.


Outstanding for a period exceeding 6 months from the date

they are due for payment *

As at

March 31, 2017




March 31, 2017 March 31, 2016

19 Other Income

Gain from redemption of Non-current Investments - 7

Gain from redemption of Current Investments 29,341 26,105

Profit on sale of Assets (net) 464 237

Interest on income tax refund 1,994 2,853

Gain on account of foreign exchange fluctuations (net) - 6,829

Provision no longer required written back - 22,197

Miscellaneous 257 40

Total 32,056 58,268

March 31, 2017 March 31, 2016

20 Employee benefits expense

Salaries, wages and bonus 367,602 382,129

Contribution to provident fund and other funds (Refer note 26(a)) 15,771 15,706

Gratuity (Refer note 26(f)) 7,299 4,709

Restricted share plan (Refer note 28) 5,454 5,418

Staff welfare 5,144 5,755

Total 401,270 413,717

March 31, 2017 March 31, 2016

21 Finance costs

Finance charge on finance leases 782 1,088

Total 782 1,088

March 31, 2017 March 31, 2016

22 Other expenses

Brokerage and incentives - 29

Legal and professional fees 8,872 8,624

Support service charges (Refer note 22(a)) 104,175 73,805

Rent and utilities 46,604 36,041

Payment to auditors

- statutory audit fees 1,250 1,100

- other services 180 143

- reimbursement of expenses 75 -

Business development 32,362 21,161

Repairs and maintenance 34,916 32,202

Telephone, communication and postage 38,286 38,950

Office administration 2,564 3,108

Loss on account of foreign exchange fluctuations (net) 3,965 -

Insurance 11,984 10,468

Scheme related expenses 15,530 7,386

Compensation (Refer note 22(b)) 44 343

Recruitment cost 1,820 3,232

Guarantee charges 2,002 1,918

Membership and subscription 987 1,395

Directors sitting fees 410 410

Rates and taxes 5,663 3,119

Travelling 8,883 15,523

Contribution to Corporate Social Responsibility (Refer note 22(c)) 2,200 -

Total 322,772 258,957

For the year ended

For the year ended

For the year ended

For the year ended




a) Support service charges

b) Compensation

c) Corporate Social Responsibility Expenditure

Sr.No. In cash Yet to be paid in

cash

Total

(i)- - -

(ii)2,200 - 2,200

March 31, 2017 March 31, 2016

23 Exceptional items

Insurance claim recovery pertaining to HSBC Gilt fund - 45,000

March 31, 2017 March 31, 2016

24 Expenditures in foreign currency

Training 864 121

Support service charges 82,496 50,002

Business development 41 477

Telephone, communication and postage 3,168 3,464

Membership and subscription 335 312

Travelling 1,252 4,361

Total 88,156 58,737

March 31, 2017 March 31, 2016

25 Earnings in foreign currency

Advisory fees 339,241 367,702

Total 339,241 367,702

##### Notes to the financial statements (Continued)

March 31, 2017 March 31, 2016

26 Employee Benefits

a) Defined contribution plan

Defined contributions plans amount recognised

11,832 12,453

ii) Pension fund paid to the authorities 1,759 1,907

iii) Others 1,075 1,136

1,105 210

Total 15,771 15,706

Gross amount required to be spent by the company during the year 2016-17 Rs. 2200

Amount spent during the year on:

For the year ended

For the year ended

iv) National Pension Scheme

For the year ended

The Company incurred Rs 44 (previous year Rs 343) towards compensation paid by the Company to investors / distributors on account of routine processing

errors / delays.

Above charges represent the charges paid by the Company to other HSBC Group entities both for central as well as regional support. These Group entities

provide management, administrative as well as technical support on various functional aspects of day-to-day business as well as the strategy for growth.

Pursuant to a complaint filed by certain investors, Securities and Exchange Board of India (SEBI) issued a Show Cause notice dated August 7, 2009 to the

Board of Trustees of the Fund, the Fund, HSBC Asset Management (India) Private Limited and the then CEO of the HSBC Asset Management (India) Private

Limited, (together the “respondents”) pertaining to changes made in the Scheme Information Document of HSBC Gilt Fund via Addendums dated January 05,

2009 and March 02, 2009. SEBI, vide its order dated April 23, 2010 disposed off the Show Cause Notice dated August 7, 2009. Aggrieved by this, the investors

filed an appeal with the Securities Appellate Tribunal (SAT). SAT vide its order directed the respondent to provide exit option at the then prevailing Net Asset

Value. The Company filed an appeal against these Orders before the Supreme Court. The Supreme Court dismissed the appeal vide its order dated on January

15, 2014. Accordingly the Company has paid compensation amounting to Rs 101,715 (including interest of Rs 44,234) in February, 2014. The Company had

logded a claim with the Insurance company and received Rs 45,000 during the previous year as full and final settlement against the above payment.

Particulars

i) Provident fund paid to the authorities

Construction/acquisition of any

asset

On purposes other than (i) above

Massom

For the year ended




March 31, 2017 March 31, 2016

b) Reconciliation of defined benefit obligations

23,920 23,156

1,559 1,684

4,273 4,146

(7,354) (3,945)

- -

- -

1,467 (1,121)

23,865 23,920

March 31, 2017 March 31, 2016

c) Reconciliation of fair value of plan assets

- -

- -

- -

- -

- -

- -

- -

- -

March 31, 2017 March 31, 2016

d) Amounts to be recognised in the Balance Sheet and movement in net liability

23,865 23,920

- -

Net liability recognized in the Balance Sheet 23,865 23,920

March 31, 2017 March 31, 2016 March 31, 2017 March 31, 2016

e) Classification into current / non current

20,789 20,497 3,076 3,424

Total 20,789 20,497 3,076 3,424

March 31, 2017 March 31, 2016

f) Expense recognised in the Statement of Profit and Loss

4,273 4,146

1,559 1,684

- -

- -

1,467 (1,121)

- -

7,299 4,709

March 31, 2017 March 31, 2016

g) Description of Plan Assets

- -

Qualifying Insurance - -

March 31, 2017 March 31, 2016

h) Summary of Actuarial Assumptions

6.90% 7.70%

6.00% 13.50%

* The discount rate is based on the prevailing market yields of Indian government securities as at the balance sheet date for the estimated term of the obligations.

Actuarial gain on plan assets

Present Value Obligation (PVO) at beginning of year

PVO at end of the year

Benefit paid

Settlement cost

Acquisition (credits)

Expected Return on Plan Assets

Actuarial loss on obligation

Gratuity

As at

Current

Settlement cost

Actuarial Loss/(Gain) recognised for the year

Net Gratuity expense included in Employee costs

Non current

Interest cost

** The estimates of future salary increases considered in actuarial valuation takes into account, inflation, seniority, promotions and other relevant factors, such as

demand and supply in the employment market.

Current Service Cost

Benefits Paid

Discount Rate*

Salary escalation rate**

Interest cost

Government bonds

As at

For the year ended

Present value of obligation

As at

Contributions

Expected Return on Plan Assets

Current Service Cost

Total included in employee benefits

Closing Fair Value of Plan Assets

Less : Fair Value of Plan Assets at end of the year

Adjustment to opening balance of plan assets

Transfer in

As at

Opening Fair Value of Plan Assets

As at

As at




March 31, 2017 March 31, 2016 March 31, 2015 March 31, 2014 March 31, 2013

i)

Defined benefit obligation at the end of year 23,865 23,920 23,156 15,674 14,536

- - - - -

(Deficit) (23,865) (23,920) (23,156) (15,674) (14,536)

400 (1,436) (1,159) (9) 2,139

- - - - -

27 Earnings per share

March 31, 2017 March 31, 2016

160,217 260,955

61,590,908 61,590,908

Shares issued during the year - -

Total number of equity shares outstanding at the year end 61,590,908 61,590,908

61,590,908 61,590,908

2.60 4.24

10 10

28 Restricted Share Plan

The terms and conditions related to the grant of the restricted share plan are as follows :

Particulars

March 31, 2017 March 31, 2016

Outstanding at the beginning of the year 23,558 18,428

5,243 10,152

Exercised / vested during the year (13,375) (6,535)

Other movements * (677) 1,513

Outstanding at the end of the year 14,749 23,558

Restricted Share plan expense

Particulars

March 31, 2017 March 31, 2016

Amount recognised in employee benefits 5,454 5,418

Total expense recognised in employee benefits 5,454 5,418

29 Related party disclosures

Names of related parties and nature of relationship

1 Holding Company

HSBC Securities and Capital Markets (India) Private Limited

2 Ultimate Holding Company

HSBC Holdings PLC

3 Fellow subsidiaries

The Hong Kong and Shanghai Banking Corporation Limited - India Branches

HSBC Global Asset Management (Hong Kong) Limited

HSBC Software Development (India) Private Limited

HSBC Electronic Data Processing (India) Private Limited

HSBC Global Asset Management Limited

The Hong Kong and Shanghai Banking Corporation Limited, Hong Kong

HSBC Invest Direct Securities (India) Limited.

HSBC Bank Plc.

HSBC Global Asset Management (Singapore) Limited

4 Others

HSBC Mutual Fund *

* HSBC Asset Management (India) Private Limited is the Investment Manager to HSBC Mutual Fund.

5

Mr. Ravi Menon ( Appointed with effect from Apr 24, 2015)

Mr. Puneet Chaddha (Resigned with effect from May 24, 2016)

In accordance with Accounting Standard 20 on 'Earnings Per Share', the following is the calculation of the basic and diluted earnings per share:

Weighted average number of equity shares

For the year ended

* Other movements refers to the net transfer-in and transfer-out of restricted share awards to the employees within group entities having no additional liability to

the Company.

Calculation of weighted average number of equity shares

Nominal value per share Rupees

Profit for the year

Restricted share plan represents restricted stock award granted to select high potential employees. Shares are awarded through Restricted Shares of HSBC

Holdings Plc. At the end of the vesting period the shares awarded will be transferred to the employee provided the employee continues to be in employment.

These restricted shares have been awarded to the employees during every financial year ended except March 2009.

Key management personnel

As per Accounting Standard (AS 18) on ‘Related Party Disclosure’, the releated parties are as follows

Vesting conditions : Employees need to be in employment with the entity at the time of vesting of the shares.

Granted during the year

For the year ended

Number of shares at the beginning of the year

Basic and diluted earnings (in Rupees) per share

For the year ended

Contractual life : The maximum life is three years with one-third vesting at the end of every twelve months and in few cases the vesting is after thirty six

months from the date of the grant.

Particulars

In accordance with Accounting Standard 20 on 'Earnings Per Share', the following is the calculation of the basic and diluted earnings per share:

Plan assets at the end of year

As at

Experience Gain / (Loss) adjustments on plan assets

Experience adjustments

Experience Gain / (Loss) adjustments on plan liabilities


Notes to the financial statements for the year ended March 31, 2017 (Continued)


29 Related party transactions

i) Transactions during the year are as under:

March 31,2017 March 31,2016 March 31,2017 March 31,2016 March 31,2017 March 31,2016 March 31,2017 March 31,2016

Income

Investment management

fees

- - - - 519,790 500,536 - -

Advisory fees - - 339,241 367,702 - - - -

Dividend - - - - - - - - Profit / (Loss) on sale of - - - - - - - - Expenses

Managerial

Remuneration

- - - - - - 25,996 19,613

Training - - 4 121 - - - -

Brokerage and incentives - - - - - 1 - -

Support service charges - - 89,034 60,169 - - - -

Rent and Utilities - - 42,285 33,290 - - - -

Repairs and maintenance -

Computers

3,665 4,879 14,771 8,435 - - - -

Scheme related expenses - - - - 15,530 7,386 - -

Bank and Guarantee

charges

- - 2,181 2,033 - - - -

Refund of Deposit for

premises

- - 3,601 7,904 - - -

Deposit paid for premises - - 908 4,964 - - -

Purchase of investments - - - - 605,500 977,947 - -

Sale of investments - - - - 600,500 750,639 - -


Notes to related party disclosures (to the extent of material transactions)

March 31,2017 March 31,2016

Investment management fees

HSBC Mutual Fund 519,790 500,536

Advisory fees

HSBC Global Asset Management (Hongkong) Limited 339,241 367,702

Managerial Remuneration

Ravi Menon 25,726 2,928

Puneet Chaddha 270 16,685

Training

HSBC Global Asset Management (Hongkong) Limited 4 101

Brokerage and incentives

HSBC Mutual Fund - 1

Support service charges

HSBC Global Asset Management Limited 38,091 14,234


The Hongkong and Shanghai Banking Corporation Ltd - Hongkong 7,286 8,760

HSBC Electronic Data Processing (India) Pvt Ltd 4,311 9,586

The Hong Kong and Shanghai Banking Corporation Limited - India - 581

HSBC Bank Plc 2,574 -

HSBC Holdings Plc 12,052 -

Rent and Utilities

The Hong Kong and Shanghai Banking Corporation Limited - India 42,285 33,290

Repairs and maintenance - Computers

HSBC Securities and Capital market Pvt ltd 3,665 4,879

HSBC Software Development Pvt Ltd 14,771 8,435

Scheme related expenses


Bank and Guarantee charges


Deposit for premises

The Hong Kong and Shanghai Banking Corporation Limited - India (Refund of Deposit for premises) 3,601 7,904

The Hong Kong and Shanghai Banking Corporation Limited - India (Deposit paid for premises) 908 4,964

Purchase of investments


Sale of investments


Particulars with Holding Company with fellow Subsidiaries with others* with Key Management

Personnel

For the year ended

The nature and volume of transactions during the year and balances outstanding as year end with related parties in the ordinary course of business above

are as follows:




ii) Balances outstanding are as under:

Particulars

March 31,2017 March 31,2016 March 31,2017 March 31,2016 March 31,2017 March 31,2016 March 31,2017 March 31,2016

Assets

Investment management

fee receivable

- - - - 79,723 63,780 - -

PMS advisory fees

receivable

- - 9,226 4,703 - - - -

Investment advisory fee

receivable

- - 155,021 62,061

Deposit for premises - - 6,635 9,328 - - - -

Investments - - - - 594,327 559,986

Balances with banks - - 7,602 19,130 - - - -

Liabilities

Equity share capital 615,909 615,909 - - - -

Legal and professional fees - - - - - - - - Computer maintenance 1,258 - - - - - - -

Support service charges - - 39,582 32,862 - - - -

Commission/Brokerage - - 401 401 - - - -

Scheme related expenses - - - - 14,835 7,321 - -


Notes to related party disclosures (to the extent of material transactions)

March 31,2017 March 31,2016

Investment management fees


PMS advisory fees receivable


Investment advisory fee receivable


Deposit for premises


Investments


Balances with banks


Equity share capital

HSBC Securities and Capital market Pvt ltd 615,909 615,909

Computer maintenance

HSBC Securities and Capital market Pvt ltd 1,258 -

Support service charges

HSBC Global Asset Management Limited 15,982 11,778

HSBC Global Asset Management (Hong Kong) Limited 5,266 4,833

HSBC Bank Honkgong 1,824 7,112

HSBC Holdings Plc 10,748 -

HSBC Bank Plc, 2,574 -

HSBC Software Development India Pvt.Ltd 2,819 7,365

HSBC Electronic Data Processing (India) Pvt Ltd 369

Commission/Brokerage

The Hong Kong and Shanghai Banking Corporation Limited - India Branches 190 190

HSBC Investdirect Securities (India) Limited 211 211

Scheme related expenses


with others* with Key Management

Personnel

with Holding Companies with fellow Subsidiaries

For the year ended




March 31,2017 March 31,2016

30 Contingent Liabilities

Dues towards Income Tax matters 93,209 93,209

Dues towards Service Tax matters # 32,095 4,985

125,304 98,194

# excluding interest, if any as this cannot be quantified currently

31 Unhedge foreign currency exposures

Foreign

currency

Rupees Foreign

currency

Rupees

Trade payable GBP 331 26,730 121 11,532

USD 141 9,144 98 6,532

HKD 184 1,537 810 6,921

Trade receivable USD 2,533 164,246 1,009 66,764

32 Disclosures relating to Specified Bank Notes* (SBNs) held and transacted during the period

from November 8, 2016 to December 30, 2016

SBNs Other Total

Closing cash in hand as on November 8, 2016 10 - 10

(+) Permitted receipts (includes cash withdrawals) 105 105 105

(-) Permitted payments (95) (95) 95

(-) Amount deposited in Banks (10) (10)

Closing cash in hand as on December 30, 2016 - 10 10

33 Transfer Pricing

34 Prior year comparatives

Previous year figures are re-grouped/re-classified wherever necessary to confirm to current year's classification.



sd/- sd/- sd/-




DIN No: 00016302

sd/-

Sumesh Kumar

Company Secretary

CS No: 17520



The Company is in the process of carrying out transfer pricing studies for the year ended March 31, 2017 in accordance with the transfer pricing rules.

Adjustment towards liability of taxation, if any, can be determined only on completion of transfer pricing study. Management is of the view that there

will not be any significant adjustments arising on completion of transfer pricing study.

Particulars

* Specified Bank Notes (SBNs) mean the bank notes of denominations of the existing series of the value of five hundred rupees and one thousand

rupees as defined under the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs no. S.O. 3407(E),

dated the November 8, 2016.

Claims against the Company not acknowledged as debt

Particulars Currency March 31,2017 March 31,2016

As at

As at

(a) It is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above pending resolution of the respective

proceedings.

(b) The Company does not expect any reimbursements in respect of the above contingent liabilities.

ANNEXURE – B

FORMAT OF THE ANNUAL REPORT ON CSR ACTIVITIES TO BE INLCUDED IN

BOARD ‘S REPORT 1. A brief outline of the company’s CSR policy, including overview of projects or

programs proposed to be undertaken and a reference to the web-link to the CSR policy and projects or programs:

The Company is committed to Corporate Social Responsibility (CSR) and demonstrates this by contributing to the economic and social development of the communities and safeguarding the environment. While these two components are universal and will be at the center of most sustainability initiatives, there are various components which make up this huge canvas. The Company’s community investments (CI) are focused on two core themes:

1. Promoting Education 2. Environmental Sustainability

Within Promoting Education focus is particularly on:

Disadvantaged young people particularly at primary and secondary education levels

Employment enhancing vocational skills

Livelihoods enhancement projects

Empowering women

Language and cultural understanding

Within the Environmental Sustainability focus is particularly on:

Freshwater sustainability

Access to safe water

Water and sanitation

Climate change

Conservation of terrestrial biodiversity and habitats (e.g. forests) (ecological balance, protection of flora and fauna)

2. The composition of the CSR Committee: a) Kishori Udeshi (Independent Director) b) Ravi Menon (Director & Chief Executive Officer) c) S. P. Mustafa (Independent Director)

3. Average net profit of the Company for last three financial years: Average net profit: Rs. 10,93,47,000

4. Prescribed CSR Expenditure (two percent of the amount as in item 3 above):

The Company is required to spend Rs. 21,87,000 towards CSR.

5. Details of CSR spend for the financial year: a) Total amount spent for the financial year:

Rs. 22,00,000 * Additional Rs. 13,000 was spent during the year 2016-17 than the prescribed CSR expenditure

b) Amount unspent, if any: Nil

c) Manner in which the amount spent during the financial year is detailed below:

S

Sr.

No.

CSR project

or activity

identified

Sector in

which the

Project is

covered

Projects or

programs

1) Local area

or other

2) Specify

the State and

district

where

projects was

undertaken

Amount

outlay

(budget)

project or

programs

wise

Amounts

spent in the

projects or

programs

Subheads:

1) Direct

expenditure

on projects

or programs

2) Overhead

s

Cumulative

expenditur

e upto the

reporting

period

Amount

spent:

Direct or

through

impleme

nting

agency

1 Educational

support and

materials for

SSC Nights

School

students in

Mumbai

Promoting

Education

Mumbai,

Maharashtra

Rs.

22,00,000

Rs.

22,00,000

Rs.

22,00,000

Masoom

6. In case the company has failed to spend the two percent of the average net profit of the last three financial years or any part thereof, the Company shall provide the reasons for not spending the amount in the Board report.

Not Applicable

7. A responsibility statement of the CSR Committee that the implementation and

monitoring of CSR Policy, is in compliance with CSR objectives and Policy of the Company.

The CSR Committee of the Company hereby confirms that the implementation and monitoring of CSR Policy, is in compliance with CSR objectives and Policy of the Company.

For HSBC Asset Management (India) Private Limited Kishori Udeshi Director & Chairperson CSR Committee

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