principal pnb asset management company private...

Principal Pnb Asset Management

Company Private Limited

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Annual report

2015-2016

1

DIRECTORS’ REPORT

Dear Shareholders, Your Directors have pleasure in presenting the Twenty Fourth (24th) Annual Report on the business and performance of the Company together with the audited financial statements for the Financial Year ended March 31, 2016. FINANCIAL HIGHLIGHTS The Company's performance during the year ended March 31, 2016 as compared to the previous financial year, is summarized below:

(Rs. in lakh)

Particular For the financial

year ended

March 31, 2016

For the financial

year ended

March 31, 2015

Income 3,903.72 3684.58

Less: Expenses 5,247.13 4740.53

Profit/ (Loss) before tax (1,343.41) (1055.95)

Less: Provision for tax - -

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

Exception Income - -

Exception expenditure - -

Profit after Tax (1,343.22) (1055.95)

APPROPRIATION

(Rs. in lakh)

Interim Dividend - -

Final Dividend - -

Tax on distribution of dividend - -

Transfer of General Reserve - -

Balance carried to Balance sheet (1,343.22) (1055.95)

FUND PERFORMANCE The performance of various funds of the Company during the financial year 2015-16 was as under:

Name of Fund

Year of Launch Return (%)

Principal Balanced Fund Regular Plan - 14/01/2000 -2.14

Direct Plan - 2/1/2013 -1.40

Principal Index Fund – Midcap Regular Plan – 12/05/2014 -1.46

Direct Plan – 12/05/2014 -0.96

Principal Dividend Yield Fund Regular Plan - 15/10/2004 -6.87

2

Direct Plan – 02/01/2013 -6.36

Principal Global Opportunities Fund Regular Plan – 29/03/2004 -8.38

Direct Plan – 02/01/2013 -7.97

Principal Growth Fund Regular Plan – 25/10/2000 -5.47

Direct Plan – 02/01/2013 -4.80

Principal Index Fund – Nifty Regular Plan – 27/07/1999 -8.52

Direct Plan – 02/01/2013 -8.06

Principal Large Cap Fund Regular Plan – 11/11/2005 -7.70

Direct Plan – 02/01/2013 -7.05

Principal Personal Tax Saver Fund Regular Plan – 31/03/1996 -7.88

Direct Plan – 02/01/2013 -7.27

Principal Emerging Bluechip Fund Regular Plan – 12/11/2008 -5.31

Direct Plan – 02/01/2013 -4.40

Principal Low Duration Fund Regular Plan – 14/09/2004 8.12

Direct Plan - 2/1/2013 9.06

Principal Bank CD Fund Regular Plan – 06/11/2007 8.36

Direct Plan - 2/1/2013 8.91

Principal Government Securities Fund Regular Plan – 23/08/2001 5.88

Direct Plan - 2/1/2013 6.41

Principal Dynamic Bond Fund Regular Plan – 09/05/2003 6.07

Direct Plan - 2/1/2013 6.85

Principal Short Term Income Fund Regular Plan - 09/05/2003 8.02

Direct Plan - 2/1/2013 8.82

Principal Equity Savings Fund Regular Plan - 23/05/2003 1.49

Direct Plan - 2/1/2013 2.18

Principal Debt Savings Fund – Retail Plan

Regular Plan – 30/12/2003 7.13

Direct Plan - 2/1/2013 7.93

Principal Cash Management Fund Regular Plan – 30/08/2004 8.24

Direct Plan - 1/1/2013 8.32

Principal Credit Opportunities Fund Regular Plan – 14/09/2004 9.02

Direct Plan - 2/1/2013 9.19

Principal Retail Money Manager Fund Regular Plan – 28/12/2007 8.56

Direct Plan - 1/1/2013 8.64

Principal Smart Equity Fund Regular Plan – 16/12/2010 -0.54

Direct Plan - 2/1/2013 0.47

Principal Tax Savings Fund Regular Plan – 31/03/1996 -5.51

Direct Plan – 02/01/2013 -4.98

Principal Asset Allocation Fund-of-Funds – Conservative Plan

Regular Plan – 1412/2015 1.57

Direct Plan – 14/12/2015 1.81

Principal Asset Allocation Fund-of-Funds – Moderate Plan

Regular Plan – 1412/2015 -1.02

Direct Plan – 14/12/2015 -0.78

Principal Asset Allocation Fund-of-Funds – Aggressive Plan

Regular Plan – 1412/2015 -1.33

Direct Plan – 14/12/2015 -1.07

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OUTLOOK

At Principal Mutual Fund, our stress is not only to grow our AUM, but also on giving the right products to the investors and staying relevant in their minds. The company has taken several actions during the year to position the Company for increasing its retail business while aligning the institutional business strategically towards higher margin products. The company plans for the next three to five years are to consolidate its position as a dominant player in ‘long term’ asset management business. Besides developing new solutions to meet needs of the investors through domestic funds, the company will pursue bringing in unique global investment options for its clients. OPERATIONS

Principal Mutual Fund as at March 31, 2016 offers thirty Schemes. These include fourteen Equity Schemes (including two Equity Linked Savings Schemes, one Balanced Scheme, one Fund of Fund Overseas (investing in international fund/s, three Fund of Funds Domestic Scheme), fifteen Debt Schemes/ Plans (including one Hybrid Scheme and six Fixed Maturity Plans) and one Liquid Scheme. The Average Assets under Management (AAuM) from all these Schemes during the quarter ended March 31, 2016 was Rs. 4,828.02 crore.

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

Performance of some of our schemes were recognized for their excellence, in several Rankings and Star Ratings released by various independent third party agencies. Principal Credit Opportunities Fund was 5-star rated fund & Principal Large Cap Fund, Principal Growth Fund, Principal Bank CD Fund, Principal Low Duration Fund and Principal Cash Management Fund were 4-star rated funds (as on March 31, 2016) as per Value Research. There was no change in nature of the business of the Company, during the year under review. DIRECTORS

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

The existing Board consists of:

Mr. M. M. Chitale Chairman (Director) (Independent) Mr. Lalit Vij Managing Director Mr. M. M. Kamath Director (Independent) Mr. Pedro Borda Director (Alternate Director: Mr. Kim Thean Soo) Mr. Rustam Gagrat Director (Independent) Mr. Vimlesh Kumar Director

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The Composition of the Board of Directors is in line with the requirements prescribed under the Companies Act 2013, SEBI (Mutual Funds) Regulations, 1996 and the Articles of Association of the Company. During the year, following changes took place in the composition of the Board of Directors: 1. Vacation of office of Ms. Vibha Aren as a Director from the Company’s Board with

effect from March 28, 2016.

2. Appointment of Ms. T. Latha, Nominee of Punjab National Bank as an Additional Director on the Company’s Board with effect from April 20, 2016.

3. Vacation of office of Ms. T. Latha as a Director from the Company’s Board with

effect from May 02, 2016. 4. Appointment of Mr. Vimlesh Kumar, Nominee of Punjab National Bank as an

Additional Director on the Company’s Board with effect from May 12, 2016.

5. Appointment of Mr. Pedro Borda, Nominee of Principal Financial Group (Mauritius) Limited, as an Additional Director and Mr. Kim Thean Soo as an Alternate Director to Mr. Pedro with effect from June 03, 2016.

6. Vacation of office of Mr. Kim Thean Soo as an Alternate Director to Mr. Pedro with

effect from July 12, 2016 and subsequent appointment of Mr. Kim Thean Soo as an Alternate Director to Mr. Pedro with effect from August 12, 2016.

In accordance with Section 152 of the Companies Act 2013 read with applicable Rules and the Articles of Association of the Company, the appointment of Mr. Vimlesh Kumar and Mr. Pedro Borda as Directors will be taken up at the ensuing Annual General Meeting of the Company. KEY MANAGERIAL PERSONNEL In Compliance of the Section 203 read with Rule 8A of the Companies Act 2013, the Company appointed Ms. Niyati Shah as the Whole Time Company Secretary with effect from April 23, 2015. DIRECTORS’ RESPONSIBILITY STATEMENT In terms of Section 134(5) of the Companies Act, 2013, in relation to the audited financial statements of the Company for the year ended March 31, 2016, the Board of Directors hereby confirms that: a. in the preparation of the annual accounts, the applicable accounting standards had

been followed along with proper explanation relating to material departures;

b. such accounting policies have been selected and applied consistently and the Directors made judgments and estimates that are reasonable and prudent so as to

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give a true and fair view of the state of affairs of the Company as at March 31, 2016 and of the profit/loss of the Company for that year;

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

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

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

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

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

Internal Auditors also evaluate the effectiveness of internal controls in place. BOARD MEETINGS During the Financial Year 2015-16, four meetings of Board of Directors were held on the following dates:

Date Day Number of Board Meeting

April 23, 2015 Thursday 127th

August 18, 2015 Tuesday 128th

October 26, 2015 Monday 129th

January 28, 2016 Thursday 130th

AUDIT COMMITTEE

The Company has an Audit Committee of Board of Directors in compliance with Master Circular no. CIR/IMD/DF/18/2014 dated October 01, 2014 of SEBI (Mutual Funds) Regulations, 1996.

The Composition of the Audit Committee is as under:

Mr. M. M. Kamath Chairman (Independent) Mr. M. M. Chitale Member (Independent) Mr. Rustam Gagrat Member (Independent)

During the Financial Year 2015-16, four meetings of Audit Committee were held on the following dates:

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Date Day Number of Audit

Committee Meeting

April 23, 2015 Thursday 50th

August 18, 2015 Tuesday 51st

October 26, 2015 Monday 52nd

January 28, 2016 Thursday 53rd

CORPORATE SOCIAL RESPONSIBILITY

The provisions of Section 135 read with Rules as prescribed under the Companies Act, 2013 with respect to Corporate Social Responsibility are currently not applicable on the Company. STATUTORY AUDITORS In the Annual General Meeting held on September 23, 2014, S. V. Ghatalia and Associates LLP, Chartered Accountants, were appointed as Statutory Auditors of the Company for a term of 5 years to hold office from the conclusion of the 22nd Annual General Meeting until the conclusion of the 27th Annual General Meeting, pursuant to the provisions of Section 139 of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014. S. V. Ghatalia and Associates, LLP, Chartered Accountants, have expressed their inability to continue as the Statutory Auditors of the Company for the remaining term due to preoccupation. The Board of Directors, in its meeting held on September 12, 2016, appointed S. R. Batliboi & Associates LLP, Chartered Accountants, in place of S. V. Ghatalia and Associates LLP, Chartered Accountants, for conducting the Statutory Audit of the Company for a term of 4 years. Pursuant to the provisions of Section 139 (8) of the Companies Act, 2013, their appointment as Statutory Auditors of the Company shall also be approved by the Members at the ensuing Annual General Meeting. Necessary resolution for appointment of the said Auditors is included in the Notice of Annual General Meeting for seeking approval of members. PUBLIC DEPOSITS During the Financial Year 2015-16, the Company did not accept any fixed deposits under the applicable provisions of the Companies Act, 2013.

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STATUTORY AUDITORS’ REPORT The Board has duly examined the Statutory Auditors’ Report on the financial statements of the Company for the financial year ended on March 31, 2016. The Statutory Auditors have, in their report under Companies (Auditor’s Report) Order, 2016, have stated that there has been a slight delay in payment of professional tax and provident fund. They have further stated that there has been a serious delay in the deduction and payment of income tax at source on perquisites given to one employee where income-tax amounting to Rs.20,65,931/- (cumulative for the past three years), was not deducted and deposited with the Income-tax authority. This amount has been deposited in the month of August 2015. Also there has been a serious delay in the deduction and payment of income tax at source in the same case where income-tax amounting to Rs.596,253/-, on perquisites, for the period April 2015 to July 2015, was deposited in the month of September 2015 and Rs.153,787/- for the month of August 2015 was deposited in October, 2015. The Board of Directors has taken a serious note of the above and has directed the management to ensure that appropriate controls and safeguards are in place to avoid such lapses and delays. EXTRACT OF ANNUAL RETURN In compliance with Section 92(3) of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of Annual Return in MGT-9 forms part of this Report annexed as Annexure I. SHARE CAPITAL During the financial year, no further shares were issued by the Company. The issued, subscribed and paid-up equity share capital of the Company as on March 31, 2016, stands at 17,400,014 Equity Shares of Rs. 10/- each. PARTICULARS OF EMPLOYEES The statement pursuant to Section 197 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 showing the details of the employees who were in receipt of remuneration during the financial year, in the aggregate, not less than one crore and two lakh rupees or if employed for a part of the financial year, were in receipt of remuneration for any part of that year, at a rate which, in the aggregate, not less than eight lakh and fifty thousand rupees per month, is set out in the annexure to the Boards’ Report. Any shareholder interested in obtaining a copy of the said annexure may write it to the Company. ST ATEMENT OF SUBSIDIARY COMPANIES, JOINT VENTURES AND ASSOCIATES Your Company has no subsidiary, joint venture or subsidiaries and hence the statement to be annexed pursuant to Section 129 of Companies Act, 2013 is not applicable.

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TRANSACTIONS WITH RELATED PARTIES The transactions with related parties are subject to the provisions contained in the Articles of Association of the Company and the applicable provisions of Companies Act, 2013 and are entered into with the approval of the Board of Directors and shareholders (wherever applicable). The Related Parties Transactions are reviewed by the Directors, to ensure that such transactions are in the best interest of the Company. The contracts / arrangements entered with the related parties during the Financial Year 2015-16 are enclosed as Annexure III. The transactions entered into with the related parties during the Financial Year 2015-16 are stated under ‘Notes to the Accounts’ in the Audited Financial Statements of the Company. LOANS, GUARANTEES, INVESTMENTS AND SECURITIES The Company has not given any loan, guarantee, provided securities or made any investments under the provisions of Section 186 of the Companies Act, 2013 during the year. RISK MANAGEMENT APPROACH Risk Management is an integral part of the Company’s business. The Company has a Risk Management Framework in place under which the key financial and non-financial risks applicable to the Company and the mitigation measures are identified and are monitored periodically. DISCLOSURE UNDER SECTION 22 OF THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 The Company has duly constituted an Internal Complaints Committee in place in terms of the requirements of Section 4 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company has in place the Policy on matters relating to Workplace Safety in compliance with the requirements of the Act. No cases were reported during the Financial Year 2015-16. COMPANIES DISCLOSURE OF PARTICULARS PURSUANT TO SECTION 134 (3) (m) OF THE COMPANIES ACT, 2013 IS AS UNDER:

(A) Foreign Exchange Earnings and Outflow:

During the Financial Year 2015-16, the foreign exchange earnings and outflow were as under:

(Amount in Rs.)

2015-16 (In Rs.) 2014-15 (In Rs.)

Actual Foreign Exchange earnings Nil Nil

Actual Foreign Exchange outgo :-

Travel Expenses 1,634,319 17,903

Professional Charges 1,354,215 Nil

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Software Maintenance / E – Communication 305,938 3,202,576

Information/Wire-Service Expenses 3,656,489 2,288,604

Training Expenses 4,142,004 1,967,869

Total 11,092,965 7,476,952

(B) Conservation of Energy & Technology Absorption:

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

DIVIDEND The Board of Directors do not recommend any dividend for the Financial Year under review. OTHER DISCLOSURES The financial statements for any of the previous years have not been reinstated by the Company. There were no recommendations of the Audit Committee which were not concurred or accepted by the Board of Directors. ACKNOWLEDGEMENT The Board of Directors take this opportunity to thank the customers, shareholders,

suppliers, bankers, business partners/associates, Securities and Exchange Board of

India, Ministry of Corporate Affairs, financial institutions and Central and State

Governments for their consistent support and encouragement to the Company.

For and on behalf of the Board of Principal Pnb Asset Management Company Private Limited Sd/- Sd/- M. M. Chitale Lalit Vij Chairman Managing Director DIN: 00101004 DIN: 00533071 Date: September 12, 2016 Place: Mumbai Registered Office Exchange Plaza, B Wing, Ground Floor, NSE Building, Bandra Kurla Complex, Bandra (East), Mumbai – 400051 CIN: U25000MH1991PTC064092 Tel No: 022-6772-0555 Fax: 022-6772-0512 E-Mail: [email protected] Web-site: www.principalindia.com

http://www.mca.gov.in/mcafoportal/companyLLPMasterData.do

mailto:[email protected]

http://www.principalindia.com/

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Annexure I

FORM NO. MGT-9

EXTRACT OF ANNUAL RETURN AS ON FINANCIAL YEAR ENDED ON 31st March 2016

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

(Management and Administration) Rules, 2014]

I. REGISTRATION AND OTHER DETAILS:

CIN : U25000MH1991PTC064092

Registration Date : 20.11.1991

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

Category / Sub-Category of the Company

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

Address of the Registered office and contact details

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

Whether listed company : No

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

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

II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY All the business activities contributing 10% or more of the total turnover of the Company shall be stated:-

Sl. No

Name and Description of main products / services

NIC Code of the Product/service

% to total turnover of the company

1. Asset Management Services 66301 92%

11

III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES

Sr. No

Name and address of the Company

CIN / GLN

Holding / subsidiary / associate

% of shares held

Applicable section

1 Principal Financial Group (Mauritius) Limited

- Holding Company

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

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

Total Equity)

(i) Category-wise Share Holding

Category of Shareholders

No. of Shares held at the beginning of the year

No. of Shares held at the end of the year

% Change during the year

Demat Physical

Total % of Total Shares

Demat Physical

Total % of Total Shares

A. Promoters

1) Indian

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

Central Govt - - - - - - - - -

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

Bodies Corp - - - - - - - - -

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

Any other

Sub total(A)(1):

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

2) Foreign

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

Other Individuals

- - - - - - - - -

Bodies Corp 13,680,009 5 13,680,0141 78.62% 13,680,009 5 13,680,00141 78.62%

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

Any Other - - - - - - - - -

Sub total (A)(2) 13,680,009 5 13,680,014 78.62% 13,680,009 5 13,680,0014 78.62%

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

17,400,009 5 17,400,014 100% 17,400,009 5 17,400,014 100%

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

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

12

B. Public Shareholding

1. Institutions

Mutual Funds - - - - - - - - -

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

Central Govt - - - - - - - - -

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

Venture Capital Funds

- - - - - - - - -

Insurance Companies

- - - - - - - - -

FIIs - - - - - - - - -

Foreign Venture Capital Funds

- - - - - - - - -

Others (specify)

- - - - - - - - -

Sub-total (B)(1):-

- - - - - - - - -

2. Non-Institutions

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

Indian - - - - - - - - -

Overseas - - - - - - - - -

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

Individual shareholders holding nominal share capital upto Rs. 1 lakh

- - - - - - - - -

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

- - - - - - - - -

c) Others

(specify)

Sub-total (B)(2): - - - - - - - - -

13

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

- - - - - - - - -

C. Shares held by Custodian for GDRs & ADRs

- - - - - - - - -

Grand Total (A+B+C)

17,400,009 5 17,400,014 100% 17,400,009 5 17,400,014 100%

(ii) Shareholding of Promoters-

Sl. No

Shareholder’s Name

Shareholding at the beginning of the year

Shareholding at the end of the year

% change in shareholding during the year

No. of Shares

% of total

Shares of the

company

% of Shares Pledged / encumbered to total shares

No. of Shares

% of total

Shares of the compa

ny

% of Shares Pledged / encumbered to total shares

1

Principal Financial Group (Mauritius) Limited

13,680,014 2 78.62% - 13,680,0142 78.62% - -

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

Total 17,400,014 100% - 17,400,014 100% - -

2 6 Equity Shares of INR 10/- each are held by Mr. Sudhinchandra Arvind Padhye as a Nominee of Principal Financial

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

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

Sl. No.


Cumulative Shareholding during the year

No. of shares

% of total shares of the company

No. of shares


At the beginning of the year

No change

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

At the end of the year

(iv) Shareholding Pattern of top ten Shareholders (Other than Directors, Promoters and

Holders of GDRs and ADRs) :

Sl. No.

For Each of the Top 10 Shareholders


Cumulative Shareholding during the Year

No. of shares


No. of shares


1 At the beginning of the year

Not Applicable

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

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

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(v) Shareholding of Directors and Key Managerial Personnel:

Sl. No.

For each of Directors and each Key Managerial Personnel


Cumulative Shareholding during the Year

No. of shares

% of total shares of the Company

No. of shares

% of total shares of the Company

1 At the beginning of the year

Not Applicable

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

3 At the end of the year

V. INDEBTEDNESS

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

Secured Loans excluding deposits

Unsecured Loans

Deposits Total Indebtedness

Indebtedness at the beginning of the financial year

i. Principal Amount Nil Nil Nil Nil

ii. Interest due but not paid Nil Nil Nil Nil

iii. Interest accrued but not due Nil Nil Nil Nil

Total (i+ii+iii)

Nil Nil Nil Nil

Change in Indebtedness during the financial year

* Addition Nil Nil Nil Nil

* Reduction Nil Nil Nil Nil

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Net Change Nil Nil Nil Nil

Indebtedness at the end of the financial year

i. Principal Amount Nil Nil Nil Nil

ii. Interest due but not paid Nil Nil Nil Nil

iii. Interest accrued but not due Nil Nil Nil Nil

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

VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

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

(All figures in Rupees)

Sl. No.

Particulars of Remuneration Name of MD/WTD/ Manager

Total Amount

1 Name Mr. Lalit Vij

2 Gross salary

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

18,929,373 18,929,373

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

943,612 943,612

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

3 Stock Option - -

4 Sweat Equity - -

5 Commission - as % of profit - others, specify

- -

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

- -

Total (A)

19,872,985 19,872,985

Ceiling as per the Act

Not Applicable

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B. Remuneration to other directors:

BM- Board Meeting; ACM – Audit Committee Meeting

Sl. No.

Particulars of Remuneration

Name of Directors Total Amount

1 Independent Directors Mr. M. M. Chitale

Mr. Rustam Gagrat

Mr. M. M. Kamath

Fee for attending board and committee meetings

BM- 200,000 ACM- 200,000

BM- 150,000 ACM-150,000

BM- 200,000 ACM-200,000

BM- 550,000 ACM- 550,000

Commission

Others

Total (1) 400,000 300,000 400,000 1,100,000

2 Other Non-Executive Directors

Fee for attending board committee meetings

- - -

-

Commission - - - -

Others, please specify - - - -

Total (2) - - - -

Total (B)=(1+2) 400,000 300,000 400,000 1,100,000

Total Managerial Remuneration

400,000 300,000 400,000 1,100,000

Overall Ceiling as per the Act

800,000 600,000 800,000 2,200,000

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

Sl. No

Particulars of Remuneration Key Managerial Personnel

Company Secretary Total

1. Gross salary Niyati Shah3

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

359,584 359,584

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

- -

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

- -

3 Remuneration to Ms. Niyati Shah is for the period from April 23, 2015 to March 31, 2016.

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2. Stock Option - -

3. Sweat Equity - -

4. Commission - -

- as % of profit - -

- others, specify - -

5. Others, please specify - -

Total 359,584 359,584

VII.PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES: NIL

Type Section of the

Companies Act Brief Description

Details of Penalty / Punishment/ Compounding fees imposed

Authority [RD / NCLT/ COURT]

Appeal made, if any (give Details)

A. COMPANY:

Penalty

Nil

Punishment

Compounding

B. DIRECTORS:

Penalty Nil

Punishment

Compounding

C. OTHER OFFICERS IN DEFAULT:

Penalty Nil

Punishment

Compounding

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Annexure III FORM NO. AOC -2

(Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014.

Form for Disclosure of particulars of contracts/arrangements entered into by the company with related parties referred to in sub section

(1) of section 188 of the Companies Act, 2013 including certain arm’s length transaction under third proviso thereto.

1. Details of contracts or arrangements or transactions not at Arm’s length basis.

SL.

No.

Particulars Details

a) Name (s) of the related party Nature of relationship Principal Consulting (India) Private Limited (‘PC’) Mr. Rajan Ghotgalkar was also a Director on the Board of Principal Consulting (India) Private Limited

b) Nature and Duration of

contracts/arrangements/transaction

PC provides certain Management Services to the Company through its Designated Employees.

c) Salient terms of the contracts or arrangements or

transaction including the value, if any

The Service Agreement includes oversight and guidance for finance,

technology and others, regulatory compliances related functions and

providing advices on matters discussed in meetings of various

Committees.

d) Justification for entering into such contracts or

arrangements or transactions’

Alignment of India business strategy with Principal Financial Group

strategy.

e) Date of approval by the Board April 23, 2015

f) Amount paid as advances, if any Nil

g) Date on which the special resolution was passed in

General meeting as required under first proviso to

section 188

June 29, 2015

The transactions entered into with the related parties during the Financial Year 2015-16 are stated under “Notes to the Accounts” of

the audited Financial Statements of the Company

20

2. Details of material contracts or arrangements or transactions at Arm’s length basis

SL.

No.

Particulars Details

a) Name (s) of the related party & nature of

relationship

b) Nature of contracts/arrangements/transaction

c) Duration of the

contracts/arrangements/transaction

d) Salient terms of the contracts or arrangements

or transaction including the value, if any

e) Date of approval by the Board

f) Amount paid as advances, if any

INDEPENDENT AUDITOR’S REPORT

To the Members of Principal Pnb Asset Management Company Private Limited

Report on the Financial Statements

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

Company Private Limited (“the Company”), which comprise the Balance Sheet as at March 31, 2016,

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

significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these financial statements that

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

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

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

(Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records

in accordance with the provisions of the Act for safeguarding of the assets of the Company and for

preventing and detecting frauds and other irregularities; selection and application of appropriate

accounting policies; making judgments and estimates that are reasonable and prudent; and the design,

implementation and maintenance of adequate internal financial control that were operating effectively

for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and

presentation of the financial statements that give a true and fair view and are free from material

misstatement, whether due to fraud or error.

Auditor’s Responsibility

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

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

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

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

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

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

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

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

in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or

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

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

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

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

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

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

for our audit opinion on the financial statements.

Opinion

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

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

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

affairs of the Company as at March 31, 2016, its loss, and its cash flows for the year ended on that

date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s report) Order, 2016 (“the Order”) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the

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

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

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

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

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

as it appears from our examination of those books;

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

Report are in agreement with the books of account;

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

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

(e) On the basis of written representations received from the directors as on March 31, 2016, and

taken on record by the Board of Directors, none of the directors is disqualified as on March 31,

2016, from being appointed as a director in terms of section 164 (2) of the Act;

(f) With respect to the adequacy of the internal financial controls over financial reporting of the

Company and the operating effectiveness of such controls, refer to our separate Report in

“Annexure 2” to this report;

(g) With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our

information and according to the explanations given to us:

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

position;

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

there were any material foreseeable losses

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

Protection Fund by the Company.

For S.V. Ghatalia & Associates LLP

Chartered Accountants

ICAI Firm Registration Number: 103162W/E300006

Sd/-

per Hormuz Master

Partner

Membership Number: 110797

Place of Signature: Mumbai

Date: September 12, 2016

of 2

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

of even date

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

and situation of fixed assets.

(b) All fixed assets have not been physically verified by the management during the year but there is

a regular Programme of verification which, in our opinion, is reasonable having regard to the

size of the Company and the nature of its assets. No material discrepancies were noticed on

such verification.

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

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

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

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

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

upon.

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

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

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

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

the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to us, there are no loans,

investments, guarantees, and securities given in respect of which provisions of section 185 and

186 of the Companies Act 2013 are applicable and hence not commented upon.

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

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

maintenance of cost records under Section 148(1) of the Companies Act, 2013, for the

products/services of the Company.

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

statutory dues have generally been regularly deposited with the appropriate authorities though

there has been a slight delay in payment of professional tax and provident fund. There has been

a serious delay in the deduction and payment of income tax at source on perquisites given to

one employee where income-tax amounting to Rs.20,65,931 (cumulative for the past three

years), was not deducted and deposited with the Income-tax authority. This amount has been

deposited in the month of August 2015. There has been a serious delay in the deduction and

payment of income tax at source in the same case where income-tax amounting to Rs.596,253,

on perquisites, for the period April 2015 to July 2015, was deposited in the month of September

2015 and Rs.153,787 for the month of August 2015 was deposited in October, 2015.

The provisions related to employee’s state insurance, investor education and protection fund, sales-tax, wealth-tax, value added tax, customs duty and excise duty are not applicable to the

Company.

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

(c) According to the records of the Company, there are no dues of income-tax, sales-tax, service

tax, value added tax, customs duty, excise duty and cess which have not been deposited on

account of any dispute

of 2

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

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

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

raised any money way of initial public offer / further public offer / debt instruments and term

loans hence, reporting under clause (ix) is not applicable to the Company and hence not

commented upon.

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

of the financial statements and according to the information and explanations given by the

management, we report that no fraud by the company or no fraud / material fraud on the

company by the officers and employees of the Company has been noticed or reported during

the year.

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

section 197 read with Schedule V of the Act is not applicable to the company and hence

reporting under clause 3(xi) are not applicable and hence not commented upon.

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

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

(xiii) According to the information and explanations given by the management, transactions with the

related parties are in compliance with section 177 and 188 of Companies Act, 2013 where

applicable and the details have been disclosed in the notes to the financial statements, as

required by the applicable accounting standards.

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

balance sheet, the company has not made any preferential allotment or private placement of

shares or fully or partly convertible debentures during the year under review and hence,

reporting requirements under clause 3(xiv) are not applicable to the company and, not

commented upon.

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

entered into any non-cash transactions with directors or persons connected with him as referred

to in section 192 of Companies Act, 2013.

(xvi) According to the information and explanations given to us, the provisions of section 45-IA of the

Reserve Bank of India Act, 1934 are not applicable to the Company.

For S. V. GHATALIA & ASSOCIATES LLP


ICAI Firm registration number: 103162W/E300006

Sd/-

per Hormuz Master

Partner

Membership No.: 110797

Place: Mumbai


ANNEXURE 2 TO THE INDEPENDENT AUDITOR’S REPORT OF EVEN DATE ON THE STANDALONE FINANCIAL STATEMENTS OF PRINCIPAL PNB ASSET MANAGEMENT

COMPANY PRIVATE LIMTED

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the

Companies Act, 2013 (“the Act”)

We have audited the internal financial controls over financial reporting of Principal Pnb Asset Management

Company Private Limited (“the Company”) as of March 31, 2016 in conjunction with our audit of the

standalone financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s Management is responsible for establishing and maintaining internal financial controls based on

the internal control over financial reporting criteria established by the Company considering the essential

components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over

Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the

design, implementation and maintenance of adequate internal financial controls that were operating effectively

for ensuring the orderly and efficient conduct of its business, including adherence to the Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of

the accounting records, and the timely preparation of reliable financial information, as required under the

Companies Act, 2013.

Auditor’s Responsibility

Our responsibility is to express an opinion on the Company's internal financial controls over financial reporting

based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal

Financial Controls Over Financial Reporting (the “Guidance Note”) and the Standards on Auditing as specified

under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial

controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance

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

assurance about whether adequate internal financial controls over financial reporting was established and

maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial

controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls

over financial reporting included obtaining an understanding of internal financial controls over financial

reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating

effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether

due to fraud or error.

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

opinion on the internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial control over financial reporting is a process designed to provide reasonable

assurance regarding the reliability of financial reporting and the preparation of financial statements for external

purposes in accordance with generally accepted accounting principles. A company's internal financial control

over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records

that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the

company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of

financial statements in accordance with generally accepted accounting principles, and that receipts and

expenditures of the company are being made only in accordance with authorisations of management and

directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of

unauthorised acquisition, use, or disposition of the company's assets that could have a material effect on the

financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the

possibility of collusion or improper management override of controls, material misstatements due to error or

fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over

financial reporting to future periods are subject to the risk that the internal financial control over financial

reporting may become inadequate because of changes in conditions, or that the degree of compliance with the

policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over

financial reporting and such internal financial controls over financial reporting were operating effectively as at

March 31, 2016, based on the internal control over financial reporting criteria established by the Company

considering the essential components of internal control stated in the Guidance Note on Audit of Internal

Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For S.V. Ghatalia & Associates LLP


ICAI Firm Registration Number: 103162W/E300006

Sd/-

per Hormuz Master

Partner

Membership Number: 110797

Place of Signature: Mumbai


March 31, 2016 March 31, 2015

Notes Rs. Rs.

Equity and Liabilities

Shareholders' Funds

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

Reserves and Surplus ' 4 ' 432,409,215 566,731,656

Non-Current Liabilities

Long-term Provisions ' 5 ' 4,266,255 2,668,575

Current Liabilities

Trade Payables ' 6A ' 27,306,545 26,735,257

Other Payables ' 6B ' 81,302,503 69,017,608

Short-term Provisions ' 5 ' 7,972,452 5,872,643

116,581,500 101,625,508

Total 727,257,110 845,025,879

Assets

Non-Current Assets

Fixed Assets:

Tangible Assets ' 7 ' 2,678,569 6,120,569

Intangible Assets ' 8 ' 2,473,024 3,105,406

Intangible Assets under Development 52,956 839,891

Non-Current investments ' 9A ' 87,102,498 79,342,498

Long-term Loans & advances ' 10 ' 5,490,454 42,919,902

Current Assets

Current Investments ' 9B ' 449,121,763 605,068,764

Trade Receivables ' 11 ' 31,267,124 38,328,052

Cash & Bank Balances ' 12 ' 40,456,410 4,134,314

Short Term Loans & Advances ' 10 ' 108,614,312 65,166,483

629,459,609 712,697,613

Total 727,257,110 845,025,879

Summary of Significant Accounting Policies ' 2.1 '

The accompanying notes are an integral part of the financial statements

As per our report of even date.

For S. V. Ghatalia & Associates LLP For and on behalf of the Board of

ICAI Firm Registration No. 103162W/ E300006 Principal Pnb Asset Management Company Private Limited


Sd/- Sd/- Sd/-

per Hormuz Master M. M. Chitale Lalit Vij

Partner Chairman Managing Director

Membership No.110797

Sd/-

Niyati Shah

Company Secretary

September 12 , 2016 September 12 , 2016

Balance Sheet as at March 31, 2016

Principal Pnb Asset Management Company Private Limited

Year ended Year ended

March 31, 2016 March 31, 2015

Notes Rs. Rs.

Income

Income from Operations ' 13 ' 358,809,839 339,843,986

Other Income ' 14 ' 31,562,403 28,614,289

390,372,242 368,458,275

Expenses

Employee Cost ' 15 ' 270,880,426 291,795,987

Administrative and Other Expenses ' 16 ' 248,150,725 174,136,812

Depreciation and Amortisation ' 17 ' 5,681,622 8,120,043

524,712,773 474,052,842

Loss before tax (134,340,531) (105,594,567)

Tax Expenses

- Current Tax - -

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

- Deferred Tax - -

Total Tax Expense (18,090) -

Loss for the year from continuing operations (134,322,441) (105,594,567)

Earnings per Equity Share (Basic and Diluted)

[Nominal value of Share Rs. 10 (March 31, 2015: Rs. 10)] (7.72) (7.59)

Summary of Significant Accounting Policies ' 2.1 '

The accompanying notes are an integral part of the financial statements





Sd/- Sd/- Sd/-




Sd/-

Niyati Shah

Company Secretary



Statement of Profit and Loss for the year ended March 31, 2016


March 31, 2016 March 31, 2015

Rs. Rs.

Cash Flow from Operating Activities

Loss before Tax (134,340,531) (105,594,567)

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

Depreciation and Amortisation 5,681,622 8,120,043

(Profit) / Loss on Sale of Fixed Assets (121,296) (52,000)

Net (Profit) / Loss on Sale of Current Investments (considered seperately) (31,355,009) (28,552,848)

Operating Profit before Working Capital Changes (160,135,214) (126,079,372)

Movements in Working Capital

Increase / (Decrease) in Long Term Provisions 1,597,680 297,363

Increase / (Decrease) in Trade Payables 571,288 3,927,175

Increase / (Decrease) in Other Payables 12,284,895 20,105,578

Increase / (Decrease) in Short Term Provisions 2,099,809 5,303,271

(Increase) / Decrease in Long-term Loans and Advances 37,429,448 (11,349,312)

(Increase) / Decrease in Trade Receivables 7,060,928 (13,063,189)

(Increase) / Decrease in Short-term Loans and Advances (36,350,029) 1,085,603

(135,441,195) (119,772,883) Less: Taxes paid (7,079,710) (3,717,096)

Net Cash Flow from Operating Activities (A) (142,520,905) (123,489,979)

Cash Flow from Investing Activities

Purchase of Fixed Assets (2,386,342) (3,604,653)

Sale of Fixed Assets 1,687,333 52,000

Purchase of Non-Current Investments (7,760,000) (79,342,498)

Purchase of Current Investments (1,026,939,565) (1,548,025,690)

Sale of Current Investments 1,214,241,575 1,105,443,425

Net Cash Flow from Investing Activities (B) 178,843,001 (525,477,416)

Cash Flow from Financing Activities

Proceeds from Issuance of Share Capital - 650,000,520

Net Cash Flow from Financing Activities (C) - 650,000,520

Net Increase / (Decrease) in Cash and Cash Equivalents (A + B + C) 36,322,096 1,033,131

Cash and Cash Equivalents at the beginning of the year 4,134,314 3,101,183

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

Notes to cash flow statement

1 Cash and Cash Equivalents include:

Balance with banks 40,452,861 4,123,181

Cash on hand 3,549 11,133

40,456,410 4,134,314





Sd/- Sd/- Sd/-




Sd/-

Niyati Shah

Company Secretary



Cash Flow Statement for year ended March 31, 2016

Principal Pnb Asset Management Company Private Limited Notes forming part of the financial statements for the year ended March 31, 2016

1. Corporate Information

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

2. Basis of Preparation

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

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

2.1 Summary of Significant Accounting Policies:

a. Accounting concepts

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

b. Use of estimates

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

c. Revenue recognition

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

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

d. Fixed assets and depreciation / amortisation

(a) Tangible fixed assets and depreciation

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

The acquisition value includes the purchase price (excluding refundable taxes) and expenses directly attributable to the asset to bring it to the site and in the working


condition for its intended use. Examples of directly attributable expenses included in the acquisition value are delivery and handling costs, installation, legal services and consultancy services.

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

Asset Type As per

Schedule II As per Estimated

Life

Furniture and fixtures 10 years 4 years

Office equipments 5 years 3 years

Mobile Phones 5 years 2 years

Computers 3 years 3 years

Electrical installations 10 years 4 years

Motor cars 8 years 4 years

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

(b) Intangible assets and amortisation

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

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

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

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

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

e. Impairment of assets

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


f. Long Term Investments

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

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

g. Current Investments and investment income

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

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

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

h. Employee Benefits

(a) Short Term

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

(b) Long Term

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

(c) Defined-contribution plans

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

(d) Defined-benefit plans

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

(e) Other Employee Benefits

Compensated absences which accrue to employees and which can be carried to future periods but are expected to be encashed or availed in twelve months immediately following the year end are reported as expenses during the year in which the employees perform the services that the benefit covers and the liabilities are reported at the undiscounted amount of the benefits after deducting amounts already paid. Where there are restrictions on availment of encashment of such accrued benefit or where the availment or encashment is otherwise not expected to wholly occur in the next twelve months, the liability on account of the benefit is actuarially determined using the projected unit credit method.


i. Foreign currency translation

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

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

j. Taxes on income

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

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

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

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

k. Scheme Administration Expenses

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

l. Provisions and contingencies

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

m. Operating leases

Leases of assets whereby the lessor essentially remains the owner of the asset is classified as operating leases. The payments made by the Company as lessee in accordance with operational leasing contracts or rental agreements are expensed on a straight line basis during the lease or rental period respectively. Any compensation, according to agreement, that the lessee is obliged to pay to the lessor if the leasing contract is terminated prematurely is expensed during the period in which the contract is terminated.

March 31, 2016 March 31, 2015

Rs. Rs.

3. SHARE CAPITAL

Authorised Shares

25,000,000 (31 March 2015: 25,000,000) equity shares of Rs. 10 each 250,000,000 250,000,000

250,000,000 250,000,000

Issued, Subscribed and Fully Paid-up shares

17,400,014 (31 March 2015: 17,400,014) equity shares of Rs. 10 each 174,000,140 174,000,140

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

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

Equity Shares March 31, 2016 March 31, 2015

No. Rs. No. Rs.

At the beginning of the year 17,400,014 174,000,140 12,400,010 124,000,100

Issued during the year - - 5,000,004 50,000,040 Outstanding at the end of the year 17,400,014 174,000,140 17,400,014 174,000,140

b. Terms/Rights attached to Equity Shares

c. Shares held by Holding Company

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

March 31, 2016 March 31, 2015

Rs. Rs.

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

13,680,014 (March 31, 2015: 13,680,014) Equity Shares of Rs.10 each fully paid 136,800,140 136,800,140

(including nominee shares)

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

March 31, 2016 March 31, 2015

% holding in % holding in

No. the class No. the class

Equity Shares of Rs.10 each fully paid

Principal Financial Group (Mauritius) Ltd,

the holding company

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

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

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

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

March 31, 2016 March 31, 2015

Rs. Rs.

4. RESERVES AND SURPLUS

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

Share Premium Account

Balance as per last financial statements 1,276,000,710 676,000,230

Add: Premium on issue of equity shares - 600,000,480

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

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

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

Balance as per last financial statements (840,582,081) (734,987,514)

Loss for the year (134,322,441) (105,594,567)

Net Surplus / (Deficit) in the Statement of Profit & Loss (974,904,522) (840,582,081)

432,409,215 566,731,656 Total Reserves and Surplus


Notes forming part of the Balance Sheet as at March 31, 2016

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

vote per share.

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

Non-Current Current

March 31, 2016 March 31, 2015 March 31, 2016 March 31, 2015

Rs. Rs. Rs. Rs.

5. PROVISIONS

Provision for Employee Benefits

Provision for gratuity 1,989,300 - 7,327,912 5,255,515

Provision for leave benefits 2,276,955 2,668,575 644,540 617,128

4,266,255 2,668,575 7,972,452 5,872,643

March 31, 2016 March 31, 2015

Rs. Rs.

6. CURRENT LIABILITIES

Trade Payables (including acceptances) (A) 27,306,545 26,735,257

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

Other Payables

Service tax Payable 8,312 4,214,031

TDS Payable 21,028,565 27,191,632

PF Payable 1,939,657 1,960,906

Profession Tax Payable 22,544 21,917

Other Liabilities 58,303,425 35,629,122

(B) 81,302,503 69,017,608

Total (A + B) 108,609,048 95,752,865





7. TANGIBLE ASSETS

Office Furniture & Computers Motor Cars Leasehold Electrical Total

Equipments Fixtures Improvements Installations

Cost or Valuation

As at March 31, 2014 12,525,385 1,997,668 35,586,226 2,984,775 61,475 15,215 53,170,744

Additions 111,627 - 1,830,026 - - - 1,941,653

Disposals (37,613) (143,557) (1,492,889) - - - (1,674,059)

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

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

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

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

Depreciation

As at March 31, 2014 10,967,043 1,984,513 30,346,355 744,121 61,475 15,215 44,118,722

Additions 843,885 13,155 3,269,872 746,194 - - 4,873,106

Disposals (37,613) (143,557) (1,492,889) - - - (1,674,059)

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

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

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

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

Net Block

As at March 31, 2015 826,084 - 3,800,025 1,494,460 - - 6,120,569

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

8. INTANGIBLE ASSETS

Asset Computer Total

Management Software

Rights

Gross Block

As at March 31, 2014 91,655,275 23,402,969 115,058,244

Additions - 2,359,560 2,359,560

Disposals - - -

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

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

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

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

Amortisation

As at March 31, 2014 84,787,353 20,354,120 105,141,473

Charge for the year 943,935 2,303,003 3,246,938

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

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

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

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

Imapirment Loss

As at March 31, 2014 5,923,987 - 5,923,987

Charge for the year - - -

Reversals for the year - - -

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

Charge for the year - - -

Reversals for the year - - -

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

Net Block

As at March 31, 2015 - 3,105,406 3,105,406

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

March 31, 2016 March 31, 2015

Rs. Rs.

9 A. NON - CURRENT INVESTMENTS

Non Current Investments (valued at cost unless stated otherwise)

Unquoted Mutual Funds

101,394.046 units (March 31, 2015: 101,394.046 units) of Rs.10.21 (March 31, 2015: Rs.10.21)

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


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


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

2,282.84 units (March 31, 2015: 2,282.84 units) of Rs.2,190.25 (March 31, 2015: Rs.2,190.25)

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

178.79 units (March 31, 2015: 178.79 units) of Rs.2,129.82 (March 31, 2015: Rs.2,129.82)

each fully paid-up of Principal Debt Opportunities Fund Corporate Bond Plan-Direct Plan -Growth 380,789 380,789


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


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


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


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


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


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


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


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


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


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


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

2,825.538 units (March 31, 2015: 2,825.538 units) of Rs.1769.57 (March 31, 2015: Rs.1,769.57)

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


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


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


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


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

15,234.93 units (March 31, 2015: 15,234.93) of Rs.57.54 (March 31, 2015: Rs.57.54)

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

439,000.00 units (March 31, 2015: Nil) of Rs.10.00 (March 31, 2015: Rs.Nil)

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


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


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

Investment in Equities

500,000 units (March 31, 2015: 500,000 units) of Rs.1.00 (March 31, 2015: Rs.1)

each fully paid-up of MF utilities India Pvt Ltd 500,000 500,000

87,102,498 79,342,498

Aggregate amount of unquoted investments (Market Value Rs.90,134,739 (March 31, 2015: 81,407,213)) 87,102,498 79,342,498



9 B. CURRENT INVESTMENTS

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

Unquoted Mutual Funds

360,786,981 5,068,764

78,710,248 600,000,000

9,624,534 -

449,121,763 605,068,764

Aggregate amount of unquoted investments (Market Value Rs.460,915,895 (March 31, 2015: 606,614,341)) 449,121,763 605,068,764

Non-Current Current

March 31, 2016 March 31, 2015 March 31, 2016 March 31, 2015

Rs. Rs. Rs. Rs.

10. LOANS AND ADVANCES

Capital Advances

Secured, considered good - - - -

Unsecured, considered good - - 14,000 42,563

(A) - - 14,000 42,563

Security Deposit


Unsecured, considered good 2,933,114 37,075,337 33,533,531 -

Doubtful 592,631 145,136 - -

3,525,745 37,220,473 33,533,531 -

Provision for Doubtful Security Deposit 592,631 145,136 - -

(B) 2,933,114 37,075,337 33,533,531 -

Advances recoverable in cash or kind


Unsecured, considered good 1,970,854 5,824,165 16,459,591 14,062,395

Doubtful - - 1,149,386 1,162,776

1,970,854 5,824,165 17,608,977 15,225,171

Provision for doubtful advances - - 1,149,386 1,162,776

(C) 1,970,854 5,824,165 16,459,591 14,062,395

Other Loans and Advances

Advance Income Tax (net of provision for taxation) - - 51,688,943 44,591,143

Prepaid Expenses 586,486 20,400 6,872,884 6,407,336

Loans to Employees - - 45,363 63,046

Doubtful - - 568,955 331,099

586,486 20,400 59,176,145 51,392,624

Provision for doubtful tax - - 568,955 331,099

(D) 586,486 20,400 58,607,190 51,061,525

Total (A+B+C+D) 5,490,454 42,919,902 108,614,312 65,166,483

11. TRADE RECEIVABLES

Trade Receivables

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

due for payment


Unsecured, considered good - - 31,267,124 38,328,052

Doubtful - - - -

- - 31,267,124 38,328,052

Provision for doubtful receivables - - - -

- - 31,267,124 38,328,052

12. CASH AND BANK BALANCES

Cash and cash equivalents

Balances with Banks

On current accounts - - 40,452,861 4,123,181

Cash on hand - - 3,549 11,133

- - 40,456,410 4,134,314


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




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


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


March 31, 2016 March 31, 2015

Rs. Rs.

13. INCOME FROM OPERATIONS

Details of Services Rendered

Fees from Mutual Fund Operations 358,809,839 339,843,986

358,809,839 339,843,986

14. OTHER INCOME

Interest income 10,564 9,441

Net Gain on Sale of Current Investments 31,430,543 28,552,848

Profit on sale of fixed assets (net) 121,296 52,000

31,562,403 28,614,289

15. EMPLOYEE COST

Salary, bonus and allowances 245,041,960 267,883,497

Contribution to Provident and Other Funds 20,878,779 18,712,156

Welfare Expenses 4,959,687 5,200,334

270,880,426 291,795,987

16. ADMINISTRATIVE AND OTHER EXPENSES

Rent 48,796,588 40,386,326

Electricity 4,903,780 4,874,748

Repairs and Maintenance

Office Equipments 901,911 1,003,315

Others 29,247,295 25,166,623

Travel and Entertainment 24,859,693 26,068,044

Admin and Office Support 7,198,985 6,554,719

Legal and Professional Fees (Refer Note 31) 50,728,880 11,276,514

Auditors' Remuneration: (net of service tax)

Audit Fees 550,000 500,000

For Tax Audit 150,000 150,000

SerOut of Pocket Expenses 39,521 22,385

Computer Expenses 6,144,675 6,105,645

Telecommunication Expenses 6,890,760 7,994,033

Subscription to Databases, Books & Periodicals 18,315,629 14,323,496

Printing, Stationery, Postage and Courier 1,702,417 1,530,882

Advertisement and Publicity 2,132,617 45,765

Membership/Registration fees 1,393,103 746,318

Scheme Administration Expenses 29,789,727 10,618,774

Insurance Expenses 845,223 1,028,069

Rates and Taxes 9,560 678,941

SEBI Filing Fees 873,835 871,219

Miscellaneous Expenses (Refer Note 32) 12,676,526 14,190,996

248,150,725 174,136,812

17. DEPRECIATION AND AMORTISATION

Depreciation of Tangible Assets 3,634,433 4,873,105

Amortisation of Intangible Assets 2,047,189 3,246,938

5,681,622 8,120,043


Notes forming part of the Profit and Loss Account for the year ended March 31, 2016


18. Managerial Remuneration

(a) Director’s Remuneration: -

(Amount in Rs.)

Particulars 2015-2016 2014-2015

Salaries and allowances 18,172,459 20,609,225

Contribution to Provident and Other Funds 756,914 960,005

Perquisites 943,612 1,017,342

Total 19,872,985 22,586,572

Notes:

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

(b) Miscellaneous expenses include: -

(Amount in Rs.)

Particulars 2015-2016 2014-2015

Sitting Fees paid to Directors 1,100,000 900,000

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

19. Expenditure in foreign currency: -

(Amount in Rs.)

Particulars 2015-2016 2014-2015

Travel Expenses 1,634,319 17,903

Professional Charges 1,354,215 Nil

Software Maintenance/E-Communication 305,938 3,202,576

Information/Wire-Service Expenses 3,656,489 2,288,604

Training Expenses 4,142,004 1,967,869

Total 11,092,965 7,476,952

20. Foreign Currency Exposures:

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

Particulars 2015-2016 2014-2015

Rs. USD Rs. USD

Liability for Employee Stock Purchase Plan 1,449,092 21,523 2,938,167 46,942

Information/Wire-Service Expenses 6,566,957 99,000 3,755,448 60,000

Professional Charges 331,665 5,000 - -

Software Maintenance/E Communication - - 112,663 1,800


21. Segment Reporting:

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

22. Related Party Disclosures:

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

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

Nature of Relationship Name of the related party

Ultimate Holding Company Principal Financial Group, Inc.

Holding Company of Principal Financial Group (Mauritius) Limited

Principal Financial Services, Inc.

Subsidiary of Principal Financial Services, Inc.

Principal International, Inc., Principal Global Services Private Limited, Principal Consulting (India) Private Limited

Holding Company Principal Financial Group (Mauritius) Limited

Subtantive Shareholder Punjab National Bank

Fellow Subsidiaries Principal Trustee Company Private Limited

Principal Retirement Advisors Private Limited

Key Management Personnel Mr. Lalit Vij, Managing Director

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

Nature of Relationship Name of the related party

Company Secretary Ms. Niyati Shah (From April 23, 2015 till date)

B. Transaction with Related Parties

(Amount in Rs.)

Name of the related party Particulars 2015-2016 2014-2015

Principal International, Inc. Professional Services

Balance Receivable/(Payable) as on March 31, 2016

1,354,215

(331,665)

-

-

Principal Financial Group (Mauritius) Ltd

Subscription to Share Capital

Closing Balance of Shares Subscribed

-

136,800,140

650,000,520

136,800,140

Principal Retirement Advisors Private Limited

Net Recovery relating to sharing of common expenses

150,358

3,534,196


Name of the related party Particulars 2015-2016 2014-2015

Payments relating to sharing of common infrastructure

Recovery Relating to sharing of deposit for premises

Payment Relating to sharing of deposit for premises


21,215,749

2,473,282

708,063

(9,643,181)

15,913,118

2,820,460

-

(1,721,789)

Principal Consulting (India) Private Limited

Net Recovery relating to sharing of common expenses

Recovery relating to sharing of common infrastructure

Payment relating to service fees


5,250,731

714,405

33,462,190

(3,567,268)

-

-

-

-

Mr. Rajan Ghotgalkar*

Mr. Lalit Vij

Mr. Rajat Jain*

Mr. Pratik Shah*

Ms. Niyati Shah#

Remuneration Paid -

19,872,985

-

-

359,584

9,925,894

8,187,678

4,473,000

497,690

-

* For Part of the year in 2014-15

# For Part of the year in 2015-16

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

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

The company has recognized Rs. 48,796,588 (Previous Year Rs. 40,386,326) towards lease payments in the statement of profit and loss.

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


25. Earnings Per Share (EPS):

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

(Amount in Rs.)

Particulars 2015-2016 2014-2015

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

(134,322,441) (105,594,567)

Weighted average numbers of equity shares (Nos.) 17,400,014 13,920,559

Basic and Diluted EPS (7.72) (7.59)

Nominal value per share 10.00 10.00

26. The employees of the Company are offered an Employee Stock Purchase Plan (Plan) by Principal Financial Group Inc. USA (PFG), the ultimate holding company. Contributions received from the employees are held by the Company, for onward remittance to PFG. Contributions received as at the year end Rs. 1,449,092 (Previous Year Rs. 2,938,167) have been included as part of “Other Liabilities”.

27. Miscellaneous expenses include foreign currency exchange loss (net) of Rs. 134,320 (Previous Year - (net) of Rs. 149,931).

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

29. Dues to micro, small and medium enterprises: There are no amounts that need to be disclosed in accordance with the Micro Small and Medium Enterprise Development Act, 2006 (the ‘MSMED’) pertaining to micro or small enterprises. For the year ended March 31, 2016, no supplier has intimated the Company about its status as micro and small enterprises or its registration with the appropriate authority under ‘MSMED’.

30. Employee Benefit Obligations

Defined-Contribution Plans

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

A sum of Rs. 10,727,333 (Previous Year Rs. 11,131,498) has been charged to the Statement of Profit and Loss in this respect.

Defined–Benefits Plans

The Company offers its employees defined-benefit plans in the form of a gratuity scheme (a lump sum amount). Benefits under the defined benefit plans are typically based either on years of service and the employee’s compensation (generally immediately before retirement). The gratuity scheme covers all regular employees of the Company. The Company contributes funds to the Life Insurance Corporation of India. Commitments are actuarially determined at year-end. In accordance with the revised Accounting Standard, (AS) 15 on “Employee Benefits”, actuarial valuation is done based on “Projected Unit Credit” method. Gains and losses of changed actuarial assumptions are charged to Statement of the profit and loss.

Disclosure for defined benefit plans based on actuarial reports:


Sr. No.

Particulars As at

March 31, 2016

March 31, 2015

Rs. Rs.

I Change in defined benefit obligation

Present Value of Benefit Obligation at the Beginning of the Period 26,364,533 21,300,705

Interest Cost 2,088,071 1,991,616

Current Service Cost 4,017,953 3,001,622

Liability Transferred In/ Acquisitions - 88,889

Liability Transferred Out/ Divestments (14,596,275) (4,133,392)

Benefit Paid From the Fund (1,690,917) (2,191,258)

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

2,256,817 -

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

113,017 3,678,047

Actuarial (Gains)/Losses on Obligations - Due to Experience 3,693,375 2,628,304

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

II Changes in the Fair Value of Plan Assets

Fair Value of Plan Assets at the Beginning of the Period 21,109,018 25,278,937

Expected Return on Plan Assets 1,671,834 2,363,581

Contributions by the Employer 6,172,610 -

Assets Transferred In/Acquisitions - 88,889

Assets Transferred Out/ Divestments (14,596,275) (4,133,392)

Benefit Paid from the Fund (1,690,917) (2,191,258)

Actuarial Gains/(Losses) on Plan Assets - Due to Experience 263,092 (297,739)

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

III Expenses recognized in the Statement of Profit and Loss

Current Service Cost 4,017,953 3,001,622

Interest Costs 2,088,071 1,991,616

Expected return on Plan Assets (1,671,834) (2,363,581)

Actuarial (Gains)/Losses 5,800,117 6,604,090

Expenses Recognized in the Statement of Profit or Loss 10,234,307 9,233,747

IV Amount recognized in the Balance Sheet

Present Value of Benefit Obligation at the end of the Period (22,246,574) (26,364,533)

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

Funded Status (Surplus/ (Deficit)) (9,317,212) (5,255,515)

Net (Liability)/Asset Recognized in the Balance Sheet (9,317,212) (5,255,515)

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

Investments with Insurer

100%

100%


VI Actuarial Assumptions

Discount Rate 7.85% 7.92%

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

Expected return on plan assets 7.85% 7.92%

VII Actual Return on Plan Assets 1,934,926 2,065,842

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

b) The company expects to contribute Rs. 7,327,912 to gratuity in the next year (Previous Year Rs. 7,928,944).

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

As at

March 31, 2016 March 31, 2015 March 31, 2014 March 31, 2013 March 31, 2012

Rs. Rs. Rs. Rs. Rs.

Defined benefit obligation

22,246,574 26,364,533 21,300,705 20,637,611 16,564,739

Plan assets 12,929,362 21,109,018 25,278,937 17,529,826 18,937,289

Surplus/(deficit) (9,317,212) (5,255,515) 3,978,232 (3,107,785) 2,372,550

Experience adjustment on plan liabilities

3,693,375 2,628,304 625,941 1,661,453 2,561,997

Experience adjustments on plan assets

263,092 (297,739) 380,919 71,339 (31,200)

Compensated Absences

The Company has treated the earned leave which can be carried forward to future periods as a “short term” benefit only if the employees are entitled to either encash or utilise the benefits during the period of twelve months following the end of the accounting period (when they became entitled to the leave) and are also expected to do so. In other cases the benefit has been treated as “long term”. A sum of Rs. 26,469 has been charged in the current year (Previous Year Rs. 710,100) to the Statement of Profit and Loss in this respect.

31. Legal and Professional fees include service fees of Rs. 33,462,190 (Previous Year Rs. Nil) to Principal Consulting (India) Private Limited.

32. Miscellaneous expenses include income tax deducted at source on perquisities paid to one employee amounting to Rs. 2,065,931 and interest on delayed deposit of the same with tax authorities amounting to Rs. 473,806.


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


ICAI Firm Registration No. 103162W/ E300006 Principal Pnb Asset Management Company Private Limited Chartered Accountants

Sd/-

Sd/- Sd/-


Partner

Chairman Managing Director


Sd/-

Niyati Shah

Company Secretary

September 12, 2016 September 12, 2016

principal pnb asset management company private...

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