PRINCIPAL PNB ASSET MANAGEMENT COMPANY PRIVATE …...Mr. Vimlesh Kumar Non - Executive Director The...

PRINCIPAL PNB ASSET MANAGEMENT COMPANY PRIVATE LIMITED

DIRECTORS’ REPORT

Dear Shareholders, Your Directors have pleasure in presenting the Twenty Fifth (25th) Annual Report on the business and performance of the Company together with the audited financial statements for the Financial Year ended March 31, 2017.

FINANCIAL HIGHLIGHTS The Company's performance during the year ended March 31, 2017 as compared to the previous financial year, is summarized below:

(Rs. in lakh)

Particular For the Financial

Year ended

March 31, 2017

For the Financial

Year ended

March 31, 2016

Income 4,534.12 3,903.72

Less: Expenses 4,874.14 5,247.13

Profit/ (Loss) before tax and extraordinary items

(340.02) (1,343.41)

Less: Prior period Items 42.66 -

Profit/ (Loss) before tax (382.68) (1,343.41)

Less: Provision for tax - -

Income Tax of earlier years w/off - (0.18)

Profit after Tax (382.68) (1,343.22)

Earnings per Equity Share (Basic and Diluted)

(2.20) (7.72)

APPROPRIATION

(Rs. in lakh)

Interim Dividend - -

Final Dividend - -

Tax on distribution of dividend - -

Transfer of General Reserve - -

Balance carried to Balance sheet (382.68) (1,343.22)

FUND PERFORMANCE The performance of various funds of the Company during the financial year 2016-17 was as under:

Name of Fund

Year of Launch

Return (%)

Principal Balanced Fund Regular Plan - 14/01/2000 27.07

Direct Plan - 2/1/2013 28.33

Principal Index Fund – Midcap Regular Plan – 12/05/2014 34.05

Direct Plan – 12/05/2014 34.72

Principal Dividend Yield Fund Regular Plan - 15/10/2004 29.20

Direct Plan – 02/01/2013 29.68

Principal Global Opportunities Fund Regular Plan – 29/03/2004 13.69

Direct Plan – 02/01/2013 14.21

Principal Growth Fund Regular Plan – 25/10/2000 33.16

Direct Plan – 02/01/2013 34.06

Principal Index Fund – Nifty Regular Plan – 27/07/1999 18.75

Direct Plan – 02/01/2013 19.34

Principal Large Cap Fund Regular Plan – 11/11/2005 22.82

Direct Plan – 02/01/2013 23.67

Principal Personal Tax Saver Fund Regular Plan – 31/03/1996 22.46

Direct Plan – 02/01/2013 23.27

Principal Emerging Bluechip Fund Regular Plan – 12/11/2008 39.21

Direct Plan – 02/01/2013 40.62

Principal Low Duration Fund Regular Plan – 14/09/2004 8.45

Direct Plan - 2/1/2013 8.91

Principal Bank CD Fund Regular Plan – 06/11/2007 6.87

Direct Plan - 2/1/2013 7.41

Principal Government Securities Fund Regular Plan – 23/08/2001 12.45

Direct Plan - 2/1/2013 13.35

Principal Dynamic Bond Fund Regular Plan – 09/05/2003 11.26

Direct Plan - 2/1/2013 12.09

Principal Short Term Income Fund Regular Plan - 09/05/2003 8.72

Direct Plan - 2/1/2013 9.59

Principal Equity Savings Fund Regular Plan - 23/05/2003 11.15

Direct Plan - 2/1/2013 12.00

Principal Debt Savings Fund – Retail Plan

Regular Plan – 30/12/2003 9.29

Direct Plan - 2/1/2013 10.11

Principal Cash Management Fund Regular Plan – 30/08/2004 7.34

Direct Plan - 1/1/2013 7.41

Principal Credit Opportunities Fund Regular Plan – 14/09/2004 8.36

Direct Plan - 2/1/2013 8.62

Principal Retail Money Manager Fund Regular Plan – 28/12/2007 7.72

Direct Plan - 1/1/2013 7.86

Principal Smart Equity Fund Regular Plan – 16/12/2010 12.05

Direct Plan - 2/1/2013 13.26

Principal Tax Savings Fund Regular Plan – 31/03/1996 33.09

Direct Plan – 02/01/2013 33.62

Principal Asset Allocation Fund-of-Funds – Conservative Plan

Regular Plan – 1412/2015 10.99

Direct Plan – 14/12/2015 11.30

Principal Asset Allocation Fund-of-Funds – Moderate Plan

Regular Plan – 1412/2015 14.91

Direct Plan – 14/12/2015 15.71

Principal Asset Allocation Fund-of-Funds – Aggressive Plan

Regular Plan – 1412/2015 20.89

Direct Plan – 14/12/2015 21.65

OUTLOOK

At Principal Mutual Funds, our focus is not only to grow our AUM, but also to provide right products to the investors and staying relevant in their minds. We have taken several actions during the year to position the company for increasing its retail business while aligning our institutional business strategy towards higher margin products. Our plans for the next three to five years are to position the company as a dominant player in ‘long term’ asset management business. Besides developing new solutions to meet needs of the investors through our domestic funds, we continue to pursue bringing in unique global investment options from our international product suite for our clients. Additionally, we are investing aggressively to enhance our digital infrastructure and brand positioning to increase our relevance in minds of millennia investors.

OPERATIONS

Principal Mutual Fund as at March 31, 2017 offers thirty Schemes. These include twelve Equity Schemes (including two Equity Linked Savings Schemes, one Balanced Scheme), one Fund of Fund Overseas (investing in international fund/s), three Fund of Funds Domestic Schemes, thirteen Debt Schemes/ Plans (including five Fixed Maturity Plans) and one Liquid Scheme. The Assets under Management (AuM) from all these Schemes as on March 31, 2017 was Rs. 5,009.70 crore.

The Company operates out of 11 branches, including Mumbai. To enhance our reach with distributors and customers, the AMC has 104 Investor Service Centers (of Karvy Computershare Private Limited) across India, as Official Point of Acceptance.

Performance of some of our schemes were recognized for their excellence, in several Rankings and Star Ratings released by various independent third party agencies. Principal Emerging Blue chip Fund was 5-star rated fund. Principal Large Cap Fund, Principal Growth Fund, Principal Dynamic Bond Fund, Principal Low Duration Fund, Principal Cash Management Fund and Principal Tax Savings Fund were 4-star rated funds (as on March 31, 2017) as per Value Research. There was no change in nature of the business of the Company, during the year under review.

DIRECTORS The Board represents an optimum combination of Executive and Non-Executive Directors, who possess varied professional knowledge and experience in diverse fields like finance, economics, administration etc. The Board consists of 6 Members including one non-executive Chairman and one Managing Director.

The existing Board consists of: Mr. M. M. Chitale

Chairman (Independent Non - Executive Director)

Mr. Lalit Vij Managing Director Mr. M. M. Kamath Independent Non - Executive Director Mr. Pedro Borda Non - Executive Director Mr. Rustam Gagrat Independent Non - Executive Director Mr. Vimlesh Kumar Non - Executive Director The Composition of the Board of Directors is in line with the requirements prescribed under the Companies Act 2013 and SEBI (Mutual Funds) Regulations, 1996. During the year, following changes took place in the composition of the Board of Directors: 1. Vacation of office of Mr. Kim Thean Soo as an Alternate Director to Mr. Pedro Borda

with effect from September 19, 2016.

2. Appointment of Mr. Kim Thean Soo as an Alternate Director to Mr. Pedro with effect from October 25, 2016, following Vacation of office of Mr. Kim as an Alternate Director to Mr. Pedro with effect from November 16, 2016.

3. Appointment of Mr. Kim Thean Soo as an Alternate Director to Mr. Pedro with effect

from June 28, 2017.

KEY MANAGERIAL PERSONNEL In Compliance of the Section 203 read with Rule 8A of the Companies Act 2013, the Company has following Key Managerial Personnel: a) Mr. Lalit Vij, Managing Director b) Ms. Nidhi Shah, Company Secretary During the year, Ms. Niyati Shah resigned from the position of Company Secretary with effect from August 04, 2017. The Board of Directors in their meeting held on July 13, 2017, appointed Ms. Nidhi Shah as the Company Secretary of the Company, with effect from August 08, 2017. The terms of appointment (s) of Key Managerial Personnel are approved by the Board of Directors in compliance with the applicable requirements.

DIRECTORS’ RESPONSIBILITY STATEMENT In terms of Section 134(5) of the Companies Act, 2013, in relation to the audited financial statements of the Company for the year ended March 31, 2017, the Board of Directors hereby confirms that:

a. in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b. such accounting policies have been selected and applied consistently and the Directors 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 March 31, 2017 and of the profit/loss of the Company for that year;

c. proper and sufficient care was taken for the maintenance of adequate accounting

records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. the annual accounts of the Company have been prepared on a going concern basis;

e. proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively;

INTERNAL FINANCIAL CONTROL Your Company’s Internal Control Systems are generally found commensurate with the nature, size and complexity of its business and ensure proper safeguarding of assets, maintaining proper accounting records and providing reliable financial information. The internal audit of the Company’s operations is carried out by M. P. Chitale & Co., Chartered Accountants, Internal Auditors and the audit findings are placed before the Audit Committee on a regular basis.

Internal Audit also evaluates the effectiveness of internal controls in place. Gaps, if any, observed from the audit report are addressed by further strengthening the internal controls to avoid recurrence.

BOARD MEETINGS During the Financial Year 2016-17, five meetings of Board of Directors were held as under:

DATE DAY NUMBER OF BOARD MEETING

April 27, 2016 Wednesday 131st

July 13, 2016 Wednesday 132nd

September 12, 2016 Monday 133rd

October 27, 2016 Thursday 134th

January 23, 2017 Monday 135th

AUDIT COMMITTEE:

During the Financial Year 2016-17, five meetings of Audit Committee were held as under:

DATE DAY NUMBER OF AUDIT COMMITTEE MEETING

April 27, 2016 Wednesday 54th

July 13, 2016 Wednesday 55th

September 12, 2016 Monday 56th

October 27, 2016 Thursday 57th

January 23, 2017 Monday 58th

CORPORATE SOCIAL RESPONSIBILITY During the Financial Year 2016-17, the Company was not required to constitute a Corporate Social Responsibility Committee of the Board as applicable under the provisions of Companies Act, 2013.

STATUTORY AUDITORS In the Annual General Meeting held on September 29, 2016, S. R. Batliboi and Associates LLP., Chartered Accountants, were appointed as Statutory Auditors of the Company in place of S. V. Ghatalia & Associates LLP, Chartered Accountants, for a term of 4 years to hold office from the conclusion of the 24th Annual General Meeting until the conclusion of the 28th Annual General Meeting, pursuant to the provisions of Section 139 of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014. In accordance with Section 139 of the Companies Act, 2013, their appointment as Statutory Auditors of the Company shall be required to be ratified by the Members at the ensuing Annual General Meeting. The Company has received a confirmation from the Statutory Auditors that they are not disqualified to act as the Auditors and are eligible to hold the office as Auditors of the Company. Necessary resolution for ratification of appointment of the Statutory Auditors is included in the Notice of AGM for seeking approval of members.

PUBLIC DEPOSITS During the Financial Year 2016-17, the Company did not accept any fixed deposits under the applicable provisions of the Companies Act, 2013.

STATUTORY AUDITORS’ REPORT The Board has duly examined the Statutory Auditors’ Report on the financial statements of the Company for the financial year ended on March 31, 2017. The clarifications wherever necessary, have been included in the section – ‘Notes to accounts’ of the Annual Report. The Statutory Auditors have, in their report under Companies (Auditor’s Report) Order, 2016, stated that while Undisputed statutory dues including provident fund, income-tax, service tax, cess and other statutory dues have generally been regularly deposited with the appropriate authorities though there have been serious delays in many cases in payment of professional tax and serious delays payment of income tax deducted at source where income tax amounting to Rs.12,61,380 on perquisites given to one employee for the period April 2016 to August 2016 was deposited in October 2016 and in other case where Income Tax amounting to Rs. 97,552 of one employee for the month of March 2017 was deposited in July 2017. The provisions related to employee’s state insurance, investor education and protection fund, sales-tax, wealth-tax, value added tax, customs duty and excise duty are not applicable to the Company. The Board of Directors have taken serious note of the remarks made by the Statutory Auditors and the management has been advised to put in place additional controls to ensure that these delays do not recur.

EXTRACT OF ANNUAL RETURN In compliance with Section 92(3) of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of Annual Return in MGT-9 forms part of this Report annexed as Annexure I.

SHARE CAPITAL During the financial year, no further shares were issued. The issued, subscribed and paid-up equity share capital of the Company stands at 17,400,014 Equity Shares of Rs. 10/- each.

PARTICULARS OF EMPLOYEES The statement pursuant to Section 197 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 showing the details of the employees who were in receipt of remuneration during the financial year, in the aggregate, was not less than one crore and two lakh rupees or if employed for a part of the financial year, was in receipt of remuneration for any part of that year, at a rate which, in the aggregate, was not less than eight lakh and fifty thousand rupees per month, is annexed to the Report as Annexure II.

ST ATEMENT OF SUBSIDIARY COMPANIES, JOINT VENTURES AND ASSOCIATES Your Company has no subsidiary, joint venture or subsidiaries and hence the statement to be annexed pursuant to Section 129 of Companies Act, 2013 is not applicable. Further the Company does not have any joint venture or associates.

TRANSACTIONS WITH RELATED PARTIES The transactions with related parties are subject to the provisions contained in the Articles of Association of the Company and the applicable provisions of Companies Act, 2013 and are entered into with the approval of the Board of Directors and shareholders (wherever applicable). The Related Parties Transactions are reviewed by the Directors, to ensure that such transactions are in the best interest of the Company. There were no contracts / arrangements entered with the related parties during the Financial Year 2016-17. The transactions entered into with the related parties during the Financial Year 2016-17 are stated under ‘Notes to the Accounts’ in the Audited Financial Statements of the Company.

LOANS, GUARANTEES, INVESTMENTS AND SECURITIES The Company has not given any Loan, Guarantee, provided Securities or made any investments under the provisions of Section 186 of the Companies Act, 2013 during the year.

RISK MANAGEMENT APPROACH Risk Management is an integral part of the Company’s business. The Company has a Risk Management Framework in place under which the key financial and non-financial risks applicable to the Company and the mitigation measures are identified and are periodically monitored.

DISCLOSURE UNDER SECTION 22 OF THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 The Company has duly constituted an Internal Complaints Committee in place in terms of the requirements of Section 4 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company has in place the Policy on matters relating to Workplace Safety in compliance with the requirements of the Act. No cases were reported during the Financial Year 2016-17.

COMPANIES DISCLOSURE OF PARTICULARS PURSUANT TO SECTION 134 (3) (m) OF THE COMPANIES ACT, 2013 IS AS UNDER:

(A) Foreign Exchange Earnings and Outflow:

During the Financial Year 2016-17, the foreign exchange earnings and outflow were as under:

(Amount in Rs.)

FY 2016-17

FY 2015-16

Actual Foreign Exchange earnings Nil Nil

Actual Foreign Exchange outgo

Travel Expenses 1,848,157 1,634,319

Professional Charges 5,040,100 1,354,215

Software Maintenance / E - Communication 599,850 305,938

Information/Wire-Service Expenses 6,009,300 3,656,489

Training Expenses 200,567 4,142,004

Total 13,697,974 11,092,965

(B) Conservation of Energy & Technology Absorption:

While the Company is a mutual fund, it constantly endeavors to conserve energy and to improve upon the existing technology to meet global standards and adopt the best available technology for servicing customers.

DIVIDEND The Board of Directors do not recommend any dividend for the financial year ended March 31, 2017.

OTHER DISCLOSURES The financial statements for any of the previous years have not been reinstated by the Company. There were no recommendations of the Audit Committee which were not concurred or accepted by the Board of Directors.

ACKNOWLEDGEMENT The Board of Directors take this opportunity to thank the customers, shareholders, suppliers, bankers, business partners/associates, Securities and Exchange Board of

India, Ministry of Corporate Affairs, financial institutions and Central and State Governments for their consistent support and encouragement to the Company.

For and on behalf of the Board of Principal Pnb Asset Management Company Private Limited Sd/- M. M. Chitale Chairman DIN: 00101004 Date: August 22, 2017 Place: Mumbai Registered Office Exchange Plaza, B Wing, Ground Floor, NSE Building., Bandra Kurla Complex, Bandra (East), Mumbai – 400051 CIN: U25000MH1991PTC064092 Tel No: 022-6772-0555 Fax: 022-6772-0512 E-Mail: [email protected] Web-site: www.principalindia.com

mailto:[email protected]

http://www.principalindia.com/

Annexure I

FORM NO. MGT-9

EXTRACT OF ANNUAL RETURN AS ON FINANCIAL YEAR ENDED ON March 31, 2017

[Pursuant to Section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies

(Management and Administration) Rules, 2014]

I. REGISTRATION AND OTHER DETAILS:

CIN : U25000MH1991PTC064092

Registration Date : 20.11.1991

Name of the Company : Principal Pnb Asset Management Company Private Limited

Category / Sub-Category of the Company

: Category: Company Limited by Shares Sub-Category: Indian Non-Government Company

Address of the Registered office and contact details

: Exchange Plaza, B Wing, Ground Floor, NSE Bldg, Bandra Kurla Complex, Bandra (East), Mumbai – 400051.

Whether listed company : No

Name, Address and Contact details of Registrar and Transfer Agent, if any:

: Karvy Computershare Private Limited Address: 24 B, Rajabahadur Mansion, Ground Floor, Amabalal Doshi Marg, Mumbai, Maharashtra 400023 Contact: 022 3292 0444

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:-

Sl. No

Name and Description of main products / services

NIC Code of the Product/service

% to total turnover of the company

1. Asset Management Services 66301 100%

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 Principal Financial Group (Mauritius) Limited

- Holding Company

78.62% Section 2 (46) of the Companies Act, 2013.

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

Individual/ HUF - - - - - - - - -

Central Govt - - - - - - - - -

State Govt(s) - - - - - - - - -

Bodies Corp - - - - - - - - -

Banks / FI 3,720,000 - 3,720,000 21.38% 3,720,000 - 3,720,000 21.38%

Any other

Sub-total(A)(1):

3,720,000 - 3,720,000 21.38% 3,720,000 - 3,720,000 21.38%

2) Foreign

NRIs-Individuals - - - - - - - - -

Other Individuals

- - - - - - - - -

Bodies Corp 13,680,009 5 13,680,014 78.62% 13,680,009 5 13,680,014 78.62%

Banks/FI - - - - - - - - -

Any Other - - - - - - - - -

Sub-total (A)(2) 13,680,0091 51 13,680,014 78.62% 13,680,0091 51 13,680,014 78.62%

1 6 Equity Shares of INR 10/- each are held by Mr. Sudhinchandra Arvind Padhye as a Nominee of Principal Financial Group

(Mauritius) Limited, out of which; 1 Equity Share of INR 10/- is held in Demat Form, and 5 Equity Shares of INR 10/- each are held in Physical Form.

Total shareholding of Promoter (A) =(A)(1)+(A)(2)

17,400,0092 52 17,400,014 100% 17,400,0092 52 17,400,014 100%

B. Public Shareholding

1. Institutions

Mutual Funds - - - - - - - - -

Banks / FI - - - - - - - - -

Central Govt - - - - - - - - -

State Govt(s) - - - - - - - - -

Venture Capital Funds

- - - - - - - - -

Insurance Companies

- - - - - - - - -

FIIs - - - - - - - - -

Foreign Venture Capital Funds

- - - - - - - - -

Others (specify)

- - - - - - - - -

Sub-total (B)(1):-

- - - - - - - - -

2. Non-Institutions

a) Bodies Corp. - - - - - - - - -

Indian - - - - - - - - -

Overseas - - - - - - - - -

b) Individuals - - - - - - - - -

Individual shareholders holding nominal share capital upto Rs. 1 lakh

- - - - - - - - -



Individual shareholders holding nominal share capital in excess of Rs 1 lakh

- - - - - - - - -

c) Others

(specify)

- - - - - - - - -

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)

17,400,0093 53 17,400,014 100% 17,400,0093 53 17,400,014 100%

(ii) Shareholding of Promoters-

Sl. No

Shareholder’s Name

Shareholding at the beginning of the year

Shareholding at the end of the year

% change in shareholding during the year

No. of Shares

% of total

Shares of the compa

ny

% of Shares Pledged / encumbered to total shares

No. of Shares

% of total

Shares of the compa

ny

% of Shares Pledged / encumbered to total shares

1

Principal Financial Group (Mauritius) Limited

13,680,0143 78.62% - 13,680,0143 78.62% - -

2 Punjab National Bank 3,720,000 21.38% - 3,720,000 21.38% - -

Total 17,400,0143 100% - 17,400,0143 100% - -



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

(iv) Shareholding Pattern of top ten Shareholders (Other than Directors, Promoters and Holders of GDRs and ADRs) :

Sl. No.

For Each of the Top 10 Shareholders


Cumulative Shareholding during the Year

No. of shares

% of total shares of the company

No. of shares


1 At the beginning of the year

Not Applicable

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

3 At the end of the year (or on the date of separation, if separated during the year)

Sl. No.


Cumulative Shareholding during the year

No. of shares


No. of shares


At the beginning of the year

No change

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

At the end of the year

(v) Shareholding of Directors and Key Managerial Personnel:

Sl. No.

For each of Directors and each Key Managerial Personnel


Cumulative Shareholding during the Year

No. of shares

% of total shares of the Company

No. of shares

% of total shares of the Company

1 At the beginning of the year

Not Applicable

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

3 At the end of the year

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 Nil Nil Nil Nil

ii. Interest due but not paid Nil Nil Nil Nil

iii. Interest accrued but not due Nil Nil Nil Nil

Total (i+ii+iii)

Nil Nil Nil Nil

Change in Indebtedness during the financial year

* Addition Nil Nil Nil Nil

* Reduction Nil Nil Nil Nil

Net Change Nil Nil Nil Nil

Indebtedness at the end of the financial year

i. Principal Amount Nil Nil Nil Nil

ii. Interest due but not paid Nil Nil Nil Nil

iii. Interest accrued but not due Nil Nil Nil Nil

Total (i+ii+iii) Nil Nil Nil Nil

VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

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

(All figures in Rupees)

Sl. No.

Particulars of Remuneration Name of MD/WTD/ Manager

Total Amount

1 Name Mr. Lalit Vij

2 Gross salary

a. Salary as per provisions contained in section 17(1) of the Income-tax Act, 1961

20,326,801 20,326,801

b. Value of perquisites u/s 17(2) Income-tax Act, 1961

24,423 24,423

c. Profits in lieu of salary under section 17(3) Income- tax Act, 1961 - -

3 Stock Option - -

4 Sweat Equity - -

5 Commission - as % of profit - others, specify

- -

6 Others, please specify (Contribution to Provident Fund and other fund)

- -

Total (A)

20,351,224 20,351,224

Ceiling as per the Act

Not Applicable

B. Remuneration to other directors:

BM- Board Meeting; ACM – Audit Committee Meeting (in Rs.)

Sl. No.

Particulars of Remuneration

Name of Directors

Total Amount 1 Independent Directors Mr. M. M.

Chitale Mr. Rustam Gagrat

Mr. M. M. Kamath

Fee for attending board and committee meetings

500,000 300,000 500,000 1,300,000

Commission

Others

Total (1) 500,000 300,000 500,000 1,300,000

2 Other Non-Executive Directors

Fee for attending board committee meetings

Commission

Others, please specify

Total (2) - - - -

Total (B)=(1+2) 500,000 300,000 500,000 1,300,000

Total Managerial Remuneration

Overall Ceiling as per the Act

Not Applicable

Not Applicable

Not Applicable

C. Remuneration to Key Managerial Personnel other than MD/Manager/WTD

Sl. No

Particulars of Remuneration Key Managerial Personnel

Company Secretary Total

1. Gross salary Niyati Shah*

a. Salary as per provisions contained in section 17(1) of the Income-tax Act, 1961

553,532 553,532

b. Value of perquisites u/s 17(2) Income-tax Act, 1961

- -

c. Profits in lieu of salary under section 17(3) Income-tax Act, 1961

- -

2. Stock Option - -

3. Sweat Equity - -

4. Commission - -

- as % of profit - -

- others, specify - -

5. Others, please specify - -

Total

*Resigned from the position of Company Secretary with effect from August 04, 2017

VII.PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES: NIL

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

Annexure II

Information as per Section 197 of the Companies Act, 2013, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2013, and forming part of the Directors’ report for the year ended March 31, 2017 (Full Year / Part of the Year) The information is available for inspection at the registered office of the Company

INDEPENDENT AUDITOR’S REPORT

To the Members of Principal Pnb Asset Management Company Private Limited

Report on the Financial Statements

We have audited the accompanying financial statements of Principal Pnb Asset Management

Company Private Limited (“the Company”), which comprise the Balance Sheet as at March 31, 2017,

the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of

significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the

Companies Act, 2013 (“the Act”) with respect to the preparation of these financial statements that

give a true and fair view of the financial position, financial performance and cash flows of the

Company in accordance with accounting principles generally accepted in India, including the

Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies

(Accounts) Rules, 2014 and the Companies (Accounting Standards) Amendment Rules, 2016. This

responsibility also includes maintenance of adequate accounting records in accordance with the

provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting

frauds and other irregularities; selection and application of appropriate accounting policies; making

judgments and estimates that are reasonable and prudent; and the design, implementation and

maintenance of adequate internal financial control that were operating effectively for ensuring the

accuracy and completeness of the accounting records, relevant to the preparation and presentation of

the financial statements that give a true and fair view and are free from material misstatement,

whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We have

taken into account the provisions of the Act, the accounting and auditing standards and matters which

are required to be included in the audit report under the provisions of the Act and the Rules made

thereunder. We conducted our audit in accordance with the Standards on Auditing, issued by the

Institute of Chartered Accountants of India, as specified under Section 143(10) of the Act. Those

Standards require that we comply with ethical requirements and plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures

in the financial statements. The procedures selected depend on the auditor’s judgment, including the

assessment of the risks of material misstatement of the financial statements, whether due to fraud or

error. In making those risk assessments, the auditor considers internal financial control relevant to the

Company’s preparation of the financial statements that give a true and fair view in order to design

audit procedures that are appropriate in the circumstances. An audit also includes evaluating the

appropriateness of accounting policies used and the reasonableness of the accounting estimates made

by the Company’s Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis

for our audit opinion on the financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the

financial statements give the information required by the Act in the manner so required and give a true

and fair view in conformity with the accounting principles generally accepted in India of the state of

affairs of the Company as at March 31, 2017, its loss, and its cash flows for the year ended on that

date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s report) Order, 2016 (“the Order”) issued by the Central

Government of India in terms of sub-section (11) of section 143 of the Act, we give in the

Annexure 1 a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by section 143 (3) of the Act, we report that:

(a) We have sought and obtained all the information and explanations which to the best of our

knowledge and belief were necessary for the purpose of our audit;

(b) In our opinion proper books of account as required by law have been kept by the Company so far

as it appears from our examination of those books;

(c) The Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this

Report are in agreement with the books of account;

(d) In our opinion, the aforesaid financial statements comply with the Accounting Standards specified

under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the

Companies (Accounting Standards) Amendment Rules, 2016;

(e) On the basis of written representations received from the directors as on March 31, 2017, and

taken on record by the Board of Directors, none of the directors is disqualified as on

March 31, 2017, from being appointed as a director in terms of section 164 (2) of the Act;

(f) This report does not include Report on the internal financial controls under clause (i) of Sub-

section 3 of Section 143 of the Companies Act, 2013 (the ‘Report on internal financial controls’),

since in our opinion and according to the information and explanation given to us, the said report

on internal financial controls is not applicable to the Company basis the exemption available to

the Company under MCA notification no. G.S.R. 583(E) dated June 13, 2017, read with

corrigendum dated July 13, 2017 on reporting on internal financial controls over financial

reporting;

(g) With respect to the other matters to be included in the Auditor’s Report in accordance with

Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our

information and according to the explanations given to us:

i. The Company does not have any pending litigations which would impact its financial

position;

ii. The Company did not have any long-term contracts including derivative contracts for which

there were any material foreseeable losses.

iii. There were no amounts which were required to be transferred to the Investor Education and

Protection Fund by the Company.

iv. The Company has provided requisite disclosures in Note 32 to these financial statements as

to the holding of Specified Bank Notes on November 8, 2016 and December 30, 2016 as

well as dealings in Specified Bank Notes during the period from November 8, 2016 to

December 30, 2016. Based on our audit procedures and relying on the management

representation regarding the holding and nature of cash transactions, including Specified

Bank Notes, we report that these disclosures are in accordance with the books of accounts

maintained by the Company and as produced to us by the Management.

For S.R. Batliboi & Associates LLP

Chartered Accountants

ICAI Firm Registration Number: 101049W/E300004

Sd/-

per Charanjit Attra

Partner

Membership Number: 100312

Place of Signature: Mumbai

Date: 22 August 2017

of 3

Annexure 1 referred to in paragraph 1 of Report on Legal and Regulatory requirements on our report of even date

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details

and situation of fixed assets.

(b) Fixed assets have been physically verified by the management during the year and no material discrepancies were identified on such verification.

(c) According to the information and explanations given by the management, there are no

immovable properties of the Company and accordingly, the requirements under paragraph

3(i)(c) of the Order are not applicable to the Company.

(ii) The Company’s business does not involve inventories and therefore the provisions of clause (ii)

of paragraph 3 of the said Order are not applicable to the Company and hence not commented

upon.

(iii) (a) According to the information and explanations given to us, the Company has not granted / taken

any loans, secured or unsecured to / from companies, firms, Limited Liability Partnerships or

other parties covered in the register maintained under section 189 of the Companies Act, 2013.

Accordingly, the provisions of clause 3 (iii) (a), 3 (b) and 3 (c) of the Order are not applicable to

the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to us, there are no loans, investments, guarantees, and securities given in respect of which provisions of section 185 and 186 of the Companies Act 2013 are applicable and hence not commented upon.

(v) The Company has not accepted any deposits from the public.

(vi) To the best of our knowledge and as explained, the Central Government has not specified the

maintenance of cost records under Section 148(1) of the Companies Act, 2013, for the products/services of the Company.

(vii) (a) Undisputed statutory dues including provident fund, income-tax, service tax, cess and other

statutory dues have generally been regularly deposited with the appropriate authorities though there have been serious delays in many cases in payment of professional tax and serious delays in payment of income tax deducted at source where income tax amounting to Rs.12,61,380 on perquisites given to one employee for the period April 2016 to August 2016 was deposited in October 2016 and in other case where income tax amounting to Rs.97,552 of one employee for the month of March 2017 was deposited in July 2017. The provisions related to employee’s state insurance, investor education and protection fund, sales-tax, wealth-tax, value added tax, customs duty and excise duty are not applicable to the Company.

of 3

(b)According to the information given to us, no undisputed statutory dues including provident fund, income-tax, service tax, cess and other statutory dues were outstanding at the year end, for a period of more than six months from the date they became payable.

(c) According to the records of the Company, there are no dues of income-tax, sales-tax, service tax, value added tax, customs duty, excise duty and cess which have not been deposited on account of any dispute

(viii) The Company did not have any outstanding any loans or borrowings dues in respect of financial

institutions, banks, government or debenture holders during the year.

(ix) According to the information and explanations given by the management, the Company has not raised any money way of initial public offer / further public offer / debt instruments and term loans hence, reporting under clause (ix) is not applicable to the Company and hence not commented upon.

(x) Based upon the audit procedures performed for the purpose of reporting the true and fair view

of the financial statements and according to the information and explanations given by the management, we report that no fraud by the company or no fraud / material fraud on the company by the officers and employees of the Company has been noticed or reported during the year.

(xi) According to the information and explanations given by the management, the provisions of

section 197 read with Schedule V of the Act is not applicable to the company and hence reporting under clause 3(xi) are not applicable and hence not commented upon.

(xii) In our opinion, the Company is not a Nidhi Company. Therefore, the provisions of clause 3(xii) of

the Order are not applicable to the Company and hence not commented upon.

(xiii) According to the information and explanations given by the management, transactions with the related parties are in compliance with section 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the notes to the financial statements, as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us and on an overall examination of the

balance sheet, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and hence, reporting requirements under clause 3(xiv) are not applicable to the company and, not commented upon.

(xv) According to the information and explanations given by the management, the Company has not

entered into any non-cash transactions with directors or persons connected with him as referred to in section 192 of Companies Act, 2013.

of 3

(xvi) According to the information and explanations given to us, the provisions of section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company.

For S.R. Batliboi & Associates LLP

ICAI Firm Registration No. 101049W/E300004


Sd/- per Charanjit Attra

Partner

Membership No. 100312

Place: Mumbai Date: 22 August 2017

March 31, 2017 March 31, 2016

Notes Rs. Rs.

Equity and Liabilities

Shareholders' Funds

Share Capital ' 3 ' 174,000,140 174,000,140

Reserves and Surplus ' 4 ' 394,141,433 432,409,215

Non-Current Liabilities

Long-term Provisions ' 5 ' 24,086,703 4,266,255

Current Liabilities

Trade Payables ' 6A ' 19,512,729 27,306,545

Other Payables ' 6B ' 95,986,186 81,302,503

Short-term Provisions ' 5 ' 7,012,361 7,972,452

122,511,276 116,581,500

Total 714,739,552 727,257,110

Assets

Non-Current Assets

Fixed Assets:

Property, Plant & Equipment ' 7 ' 2,759,028 2,678,569

Intangible Assets ' 8 ' 1,062,549 2,473,024

Intangible Assets under Development - 52,956

Non-Current Investments ' 9A ' 92,102,498 87,102,498

Long-term Loans & advances ' 10 ' 28,009,640 5,490,454

Current Assets

Current Investments ' 9B ' 449,034,056 449,121,763

Trade Receivables ' 11 ' 39,285,394 31,267,124

Cash & Bank Balances ' 12 ' 7,275,945 40,456,410

Short Term Loans & Advances ' 10 ' 95,210,442 108,614,312

590,805,837 629,459,609

Total 714,739,552 727,257,110

Summary of Significant Accounting Policies ' 2.1 '

The accompanying notes are an integral part of the financial statements

As per our report of even date.

For S. R. Batliboi & Associates LLP For and on behalf of the Board of

ICAI Firm Registration No. 101049W/E300004 Principal Pnb Asset Management Company Private Limited


Sd/- Sd/- Sd/-

per Charanjit Attra M. M. Chitale Lalit Vij

Partner Chairman Managing Director

Membership No.100312 DIN : 00101004 DIN: 00533071

Sd/-

Nidhi Shah

Company Secretary

Mumbai, August 22, 2017 Mumbai, August 22, 2017

Balance Sheet as at March 31, 2017

Principal Pnb Asset Management Company Private Limited

Year ended Year ended

March 31, 2017 March 31, 2016

Notes Rs. Rs.

Income

Income from Operations ' 13 ' 420,887,251 358,809,839

Other Income ' 14 ' 32,525,375 31,562,403

453,412,626 390,372,242

Expenses

Employee Cost ' 15 ' 266,129,253 270,880,426

Administrative and Other Expenses ' 16 ' 217,953,214 248,150,725

Depreciation and Amortisation ' 17 ' 3,332,012 5,681,622

487,414,479 524,712,773

Loss before tax and extraordinary items (34,001,853) (134,340,531)

Less: Prior period items 4,265,929 -

Loss before tax (38,267,782) (134,340,531)

Tax Expenses

- Income Tax - -

- Prior Period Tax (net) - (18,090)

- Deferred Tax - -

Total Tax Expense - (18,090)

Loss for the year from continuing operations (38,267,782) (134,322,441)

Earnings per Equity Share (Basic and Diluted)

[Nominal value of Share Rs. 10 (March 31, 2016: Rs. 10)] (2.20) (7.72)

Summary of Significant Accounting Policies ' 2.1 '

The accompanying notes are an integral part of the financial statements





Sd/- Sd/- Sd/-



Membership No.100312 DIN : 00101004 DIN: 00533071

Sd/-

Nidhi Shah

Company Secretary



Statement of Profit and Loss for the year ended March 31, 2017


March 31, 2017 March 31, 2016

Rs. Rs.

Cash Flow from Operating Activities

Profit before Tax and extraordinary items (34,001,853) (134,340,531)

Non-Cash Adjustment to reconcile Profit before Tax to Net Cash Flows

Prior period items (4,265,929) -

Depreciation and Amortisation 3,332,012 5,681,622

Loss / (Profit) on Sale of Fixed Assets (95,415) (121,296)

Net (Gain) / Loss on Sale of Current Investments (considered seperately) (25,154,092) (31,355,009)

Operating Profit before Working Capital Changes (60,185,277) (160,135,214)

Movements in Working Capital

Increase / (Decrease) in Long Term Provisions 19,820,448 1,597,680

Increase / (Decrease) in Trade Payables (7,793,816) 571,288

Increase / (Decrease) in Other Payables 14,683,683 12,284,895

Increase / (Decrease) in Short Term Provisions (960,091) 2,099,809

(Increase) / Decrease in Long-term Loans and Advances (22,519,186) 37,429,448

(Increase) / Decrease in Trade Receivables (8,018,270) 7,060,928

(Increase) / Decrease in Short-term Loans and Advances 13,774,545 (36,350,029)

Less: Taxes paid (370,675) (7,079,710)

Net Cash Flow from Operating Activities (51,568,639) (142,520,905)

Cash Flow from Investing Activities

Purchase of Fixed Assets (1,959,125) (2,386,342)

Sale of Fixed Assets 105,500 1,687,333

Purchase of Non Current Investments (5,000,000) (7,760,000)

Purchase of Current Investments (1,788,832,635) (1,026,939,565)

Sale of Current Investments 1,814,074,434 1,214,241,575

Net Cash Flow from Investing Activities 18,388,174 178,843,001

Cash Flow from Financing Activities

Proceeds from Issuance of Share Capital - -

(net of opening share application money)

Net Cash Flow from Financing Activities - -

Net Increase / (Decrease) in Cash and Cash Equivalents (33,180,465) 36,322,096

Cash and Cash Equivalents at the beginning of the year 40,456,410 4,134,314

Cash and Cash Equivalents at the end of the year 7,275,945 40,456,410

The above Cash Flow Statement has been prepared under the 'Indirect Method' as set out in Accounting Standard (AS) - 3,

Cash Flow Statements' notfied under section 133 of the Companies Act, 2013, read together with Rule 7 of the Companies

(Accounts) Rules, 2014 and the Companies (Accounting Standards) Amendment Rules, 2016.

Cash and Cash Equivalents in the balance sheet comprises of cash at bank and cast at hand.





Sd/- Sd/- Sd/-



Membership No.100312 DIN: 00101004 DIN: 00533071

Sd/-

Nidhi Shah

Company Secretary



Cash Flow Statement for the year ended March 31, 2017

Principal Pnb Asset Management Company Private Limited Notes forming part of the financial statements for the year ended March 31, 2017

1. Corporate Information

Principal Pnb Asset Management Company Private Limited (the Company) is a private limited company domiciled in India. The Company provides asset management services to Principal Mutual Fund. It also provides portfolio management and advisory services.

2. Basis of Preparation

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the accounting standards notified under Section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules 2014, Companies (Accounting Standards) Amendment Rules, 2016 and the relevant provisions of the Companies Act, 2013. The financial statements have been prepared on an accrual basis and under the historical cost convention.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.

2.1 Summary of Significant Accounting Policies:

a. Accounting concepts

The Company is a Small and Medium Sized Company (SMC) as defined in the General Instructions in respect of Accounting Standards notified under Section 133 of the Companies Act, 2013 read together with paragraph 7 of the Companies (Accounts) Rules 2014 and the Companies (Accounting Standards) Amendment Rules, 2016. Accordingly, the Company has complied with the Accounting Standards as applicable to the SMC.

b. Use of estimates

The presentation of the financial statements in conformity with the generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported amount of assets and liabilities, revenues and expenses and disclosure of contingent liabilities. Such estimates and assumptions are based on management’s evaluation of relevant facts and circumstances as on the date of financial statements. The actual outcome may differ from these estimates.

c. Revenue recognition

Investment management fees are recognised in accordance with the terms of contract between the Company and the Board of Trustees of Principal Mutual Fund and are in line with the Securities and Exchange Board of India ("SEBI") (Mutual Funds) Regulations, 1996 (SEBI Regulations) as amended from time to time, based on daily net asset value (excluding investments made by the Company in the schemes in accordance with SEBI Regulations). Such fees and other revenues received for providing asset management services are recognised as revenue when the service is performed.

Portfolio Management Fees and Advisory Fees are recognised on an accrual basis at the time the services are rendered and an enforceable right to receive has arisen in accordance with terms of the contract between the Company and clients.

d. Fixed assets and depreciation / amortisation

(a) Property, plant & equipment and depreciation

Tangible fixed assets acquired by the Company are reported at acquisition value, with deductions for accumulated depreciation and impairment losses, if any.


The acquisition value includes the purchase price (excluding refundable taxes) and expenses directly attributable to the asset to bring it to the site and in the working condition for its intended use. Examples of directly attributable expenses included in the acquisition value are delivery and handling costs, installation, legal services and consultancy services.

Depreciation is charged over the estimated useful life of a fixed asset on a straight line basis. If the management’s estimate based on technical assessment of the useful life of the fixed asset at the time of acquisition of the asset or of the remaining useful life on a subsequent review is different than that envisaged in the Schedule II, depreciation is charged based on the management’s estimate of the useful life or remaining useful life of the fixed asset. Pursuant to this policy, depreciation on the following assets is provided over the estimated useful lives stated below:

Asset Type As per

Schedule II As per Estimated

Life

Furniture and fixtures 10 years 4 years

Office equipments 5 years 3 years

Mobile Phones 5 years 2 years

Computers 3 years 3 years

Electrical installations 10 years 4 years

Motor cars 8 years 4 years

Leasehold improvements are depreciated on a straight line basis over the primary period of lease. Assets individually costing less than Rs. 5,000 are fully depreciated in the year of purchase.

(b) Intangible assets and amortisation

Intangible assets other than goodwill are valued at cost less amortisation. These generally comprise of asset management rights acquired by the Company and costs incurred to acquire computer software licences and implement the software for internal use (including software coding, installation, testing and certain data conversion).

Intangible assets are reported at acquisition value with deductions for accumulated amortisation and any impairment losses.

Amortisation takes place on a straight line basis over the asset’s anticipated useful life estimated by the Management. The useful life is determined based on the period of the underlying contract and the period of time over which the intangible asset is expected to be used and does not exceed three years except in case of asset management rights, which are amortised over a period of ten years.

An impairment test of intangible assets is conducted annually or more often if there is an indication of a decrease in value. The impairment loss, if any, is reported in the Statement

of Profit and Loss. Where assets are impaired, the amortisation charge is adjusted so as to charge off the carrying value of such asset after adjusting the impairment in their value, over their respective remaining useful lives.

e. Impairment of assets

The carrying values of assets of the Company’s cash-generating units are reviewed for impairment at the Balance Sheet date. If any indication of such impairment exists, the recoverable amounts of those assets are estimated and impairment loss is recognised, if the carrying amount of those assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the estimated future cash flows to their present value based on appropriate discounting factor.


f. Long Term Investments

Long Term Investments are valued at cost unless otherwise stated. Cost includes the purchase price and related expenses such as brokerage and stamp duties.

The carrying values of Long Term Investments of the Company are reviewed for permanant impairment annually. If any indication of such impairment exists, impairment loss is recognised.

g. Current Investments and investment income

Current Investments are valued at the lower of cost and fair value. Cost includes the purchase price and related expenses such as brokerage and stamp duties.

The difference between the cost and the redemption / sale proceeds net of expenses is recognised in the statement of profit and loss. For calculation of profit/loss on investment, cost is calculated on weighted average basis.

Dividend income is accounted when the right to receive the income is established.

h. Employee Benefits

(a) Short Term

A short term employee benefit is recognised as an expense at the undiscounted amount expected to be paid over the period of services rendered by the employees to the Company.

(b) Long Term

The Company has both defined-contribution and defined-benefit plans, of which some have assets in special funds or securities. The plans are financed by the Company, and in the case of some defined contribution plans, by the Company along with its employees.

(c) Defined-contribution plans

These are plans in which the Company pays pre-defined amounts to separate funds and does not have any legal or informal obligation to pay additional sums. These comprise of contributions to the employees’ provident fund and family pension fund. The Company’s payments to the defined-contribution plans are reported as expenses during the period in which the employees perform the services that the payment covers.

(d) Defined-benefit plans

Expenses for defined-benefit gratuity payment plans are calculated as at the balance sheet date by an Actuary in a manner that distributes expenses over the employee’s working life. These commitments are valued at the present value of the expected future payments, with consideration for calculated future salary increases, using a discount rate corresponding to the interest rate estimated by the Actuary having regard to the interest rate on government bonds with a remaining term that is almost equivalent to the average balance working period of employees.

(e) Other Employee Benefits

Compensated absences which accrue to employees and which can be carried to future periods but are expected to be encashed or availed in twelve months immediately following the year end are reported as expenses during the year in which the employees perform the services that the benefit covers and the liabilities are reported at the undiscounted amount of the benefits after deducting amounts already paid. Where there are restrictions on


availment of encashment of such accrued benefit or where the availment or encashment is otherwise not expected to wholly occur in the next twelve months, the liability on account of the benefit is actuarially determined using the projected unit credit method.

i. Foreign currency translation

Transactions in foreign currencies are translated to the reporting currency based on the exchange rate on the date of the transaction. Exchange differences arising on settlement thereof during the year are recognised as income or expenses in the Statement of Profit and Loss.

Monetary assets and liabilities in foreign currencies as at the year end are valued at closing-date rates, and unrealised translation differences are included in the Statement of Profit and Loss.

j. Taxes on income

Income taxes include tax payable in respect of taxable income for the year, adjustment attributable to earlier periods and changes in deferred taxes. Valuation of all tax liabilities / receivables is conducted at nominal amounts and in accordance with enacted tax regulations and tax rates and in the case of deferred taxes, those that have been substantially enacted.

Deferred tax is calculated to correspond to the tax effect arising when final tax is determined. Deferred tax corresponds to the net effect of tax on all timing differences which occur as a result of items being allowed for income tax purposes during a period different from when they were recognised in the financial statements.

Deferred tax assets are recognised with regard to all deductible timing differences to the extent that it is probable that taxable profit will be available against which deductible timing differences can be utilised. When the Company carries forward unused tax losses and unabsorbed depreciation, deferred tax assets are recognised only to the extent there is virtual certainty backed by convincing evidence that sufficient future taxable income will be available against which deferred tax assets can be realised.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced by the extent that it is no longer probable that sufficient taxable profit will be available to allow all or a part of the aggregate deferred tax asset to be utilised.

k. Scheme Administration Expenses

Expenses of schemes of Principal Mutual Fund in excess of the stipulated rates are required to be borne by the Company, in accordance with the requirements of Securities and Exchange Board of India (Mutual Fund) Regulations, 1996, and as such, are charged to the Statement of Profit and Loss.

l. Provisions and contingencies

A provision is recognised when the Company has a present legal obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not recognised, however adequate disclosure has been made for the same. A contingent asset is neither recognised nor disclosed.

m. Operating leases

Leases of assets whereby the lessor essentially remains the owner of the asset is classified as operating leases. The payments made by the Company as lessee in accordance with operational


leasing contracts or rental agreements are expensed on a straight line basis during the lease or rental period respectively. Any compensation, according to agreement, that the lessee is obliged to pay to the lessor if the leasing contract is terminated prematurely is expensed during the period in which the contract is terminated.

March 31, 2017 March 31, 2016

Rs. Rs.

3. SHARE CAPITAL

Authorised Shares 250,000,000 250,000,000

25,000,000 (31 March 2016: 25,000,000) equity shares of Rs. 10 each

- -

250,000,000 250,000,000

Issued, Subscribed and Fully Paid-up shares

17,400,014 (31 March 2016: 17,400,014) equity shares of Rs. 10 each 174,000,140 174,000,140

Total Issued, Subscribed and Fully Paid-up share capital 174,000,140 174,000,140

a. Reconciliation of the shares outstanding at the beginning and at the end of the reporting period

Equity Shares March 31, 2017 March 31, 2016

No. Rs. No. Rs.

At the beginning of the year 17,400,014 174,000,140 17,400,014 174,000,140

Issued during the year - - - - Outstanding at the end of the year 17,400,014 174,000,140 17,400,014 174,000,140

b. Terms/Rights attached to Equity Shares

c. Shares held by Holding Company

Out of Equity Shares issued by the Company, shares held by its Holding Company are as below:

March 31, 2017 March 31, 2016

Rs. Rs.

Principal Financial Group (Mauritius) Ltd., the holding Company

13,680,014 (March 31, 2016: 13,680,014) Equity Shares of Rs.10 each fully paid 136,800,140 136,800,140

(including nominee shares)

d. Details of shareholders holding more than 5% shares in the Company

March 31, 2017 March 31, 2016

% holding in % holding in

No. the class No. the class

Equity Shares of Rs.10 each fully paid

Principal Financial Group (Mauritius) Ltd,

the holding company

(including nominee shares) 13,680,014 79% 13,680,014 79%

Punjab National Bank 3,720,000 21% 3,720,000 21%

As per records of the company, including its register of shareholders/members and other declarations received from shareholders

regarding beneficial interest, the above shareholding represents legal and beneficial ownerships of shares.

March 31, 2017 March 31, 2016

Rs. Rs.

4. RESERVES AND SURPLUS

Capital Redemption Reserve 60,000,000 60,000,000

Share Premium Account

Balance as per last financial statements 1,276,000,710 1,276,000,710

Add: Premium on issue of equity shares - -

Closing Balance 1,276,000,710 1,276,000,710

General Reserve 71,313,027 71,313,027

Surplus / (Deficit) in the Statement of Profit & Loss

Balance as per last financial statements (974,904,522) (840,582,081)

Loss for the year (38,267,782) (134,322,441)

Net Surplus / (Deficit) in the Statement of Profit & Loss (1,013,172,304) (974,904,522)

394,141,433 432,409,215 Total Reserves and Surplus


Notes forming part of the Balance Sheet as at March 31, 2017

The Company has only one class of equity shares having a par value of Rs.10 per share. Each holder of equity shares is entiled to one

vote per share.

In the event of liquidation, the holders of equity shares will be entitled to receive remaining assets of the Company.

Non-Current Current

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

Rs. Rs. Rs. Rs.

5. PROVISIONS

Provision for Employee Benefits

Provision for gratuity 20,012,896 1,989,300 6,400,636 7,327,912

Provision for leave benefits 4,073,807 2,276,955 611,725 644,540

24,086,703 4,266,255 7,012,361 7,972,452

March 31, 2017 March 31, 2016

Rs. Rs.

6. CURRENT LIABILITIES

Trade Payables (including acceptances) (A) 19,512,729 27,306,545

(refer note 29 for details of dues to micro and small enterprises)

Other Payables

Statutory Dues Payable 25,998,770 22,999,078

Other Liabilities 69,987,416 58,303,425

(B) 95,986,186 81,302,503

Total (A + B) 115,498,915 108,609,048





7. PROPERTY, PLANT & EQUIPMENT

Office Furniture & Computers Motor Cars Leasehold Electrical Total

Equipments Fixtures Improvements Installations

Cost or Valuation

As at March 31, 2015 12,599,399 1,854,111 35,923,363 2,984,775 61,475 15,215 53,438,338

Additions 233,035 - 1,525,435 - - - 1,758,470

Disposals (1,006,561) (171,372) (5,681,217) (2,984,775) - - (9,843,925)

As at March 31, 2016 11,825,873 1,682,739 31,767,581 - 61,475 15,215 45,352,883

Additions 179,406 89,040 591,679 - 1,079,962 - 1,940,087

Disposals (5,859,674) (13,612) (8,727,532) - - - (14,600,818)

As at March 31, 2017 6,145,605 1,758,167 23,631,728 - 1,141,437 15,215 32,692,152

Depreciation

As at March 31, 2015 11,773,315 1,854,111 32,123,338 1,490,315 61,475 15,215 47,317,769

Additions 784,650 - 2,601,051 248,731 - - 3,634,432

Disposals (990,379) (171,372) (5,377,090) (1,739,046) - - (8,277,887)

As at March 31, 2016 11,567,586 1,682,739 29,347,299 - 61,475 15,215 42,674,314

Additions 228,484 1,535 1,600,904 - 18,620 - 1,849,543

Disposals (5,849,589) (13,612) (8,727,532) - - - (14,590,733)

As at March 31, 2017 5,946,481 1,670,662 22,220,671 - 80,095 15,215 29,933,124

Net Block

As at March 31, 2016 258,287 - 2,420,282 - - - 2,678,569

As at March 31, 2017 199,124 87,505 1,411,057 - 1,061,342 - 2,759,028

8. INTANGIBLE ASSETS

Asset Computer Total

Management Software

Rights

Gross Block

As at March 31, 2015 91,655,275 25,762,529 117,417,804

Additions - 1,414,807 1,414,807

Disposals - (5,274,324) (5,274,324)

As at March 31, 2016 91,655,275 21,903,012 113,558,287

Additions - 71,994 71,994

Disposals - - -

As at March 31, 2017 91,655,275 21,975,006 113,630,281

Amortisation

As at March 31, 2015 85,731,288 22,657,123 108,388,411

Charge for the year - 2,047,189 2,047,189

Disposals - (5,274,324) (5,274,324)

As at March 31, 2016 85,731,288 19,429,988 105,161,276

Additions - 1,482,469 1,482,469

Disposals - -

As at March 31, 2017 85,731,288 20,912,457 106,643,745

Impairment Loss

As at March 31, 2015 5,923,987 - 5,923,987

Charge for the year - - -

Reversals for the year - - -

As at March 31, 2016 5,923,987 - 5,923,987

Charge for the year - - -

Reversals for the year - - -

As at March 31, 2017 5,923,987 - 5,923,987

Net Block

As at March 31, 2016 - 2,473,024 2,473,024

As at March 31, 2017 - 1,062,549 1,062,549

March 31, 2017 March 31, 2016

9 A. NON - CURRENT INVESTMENTS

Non Current Investments (valued at cost unless stated otherwise)

Unquoted Mutual Funds

101,394.046 units (March 31, 2016: 101,394.046 units) of Rs.19.15 (March 31, 2016: Rs.10.21)

each fully paid-up of Principal Index Fund-Mid Cap-Direct-Growth 1,035,000 1,035,000


each fully paid-up of Principal Dividend Yield Fund -Direct Plan -Growth 5,000,000 5,000,000


each fully paid-up of Principal Emerging Blue ChipFund -Direct Plan -Growth 5,000,000 5,000,000

2,282.84 units (March 31, 2016: 2,282.84 units) of Rs.2,656.88 (March 31, 2016: Rs.2,190.25)

each fully paid-up of Principal Low Duration Fund -Direct Plan -Growth 5,000,000 5,000,000

178.79 units (March 31, 2016: 178.79 units) of Rs.2,576.54 (March 31, 2016: Rs.2,129.82)

each fully paid-up of Principal Credit Opportunities Fund -Direct Plan -Growth 380,789 380,789


each fully paid-up of Principal Growth Fund -Direct Plan-Growth 5,000,000 5,000,000


each fully paid-up of Principal Government Securities Fund-direct Plan-Growth 5,000,000 5,000,000


each fully paid-up of Principal Global Opportunities Fund-Direct Plan-Growth 2,371,402 2,371,402


each fully paid-up of Principal Dynamic Bond Fund -Direct Plan -Growth 5,000,000 5,000,000


each fully paid-up of Principal Short Term Income Fund -Direct Plan-Growth 5,000,000 5,000,000


each fully paid-up of Principal Large Cap Fund -Direct Plan - Growth 5,000,000 5,000,000


each fully paid-up of Principal Cash Management Fund -Direct Plan -Growth 5,000,000 5,000,000


each fully paid-up of Principal Equity Savnig Plan -Direct Plan MIP-Growth 2,691,305 2,691,305


each fully paid-up of Principal Retail Money Manager Fund-Direct Plan-Growth 1,500,000 1,500,000


each fully paid-up of Principal Retail Money Manager Fund-Direct Plan-Growth 723,839 723,839


each fully paid-up of Principal Debt Savings Fund Retail -Direct Plan -Growth 2,553,502 2,553,502

2,825.538 units (March 31, 2016: 2,825.538 units) of Rs.2112.81 (March 31, 2016: Rs.1,769.57)

each fully paid-up of Principal Bank CD Fund-Direct -Growth 5,000,000 5,000,000


each fully paid-up of Principal Smart Equity Fund -Direct Plan-Growth 5,000,000 5,000,000


each fully paid-up of Principal Balance Fund -Direct Plan-Growth 1,710,089 1,710,089


each fully paid-up of Principal Personal Tax Saver Fund-Direct Plan-Growth 5,000,000 5,000,000


each fully paid-up of Principal Tax Saving Fund-Direct Plan -Growth 5,000,000 5,000,000

15,234.93 units (March 31, 2016: 15,234.93) of Rs.64.66 (March 31, 2016: Rs.57.54)

each fully paid-up of Principal Index Fund Nifty-Direct Plan -Growth 876,572 876,572

439,000.00 units (March 31, 2016: 439,000.00) of Rs.11.33 (March 31, 2016: Rs.10)

each fully paid-up of Principal Asset Allocation Fund of Fund-Conservative Plan-Direct Plan-Growth 4,390,000 4,390,000


each fully paid-up of Principal Asset Allocation Fund of Fund-Aggressive Plan-Direct Plan-Growth 1,180,000 1,180,000


each fully paid-up of Principal Asset Allocation Fund of Fund-Moderate Plan-Direct Plan-Growth 2,190,000 2,190,000


each fully paid-up of Principal Arbitrage Fund-Direct Plan-Growth 5,000,000 -

Investment in Equities

500,000 units (March 31, 2016: 500,000 units) of Rs.1.00 (March 31, 2016: Rs.1)

each fully paid-up of MF utilities India Private Limited 500,000 500,000

92,102,498 87,102,498

Aggregate amount of unquoted investments (Market Value Rs.111,679,358 (March 31, 2016: 90,134,739)) 92,102,498 87,102,498



March 31, 2017 March 31, 2016

9 B. CURRENT INVESTMENTS

Current Investments (valued at lower of cost and fair value, unless stated otherwise)

Unquoted Mutual Funds

20,323,807 360,786,981

428,710,249 78,710,248

- 9,624,534

449,034,056 449,121,763

Aggregate amount of unquoted investments (Market Value Rs.473,544,313 (March 31, 2016: 460,915,895)) 449,034,056 449,121,763

Non-Current Current

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

Rs. Rs. Rs. Rs.

10. LOANS AND ADVANCES

Capital Advances

Secured, considered good - - - -

Unsecured, considered good - - - 14,000

(A) - - - 14,000

Security Deposit


Unsecured, considered good 27,131,932 2,933,114 2,642,070 33,533,531

Doubtful 715,387 592,631 - -

27,847,319 3,525,745 2,642,070 33,533,531

Provision for Doubtful Security Deposit 715,387 592,631 - -

(B) 27,131,932 2,933,114 2,642,070 33,533,531

Advances recoverable in cash or kind


Unsecured, considered good 456,522 1,970,854 34,664,330 16,459,591

Doubtful - - 1,140,106 1,149,386

456,522 1,970,854 35,804,436 17,608,977

Provision for doubtful advances - - 1,140,106 1,149,386

(C) 456,522 1,970,854 34,664,330 16,459,591

Other Loans and Advances

Advance Income Tax (net of provision for taxation) - - 52,059,618 51,688,943

Prepaid Expenses 421,186 586,486 5,844,424 6,872,884

Loans to Employees - - - 45,363

Doubtful - - 569,218 568,955

421,186 586,486 58,473,260 59,176,145

Provision for doubtful Fringe Benefit Tax 569,218 568,955

(D) 421,186 586,486 57,904,042 58,607,190

Total (A+B+C+D) 28,009,640 5,490,454 95,210,442 108,614,312

11. TRADE RECEIVABLES

Trade Receivables

Outstanding for a period less than six months from the date they are

due for payment

Secured, considered good - -

Unsecured, considered good 39,285,394 31,267,124

Doubtful - -

39,285,394 31,267,124

Provision for doubtful receivables - - 39,285,394 31,267,124

12. CASH AND BANK BALANCES

Cash and cash equivalents

Balances with Banks

On current accounts 7,237,662 40,452,861

Cash on hand 38,283 3,549 7,275,945 40,456,410

each fully paid-up of Principal Debt Opp Fund Cons Plan-Direct-Growth

Nil units (March 31, 2016: 970,000) of Rs.Nil (March 31, 2016: Rs.9.92)

each fully paid-up of Principal Asset Allocation Fund-Moderate-Direct Plan-Growth



13,046.74 units (March 31, 2016: 247,640 units) of Rs.1,584.05 (March 31, 2016: Rs.1,474.76)

each fully paid-up of Principal Cash Management Fund - Direct - Growth Plan



March 31, 2017 March 31, 2016

Rs. Rs.

13. INCOME FROM OPERATIONS

Details of Services Rendered

Fees from Mutual Fund Operations 420,887,251 358,809,839

420,887,251 358,809,839

14. OTHER INCOME

Net Gain on Sale of Current Investments 25,154,092 31,430,543

Profit on sale of fixed assets (net) 95,415 121,296

Other Non-Operating Income 7,275,868 10,564

32,525,375 31,562,403

15. EMPLOYEE COST

Salary, bonus and allowances 238,715,395 245,041,960

Contribution to Provident and Other Funds 22,901,524 20,878,779

Welfare Expenses 4,512,334 4,959,687 266,129,253 270,880,426

16. ADMINISTRATIVE AND OTHER EXPENSES

Rent 47,837,626 48,796,588

Electricity 4,826,774 4,903,780

Repairs and Maintenance

Office Equipments 1,539,014 901,911

Others 8,691,726 29,247,295

Travel and Entertainment 19,961,455 24,859,693

Admin and Office Support 7,735,998 7,198,985

Legal and Professional Fees 41,643,625 50,728,880

Auditors' Remuneration: (net of service tax)

Audit Fees 600,000 550,000

For Tax Audit 150,000 150,000

For Certification 200,000 -

Service TaxOut of Pocket Expenses 57,648 39,521

Computer Expenses 6,391,634 6,144,675

Telecommunication Expenses 6,041,546 6,890,760

Subscription to Databases, Books & Periodicals 12,226,632 18,315,629

Printing, Stationery, Postage and Courier 2,756,317 1,702,417

Advertisement and Publicity 1,789,194 2,132,617

Membership/Registration fees 790,264 1,393,103

Scheme Administration Expenses 43,259,136 29,789,727

Insurance Expenses 529,430 845,223

Rates and Taxes 696,266 9,560

SEBI Filing Fees 619,071 873,835

Miscellaneous Expenses 9,609,858 12,676,526 217,953,214 248,150,725

17. DEPRECIATION AND AMORTISATION

Depreciation of Property, Plant & Equipment 1,849,543 3,634,433

Amortisation of Intangible Assets 1,482,469 2,047,189 3,332,012 5,681,622


Notes forming part of the Profit and Loss Account for the year ended March 31, 2017


18. Managerial Remuneration

(a) Director’s Remuneration: -

(Amount in Rs.)

Particulars 2016-2017 2015-2016

Salaries and allowances 19,558,801 18,172,459

Contribution to Provident and Other Funds 768,000 756,914

Perquisites 24,423 943,612

Total 20,351,224 19,872,985

Notes:

1. Provision for Gratuity and Compensated Absences is made in aggregate for the Company as a whole and the component attributable to the Director’s remuneration is not separately identifiable and has therefore not been included above.

(b) Miscellaneous expenses include: -

(Amount in Rs.)

Particulars 2016-2017 2015-2016

Sitting Fees paid to Directors 1,300,000 1,100,000

The above amounts do not include reimbursement of expenses paid to directors.

19. Expenditure in foreign currency: -

(Amount in Rs.)

Particulars 2016-2017 2015-2016

Travel Expenses 1,848,157 1,634,319

Professional Charges 5,040,100 1,354,215

Software Maintenance/E-Communication 599,850 305,938

Information/Wire-Service Expenses 6,009,300 3,656,489

Seminar, conference and training expenses 200,567 4,142,004

Total 13,697,974 11,092,965

20. Foreign Currency Exposures:

The year end foreign currency exposures that were not hedged by derivative instruments or otherwise are given below:

Particulars 2016-2017 2015-2016

Rs. USD Rs. USD

Liability for Employee Stock Purchase Plan 8,010,357 123,536 1,449,092 21,523

Information/Wire-Service Expenses - - 6,566,957 99,000

Professional Charges 324,193 5,000 331,665 5,000


21. Segment Reporting:

The Company is engaged in the business of providing asset management services in India. There are no other separate business segments and/or geographical segments as per Accounting Standard 17 – Segment Reporting issued by The Institute of Chartered Accountants of India.

22. Related Party Disclosures:

Disclosure as required by Accounting Standard (AS) - 18 “Related Party Disclosures”.

A. Names of the related parties and their relationship with the Company:

Nature of Relationship Name of the related party

Ultimate Holding Company Principal Financial Group, Inc.

Holding Company of Principal Financial Group (Mauritius) Limited

Principal Financial Services, Inc.

Subsidiary of Principal Financial Services, Inc.

Principal International, Inc.,

Step-down subsidiaries of Principal Financial Services, Inc.

Principal Global Services Private Limited, Principal Consulting (India) Private Limited

Holding Company Principal Financial Group (Mauritius) Limited

Substantial Shareholder Punjab National Bank

Fellow Subsidiaries Principal Trustee Company Private Limited

Principal Retirement Advisors Private Limited

Key Management Personnel Mr. Lalit Vij, Managing Director

Additional Related parties as per the Companies Act, 2013 with whom transactions have taken place during the year

Nature of Relationship Name of the related party

Company Secretary Ms. Niyati Shah

B. Transaction with Related Parties

(Amount in Rs.)

Name of the related party

Particulars 2016-2017 2015-2016

Principal International, Inc.

Professional Services 1,334,893 1,354,215

Balance Receivable/(Payable) as at March 31, 2017

(324,193) (331,665)

Principal Financial Group (Mauritius) Ltd

Subscription to Share Capital

- -

Closing Balance of Shares Subscribed

136,800,140

136,800,140


Principal Retirement Advisors Private Limited

Net Recovery relating to sharing of common expenses

10,301,718 150,358

Payments relating to sharing of common infrastructure

3,157,292 21,215,749

Recovery Relating to sharing of deposit for premises

8,149,395 2,473,282

Payment Relating to sharing of deposit for premises

8,219,626 708,063

Balance Receivable/(Payable) as on March 31, 2017

(7,756,773) (9,643,181)

Principal Consulting (India) Private Limited

Net Recovery relating to sharing of common expenses

61,87,473

5,250,731

Recovery relating to sharing of common infrastructure

342,991 714,405

Payment relating to service fees

21,843,059 33,462,190

Balance Receivable/(Payable) as on March 31, 2017

(418,459) (3,567,268)

Principal Trustee Company Private Limited

Recovery relating to sharing of common expenses

672,319 -

Balance Receivable/(Payable) as on Mar 31, 2017

- -

Mr. Lalit Vij Remuneration Paid

20,351,224 19,872,985

Ms. Niyati Shah# 553,532 359,584

# For Part of the year in 2015-16

Transactions in the normal course of banking business with Punjab National Bank have not been considered for reporting related party transactions.

23. The company has taken office premises under operating lease agreeements. These are cancellable and are renewable by mutual consent on mutually agreed terms.

The company has recognized Rs. 47,837,626 (Previous Year Rs. 48,796,588) towards lease payments (excluding the recovery of shared expenses) in the statement of profit and loss.


24. The Company has not recognised deferred tax asset on account of prudence.

25. Earnings Per Share (EPS):

The earnings per equity share is calculated as stated below: -

(Amount in Rs.)

Particulars 2016-2017 2015-2016

Net Profit / (Loss) after tax for calculation of Basic/Diluted EPS

(38,267,782) (134,322,441)

Weighted average numbers of equity shares (Nos.) 17,400,014 17,400,014

Basic and Diluted EPS (2.20) (7.72)

Nominal value per share 10.00 10.00

26. The employees of the Company are offered an Employee Stock Purchase Plan (Plan) by Principal Financial Group Inc. USA (PFG), the ultimate holding company. Contributions received from the employees are held by the Company, for onward remittance to PFG. Contributions received as at the year end Rs. 8,010,357 (Previous Year Rs. 1,449,092) have been included as part of “Other Liabilities”.

27. Miscellaneous expenses include foreign currency exchange loss (net) of Rs. Nil (Previous Year loss (net) of Rs. 134,320). Other non-opertaing income includes foreign currentcy exchange gain (net) of Rs.276,142 (Previous Year Nil).

28. Expenses are net of recoveries / reimbursements, and include share of expenses, wherever services / facilities are shared with other entities.

29. Dues to micro, small and medium enterprises: There are no amounts that need to be disclosed in accordance with the Micro Small and Medium Enterprise Development Act, 2006 (the ‘MSMED’) pertaining to micro or small enterprises. For the year ended March 31, 2017, no supplier has intimated the Company about its status as micro and small enterprises or its registration with the appropriate authority under ‘MSMED’.

30. Employee Benefit Obligations

Defined-Contribution Plans

The Company makes a contribution towards recognised provident fund and family pension fund for substantially all the qualifying employees. Contributions are paid during the year into separate funds under certain statutory arrangements. The employees and the Company pay predetermined contributions into the provident fund and family pension fund which is based on specified percentage of the employees’ salary.

A sum of Rs. 10,109,443 (Previous Year Rs.10,727,333) has been charged to the Statement of Profit and Loss in this respect.

Defined–Benefits Plans

The Company offers its employees defined-benefit plans in the form of a gratuity scheme (a lump sum amount). Benefits under the defined benefit plans are typically based either on years of service and the employee’s compensation (generally immediately before retirement). The gratuity scheme covers all regular employees of the Company. The Company contributes funds to the Life Insurance Corporation of India. Commitments are actuarially determined at year-end. In accordance with the revised Accounting Standard,


(AS) 15 on “Employee Benefits”, actuarial valuation is done based on “Projected Unit Credit” method. Gains and losses of changed actuarial assumptions are charged to Statement of the profit and loss.

Disclosure for defined benefit plans based on actuarial reports:

Sr. No.

Particulars As at

March 31, 2017

March 31, 2016

Rs. Rs.

I Change in defined benefit obligation

Present Value of Benefit Obligation at the Beginning of the Period 22,246,574 26,364,533

Interest Cost 1,746,356 2,088,071

Current Service Cost 3,654,441 4,017,953

Liability Transferred In/ Acquisitions - -

Liability Transferred Out/ Divestments - (14,596,275)

Benefit Paid From the Fund (10,091,094) (1,690,917)

Actuarial (Gains)/Losses on Obligations - Due to Change in Demographic Assumptions

- 2,256,817

Actuarial (Gains)/Losses on Obligations - Due to Change in Financial Assumptions

3,780,175 113,017

Actuarial (Gains)/Losses on Obligations - Due to Experience 8,867,885 3,693,375

Present Value of Benefit Obligation at the End of the Period 30,204,337 22,246,574

II Changes in the Fair Value of Plan Assets

Fair Value of Plan Assets at the Beginning of the Period 12,929,362 21,109,018

Expected Return on Plan Assets 1,014,955 1,671,834

Contributions by the Employer - 6,172,610

Assets Transferred In/Acquisitions - -

Assets Transferred Out/ Divestments - (14,596,275)

Benefit Paid from the Fund (10,091,094) (1,690,917)

Actuarial Gains/(Losses) on Plan Assets - Due to Experience (62,418) 263,092

Fair Value of Plan Assets at the End of the Period 3,790,805 12,929,362

III Expenses recognized in the Statement of Profit and Loss

Current Service Cost 3,654,441 4,017,953

Interest Costs 731,401 416,237

Expected return on Plan Assets - -

Actuarial (Gains)/Losses 12,710,478 5,800,117

Expenses Recognized in the Statement of Profit or Loss 17,096,320 10,234,307

IV Amount recognized in the Balance Sheet

Present Value of Benefit Obligation at the end of the Period (30,204,337) (22,246,574)

Fair Value of Plan Assets at the end of the Period 3,790,805 12,929,362

Funded Status (Surplus/ (Deficit)) (26,413,532) (9,317,212)

Net (Liability)/Asset Recognized in the Balance Sheet (26,413,532) (9,317,212)


V The major categories of plan assets as a percentage of total plan

Investments with Insurer

100%

100%

VI Actuarial Assumptions

Discount Rate 6.82% 7.85%

Mortality Rate IALM(2006-08) IALM(2006-08)

Expected return on plan assets 6.82% 7.85%

VII Actual Return on Plan Assets 952,537 1,934,926

a) The estimates of future salary increases, considered in the actuarial valuation, take into account inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market. The expected return on plan assets is based on market expectations at the beginning of the period, for return over the entire life of the related obligation.

b) The company expects to contribute Rs. 6,400,636 to gratuity in the next year (Previous Year Rs. 7,327,912).

c) Amount for current and previous four years are as follows

As at

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

Rs. Rs. Rs. Rs. Rs.

Defined benefit obligation

30,204,337 22,246,574 26,364,533 21,300,705 20,637,611

Plan assets 3,790,805 12,929,362 21,109,018 25,278,937 17,529,826

Surplus/(deficit) (26,413,532) (9,317,212) (5,255,515) 3,978,232 (3,107,785)

Experience adjustment on plan liabilities

8,867,885 3,693,375 2,628,304 625,941 1,661,453

Experience adjustments on plan assets

(62,418) 263,092 (297,739) 380,919 71,339

Compensated Absences

The Company has treated the earned leave which can be carried forward to future periods as a “short term” benefit only if the employees are entitled to either encash or utilise the benefits during the period of twelve months following the end of the accounting period (when they became entitled to the leave) and are also expected to do so. In other cases the benefit has been treated as “long term”.

A sum of Rs. 30,08,448 has been charged in the current year (Previous Year Rs. 26,469) to the Statement of Profit and Loss in this respect.

31. Prior Period Items

Prior period items include the effect of additional provision in the current year on account of erroneous calculation of gratuity liability during the earlier years. A sum of Rs. 43,04,239 has been charged in the current year to the Statement of Profit and Loss in this respect


It also includes the effect of lower provision in the current year on account of erroneous calculation of liability for compensated absences during the earlier years. A sum of Rs.38,310 has been charged back in the current year to the Statement of Profit and Loss in this respect.

No changes have been made to the comparative period.

32. Additional disclosure as per MCA Notification No. GSR 308 ( E ) [F.NO.17/62/2015-CL-V-(VOL.I)], dated March 30,2017 is as under:

Details of Specified Bank Notes (SBN) held and transacted during the period 08/11/2016 to 30/12/2016

Particulars SBNs

Other denomination

notes Total

Closing cash in hand as on 08.11.2016 - 1,129 1,129

(+) Permitted receipts - 364,810 364,810

(-) Permitted payments -

-353,318 -353,318

Closing cash in hand as on 30.12.2016 - 12,621 12,621

33. The figures in respect of the previous year have been regrouped / rearranged, wherever necessary to make them comparable.

For S.R. Batliboi & Associates LLP For and on behalf of the Board of ICAI Firm Registration No. 101049W/E300004 Principal Pnb Asset Management Company Private Limited


Sd/-

Sd/- Sd/-

per Charanjit Attra M. M. Chitale Lalit Vij Partner

Chairman Managing Director

Membership No. 100312 DIN: 00101004 DIN: 00533071

Sd/-

Nidhi Shah

Company Secretary

Mumbai, August 22 , 2017 Mumbai, August 22 , 2017

PRINCIPAL PNB ASSET MANAGEMENT COMPANY PRIVATE …...Mr. Vimlesh Kumar Non - Executive Director The...

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