julius baer wealth advisors (india) private limited

JULIUS BAER WEALTH ADVISORS (INDIA) PRIVATE LIMITED Portfolio Management Services – Disclosure Document

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JULIUS BAER WEALTH ADVISORS (INDIA) PRIVATE LIMITED

DISCLOSURE DOCUMENT

PORTFOLIO MANAGEMENT SERVICES

SEBI Registration No. INP000007012 CIN U65923MH2014PTC255743


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DISCLOSURE DOCUMENT OF

PORTFOLIO MANAGEMENT SERVICES

BEING OFFERED BY

JULIUS BAER WEALTH ADVISORS (INDIA) PRIVATE LIMITED

KEY INFORMATION AND DISCLOSURE DOCUMENT FOR PORTFOLIO MANAGEMENT

SERVICES UNDERTAKEN BY JULIUS BAER WEALTH ADVISORS (INDIA) PRIVATE LIMITED 1. This Disclosure Document has been filed with the Securities and Exchange Board of India

(SEBI) along with a certificate in the prescribed format in terms of Regulation 22 of the SEBI (Portfolio Managers) Regulations, 2020.

2. The purpose of the Disclosure Document is to provide essential information about the

portfolio management services being offered so as to assist and enable the investors in making informed decision for engaging a portfolio manager.

3. This Disclosure Document is dated 19 July 2021 and contains necessary information about

the portfolio manager required by an investor before investing, and the investor is hereby advised to retain the document for future reference. Investors should carefully read the entire document before making a decision and

should retain it for future reference.

Investors may also like to seek further clarifications after the date of this document from the service provider.

4. The name, phone number, e-mail address of the Principal Officer so designated by the Portfolio Manager is:

Name of the Principal Officer Rupen Rajguru Address 8th Floor, Mafatlal Centre, Nariman Point,

Mumbai- 400021 Phone 022 61760100 Email [email protected] Website https://www.juliusbaer.com/en/in/

5. The latest disclosure document is also available by click on this link : Portfolio Management

Services (juliusbaer.com)


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Table of Contents

1. Disclaimer. .............................................................................................................................. 4

2. Definitions. ............................................................................................................................. 4

3. Description. ............................................................................................................................ 6

4. Penalties, Pending Litigation or Proceedings ................................................................. 10

5. Services Offered. ................................................................................................................. 10

6. Risk Factors .......................................................................................................................... 14

7. Client Representation. ....................................................................................................... 22

8. Financial Performance of Portfolio Manager .................................................................. 22

9. Portfolio Management Performance ................................................................................ 23

10. Audit Observations ......................................................................................................... 23

11. Nature of Costs & Expenses ........................................................................................... 23

12. Taxation ............................................................................................................................ 25

13. Accounting Policy ............................................................................................................ 36

14. Prevention of Money Laundering & Know Your Customer (KYC) Requirements. . 37

15. Client/ Services. ............................................................................................................... 38

16. General. ............................................................................................................................. 38


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1. DISCLAIMER

This document has been prepared in accordance with the SEBI (Portfolio Managers) Regulations, 2020 and has been filed with SEBI. This document has neither been approved nor disapproved by SEBI nor has SEBI certified the accuracy or adequacy of the contents of this document.

2. DEFINITIONS

In this Disclosure Document, unless the context or meaning thereof otherwise requires, the following expressions shall have the meaning assigned to them hereunder respectively:

(i) “Act” means the Securities and Exchange Board of India Act 1992 (15 of 1992).

(ii) “Agreement” means the Portfolio Investment Management Agreement and/or Investment Advisory Services Agreement entered into between the Portfolio Manager and the client and shall include all the schedules, annexures, attached hereto and shall also include the alterations, modifications, additions, deletions, made thereto as per the terms thereof.

(iii) “Applicable Law” means any applicable Indian statute, law, ordinance, regulation, rule,

order, bye-law, administrative interpretation, writ, injunction, directive, judgment or decree or other instrument which has a force of law in India, as is in force from time to time. For the avoidance of doubt, the term ‘Applicable Law’ shall include the Regulations.

(iv) “Board” means the Securities and Exchange Board of India.

(v) “Bank” means any scheduled commercial bank, with which the Portfolio Manager will open and operate the bank accounts for the purpose of portfolio management services.

(vi) “Client” or “Investor” means any person who registers with the Portfolio Manager and enters into an agreement with the Portfolio Manager for availing the services of portfolio management.

(vii) “Custodian” means any entity appointed as custodian by the Portfolio Manager from time to time and on case to case basis to provide custodial services and to act as a custodian on the terms and conditions agreed between the custodian and the Portfolio Manager.

(viii) “Depository” means a body corporate as defined in the Depositories Act, 1996 (22 of 1996) and includes National Securities Depository Limited (“NSDL”) and Central Depository Services (India) Ltd. (“CDSL”).

(ix) “Discretionary Portfolio Management Services” means the portfolio management services wherein the Portfolio Manager exercises any degree of discretion as to the

investments or management of the portfolio of Securities or the Funds of the Client.

(x) “Disclosure Document” means this disclosure document issued by Julius Baer Wealth Advisors (India) Private Limited for offering portfolio management services prepared in terms of Regulation 22 and Schedule V of the SEBI (Portfolio Managers) Regulations 2020.

(xi) “Distributor” means a person/entity who may refer a Client to avail services of Portfolio Manager in lieu of commission/charges (whether known as Channel Partners, Agents,

Referral Interfaces or by any other name) (xii) “Financial Year” means the year starting from 1st April and ending on 31st March of the


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following year.

(xiii) “Funds” means the monies managed by the Portfolio Manager on behalf of the Client pursuant to this Agreement and includes the monies mentioned in the Application, any further monies placed by the Client with the Portfolio Manager for being managed pursuant to this Agreement, the proceeds of the sale or other realization of the Securities and interest, dividend or other monies arising from the Assets, so long as the same is managed by the Portfolio Manager;

(xiv) “Investment Advisory Services Agreement” means the agreement for investment advisory services executed between the Portfolio Manager and its clients in terms of Regulation 22 and as per Schedule IV of Securities and Exchange Board of India (Portfolio Managers) Regulations 2020 and amendments to the Act from time to time

(xv) “Investment Approach” is a broad outlay of the type of securities and permissible

instruments to be invested in by the Portfolio Manager for the Client, taking into account factors specific to Clients and securities and includes any of the current

Investment Approach or such Investment Approach that may be introduced at any time in future by the Portfolio Manager.

(xvi) “Portfolio” means the Securities managed by the Portfolio Manager on behalf of the

Client pursuant to the Portfolio Management Services Agreement and includes any Securities mentioned in the Application and acquired pursuant to any Client Instruction, any further Securities placed by the Client with the Portfolio Manager for being managed pursuant to the Portfolio Investment Management Agreement, Securities acquired by the Portfolio Manager through investment of Funds and bonus and rights shares and on account of any corporate actions in respect of Securities forming part of the Portfolio, so long as the same are managed by the Portfolio Manager.;

(xvii) “Portfolio Investment Management Agreement” means the agreement for discretionary and/or non-discretionary portfolio management services executed between the Portfolio Manager and its clients in terms of Regulation 22 and as per Schedule IV of Securities and Exchange Board of India (Portfolio Managers) Regulations 2020 and amendments to the Act from time to time

(xviii) “Portfolio Manager” or “JBWA” means Julius Baer Wealth Advisors (India) Private Limited, incorporated under the Companies Act, 2013 and having its registered office at 8th floor, Mafatlal Centre, Nariman Point, Mumbai - 400021.

(xix) “Principal Officer” means an employee of the portfolio manager who has been

designated as such by the portfolio manager and is responsible for: - (i) the decisions made by the portfolio manager for the management or administration of portfolio of securities or the funds of the client, as the case may be; and

(ii) all other operations of the portfolio manager.

(xx) “Regulations” means the Securities and Exchange Board of India (Portfolio Managers) Regulations 2020, including rules, guidelines or circulars issued by SEBI from time to time, as maybe applicable to the Portfolio Manager.

(xxi) “SEBI” means the Securities and Exchange Board of India established under sub-section (1) of Section 3 of the Securities and Exchange Board of India Act 1992.

(xxii) “Securities” means and includes Securities as defined under Section 2 (h) of the Securities Contracts (Regulation) Act 1956 as amended from time to time and includes any other instruments or investments (including borrowing or lending of securities) as may be permitted by Applicable Law from time to time.

Words and expressions used in this Disclosure Document and not expressly defined shall


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be interpreted according to their general meaning and usage. The definitions are not exhaustive. They have been included only for the purpose of clarity and shall in addition be interpreted according to their general meaning and usage and shall also carry meanings assigned to them in regulations governing portfolio management services. Any references to laws and regulations in this Document shall be deemed to include such laws and regulations as may be amended, updated, revised, or supplemented from time to time. Words importing the singular includes the plural and vice versa; words importing a gender include the other gender.

3. DESCRIPTION

(i) History, Present Business and Background of the Portfolio Manager:

Julius Baer Wealth Advisors (India) Private Limited (“JBWA”) was earlier known as Merrill Lynch Wealth Advisors Private Limited and was incorporated on 27 June 2014. JBWA is a 100% subsidiary of Julius Baer Group Ltd. and Julius Baer is a 130 year old private bank spread across 60 locations and a public company listed on Swiss Stock Exchange. JBWA purchased the wealth management division of DSP Merrill Lynch Ltd (“DSPML”) and the transfer of assets (including the demat accounts) was completed by September 2015. JBWA is registered with SEBI as a portfolio manager bearing Registration no. INP000007012 with effect from July 14, 2020. A segregated division of JBWA is engaged in the business of broking and is a member of the National Stock Exchange (“NSE”) for the Capital Market and Futures & Options segment and the Bombay Stock Exchange (“BSE”) for the Capital Market Segment bearing SEBI Registration Number INZ0000008631. JBWA is also registered as a clearing member of the Futures & Options segment of the NSE. JBWA is registered with the National Securities Depositories Limited (“NSDL”) as a Depository Participant bearing Registration no. IN-DP-117-2015. A segregated division of JBWA is engaged in the business of investment advisory services and is registered with SEBI pursuant to the SEBI (Investment Advisers) Regulations, 2013 bearing Registration no. INA000003130. A segregated division of JBWA is engaged in the business of distribution of units of Mutual Funds and is registered with Association of Mutual Funds in India (AMFI) bearing Registration no. ARN – 96994 JBWA is also registered with SEBI as a Research Analyst pursuant to the SEBI (Research Analyst) Regulations, 2014 bearing Registration No. INH000002541.

(ii) Promoters of the Portfolio Manager, Directors and their Background:

Promoters and directors of JBWA JBWA is a wholly owned subsidiary of Julius Baer Group Ltd. Julius Baer Group Ltd. is a Swiss multinational private bank founded and based in Zürich, Switzerland. It is a leading Swiss wealth management group founded 130 years ago. It is one of the oldest and largest Swiss banking institutions whose shares are listed on the SIX Swiss Exchange (ticker symbol: BAER) and are included in the Swiss Leader Index (“SLI”), comprising the 30 largest and most liquid Swiss stocks.


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Sr. Name Qualifications Experience Details

1 Ashish Gumashta, Director & CEO

B.Com from University of Mumbai and Master in Management Studies from Sydenham Institute of Management Studies

Mr. Ashish Gumashta has 25+ years of experience and is currently the Head of India - Investment Advisory, Stock Broking, Research Analysis & Depository Participant Business at Julius Baer Wealth Advisors (India) Private Limited. His past experience includes: DSP Merrill Lynch Limited - Working with Investment Advisory Team - Investment Banking, Institutions Sales, and Global Markets in offering comprehensive investments, wealth management and investment banking solutions. Founding member of the Private Client Group in DSP Merrill Lynch Limited.

2 Shitin Desai, Chairman & Non-Executive Director

B.Com Mr. Shitin Desai is a veteran with more than 45+ years of experience in the banking and financial services sector. He was Part of Pherwani Committee which enabled the formation of SEBI. He was also part of Bhagwati Committee of SEBI on Takeovers. He was also a member on the Committee on Investor Education and Protection Fund constituted by Ministry of Corporate Affairs, RBI Capital Market Committee, Advisory Group of Securities Market of RBI and Insider Trading Committee. He served as a Consultant to Bank of America Merrill Lynch. Before this he served as an Executive Vice Chairman of DSP Merrill Lynch Ltd. and is one of its Founding Directors. He is also a Director on the Board of Foundation for Promotion of Sports & Games, a Not-for-Profit (Section 25) Company which assists potential athletes to achieve their dream and win Olympic Gold Medals. He is also a Member of the Advisory Board of ‘Kherwadi Social Welfare Association’ (KSWA), which is one of the largest NGOs providing livelihoods to underprivileged youth by making them economically independent through vocational training.

3 Vikram Agarwal, Director

B.Com and PGDBA (IIM –

Mr. Vikram Agarwal has 20+ years of


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Shareholding Pattern of JBWA as On March 31, 2021

Name of shareholders Number of equity

shares Total Amount of share Capital (in Rs.)

Julius Baer Group Ltd. 1,00,81,40,999 10,08,14,09,990

Julius Baer Investment Ltd. (Nominee of Julius Baer Group Ltd.)

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TOTAL 1,00,81,41,000 10,08,14,10,000

(iii) Top 10 Group Companies/ Firms of the Portfolio Manager on Turnover Basis:

JBWA has a wholly owned subsidiary known as Julius Baer Capital (India) Private Limited (JBC) and is registered with the Reserve Bank of India (RBI) as Non-Deposit taking Systematically Important NBFC (‘NDSI NBFC’).

Bangalore) experience and is currently with Julius Baer Wealth Advisors (India) Private Limited- Heading Risk, Legal, Compliance, Technology & Operations. His prior work experience includes: DSP Merrill Lynch Limited- Working with CEO on special projects Accenture India- Consulting on KYC and Account opening processes Rave Technologies- Management of Software projects Novell Technologies- Technology Consulting for Financial Services clients

4 Torsten Linke, Director

Diploma in Banking Specialisation from Chamber of Commerce, Hamburg, Germany

Mr. Torsten Linke has 25+ years of work experience and is currently the Head of Private Banking- Bank Julius Baer, Singapore. His previous experience incudes: Bank Julius Baer, Singapore- Head of South East Asia for Bank Julius Baer, Singapore Credit Suisse, Singapore- Market Leader for Indonesia Deutsche Bank Private Wealth Management- Heady of strategy and business development Deutsche Bank Private Wealth Management- Country Market Manager- Indonesia, Business head of sub-continent team Deutsche Bank Private Banking, London- Setting up cross-border desk for Asian clients, Investment Advisor, and starting of private banking office in London


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(iv) Details of the Services Being Offered by JBWA:

1. Discretionary Portfolio Management Services 2. Non- Discretionary Portfolio Management Services 3. Investment Advisory Services

Julius Baer Wealth Advisors (India) Private Limited offers the above services through direct plan and distribution plan. The Client has the right to choose direct plan for each of the services offered by JBWA. The broad details of the services are given as below:

(a) Discretionary Portfolio Management Services:

In the case of discretionary portfolio management services, the Portfolio Manager shall independently manage the Funds and Securities of the Client in accordance with the provisions of the Portfolio Investment Management Agreement. The Portfolio Manager shall have the sole and absolute discretion to invest on behalf of the Client in any type of Security as per the executed agreement and make such changes in the investments and invest some or all of the Funds in such manner and in such markets as it deems fit. The Portfolio Manager’s decision in deployment of the Clients’ account is absolute and final and cannot be called to question or review at any time during the currency of the agreement or at any time thereafter except in accordance with the Portfolio Investment Management Agreement. Subject to Applicable Law, the un-invested parts of the Client’s Funds may at the discretion of the Portfolio Manager be held in cash in bank or deployed in liquid fund schemes, exchange traded liquid or index funds, debt-oriented schemes of mutual funds, gilt schemes, bank deposits, or other short-term avenues for investment. The Client’s portfolios under the discretionary services are based on Investment Approach, for an agreed fee structure, and for a definite described period, and should not be construed as any scheme promoted by the company.

(b) Non-Discretionary Portfolio Management Services:

Under this category, the investment decisions of the Portfolio Manager are guided by the instructions received from the Clients under an agreement executed between the Portfolio Manager and the Client. The deployment of Funds and/or Securities is the sole discretion of the Client and is to be exercised by the Portfolio Manager in a manner that strictly complies with the Clients’ instruction for execution. The decision of the Client in deployment of Funds and/or Securities and the handling of his/her/its Portfolio is absolute and final. The role of Portfolio Manager apart from adhering to investments or divestments upon instruction of the Client is restricted to providing market intelligence, research reports, trading strategies, trade statistics and such other material which will enable the Client to take appropriate investment decision. However, the Portfolio Manager will continue to act and be strictly guided by relevant guidelines, acts, rules, regulations, and notifications in force from time to time. For the purpose of acting on the Client’s instruction, the Portfolio Manager shall take instructions in writing or through any other medium mutually agreed such as e-mail, fax, telephone etc. and may include managing, renewing and reshuffling the portfolio, buying and selling the Securities, keeping safe custody of the Securities and monitoring book closures, dividend, bonus, rights etc. so that all benefits accrue to the Client’s Portfolio for an agreed fee structure and for a definite described period, entirely at the Client’s risk.

(c) Advisory Services:

The advisory services of the Portfolio Manager in terms of the Regulations include


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the responsibility of advising on the portfolio strategy and investment and divestment of individual Securities on the Clients’ Portfolio, for an agreed fee and for a period as agreed, entirely at the Client’s risk; to all eligible category of Investors who can invest in Indian market including Non Resident Indians, Foreign Institutional Investors, etc.

The Portfolio Manager shall be solely acting as an advisor to the Portfolio of the Client, providing non-binding advice, and shall not be responsible for the investment/ divestment of Securities and/ or an administrative activity on the Client’s Portfolio in any manner whatsoever. The Portfolio Manager shall, provide advisory services in accordance with such guidelines and/ or directives issued by the regulatory authorities and /or the Client, from time to time, in this regard. The Portfolio Manager shall not in any event and at any point of time be responsible in any manner whatsoever for any investment decision taken by the Client on the basis of the investment advice provided by the Portfolio Manager.

The advisory services of the Portfolio Manager is based on rigorous fundamental research carried out for all the products that it advises on. While due care is taken to ensure that all material facts are correctly gathered and all assessments there on are made with the trust of intentions and to the best of abilities of the Portfolio Manager, it is important for the Client to note that equity markets are prone to volatility. It is important to note that past performance of a stock is not a guarantee of its future performance.

Based on the assessed risk profile, the Client can choose to invest in one or more of the existing investment approach listed in the Disclosure Document or request Julius Baer Wealth Advisors (India) Private Limited to design a customised investment Portfolio with a specific risk profile and Investment Approach.

4. PENALTIES, PENDING LITIGATION OR PROCEEDINGS, FINDINGS OF INSPECTION OR INVESTIGATIONS FOR WHICH ACTION MAY HAVE BEEN TAKEN OR INITIATED BY ANY REGULATORY AUTHORITY

a) All cases of penalties imposed by the Board or the directions issued by

the Board under the Act or Rules or Regulations made thereunder.

None

b) The nature of penalty/direction. Not Applicable

c) Penalties imposed for any economic offence and/or for violation of any securities laws.

None

d) Any pending material litigation/legal proceedings against the portfolio

manager/key personnel with separate disclosure regarding pending criminal cases, if any.

None

e) Any deficiency in the systems and operations of the portfolio manager

observed by the Board or any regulatory agency.

None

f) Any enquiry/adjudication proceedings initiated by the Board against the Portfolio Manager or its Directors, Principal Officer or employee or

any person directly or indirectly connected with the Portfolio Manager

or its Directors, Principal Officer or employee, under the Act or Rules or Regulations made thereunder.

None

5. SERVICES OFFERED

(i) The Company proposes to offer discretionary, non-discretionary and advisory services to its Clients, as detailed hereinabove under section 3 (iv) of the Disclosure Document.

(ii) Investment Approach:


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The Portfolio Manager proposes to provide various portfolios/ services based on the mandate of the Client as agreed upon between the Portfolio Manager and the Client in the application form / agreement signed by the Client. Subject to the provisions of Regulation 24(4) and 24 (5) of the PMS Regulations, the Investment Approach of the Portfolio of the Clients depending on the Clients’ needs could fall under any one or more of the following or any combination thereof: (a) to seek to generate capital appreciation / regular returns by investing in equity/

debt/ money market instruments / equity related Securities and /or units of mutual funds;

(b) to seek to generate capital appreciation / regular returns by investing

exclusively in units of mutual funds or alternative investment funds; (c) to seek to generate regular returns by primarily investing in debt and money

market instruments; and (d) to seek to generate capital appreciation/ regular returns by investing

exclusively in gilt Securities issued by the central/state government Securities.

The type of Securities where investments may be made by the Portfolio Manager under any of the above-mentioned Services include the following:

(a) shares, scrips, stocks, bonds, debentures, debentures stock or other marketable

Securities of a like nature in or of any incorporated company or other body corporate;

(b) derivatives as permitted under the regulations; (c) units or any other instrument issued by any collective investment scheme; (d) security receipt as defined in clause (zg) of section 2 of the Securitization and

Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002;

(e) government securities; (f) units or any other such instrument issued to the investors under any scheme of

mutual fund;

(g) any certificate or instrument (by whatever name called), issued to any investor by any issuer being a special purposes distinct entity which possesses any debt or receivable, including mortgage debt, assigned to such entity, and acknowledging beneficial interest of such investor in such debt or receivable, including mortgage debt, as the case may be;

(h) such other instruments as may be declared by the central government to be

Securities; and (i) rights or interest in Securities.

The above-mentioned Securities are illustrative in nature. Subject to the provisions of Regulation 24(4) and 24 (5) of the PMS Regulations, Investments can be made in various equity and equity related Securities including convertible/non-convertible and/or cumulative/non-cumulative preference shares, convertible and/or cumulative/non-cumulative debentures, bonds and warrants carrying the right to obtain equity shares, units of mutual funds, ETFs, and other eligible modes of


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investment as may be permitted by the Regulations from time to time. The Portfolio Manager may from time to time invest the idle cash balance in units of liquid schemes of mutual funds/ liquid ETF. Investments can be made in listed, unlisted, convertible, non-convertible, secured, unsecured, rated or unrated or of any maturity, and acquired through secondary market purchases, Reserve Bank of India (“RBI”) auctions, open market sales conducted by RBI etc., Initial Public Offers (“IPOs”), other public offers, bilateral offers, placements, rights, offers, negotiated deals, etc. The debt category will include all types of debt securities including but not limited to securitised debt, pass through certificates, debentures (fixed, floating, variable coupon, and equity index /stocks/stocks basket linked), bonds, government securities issued or guaranteed by central or state government, non-convertible part of partially convertible securities, corporate debt of both public and private sector undertakings, securities issued by banks (both public and private sector) and development financial institutions, bank fixed deposits, commercial papers, certificate of deposit, trade bills, treasury bills and other money market instruments, units of mutual funds, floating rate debt securities and fixed income derivatives like interest rate swaps, forward rate agreements etc. as may be permitted by the Act, Rules and/or Regulations, guidelines and notifications in force from time to time. Asset classes for investment will always be subject to the scope of investments as may be agreed upon between the Portfolio Manager and the Client by way of any agreement, explicit or implied including this Disclosure Document, addenda thereof, other documents and communications in writing and emails duly authenticated and exchanged between the Client and the Portfolio Manager. The Investment Approach offered under Discretionary Portfolio Management Services are as follows :

1. Julius Baer All Weather Portfolio

Sr. No. Particulars Description 1 Investment Objective To generate capital appreciation using strategic

asset allocation combined with tactical overlay, across asset classes.

2 Description of types of Securities

Equity & Equity Related Securities (Including, but not restricted to listed stocks, ETFs, units of mutual funds etc.)

Fixed Income Securities (Including, but not restricted to listed bonds & debentures, ETFs, units of mutual funds etc.) & Cash

3 Basis of selection of such types of securities as part of the investment approach

Security selection shall be based on evaluation of quantitative and qualitative parameters

4 Allocation of portfolio across types of securities

Equity & Equity Related Securities: Up to 100% Fixed Income Securities & Cash: Up to 100%

5 Appropriate benchmark to compare performance and basis for choice of benchmark

Blended benchmark : CRISIL Hybrid 50: 50 Moderate Index

or Equal weighted Nifty 50 TRI & CRISIL Short

Term Bond Fund Index 6 Indicative tenure or

investment horizon for each investment allocation

The recommended investment horizon for this Strategy is 3 to 5 years

7 Risk associated with Investment Approach

Investment Risk, Performance Risk, Liquidity Risk and Credit Risk


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8 Other Salient Features None

2. Julius Baer India Premier Opportunities Portfolio

Sr. No. Particulars Description 1 Investment Objective To generate capital appreciation over the medium

to long term by investing in high growth

companies using a top down bottom up approach.

2 Description of types of Securities

Equity & Equity Related Securities (Including, but not restricted to listed stocks, ETFs, units of mutual funds etc.)

Fixed Income Securities (Including, but not restricted to listed bonds & debentures, ETFs, units of mutual funds etc.) & Cash

3 Basis of selection of such types of securities as part of the investment approach

The strategy would look to identify high

growth companies.

The strategy would try and identify these

companies based on their historical track

record and future earnings visibility and management quality and try and buy into

these businesses at reasonable valuations.

The portfolio would follow a buy and hold

approach.

The strategy would identify macro themes

using a top down approach factoring global

and domestic trends.

This would be supplemented with a bottom

up approach wherein a mix of quantitative and qualitative parameters would be used to

short list companies in the portfolio.

The Strategy while cap agnostic in its

approach would yet endeavor to have a prudent mix across market capitalizations.

A typical portfolio would comprise anywhere

between 20-25 stocks at any given point of

time.

The portfolio manager shall run a model

portfolio. Client’s capital contributions shall get deployed as per the latest prevailing

model.

Exposure to fixed income & cash may be

higher while the portfolio is in deployment phase.

The portfolio manager may rebalance the portfolio periodically, based on the macro scenario as well as in case of changing company fundamentals.

4 Allocation of portfolio across types of securities

Equity & Equity Related Securities: Up to 100% Fixed Income Securities & Cash: Up to 100%

5 Appropriate benchmark to compare performance and

Nifty 500


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basis for choice of benchmark

6 Indicative tenure or investment horizon for each investment allocation

The recommended investment horizon for this Strategy is 3 to 5 years

7 Risk associated with Investment Approach

Fiduciary Risk, Investment Risk, Risk of conflict, Business Risk, Operational Risk

8 Other Salient Features None (iii) The policies for investments in associates/group companies of the portfolio

manager and the maximum percentage of such investments therein subject to the applicable laws/regulations/ guidelines.

The Portfolio Manager shall not invest in equity securities of the associate/group companies. However, the portfolio manager may invest in Debentures / Structured Products issued by group/associate companies in consultation with the client and subject to Applicable Law.

6. RISK FACTORS

A. General Risk Factors:

(i) Investments in Securities are subject to market risks, which include price fluctuation risks. There is no assurance or guarantee that the objectives of any of the Portfolios will be achieved. The investments may not be suited to all categories of investors.

(ii) The past performance of the Portfolio Manager in any Portfolio is not indicative

of the future performance in the same or in any other Portfolio either existing or that may be offered. Investors are not being offered any guaranteed or indicative returns through these services.

(iii) The performance of the Portfolio may be affected by changes in government policies, general levels of interest rates and risks associated with trading volumes, liquidity and settlement systems in equity and debt markets.

(iv) The performance in the equity portfolios may be adversely affected by the performance of individual companies, changes in the market place, company specific and industry specific and macroeconomic and regulatory factors.

(v) The performance of the assets of the Client may be adversely affected by the performance of individual Securities, changes in the market place and industry specific and macroeconomic factors.

(vi) The debt investments and other fixed income Securities may be subject to interest rate risk, liquidity risk, credit risk, and reinvestment risk. Liquidity in these investments may be affected by trading volumes, settlement periods and transfer procedures.

(vii) Investments in niche sectors run the risk of volatility, high valuation, obsolescence and low liquidity.

(viii) Subject to Applicable Law, the Portfolio Manager may invest in non-publicly offered debt securities and unlisted equities which may expose the Client’s Portfolio to liquidity risks.

(ix) Engaging in Securities lending is subject to risks related to fluctuations in collateral value/settlement/liquidity/ Counter Party.


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(x) The Portfolio Manager’s investment decisions may be independent of the views of the in-house research department as a result of which there may be conflicting views between the portfolio management division and the research division of the Portfolio Manager.

(xi) Portfolio services using derivatives, futures and options are affected by risk different from those associated with stock and bonds. Such investments are highly leveraged instruments and their use requires a high degree of skill, diligence and expertise. Small price movements in the underlying Security may have a large impact on the value of derivatives and futures and options. Some of the risks relate to mis-pricing on the improper valuation of derivatives and futures and options and the inability to correlate the positions with underlying assets, rates and indices. Additionally, the derivatives and future and options market are nascent in India.

(xii) The Portfolio Manager is not responsible or liable for any loss resulting from the operations of the portfolio management services. All Portfolios under portfolio management are subject to change at any time at the discretion of the Portfolio Manager.

(xiii) Investment decisions made by the Portfolio Manager may not always be profitable.

(xiv) The Portfolio Manager and its employees who are directly involved in the investment operations may purchase and sell Securities where conflicts of interest arise with respect to an Investor’s Portfolio provided that the same may be disclosed to the Client.

(xv) Investments made by the Portfolio Manager are subject to risks arising from the

Investment Approach.

(xvi) The arrangement of pooling of Funds from various Clients and investing them in Securities could be construed as an ‘Association of Persons’ (“AOP”) in India under the provisions of the Income Tax Act 1961 (“IT Act”) and taxed accordingly.

(xvii) Subject to Applicable Law, in case of investments in schemes of mutual funds, the Client shall bear the recurring expenses and performance fee, if any, of the portfolio management services in addition to the expenses of the underlying schemes. Hence, the Client may receive lower pre-tax returns compared to what he may receive had he invested directly in the underlying schemes in the same proportions.

(xviii) After accepting the corpus for management, the Portfolio Manager may not get an opportunity to deploy the same or there may be delay in deployment. In such situations, the Clients may suffer opportunity loss.

(xix) Assets deposited by the Clients shall be subject to insolvency risks in relation to the Portfolio Manager, issuers, custodians, and other intermediaries. The extent to which a Client will be able to recover its/his/her Assets will depend upon local law, rules and regulations.

(xx) The Investment Approach of one or more of the investment profiles could result in concentration of a specific asset/asset class/sector/issuer etc., which could expose theh Clients’ Portfolio to risks arising out of non-diversification, including improper and/or undesired concentration of investment risks.


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B. Specific Risk Factors: (i) Market risk: The Net Asset Value (“NAV”) of the Portfolio will react to the

Securities market movements. The investor could lose money due to fluctuation in the NAV of Portfolio in response to factors such as economic and political developments, changes in interest rates and perceived trends in Securities market movements and over longer periods during market downturns.

(ii) Market trading risks: There may be an absence of active markets. Although

Securities are listed on the exchange(s), there can be no assurance that an active secondary market will develop or be maintained.

(iii) Lack of market liquidity: Trading in Securities on the exchange(s) may be halted

because of market conditions or for reasons that in the view of the exchange authorities or SEBI, trading in a particular Security is not advisable. In addition, trading in Securities is subject to trading halts caused by extra-ordinary market volatility and pursuant to exchange and SEBI ‘circuit filter’ rules. There can be no assurance that the requirements of the market necessary to maintain the listing of Securities will continue to be met or will remain unchanged.

(iv) ETF may trade at prices other than NAV: ETF may trade above or below their

NAV. The NAV or ETF may fluctuate with changes in the market value of a scheme’s holdings of the underlying stocks. The trading prices of ETF will fluctuate in accordance with changes in their NAVs as well as market supply and demand of ETF. However, given that ETF can be created and redeemed only in creation units directly with the mutual fund, it is expected that large discounts or premiums to the NAVs of ETFs will not sustain due to availability of arbitrage possibility.

(v) Legal Risk: Any change in Applicable Law may adversely affect the ability of the

Portfolio Manager to achieve its Investment Approach. The Portfolio may be affected by the actions of governments and regulatory bodies. Legislation could be imposed retrospectively or may be issued in the form of internal regulations, which the public may not be aware of. Legislation (including legislation relating to tax) or regulation may be introduced which inhibits the Portfolio Manager from pursuing their strategies or which renders an existing strategy less profitable than anticipated. Trading in securities market may be halted because of market conditions, or where the market authorities or SEBI, consider that trading in a particular security is not advisable. Also trading in securities is subject to market volatility conditions and NSE, BSE and SEBI ‘circuit filters’.

(vi) Taxation Risk: The value of an investment may be affected by the application of

tax laws, including withholding tax, or changes in government or economic or monetary policy from time to time as may be applicable to specific clients. As such, no guarantee can be given that the financial objectives will actually be achieved. There can be no guarantee that the tax position or the proposed tax position prevailing at the time of an investment in the specified Portfolio as applicable to specific Clients will endure indefinitely. The tax implications of any investment are also dependent upon the nature of the Client’s business activities and the investment in question. The Client should, therefore, consult an independent tax advisor to understand the relevant tax considerations of availing of the Portfolio Management Services.

(vii) Conflict of Interest Risk: The Portfolio Manager is part of a large international

financial group and acts simultaneously for a large number of Clients, as well as for its own account. Accordingly, conflicts of interest cannot be completely avoided. Accordingly, the Client acknowledges that the Portfolio Manager and its affiliates may (subject to applicable laws and regulations) :


17

(a) be the issuer of any investments; (b) combine the Client’s orders with its/their own orders or the orders of other Clients; (c) make investments or effect transactions for the Client through the agency of and/or with a counterparty which is a related organization or a person otherwise associated with it/them; (d) have a position or a direct or indirect interest in any Security or transaction even if the position is opposite to that taken by the Client; (e) have bought or sold any investments or entered into any transactions as principal or for its/their other Clients; or (f) have other banking, advisory or any other corporate relationships with companies whose investments are held for Client’s account or are purchased and sold for the Client and its/their officers and directors may be officers and directors of such companies.

Subject to Applicable Law and the Agreement, the Portfolio Manager and its Affiliates shall not be liable to account or specifically disclose to the Client any profit, charge or remuneration made or received from any such transaction or other connected transactions.

Subject to Applicable Law, the Portfolio Management Services provided by the Portfolio Manager to the Client are non-exclusive and the Portfolio Manager shall be under no obligation to account to the Client for any benefit received for providing services to others or to disclose to the Client any fact or thing which may come to the notice of the Portfolio Manager in the course of providing services to others or in any other capacity or in any manner whatsoever otherwise than in the course of providing the Portfolio Management Services to the Client pursuant to any Agreement.

(viii) Regulatory risk: Any changes in trading regulations by the exchange(s) or SEBI

may affect the ability of market maker to arbitrage resulting into wider premium/ discount to NAV for ETFs. In the event of a halt of trading in market the Portfolio may not be able to achieve the stated objective.

(ix) Asset class risk: The returns from the types of Securities in which the Portfolio

Manager invest may underperform returns from the various general Securities markets or different asset classes. Different types of Securities tend to go through cycles of outperformance and underperformance in comparison of the general Securities markets.

(x) Performance risk: Frequent rebalancing of Portfolio will result in higher

brokerage/ transaction cost. Also, as the allocation to other Securities can vary from 0% to 100%, there can be vast difference between the performance of the investments and returns generated by underlying Securities.

(xi) Interest Rate Risk: Changes in interest rates may affect the returns/ NAV of the

liquid/debt scheme of mutual fund in which the Portfolio Manager may invest from time to time. Normally the NAV of the liquid scheme increases with the fall in the interest rate and vice versa. Interest rate movement in the debt market can be volatile leading to the possibility of movements up or down in the NAV of the units of the liquid/ debt funds.

(xii) Credit risk: Credit risk refers to the risk that an issuer of fixed income security

may default or may be unable to make timely payments of principal and interest. NAV of units of the liquid scheme is also affected because of the perceived level of credit risk as well as actual event of default.

(xiii) Model risk: Investments in the Market Linked Debentures (“MLDs”) are also

subject to model risk. The MLDs are created on the basis of complex


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mathematical models involving multiple derivative exposures which may or may not be hedged and the actual behaviour of the Securities selected for hedging may significantly differ from the returns predicted by the mathematical models.

(xiv) Small Cap and Mid-cap stock risk: Small and mid-cap stocks may be relatively

more volatile as opposed to large cap stocks as a result of which the risks associated with investing in such stocks may be relatively higher. The reason for the greater price volatility in case of small cap stocks is the uncertain growth prospects of small cap companies, the lower degree of liquidity in the markets for such securities and the greater sensitivity of small cap stocks to changing economic conditions. Further, the small and mid-cap stocks also carry relatively higher liquidity risk compared to the large cap stocks, as the ability to sell is limited by overall trading volume in the securities. The volatility of medium / small – capitalization stocks may be higher in comparison to liquid large capitalization stocks. Trading volumes, settlement periods and transfer procedures may restrict the liquidity of these investments. Different segments of financial markets have different settlement periods and such periods may be extended significantly by unforeseen circumstances.

(xv) Risks associated with Overseas Investments: Subject to Applicable Law, the

Portfolio Manager may invest in overseas markets in which investments therein are subject to a very wide range of risks, which include amongst others and by way of illustration, risks on account of fluctuations in foreign exchange rates, nature of the Securities market of the country concerned, repatriation of capital due to exchange controls, political circumstances etc.

(xvi) Investments in derivative instruments: As and when the investments are done

in derivative market, there are risk factors and issues concerning the use of derivatives that the investors should understand. Derivative products are specialized instrument that require investment technique and risk analysis different from those associated with stocks. The use of derivative requires an understanding not only of the underlying instrument but also of the derivative itself. Derivatives require maintenance of adequate controls to monitor the transactions entered into, the ability to assess the risk that a derivative adds to the Portfolio and the ability to forecast price. There is a possibility that loss may be sustained by the Portfolio as a result of the failure of another party (usually referred as the “Counter Party”) to comply with the terms of the derivative contract. Other risks in using derivatives include but are not limited to:

(a) Credit risk: Such a risk occurs when a counterparty defaults on a transaction

before settlement; and therefore involves negotiation with another Counter Party, at the then prevailing (possibly unfavourable) market price, in order to maintain the validity of the hedge. For ETFs, the risk may be mitigated, as the exchange provides the guaranteed settlement, but one takes the performance risk on the exchange.

(b) Market liquidity: This risk is where the derivatives cannot be sold (unwound) at

prices that reflect the underlying assets, rates and indices. (c) Model risk: This is the risk of mis-pricing or improper valuation of derivatives. (d) Basis risk: This risk arises when the instrument used as a hedge does not match

the movement in the instrument/underlying asset being hedged. The risks may be inter-related also; for e.g. interest rate movements can affect equity prices, which could influence specific issuer/industry assets. The risk of loss associated with futures contracts is potentially unlimited due to the low margin deposits required and the extremely high degree of leverage involved in futures pricing. As a result, a relatively small price movement in a derivative contract may result in an immediate and substantial loss or gain. However, the Portfolio Manager


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will not use derivative instruments, options or swap agreements for speculative purposes or to leverage its net assets and will comply with applicable SEBI regulations. There may be a cost attached to buying derivative instrument. Further, there could be an element of settlement risk, which could be different from the risk in settling physical shares. The possible lack of a liquid secondary market for a derivatives contract may result in inability to close the derivatives positions prior to their maturity date.

(xvii) Illiquidity risk: The corporate debt market is relatively illiquid vis-a-vis the

government Securities market. There could therefore be difficulties in exiting from corporate bonds in times of uncertainties. Further, liquidity may occur only in specific lot sizes. Liquidity in a Security can therefore suffer. Even though the government securities market is more liquid compared to that of other debt instruments, on occasions, there could be difficulties in transacting in the market due to extreme volatility or unusual constriction in market volumes or on occasions when an unusually large transaction has to be put through. Trading in specified debt securities on the exchange may be halted because of market conditions or for reasons that in the view of the exchange authorities or SEBI, trading in the specified debt security is not advisable. There can be no assurance that the requirements of the securities market necessary to maintain the listing of specified debt security will continue to be met or will remain unchanged. In such a situation, the Portfolio Manager at his sole discretion will return the Securities to the Client.

(xviii) Zero return risk: Returns on investments undertaken in structured Securities

would depend on occurrence /non-occurrence of the specified event. Thus, returns may or may not accrue to an investor depending on the occurrence/non-occurrence of the specified event.

(xix) Redemption risk: The payoffs as envisaged in structured Securities are such that

the Client may lose a part/entire amount invested. (xx) Risk of investment in mutual funds: Investments in schemes of mutual funds are

subject to market risks and there is no assurance or guarantee that the objectives of the scheme will be achieved. Further, any investment in mutual funds is also subject to any risk factors outlined in the scheme information document and statement of additional information of the mutual fund and an adverse performance of a mutual fund scheme in which the Portfolio Manager has made investments could adversely impact the value of anticipated returns.

(xxi) Foreign exchange risk: Funds placed with the Portfolio Manager by non-resident

Clients may be subject to fluctuations in the price of foreign exchange. Any adverse fluctuation in the price of foreign exchange may affect the returns received by non-resident Clients.

(xxii) Specific Risk factors and disclosures pertinent to structured notes and

securitised debt instruments: (a) Presently, secondary market for such securitised papers is not very liquid. There

is no assurance that a deep secondary market will develop for such Securities. This could limit the ability of the investments to resell them. Even if a secondary market develops and sales were to take place, these secondary transactions may be at a discount to the initial issue price due to changes in the interest rate structure.

(b) Securitized transactions are normally backed by pool of receivables and credit

enhancement as stipulated by the rating agency, which differ from issue to issue. The credit enhancement stipulated represents a limited loss cover to the Investors. These certificates represent an undivided beneficial interest in the


20

underlying receivables and there is no obligation of either the issuer or the seller or the originator, or the parent or any affiliate of the seller, issuer and originator. No financial recourse is available to the certificate holders against the investors’ representative(s). Delinquencies and credit losses may cause depletion of the amount available under the credit enhancement and thereby the investor pay-outs may get affected if the amount available in the credit enhancement facility is not enough to cover the shortfall. On persistent default of an obligor to repay his obligation, the seller may repossess and sell the underlying asset. However, many factors may affect, delay or prevent the repossession of such asset or the length of time required to realize the sale proceeds on such sales. In addition, the price at which such asset may be sold may be lower than the amount due from that obligor.

(c) The structured notes like the index linked securities, in which Funds are

proposed to be invested in, are high risk instruments. A small movement in returns generated by the underlying index could have a large impact on their value and may also result in a loss.

(d) The issuer of equity index linked securities or any of its agents, from time to time

may have long or short positions or make markets including in NIFTY 50 indices, futures and options (hereinafter referred to as “Reference Assets”) (and other similar assets), they may act as an underwriter or distributor of similar instruments, the returns on which or performance of which, may be at variance with or asymmetrical to those on the Securities, and they may engage in other public and private financial transactions (including the purchase of privately placed investments or Securities or other assets). The foregoing activities of ‘the issuer of index linked securities’ or any of its agents and related markets (such as the foreign exchange market) may affect the value of the Securities. In particular, the value of the Securities could be adversely impacted by a movement in the Reference Assets, or activities in related markets, including by any acts or inactions of ‘the issuer of index linked securities’ or any of its agents;

(e) The equity Index linked Securities, even after being listed, may not be

marketable or may not have a market at all; (f) The returns on the structured Securities, primarily are linked to the NIFTY 50

and/or any other equity benchmark as the Reference Asset, and even otherwise, may be lower than prevalent market interest rates or even be nil or negative depending entirely on the movement in the underlying index and futures values as also that over the life of the Securities (including the amount if any, payable on maturity, redemption, sale or disposition of the Securities) the Security holder may receive no income/return at all or negative income/return on the Security, or less income/return than the Security-holder may have expected, or obtained by investing elsewhere or in similar investments.

(g) The return on investment in Securities would depend on the prevailing market

conditions, both domestically as well as internationally. The returns mentioned in the term sheets are indicative and may or may not accrue to an investor accordingly.

(h) In equity index linked Securities, in the event of any discretions to be exercised,

in relation to method and manner of any of the computations including due to any disruptions in any of the financial markets or if for any other reason, the calculations cannot be made as per the method and manner originally stipulated or referred to or implied, such alternative methods or approach shall be used as deemed fit by the issuer and may include the use of estimates and approximations. All such computations shall be valid and binding on the investor, and no liability there for will attach to the issuer of equity index linked Securities /asset management company.


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(i) There is a risk of receiving lower than expected or negligible returns or returns

lower than the initial investment amount in respect of such equity index linked Securities over the life and/or part thereof or upon maturity, of the Securities.

(j) At any time during the life of such Securities, the value of the Securities may be

substantially less than its redemption value. Further, the price of the Securities may go down in case the credit rating of the Company or issuer goes down.

(k) The Securities and the return and/or maturity proceeds hereon, are not

guaranteed or insured in any manner by the Issuer of equity index linked securities.

(l) The issuer of equity index linked Securities or any person acting on behalf of the

issuer of equity index linked Securities, may have an interest/position as regards the Portfolio Manager and/or may have an existing banking relationship, financial, advisory or other relationship with them and/or may be in negotiation/discussion with them as to transactions of any kind.

(m) The issuer of equity index linked securities or any of its agents, have the legal

ability to invest in the units offered herein and such investment does not contravene any provision of any law, regulation or contractual restriction or obligation or undertaking binding on or affecting the investor, and/or its assets.

(xxiii) Risk of investment in thematic sector portfolios: In case of thematic

investments, where the selected sectors do not perform as expected by the Portfolio Manager of the Portfolio, the Portfolio’s performance may be adversely affected due to a risk associated with non-diversification. Given that the Portfolio Manager intends to make primary investments in Securities of companies in a few select sectors, the Portfolio could be concentrated or may be overweight on Securities belonging to a specific sector, which may adversely affect the performance of the Portfolio, as a result of which the benchmark index provided herein may or may not be outperformed. Further, the Portfolio may be more sensitive to economic, business, political or other changes which may lead to sizeable fluctuation in the value of the Portfolio.

This Disclosure Document is without prejudice to any other terms agreed to between the Company and its Clients in relation to any other specific services. If any provision in this document conflicts with a provision in such specific service terms, the provisions of the agreement executed for such specific services shall prevail insofar as it does not conflict with any duty or obligation of the Portfolio Manager under Applicable Law.


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7. CLIENT REPRESENTATION (i) Details of Clientele and Funds Managed:

As on June 30, 2021

Category of Clients No of Clients

Funds Managed in Discretionary Services

(Rs. In Crores)

Funds Managed in Non-Discretionary Services

(Rs. In Crores)

Associates/Group Companies (for the last 3 years)

NIL NIL NIL

Others 9 12.11 14.38

Total NIL NIL NIL

(ii) Disclosure in Respect of Transactions with Related Parties as per the Ind

Accounting Standards prescribed under Section 133 of the Companies Act, 2013 (‘the Act’) read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and relevant amendment rules issued thereafter and the provisions of the Act as on 31 March 2020

(a) Related Parties and their Relationship: Refer Annexure 1

(b) Significant transactions with Related Parties as per balance Sheet: Refer

Annexure 1

8. FINANCIAL PERFORMANCE OF PORTFOLIO MANAGER BASED ON AUDITED FINANCIAL STATEMENT FOR THE YEAR ENDED 31.03.2020

(Rs. in million except data of earning per

share) Particulars 2019-2020 2018-2019 Total revenues 1,063.49 1,150.68 Operating profit (PBIDT) 61.70 83.67 Interest and financial charges 14.08 12.57 Depreciation, amortization and impairment 185.39 132.77 Profit before exceptional items (137.77) (61.67) Exceptional Items - -

Adjustments on account of going concern assumption - -

Profit / (loss) before taxation (137.77) (61.67) Provision for taxation Income tax - - Deferred tax (credit) / expense - -


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Profit / (loss) after tax (137.77) (61.67) Other comprehensive income (4.13) (9.66) Total comprehensive income for the year (141.90) (71.33)

Surplus balance in statement of profit and loss brought forward from the previous year (992.27) (930.60)

Transferred from statement of profit and loss (137.77) (61.67) Surplus balance carried to the balance sheet (1,130.04) (992.27) Basic / Diluted Earning Per Share (0.14) (0.06)

9. PORTFOLIO MANAGEMENT PERFORMANCE

The Company has recently received the registration certificate as a Portfolio Manager with effect from July 14, 2020 and has commenced operations after that. The performance is as follows.

Portfolio Management Performance: Julius Baer All Weather Portfolio

From April 1, 2021 to June 30, 2021

Investment Approach

AUM (in INR Cr)

Returns (%)

Portfolio Turnover Ratio

FY 1 FY 2 FY 3 FY 1 FY 2 FY 3 FY 1 FY 2 FY 3

Strategy 12.1

1

NA NA 4.60 NA NA 5.31 NA NA

Benchmark NA NA NA 5.12 NA NA NA NA NA

Total 12.1

1

NA NA 4.60 - - 5.31 NA NA

Inception date: 24th March, 2021. Past performance may or may not be sustained in

future and is not an indicator of prospective performance, hence no liability will be accepted. All return figures are stated on a Gross basis, net of expenses. Returns up to 1

year are absolute and greater than 1 year are annualized. All returns are TWRR Returns

based on Daily Valuation of all the clients combined together for investment approach. Benchmark considered is CRISIL Hybrid 50-50 Moderate Index

10. AUDIT OBSERVATIONS There have been no adverse observations by the statutory auditors of the Company for the financial years 2019-20, 2018-19 and 2017-18.

11. NATURE OF COSTS & EXPENSES

The following are indicative types of costs and expenses for Clients availing the portfolio management services. The exact basis of charge relating to each of the following services shall be annexed to the Portfolio Investment Management Agreement and the agreements in respect of each of the services availed at the time of execution of such agreements. The fees and expenses could vary depending on the asset class / type of


24

portfolio and not all these fees may apply to all portfolios. (i) Management Fees/ Advisory Fees: Subject to applicable law, Professional charges

relate to the portfolio management services offered to Clients by the Portfolio Manager. The fee may be a fixed charge, a percentage of the quantum of Funds managed, performance based, fixed fee charged upon exit, or a combination of any of these. The Portfolio Manager may charge a fixed Management Fees/Advisory Fee of up to 3 %

of the assets under management and/or a performance fees of up to 20% of the return

generated.

(ii) Performance Fees: Performance shall be computed based on high water mark principle over the life of the investment for charging of performance / profit sharing fee. High Water Mark shall be the highest value that the portfolio/account has reached. Value of the portfolio for computation of high watermark shall be taken to be the value on the date when performance fees are charged. For charging performance fee, the frequency shall not be less than quarterly. The portfolio manager shall charge performance based fee only on increase in portfolio value in excess of the previously achieved high water mark.

(iii) Custodian/Depository Fees: The charges relating to opening and operation of

dematerialized accounts, custody, Fund administration and transfer charges for shares, bonds and units, dematerialization, rematerialisation and other charges in connection with the operation and management of the depository accounts.

(iv) Registrar and Share Transfer Agent Fee: Charges payable to registrars and share

transfer agents in connection with effecting transfer of Securities and bonds including stamp charges, cost of affidavits, notary charges, postage stamp and courier charges.

(v) Brokerage and Transaction Costs: The brokerage charges and other charges like

service charge, stamp duty, transaction costs, turnover tax on the purchase and sale of shares, stocks, bonds, debt, deposits, units and other financial instruments. This fees shall be charged at actuals.

(vi) Certification and Professional Charges: Charges payable for outsourced professional

services like accounting, taxation and legal services, notarizations etc. for certifications, attestations required by bankers or regulatory authorities.

(vii) Incidental Expenses: Charges in connection with the courier expenses, stamp duty,

service tax, depository charges, postal, telegraphic, opening and operation of bank accounts etc.

(viii) Referral/ Distribution Fees: From time to time, your Portfolio Manager may at your

instruction, refer you over to external portfolio managers/ banks/financial intermediaries/any other entity including but not limited to its associates / affiliates (referred to hereafter as External Agents) for availing their services or subscribing to products issued by them. In such cases, your Portfolio Manager may enter into intermediary/referral agreements with such External Agents for which it may be entitled to receive referral fees/commissions and/or other monetary benefits as per mutual agreement. The referral fees/commissions could be charged by way of upfront fees or trail fees format or a combination of upfront fees or trail fees format and shall be exclusive of any other additional fees, costs, charges levied by the External Agents. For certain investment products, trailer fees may be charged by the External Agents in advance, at the start of every calendar quarter instead. In all cases, Goods and Services Tax, security transaction tax and other statutory levies are charged as applicable.

(ix) Audit Report Fees: In terms of Regulation 30 (3) of the Regulations, the Client shall be


25

issued an audit report from the internal auditors of the Company for which fee is payable to the auditors. The Company has appointed M/s M. P Chitale & Co., Chartered Accountants as internal auditors of the Company.

The Client shall pay by way of cheque/ DD/ Debit to the Client portfolio account, as per the respective fee schedule applicable to the portfolio services opted by the Client, as provided in the agreement between the Client and the Portfolio Manager. Exit Load : Exit loads shall be specific to each Investment Approach and may be levied as a % of the amount redeemed. Exit loads may also vary based on holding period of investment. The Portfolio manager may choose not to levy any exit load for specific Investment Approaches. In case Client portfolio is redeemed in part or full, the exit load charged shall be as under: a) In the first year of investment, maximum of 3% of the amount redeemed. b) In the second year of investment, maximum of 2% of the amount redeemed. c) In the third year of investment, maximum of 1% of the amount redeemed. d) After a period of three years from the date of investment, no exit load. Note for all portfolio fee structures: The above stated fee structure for all the portfolios/ investment approach represent the maximum and general fees applicable currently for the respective portfolios. Portfolio Manager reserves the right to charge lesser fees or such customized fees within the stated range or waive off upfront & termination fees under each concept/portfolio at its sole discretion. As per the current applicable Law, Operating expenses excluding brokerage but including custodian fees, fund accounting fees, depository fees, legal expenses, professional fees, taxes etc. shall not exceed 0.50% per annum of the client’s average daily Assets under Management (AUM). As provided in Regulation 22 (11) of the PMS Regulations, no upfront fees shall be charged by the Portfolio Managers, either directly or indirectly, to the clients. At the time of on-boarding of clients directly, statutory charges may be levied. Charges for all transactions in a financial year (Broking, Demat, custody etc.) through JBWA or associates shall be capped at 20% by value per associate (including self) per service. Any charges to self/associate shall not be at rates more than that paid to the non-associates providing the same service. List of Brokers / Custodian / Fund accountant / all outsourced activities to be mentioned Brokers: Spark Capital Advisors (India) Private Limited Phillip Capital (India) Private Limited Julius Baer Wealth Advisors (India) Private Limited Custodian and Fund Accountant: Axis Bank Ltd.

12. TAXATION

The information stated below is based on the general understanding of direct tax laws in force in India as of the date of the Disclosure Document and is provided only for general information to the Client vis-à-vis the investments made through the portfolio management services route. This information gives the direct tax implications on the footing that the Securities are/will be held for the purpose of investments. In case the


26

Securities are held as stock-in-trade, the tax treatment will substantially vary and the issue whether the investments are held as capital assets or stock-in-trade needs to be examined on a case to case basis. There is no guarantee that the tax position prevailing as on the date of the Disclosure Document/the date of making investment under portfolio management services route shall endure indefinitely. Further, the statements with regard to benefits mentioned herein are expressions of views and not representations of the Portfolio Manager to induce any Client, prospective or existing, to invest under portfolio management services route. Implications of any judicial decisions/ Double Tax Avoidance Treaties, etc. are not explained herein. The Client should not treat the contents of this section of the Disclosure Document as advice relating to legal, taxation, investment or any other matter. In view of individual nature of the tax benefits, interpretation of circulars for distinguishing between capital asset and trading asset, etc., the Client is advised to best consult its or his or her own tax consultant, with respect to specific tax implications arising out of its or his or her portfolio managed by the Portfolio Manager. It is the responsibility of all prospective Client to inform themselves as to any income tax or other tax consequences arising in the jurisdictions in which they are resident or domiciled or have any other presence for tax purposes, which are relevant to their particular circumstances in connection with the acquisition, holding or disposal of the Securities. The following summary is based on the law and practice of the IT Act, the Income-tax Rules, 1962 (the “IT Rules”) and various circulars and notifications issued thereunder from time to time. The IT Act is amended every year by the Finance Act of the relevant year and this summary reflects the provisions under the IT Act along with proposals made under the Finance Bill, 2020. The tax rates mentioned below relate to Financial Year 2020-21 (Assessment Year 2021-22) and are exclusive of surcharge and education cess, unless specified otherwise. The applicable rate of surcharge in case of foreign companies is 2% where the income exceeds INR 10 million but is less than or equal to INR 100 million and is 5% where the income exceeds INR 100 million. In case of resident companies having total income exceeding INR 10 million but not exceeding INR 100 million, surcharge of 7% on income tax is applicable. In case of resident companies having total income exceeding INR 100 million, surcharge of 12% is applicable. In case of resident companies that have opted for concessional tax regime introduced under the Taxation Laws (Amendment) Act, 2019, surcharge of 10% on income tax is applicable (irrespective of the amount of total income). In case of firms having total income exceeding INR 10 million, surcharge of 12% is applicable. For other resident and non-resident assessees, surcharge rate of 10% is applicable if total income exceeds INR 5 million but is less than or equal to INR 10 million, surcharge rate of 15% is applicable if the total income exceeds INR 10 million but is less than or equal to INR 20 million, surcharge rate of 25% is applicable if the total income exceeds INR 20 million but is less than or equal to INR 50 million and surcharge rate of 37% is applicable if the total income exceeds INR 50 million Note: The enhanced rates of surcharge of 25% and 37% shall not apply in case of capital gains arising on an on-market transfer of the following securities (where applicable STT has been paid): Equity shares Units of an equity-oriented fund Units of a Real Estate Investment Trust (REIT) or Infrastructure Investment Trust

(InvIT). Further, health and education cess at 4% is leviable (irrespective of the level of income) on aggregate of tax and surcharge.

I. Taxation in hands of Investors


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Taxation of non-resident investors: A non-resident investor would be subject to taxation in India only if;

it is regarded a tax resident of India; or being a non-resident in India, it derives (a) Indian-sourced income; or (b) if any

income is received / deemed to be received in India; or (c) if any income has accrued / deemed to have accrued in India in terms of the provisions of the IT Act.

Section 6 of the IT Act was amended by the Finance Act, 2015 to provide that a foreign company should be treated as a tax resident in India if its place of effective management (“POEM”) is in India in that year. The Finance Act, 2016 provided that the said amended provisions are effective from April 1, 2017. POEM has been defined to mean a place where key management and commercial decisions that are necessary for the conduct of the business of an entity as a whole are, in substance made. The CBDT had vide its Circular dated January 24, 2017 issued guiding principles for determination of POEM of a Company (‘POEM Guidelines’). The POEM Guidelines lays down emphasis on POEM concept being 'substance over form' and further provides that place where the management decisions are taken would be more important than the place where the decisions are implemented for determining POEM. The CBDT had vide circular dated 23 February 2017 clarified that provisions of Sec 6(3)(ii) relating to place of effective management (POEM) would not apply to companies having turnover or gross receipts less than INR 500 million during the financial year. Characterization of Income Traditionally, the issue of characterization of exit gains (whether taxable as business income or capital gains) has been a subject matter of litigation with the Indian Revenue authorities. There have been judicial pronouncements on whether gains from transactions in securities should be taxed as ‘business income’ or as ‘capital gains’. However, these pronouncements, while laying down certain guiding principles have largely been driven by the facts and circumstances of each case. Regarding characterization of income from transactions in listed shares and securities, the Central Board of Direct Taxes (“CBDT”) had issued a clarificatory Circular No. 6 of 2016 dated February 29, 2016, wherein with a view to reduce litigation and maintain consistency in approach in assessments, it has instructed that income arising from transfer of listed shares and securities, which are held for more than twelve months would be taxed under the head 'Capital Gains' unless the tax-payer itself treats these as its stock-in-trade and transfer thereof as its business income. In the context of transfer of unlisted shares, the CBDT has issued a clarification vide Instruction No. F.No. 225/12/2016/ ITA.II dated May 2, 2016 stating that income arising from transfer of unlisted shares would be considered under the head ‘Capital Gains’ irrespective of the period of holding with a view to avoid dispute/ litigation and to maintain uniform approach (with tax treatment on transfer of listed shares). However, the above shall not apply in the following cases: The genuineness of transactions in unlisted shares itself is questionable; or The transfer of unlisted shares is related to an issue pertaining to lifting of

corporate veil; or The transfer of unlisted shares is made along with the control and management of

underlying business and the Indian Revenue authorities would take appropriate view in such situations.

The tax implications in the hands of investors on different income streams are discussed below:


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I. DISTRIBUTION OF INCOME

a) Dividend income

Dividend income is taxable as any other income and expenditure incurred theron cannot exceed 20% of the said amount (Proviso to Section 57). No DDT for AY 21-22. If The shares are held as investment then dividend income is taxable as business income and all expenses incurred to earn that income can be claimed against the same. TDS for residents is 10% if dividend amount exceeds Rupees 5000/- (From 14-05-20 to 31-03-21 rate is reduced to 7.5%) For Non residents it is 20% as per the Finance Act or if DTAA benefit is available then at the rate applicable as per DTAA, if it is lower than the rate as per Finance Act. As per Finance Act 2020 dividend declared or distributed on or after 1 April 2020 would not be subject to dividend distribution tax in the hands of the distributing Indian company or mutual fund. Such dividend would be taxable in the hands of the shareholders/unitholders at the ordinary income tax rate in case of Indian residents and @ 20% in case of non-residents (subject to benefits under the tax treaty, if any). Further, the company distributing dividend will be required to withhold tax @ 10% in case of distributions made to Indian residents and @ 20% (or any beneficial rate available under the applicable tax treaty) in case of distributions made to non-residents.

b) Interest Iincome

Income in the nature of interest on debentures, shall be subject to tax in the hands of the investors at the normal rates applicable to each class of investors.

c) Income from units of a securitisation trust:

A tax pass through status has been accorded to ‘securitisation trusts’ with respect to any income earned by such a trust. Accordingly, income earned by a securitisation trust shall be chargeable to tax in the hands of the investors as if such investors had directly made the investments held by the trust. Therefore, the characterization of the income that accrues to the trust shall be passed on to the investor for tax purposes. Income distributions by a securitisation trust to investors (deemed to accrue at year end, if not actually accrued / distributed) are subject to tax withholding by the trust as follows:

a. At the rate of 25% in case of distributions to resident investors, being individuals

and Hindu Undivided Families; b. At the rate of 30% in case of distributions to other resident investors; and c. At the ‘rates in force’ (which include rates applicable under the relevant tax treaty)

in case of distributions to non-resident investors.

d) Income from units of a REIT / InvIT:

The taxability of income earned by a REIT / InvIT shall depend on the nature of such income:

Interest Income: Not taxable in the hands of REIT / InvIT. Taxable in the hands of

Unit holders (at the applicable rate) Rental Income (applicable in case of REITs): Not taxable in the hands of REIT.


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Taxable in the hands of Unit holders (at the applicable rate) Dividend: Currently, exempt in the hands of REIT / InvIT as well as Unit holders.

As per the proposal made in Finance Bill, 2020, while dividend continues to remain exempt in the hands of REIT/InvIT, the same is proposed be taxed in the hands of the unitholders (at applicable rate for residents and 20% for non-residents).

Capital on sale of assets / shares of SPV: Taxable in the hand of the REIT / InvIT (at applicable rates). Not taxable in hands of Unit holders

II. Capital Gains

A. Equity shares, Units of equity-oriented funds, Units of REITS / InvITs

Gains arising on transfer of listed equity shares and units of an equity-oriented fund shall be characterized as long-term capital gains if such listed shares/ units are held for a period exceeding 12 months. Gains arising on transfer of unlisted shares shall be considered as long term capital gains if such shares are held for a period exceeding 24 months. In case of other units (including units of REITS, InvITs), the gains shall be considered as long-term capital gains, if such units are held for a period exceeding 36 months.

(a) Long Term For resident Individuals, HUF, Partnerships Firm and Indian Companies Listed on a recognized stock exchange - As per section 112A of the Income Tax Act, 1961 (“IT Act”) long term capital gains (in excess of Rs. 1 lakh, on an aggregate basis in a financial year), arising from transfer of equity shares, or units of equity-oriented funds or units of REITs/InvITs, shall be taxable at 10% (plus surcharge and cess), provided STT has been paid at the time of acquisition (subject to certain exceptions) and transfer of such capital asset, in the case of equity shares, and paid at the time of transfer in the case of units of equity oriented fund/REIT/InvIT.

As per section 112 of the IT Act, if listed equity shares are transferred other than as mentioned above, gains shall be taxable @ 10% (plus applicable surcharge and cess) without claiming indexation benefit (or 20% (plus applicable surcharge and cess) after claiming indexation benefit). Unlisted – As per section 112 of the IT Act, long term capital gains arising on transfer of unlisted equity shares or units of equity-oriented funds or units of REITs/ InvITs shall be taxable @ 20% (plus applicable surcharge and cess), after applying the benefit of indexation.

Grandfathering of capital gains:

With effective 01st April 2018, there was a proposal to grandfather investment made on or before 31.01.18.

Since the law was made in respect of taxation of long term capital gain from equity shares and equity oriented mutual funds, the investors who invested their money before making a new law, were given the right to avail concession. This is called grandfathering.

The persons who enjoy the right to avail this concession are called grandfathered.

The LTCG can be taxable under two things—the exemption for LTCG up to Rs.1 lakh, and the grandfathering provision. If you had invested in equity mutual funds or shares before


30

31 January 2018, any gains till that date will be considered as grandfathered and thus will be exempt from tax.

Method of determining Cost of Acquisition:

A method of determining the Cost of Acquisition (COA) of such investments has been specifically laid down according to which the COA of such investments shall be deemed to be the higher of-

1. The actual COA of such investments; and 2. The lower of-

o Fair Market Value (‘FMV’) of such investments; and o the Full Value of Consideration received or accruing as a result of the

transfer of the capital asset i.e. the Sale Price

Tax implications under Grandfathering rule:

Sr No

Scenario Tax Implications

1 Purchase and sale before 31/1/2018 Exempt under Section 10(38)

2 Purchase before 31/1/2018 Sale after 31/1/2018 but before 1/4/2018

Exempt under Section 10(38)

3 Purchase before 31/1/2018 Sale on or after 1/4/2018

LTCG taxable Gains accrued before 31/1/2018 exempt

4 Purchase after 31/1/2018 Sale on or after 1/4/2018

LTCG taxable

Non-resident Indian investor Listed on a recognized stock exchange- Section 112A of the IT Act (referred to above), shall also be applicable to non-resident investors, on long term capital gains arising on transfer of equity shares or units of equity oriented mutual funds/REITS/InvITs (subject to payment of STT). Further, where the conditions of section 112A of the IT Act are not met, the provisions of section 112 of the IT Act shall apply as per which the long term capital gains shall be taxable @ 10% (plus applicable surcharge and cess) without foreign exchange and indexation benefit. Unlisted- Long-term capital gains shall be taxable at the rate of 10% (plus applicable surcharge and cess) on the transfer of capital assets, being unlisted securities including equity shares.

(b) Short Term Under section 111A of the IT Act, income from short-term capital gains arising from the transfer of equity shares or units of an equity oriented mutual fund or units of a REITs / InvITs on a recognized stock exchange , on which STT is paid, are taxable at the rate of 15% (plus the applicable surcharge and cess). The tax rates applicable to different categories of assesses on short-term capital gains (other than those referred to above) would be the normal tax rates applicable to the


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investors.

B. Debentures / Units of a mutual fund (other than equity oriented):

Gains arising on transfer of listed debentures (assuming treated as securities under the Securities Contract (Regulation) Act, 1956) shall be treated as long term capital gains if such listed debentures are held for a period exceeding 12 months. In the case of unlisted debentures and listed / unlisted units of a mutual fund (other than equity-oriented fund), the gains shall be considered as long-term capital gains if such securities are held for a period exceeding 36 months.

(a) Long term For resident Individuals, HUF, Partnerships Firm and Indian Companies: Listed on a recognized stock exchange - Long term capital gains arising on transfer of listed debentures shall be taxable @ 10%, and long-term capital gains arising on transfer of listed units of a mutual fund (other than equity oriented), shall be taxable @ 20% (plus applicable surcharge and cess) Unlisted – Long term capital gains arising on the transfer of unlisted debentures or units of a mutual fund (other than equity oriented) shall be taxable @ 20% (plus applicable surcharge and cess) Non-resident Indian investor: Listed on a recognized stock exchange - Long term capital gains arising on transfer of listed debentures shall be taxable @ 10%, and long-term capital gains arising on transfer of listed units of a mutual fund (other than equity oriented), shall be taxable @ 20% (plus applicable surcharge and cess) Unlisted - Long term capital gains arising on the transfer of unlisted debentures / units of a mutual fund (other than equity oriented) shall be taxable @ 10% (plus applicable surcharge and cess)1 (b) Short term Short term capital gains arising on transfer of debentures / units of a mutual fund (other than equity oriented), whether listed or unlisted, shall be taxable at the normal rates applicable to the investors

C. Security receipts (“SR”) of a securitisation trust:

Gains arising on transfer of listed SRs (assuming treated as securities under the Securities Contract (Regulation) Act, 1956) shall be treated as long term capital gains if such listed SRs are held for a period exceeding 12 months. In the case of unlisted SRs, the gains shall be considered as long-term capital gains if such SRs are held for a period exceeding 36 months. (a) Long term For resident Individuals, HUF, Partnerships Firm and Indian Companies: Long term capital gains arising on the transfer of SRs, listed or unlisted, shall be taxable @ 20% (plus applicable surcharge and cess)

1 The tax rate of 10% shall apply, assuming the debentures / units qualify as a security under Securities Contracts

(Regulation) Act 1956. In case investment is to be made in debentures of a private company, the applicable tax rate shall

be 20%.


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Non-resident Indian investor:

Long term capital gains arising on the transfer of SRs (assuming treated as securities under the Securities Contract (Regulation) Act, 1956), listed or unlisted, shall be taxable @ 10% (plus applicable surcharge and cess)

(b) Short term Short term capital gains arising on transfer of SRs, whether listed or unlisted, shall be taxable at the normal rates applicable to the investors.

Redemption Note that there is uncertainty in relation to characterisation of income earned by the ARC on redemption / loan repayment of the underlying debt. Proceeds received by the ARC on loan prepayment to the extent of capital invested by ARC would not be taxable, being capital in nature. However, there is uncertainty regarding amounts recovered above such capital invested which may be taxable in the hands of the investor (on a pass-through basis) as interest, i.e. at the ordinary tax rates applicable to the investor, or as capital gains i.e. at special tax rates or as business income which is taxable at 30% / 40%, plus applicable surcharge and cess). For a non-resident investor, for taxation as business income, the determining factor will be existence of a taxable presence in India.

D. Indexation benefit for computing capital gains

To compute long term capital gains, the investor can claim the benefit of indexation by applying the applicable cost inflation index, except in the case of (i) debentures and (iii) securities taxable under section 112A

III. Deemed income on investment in shares / securities

In terms of section 56(2)(x) of the IT Act, if shares / securities are acquired (either by way of fresh subscription or secondary acquisition) for less than the fair market value of the shares / securities (computed as per prescribed rules), the difference between the price paid and fair value thereof shall be deemed as ordinary income of the acquirer. Separately, if shares other than “quoted shares” are transferred for less than the fair value of the shares (computed as per prescribed rules), the fair value of such unquoted shares shall be deemed to be the sale consideration for the seller, for computing its capital gains for Indian tax purposes. “Quoted share” is defined as “the share quoted on any recognised stock exchange with regularity from time to time, where the quotation of such share is based on current transaction made in the ordinary course of business.” Thus, in case of acquisition of shares or securities of the investee companies at a price below fair value thereof, the difference would be deemed as ordinary income of the investors and taxed accordingly. Further, in case of sale of unquoted shares of the investee companies at a price below fair value thereof, the fair value will be deemed as the minimum sale consideration for the purpose of computing capital gains tax and the investors will be taxed accordingly.

IV. Gains arising on buy-back of shares by company

As per the Section 10(34A) of the IT Act, gains arising on buy-back of shares are exempt from tax in the hands of investors. However, as per section 115QA of the IT Act, a distribution tax at the rate of 20% is payable by an Indian company on


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distribution of income by way of buy-back of its shares if the buy-back is in accordance with the provisions of the Companies Act, 2013. Such distribution tax should be payable on the difference between consideration paid by such Indian company for the purchase of its own shares and the amount that was received by the Indian investee company at the time of issue of such shares, determined in the manner prescribed.

V. Tax Treaty Benefits for non-resident investors

As per Section 90(2) of the IT Act, the provisions of the IT Act would apply to the extent they are more beneficial than the provisions of the Double Taxation Avoidance Agreement (“Treaty”) between India and the country of residence of the non-resident investor (subject to GAAR provisions discussed below and to the extent of availability of Treaty benefits to the non-resident investors). However, no assurance can be provided that the Treaty benefits will be available to the non-resident investor or the terms of the Treaty will not be subject to amendment or reinterpretation in the future. The taxability of such income of the non-resident investor, in the absence of Treaty benefits or from a country with which India has no Treaty, would be as per the provisions of the IT Act.

VI. Tax Residency Certificate (“TRC”)

In order to claim Treaty benefits, the non-resident investor has to obtain the TRC as issued by the foreign tax authorities. Further, the non-resident investor shall be required to furnish such other information or document as may be prescribed. In this connection, the CBDT vide its notification dated August 1, 2013 has prescribed certain information in Form No. 10F to be produced along with the TRC, if the same does not form part of the TRC. The tax authorities may grant Treaty benefit (after verifying the TRC) based on the facts of each case and subject to satisfaction of “substance” test from the perspective of General Anti-Avoidance Rules.

VII. Securities Transaction Tax

1. Delivery based purchase transaction in

equity shares entered into in a recognized stock exchange

Purchaser 0.1

2. Delivery based purchase transaction in units of equity oriented fund entered into in a recognized stock exchange

Purchaser Nil

3. Delivery based sale transaction in equity shares entered in a recognized stock exchange

Seller 0.1

4. Delivery based sale transaction in units of equity oriented fund entered into in a recognized stock exchange

Seller 0.001

5. Non-delivery based sale transaction in equity shares or units of equity oriented fund entered in a recognised stock exchange

Seller

0.025


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6. Transaction for sale of futures in securities

Seller 0.01

7. Transaction for sale of an option in securities

Seller 0.017

8. Transaction for sale of an option in securities, where the option is exercised

Purchaser 0.125

9. Sale of units of an equity oriented fund to the mutual fund

Seller 0.001

10. Sale of unlisted equity shares by any holder of such shares under an offer for sale to the public included in an IPO and where such shares are subsequently listed on a recognised stock exchange

Seller 0.2

VIII. Withholding at a Higher Rate The income tax provisions provide that where a recipient of income (which is subject to withholding tax) does not have a Permanent Account Number (“PAN”), then tax is required to be deducted by the payer at higher of the following i.e. rates specified in relevant provisions of the IT Act, or rates in force or at 20%. However, this provision of the IT Act shall not apply in respect of payments in the nature of interest, royalty, fees for technical services and payments on transfer of any capital asset to a non-resident, subject to furnishing of certain details and documents. As per Rule 37BC of the ITR, the following details and documents are prescribed:

1. Name, e-mail id, contact number; 2. Address in the country or specified territory outside India of which the

deductee is a resident; 3. TRC; and 4. Tax identification number of the deductee in the country or specified territory

of his residence and in case no such number is available, then a unique number on the basis of which the deductee is identified by the Government of that country or the specified territory of which he claims to be a resident.

IX. Minimum Alternate Tax As per the IT Act, if the income-tax payable on total income by any company is less than 15% of its book profits (subject to prescribed adjustments), the company will be required to pay MAT at the rate of 15% of such book profits. The MAT provisions are not applicable to a foreign company if, (a) it is a resident of a country with which India has a tax treaty and it does not have a permanent establishment (“PE”) in India; or (b) it is a resident of a country with which India does not have a tax treaty and is not required to seek registration under the Indian corporate law. Further, income of a foreign company which is in the nature of inter alia capital gains arising on transfer of securities and interest, is expressly excluded from the purview of MAT provisions. MAT provisions are not applicable in case of resident companies that have opted for concessional tax regime as introduced under the Taxation Laws (Amendment) Act, 2019.


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X. Carry-forward of losses and other provisions (applicable to both equity products irrespective of the residential status): In terms of Section 70 read with Section 74 of the IT Act, short term capital loss arising during a year can be set-off against short term as well as long term capital gains. Balance loss, if any, shall be carried forward and set-off against any capital gains arising during the subsequent 8 assessment years. A long-term capital loss arising during a year is allowed to be set-off only against long term capital gains. Balance loss, if any, shall be carried forward and set-off against long term capital gains arising during the subsequent 8 assessment years.

XI. General Anti Avoidance Rule (“GAAR”)

GAAR may be invoked by the Indian income-tax authorities in case arrangements are found to be impermissible avoidance arrangements. A transaction can be declared as an impermissible avoidance arrangement, if the main purpose of the arrangement is to obtain a tax benefit and which satisfies one of the 4 (four) tests mentioned below: (a) Creates rights or obligations which are ordinarily not created between parties

dealing at arm's length;

(b) It results in direct / indirect misuse or abuse of the IT Act;

(c) It lacks commercial substance or is deemed to lack commercial substance in whole or in part; or

(d) It is entered into or carried out in a manner, which is not normally employed for bona fide business purposes.

In such cases, the tax authorities are empowered to reallocate the income from such arrangement or re-characterise or disregard the arrangement. Some of the illustrative powers are:

(a) Disregarding or combining or re-characterizing any step of the arrangement or

party to the arrangement;

(b) Ignoring the arrangement for the purpose of taxation law;

(c) Relocating place of residence of a party, or location of a transaction or situs of an asset to a place other than provided in the arrangement;

(d) Looking through the arrangement by disregarding any corporate structure;

(e) Reallocating and re-characterizing equity into debt, capital into revenue, etc.

(f) Disregarding or treating any accommodating party and other party as one and the same person;

(g) Deeming persons who are connected to each other parties to be considered as one and the same person for the purposes of determining tax treatment of any amount.

The above terms should be read in the context of the definitions provided under the IT Act. Any resident or non-resident may approach the Authority for Advance Rulings to determine whether an arrangement can be regarded as an impermissible avoidance arrangement. The GAAR provisions shall be applied in accordance with such guidelines and subject to such conditions and manner as may be prescribed.

THERE CAN BE NO GUARANTEE THAT THE ABOVE POSITION REGARDING


36

TAXATION WOULD BE NECESSARILY ACCEPTED BY THE INDIAN TAX AUTHORITIES UNDER THE ITA. NO REPRESENTATION IS MADE EITHER BY THE PORTFOLIO MANAGER OR ANY EMPLOYEE, DIRECTOR, SHAREHOLDER OR AGENT OF THE MANAGER IN REGARD TO THE ACCEPTABILITY OR OTHERWISE OF THE ABOVE POSITION REGARDING TAXATION BY THE INDIAN TAX AUTHORITIES UNDER THE ITA. INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISERS IN THIS REGARD.]

13. ACCOUNTING POLICY

13.1. Valuations

13.1.1. Listed Equity: The closing price of the previous working day from the National Stock Exchange (“NSE”) is considered for the purposes of valuation. If the price is not available on NSE, the BSE Ltd closing price is considered.

13.1.2. Mutual Funds: The previous day’s scheme NAVs declared by Mutual Funds (as

per The Association of Mutual Funds in India (AMFI) website) is considered to value Mutual Fund investments.

13.1.3. Fixed Income: Valuation of fixed income instruments is based on security level

prices received from valuation agencies.

New securities purchased for which valuation price is not provided by the external agencies on the date of purchase (e.g due to cut-off timings), is valued based on the Weighted Average Yield of trades done through the Portfolio Manager. Primary market issuances is valued at cost until allotment.

13.1.4. Others: Valuations for Structured Debentures is done as per the latest available

valuation provided by the Issuer. If valuations are not provided by the issuer, such structured debentures is valued at cost. As for valuation of unlisted, de-listed securities prices are not available and hence valuation is as per the last available rate that may be provided by the Issuer and if the same is not available, valuation is done at cost.

13.2. General Accounting Principles

13.2.1. Contribution to portfolio by way of security: Securities are valued at the

closing price of the day immediately prior to the day when the stocks are considered as contribution in the system.

13.2.2. Cost of Investments: Purchase and sale of Investments are accounted for on

trade date basis. Cost of purchase and sale includes brokerage, stamp duty and any other charges levied by the broker but excludes securities transaction tax (STT).

13.2.3. Realized Gain/Loss: It is accounted on trade date basis and calculated by

applying the first in first out (FIFO) principle.

13.2.4. Unrealized Gain/Loss: It is the difference between the current market value/NAV and the cost of the securities as accounted for by the portfolio manager. It does not consider the actual acquisition cost of the client in case a security has been contributed by the client and purchased by the portfolio manager.

13.2.5. Corporate Action:


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Dividend/Interest - Dividend on equity shares and interest on debt instruments is accounted on accrual basis. Mutual Fund dividend is accounted on accrual basis. Other income like bank interest, interest on FD etc. is accounted on receipt basis. Bonus shares - It is recognized only when the original shares on which the bonus entitlement accrues are traded on the stock exchange on an ex-bonus basis. Right entitlement - It is recognized only when the original shares on which the right entitlement accrues are traded on the stock exchange on an ex-rights basis. Fractional Entitlement – Consideration received against fractional entitlement on account of corporate actions is entirely considered as other income.

13.2.6. Expenses: Portfolio Management fees are accounted on accrual basis based on

average daily portfolio value. STT paid on securities transactions is treated as expenditure and shown under other expenses. Other expenses like custodian fees, fund accounting fees, depository charges, audit fees, etc. are recorded on payment basis.

13.2.7. Financial Statements: For the purpose of the financial statements, the

portfolio manager shall mark all investments to cost and carry investments in the balance sheet at cost price.

14. PREVENTION OF MONEY LAUNDERING & KNOW YOUR CUSTOMER (KYC) REQUIREMENTS

SEBI has mandated that all registered intermediaries to formulate and implement a comprehensive policy framework on anti-money laundering and adopt ‘Know Your Customer’ (“KYC”) norms as per the Applicable Law. Accordingly, the Investors should ensure that the amount invested by them is through legitimate sources only and does not involve and are not designed for the purpose of any contravention or evasion of Applicable Law, including the provisions of Income Tax Act 1961, Prevention of Money Laundering Act 2002, Anti-Corruption Act and or any other Applicable Laws enacted by the Government of India from time to time. The Portfolio Manager is committed to complying with all applicable anti money laundering laws and regulations in all of its operations. Accordingly, the Portfolio Manager reserves the right to reject or refund or freeze the account of the Client if the Client does not comply with the internal policies of the Portfolio Manager or any of the Applicable Laws including the KYC requirements. Further, the Portfolio Manager has put in place Client due diligence measures including screening procedures whereby names of the Investors will be screened against such database considered appropriate by the Portfolio Manager. Further, the Portfolio Manager shall take necessary action including rejection of application / refund of application money / freezing of investor account for future transactions/ submitting suspicious transactions report (“STR”) to law enforcement authorities if the Portfolio Manager has reasonable grounds to believe/ suspect that the transactions involve money laundering or terrorist financing or proceeds of crime. The Portfolio Manager shall not be held liable in any manner for any claims arising whatsoever on account of freezing the account / rejection or refund of the application etc due to non-compliance with the provisions of any of the aforesaid Regulations or Applicable Laws. KYC is mandatory for all investors and registered intermediaries are required to upload


38

the KYC data with Central KYC Records Registry (“CKYCR”). Each investor has to undergo a uniform KYC process only once in the Securities market and the details would be shared with other intermediaries by the KYC registration agencies(“KRA”) and the CKYCR. Applications shall be liable to be rejected if the investors do not comply with the aforesaid KYC requirements. Parameters of risk perception in terms of the nature of business activity, location of Client, mode of payments, volume of turnover, social and financial status etc. enables categorisation of customers into low, medium and high categories. Clients requiring very high level of monitoring, e.g. Politically Exposed Persons (“PEPs”) may, be categorised even higher; and hence the documentation requirements and other information to be collected in respect of such categories of Clients depending on perceived risk and keeping in mind the requirements of PML Act, 2002 and instructions/guidelines issued by Reserve Bank from time to time. Additional KYC requirements will be applicable for such Clients.

15. CLIENT SERVICES (i) Investor Relations Officer:

Name, address and telephone number of the investor relations officer who shall attend to the investor queries and complaints:

Name: Manali Joshi Email: [email protected]

Address: 8th floor, Mafatlal Centre, Nariman Point, Mumbai – 400021

Telephone No: 022 61760157

The official mentioned above will ensure prompt investor services. The Portfolio Manager will ensure that this official is vested with the necessary authority, independence, and wherewithal to handle investor complaints.

(ii) Grievance Redressal and Dispute Settlement Mechanism:

The Investment Relation Officer will be the interface between the Portfolio Manager and the Client. The Investor Relation Officer shall be responsible for redressing the grievances of the clients. Communication Details of Officer for Client Complaints and Queries:

Name, address and telephone number of the investor relations officer who shall attend to the investor queries and complaints:

Name: Manali Joshi

Email: [email protected]

Address: 8th floor, Mafatlal Centre, Nariman Point, Mumbai - 400021

Telephone No: 022 61760157 The aforesaid personnel of the Portfolio Manager shall attend to and address any Client query or concern within 30 days as required by SEBI. The above details are also available on the website viz. https://www.juliusbaer.com/en/legal/india/jbwa/portfolio-management-services/attention-investors/ .

M. P. Chitale & Co. Chartered Accountants 1/11, Prabhadevi Ind. Estate, 1st Flr., Opp. Siddhivinayak Temple, Veer Savarkar Marg, Prabhadevi, Mumbai - 25 Tel.: 43474301-03 Fax : 43474304

The Board of Directors,

Julius Baer Wealth Advisors (India) Private Limited,

8th Floor, Mafatlal Centre,

Nariman Point,

Mumbai - 400021

We have examined the Disclosure Document dated July 16th, 2021 for Portfolio Management

prepared in accordance with Regulation 22 of SEBI (Portfolio Managers) Regulations, 2020 by

Julius Baer Wealth Advisors (India) Private Limited, (Registration Number INP000007012) and

having its office at 8th Floor, Mafatlal Centre, Nariman Point Mumbai 400021.

Based on our examination of attached Disclosure Document, audited annual accounts of Julius

Baer Wealth Advisors (India) Private Limited and other relevant records and information

furnished by Management, we certify that the disclosures made in the attached Disclosure

Document for Portfolio Management are true, fair and adequate to enable the investors to

make a well-informed decision.

We have relied on the representations given by the management about the penalties or

litigations against the Portfolio Manager mentioned in the disclosure document.

This certificate has been issued to the Securities and Exchange Board of India for the sole

purpose of certifying the contents of the Disclosure Document for Portfolio Management and

should not be used or referred to for any other purpose without our prior written consent.

For M.P. Chitale & Co.

Chartered Accountants

Firm Reg. No. 101851W

Santosh More

Partner

Membership No. 114236

Mumbai, July 19, 2021

UDIN: 21114236AABXEO1489

Julius Baer Wealth Advisors (India) Private Limited

Notes to financial statements (Continued)

for the year ended 31 March 2020

(Currency: Indian rupees in million)

38 Related party transactions

(A) Nature of relationship:

i. Holding Company Julius Baer Group Limited ('JBGL') Switzerland

Bank Julius Baer & Co. AG ('BJBAG') Switzerland

Bank Julius Baer & Co. AG, Singapore Branch ('BJBSG') Singapore

iii. Entity over which fellow subsidiary

company is having significant influence

LOTECO Foundation ('LOTECO') Switzerland

iv. Wholly owned subsidiary Julius Baer Capital (India) Private Limited ('JBCL') India

v. Key managerial personnel

Abhishek Gumashta - Brother of Mr. Ashish Gumashta

Ashish Gumashta - Director & CEO

Ami Gumashta - Wife of Mr. Ashish Gumashtavi. Relative of key managerial personnel (with

whom transactions have taken place)

ii. Fellow subsidiary companies with whom

transactions have taken place during the year

u46419

Typewritten text

Annexure 1


Notes to the financial statements (Continued)for the year ended 31 March 2020


38 Related party transactions (Continued)

Entity over

which fellow

subsidiary

company is

having

significant

influence

Wholly owned

subsidiary

BJBAG BJBSG LOTECO JBCL

Infrastructure and support cost charged by the Company - - - 73.42

- - - 64.41

Reimbursement of share based payment expenses by the Company - - 24.70 -

- - 25.36 -

Reimbursement of expenses incurred 101.87 - - -

77.13 0.07 - -

Intercorporate deposit placed with - - - 2,417.00

- - - 1,171.00

Intercorporate deposit repayment from - - - 2,417.00

- - - 1,171.00

Borrowing through intercorporate deposit - - - 4,363.50

- - - 4,615.00

Repayment of intercorporate deposits - - - 4,363.50

- - - 4,615.00

Interest income on intercorporate deposits - - - 0.38

- - - 0.73

Interest expense on intercorporate deposits - - - 3.04

- - - 7.69

Balance at the year end

Investments in equity share capital of - - - 3,383.10

- - - 3,383.10

Receivable towards infrastructure and support cost charged - - - 7.44

- - - 4.96

Payable towards employee benefit liabilities of transferred employees - - - 1.42

- - - -

Payable towards liabilities of share based payments - - 24.14 -

- - 21.33 -

Payable towards reimbursement of expenses incurred 17.39 - - -

19.86 - - -

^ excluding Goods and service tax or service tax if any

Numbers in italic indicate previous year balances.

(B) Transactions with related parties:

Nature of transactions^Fellow subsidiaries


Notes to the financial statements (Continued)for the year ended 31 March 2020


38 Related party transactions (Continued)

(C) Transactions with key managerial personnel:

Nature of transactions^ Ashish

Gumashta

Salary, bonus, allowances and share awards a 65.85

59.51

Income from securities broking 0.34

0.36

Other fees and commission income 0.05

0.04


Trade receivable 0.03

-

Payable towards unsettled trades (net) 1.79

-

(D) Transactions with relative of key managerial personnel

Nature of transaction^ Ami Gumashta Abhishek

Gumashta

Salary, bonus, allowances and share awards a - 7.04

- 7.18

Income from securities broking 0.04 0.01

0.01 0.02


Trade receivable ++ -

- -

Receivable towards unsettled trades 2.50 -

- -

++ Rs. 4774/-

^ excluding goods and service tax or service tax if any

a Excludes provision for gratuity and leave encashment which are actuarially valued and where individual amounts are not identifiable.

Numbers in italic indicate previous year balances.

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