TWENTY-SIXTH (26th ANNUAL REPORT 2017-18 · Nidhi Shah Company Secretary ACS No.: A39461 Date:...

Annual Report 2017-18

TWENTY-SIXTH (26th) ANNUAL REPORT 2017-18


PRINCIPAL PNB ASSET MANAGEMENT COMPANY PRIVATE LIMITED (Regd. Office: Exchange Plaza, B Wing, Ground Floor, NSE Building, Bandra Kurla

Complex, Bandra East, Mumbai - 400051) Tel: 022 67720555; Fax: 022 67720512, CIN: U25000MH1991PTC064092

NOTICE OF THE TWENTY SIXTH (26TH) ANNUAL GENERAL MEETING

Notice is hereby given that the Twenty Sixth (26th) Annual General Meeting of the Members of Principal Pnb Asset Management Company Private Limited will be held at a shorter notice on Tuesday, September 25, 2018 at 03.00 P.M. at Exchange Plaza, B Wing, Ground Floor, NSE Building, Bandra Kurla Complex, Bandra (East), Mumbai - 400051, to transact the following business:

ORDINARY BUSINESS

1. To receive, consider, approve and adopt the Audited Balance Sheet as at March 31, 2018, the Profit & Loss Account, the Statement of Receipts and Payments [Cash Flow Statement] for the Financial year ended on March 31, 2018, the Auditors` Report thereon and the Directors' Report & Management Report for the aforesaid period.

SPECIAL BUSINESS 2. To consider and if thought fit, to pass with or without modification(s), the following

resolution as an Ordinary Resolution: ISSUE OF BONUS SHARES TO THE SHAREHOLDER(S) OF THE COMPANY “RESOLVED THAT pursuant to Section 63 and other applicable provisions, if any, of the Companies Act, 2013 read with Rule 14 of the Companies (Share Capital and Debentures) Rules, 2014, FEMA (Transfer or Issue of security by a person resident outside India) Regulations, 2000 and the Articles of Association of the Company, the approval of the shareholders be and is hereby accorded for capitalizing the Capital Redemption Reserve of Rs. 600,000,000/- (Rupees Six Crores) and Securities Premium Account of Rs. 10/- (Rupees Ten) by way of issue of fully paid-up bonus shares to the Members in the ratio of 0.2838085 equity share, of Rs. 10/- (Ten) each for every 1 (one) equity share held in the Company as given under:

Name of Shareholder(s) No. of Equity shares held

No. of Bonus shares

Principal Financial Group (Mauritius) Limited

16,621,211 4,717,241

Principal International India Ltd 4,519,800 1,282,758

Mr. Sudhin Padhye 6 2


RESOLVED FURTHER THAT the abovementioned bonus shares shall rank pari passu in all respect, including as to dividend, with the existing equity shares of the Company.”

By order of the Board of Directors

Sd/- Nidhi Shah

Company Secretary ACS No.: A39461

Date: September 17, 2018 Place: Mumbai Principal Pnb Asset Management Company Private Limited CIN: U25000MH1991PTC064092 Exchange Plaza, B Wing, Ground Floor, NSE Building, Bandra Kurla Complex, Bandra (East), Mumbai - 4000051 Tel: 022 67720555 Fax: 022 67720512 E-mail: [email protected] ; Web-site: www.principalindia.com

mailto:[email protected]

http://www.principalindia.com/


NOTES: 1) A member entitled to attend and vote at the Meeting is entitled to appoint a

proxy to attend and vote on a poll in his place.

2) A member of the Company, which is a body corporate, is entitled to appoint its representative duly authorized in accordance with Section 113 of the Companies Act, 2013, to vote on its behalf.

3) A proxy need not be a member of the Company.

4) The instrument appointing a proxy and a power of attorney or other authority, if any,

under which it is signed or a certified copy of that power of authority must be deposited at the Company’s registered office not later than 48 hours before the commencement of the Meeting.

5) The Explanatory Statement in terms of Section 102 of the Companies Act 2013,

relating to special business is annexed to the Notice.

6) The statutory registers and document(s) referred to in the notice and explanatory statement are open for inspection at the Registered Office of the Company during all business days (Monday to Friday) between 9:00 AM to 5:00 PM and will also be available at the meeting for inspection.

7) Route Map of the venue of Annual General Meeting forms part of the notice.

By order of the Board of Directors

Sd/- Nidhi Shah


Date: September 17, 2018 Place: Mumbai Principal Pnb Asset Management Company Private Limited CIN: U25000MH1991PTC064092 Exchange Plaza, B Wing, Ground Floor, NSE Building, Bandra Kurla Complex, Bandra (East), Mumbai – 4000051 Tel: 022 67720555 Fax: 022 67720512 E-mail: [email protected] Web-site: www.principalindia.com




EXPLANATORY STATEMENT (Pursuant to the provisions of Section 102 of the Companies Act, 2013)

ITEM NO. 2 ISSUE OF BONUS SHARES TO THE EXISTING SHAREHOLDER(S) OF THE COMPANY The Board of Directors in their meeting held on September 12, 2018, have approved the capitalization of the Capital Redemption Reserve of Rs. 60,000,000/- (Rupees Six Crores only) and Securities Premium Account of Rs. 10/- (Rupees Ten) by way of issue of fully paid-up bonus shares to the Members in the ratio of 0.2838085 equity share, of Rs. 10/- (Ten) each for every 1 (one) equity share held in the Company, in accordance with the provisions of the Companies Act, 2013 and such bonus shares shall rank pari passu in all respect, including as to dividend, with the existing equity shares of the Company. Article 10 of the Articles of Association of the Company enables the Company to issue fully paid-up bonus shares out of its free reserves. Pursuant to Section 63 of the Companies Act, 2013, the consent of the members of the Company by way of an Ordinary Resolution is required to capitalize the profits or free reserves of the Company for the purpose of issuing fully paid-up bonus shares. None of the directors and Key Managerial Personnel or their relatives are in any way concerned or interested in the proposed resolution. The Board recommends the resolution as stated in item no. 2 for the approval of the Members as an Ordinary Resolution.

By Order of the Board of Directors

Sd/- Nidhi Shah


Date: September 17, 2018 Place: Mumbai

Principal Pnb Asset Management Company Private Limited CIN: U25000MH1991PTC064092 Exchange Plaza, B Wing, Ground Floor, NSE Building, Bandra Kurla Complex, Bandra (East), Mumbai – 400051 Tel No.: 022 67720555 Fax: 022 67720512 Email: [email protected] Website: www.principalindia.com




ROUTE MAP TO THE VENUE OF THE AGM

Venue: Principal Pnb Asset Management Company Private Limited Exchange Plaza, B Wing, Ground Floor, NSE Building, Bandra Kurla Complex, Bandra (East), Mumbai – 400051


PRINCIPAL PNB ASSET MANAGEMENT COMPANY PRIVATE LIMITED (Regd. Office: Exchange Plaza, B Wing, Ground Floor, NSE Building, Bandra Kurla

Complex, Bandra (East), Mumbai – 400051)

FORM OF PROXY (FORM NO. MGT – 11) CIN: U25000MH1991PTC064092 Principal Pnb Asset Management Company Private Limited Exchange Plaza, B Wing, Ground Floor, NSE Building, Bandra Kurla Complex, Bandra (East), Mumbai – 400051

Name of the Member(s): Registered Address: Email ID: Folio No/ Client Id: DP ID:

We, being the member (s) of …………. shares of the above named company, hereby appoint

1. Name: ……………………

Address: ……………………. E-mail Id: …………………… Signature: ……………………. or failing him; 2. Name: ……………………

Address: ……………………. E-mail Id: …………………… Signature: ……………………. or failing him; 3. Name: ……………………

Address: ……………………. E-mail Id: …………………… Signature: ……………………. or failing him; as my/our proxy to attend and vote (on a poll) for me/us and on my/our behalf at the 26th Annual General Meeting (AGM) of the Company, scheduled to be held on Tuesday, the 25th day of September, 2018 at 03.00 P.M. at Exchange Plaza, B Wing, Ground Floor, NSE Building, Bandra Kurla Complex, Bandra (East), Mumbai – 400051 and at any adjournment thereof in respect of such resolutions as are indicated below:


DESCRIPTION OF RESOLUTION TYPE OF RESOLUTION

FOR AGAINST

ORDINARY BUSINESS

1. To receive, consider, approve and adopt the Audited Balance Sheet as at March 31, 2018, the Profit & Loss Account, the Statement of Receipts and Payments [Cash Flow Statement] for the financial year ended on March 31, 2018, the Auditors` Report thereon and the Directors' Report & Management Report for the aforesaid period.

Ordinary

SPECIAL BUSINESS

2. Issue of Bonus shares to the existing shareholder(s) of the Company

Ordinary

Signed this _______day of _____________, 2018

Signature of Shareholder

Signature of Proxy holder(s)

Note: This form of Proxy in order to be effective should be duly completed and deposited at Exchange Plaza, B Wing, Ground Floor, NSE Building, Bandra Kurla Complex, Bandra (East), Mumbai – 400051, not less than 48 hours before the commencement of the Meeting.

Affix Revenue Stamp

of Rs. 1/-


PRINCIPAL PNB ASSET MANAGEMENT COMPANY PRIVATE LIMITED (Regd Office: Exchange Plaza, B Wing, Ground Floor, NSE Building, Bandra Kurla

Complex, Bandra (East), Mumbai – 400051)

ATTENDANCE SLIP

PLEASE FILL ATTENDANCE SLIP AND HAND IT OVER AT THE ENTRANCE OF THE MEETING HALL Shareholders may obtain additional Slip at the venue of the meeting.

I/ We hereby record my/our presence at the 26th Annual General Meeting of the Company held on Tuesday, September 25, 2018 at 03.00 P.M. at Exchange Plaza, B Wing, Ground Floor, NSE Building, Bandra Kurla Complex, Bandra (East), Mumbai – 400051. Name: _____________________________________________________ Folio No: ______________ No. of Shares held: _____________________ Name of Proxy / Representative, if any: ___________________________ Signature of shareholder(s)/Proxy/ Representative: __________________

PRINCIPAL PNB ASSET MANAGEMENT COMPANY PRIVATE LIMITED

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

Tel: 022 67720555; Fax: 022 67720512, CIN: U25000MH1991PTC064092 Addendum to Notice dated 17th September, 2018 convening 26th Annual General Meeting of the Company scheduled to be held on Tuesday, 25th September, 2018 at 03:00 p.m. at Exchange Plaza, B Wing, Ground Floor, NSE Building, Bandra Kurla Complex, Bandra (East), Mumbai - 400051. Attention of the members is invited to the Notice of 26th Annual General Meeting of the members of the Company dated 17th September, 2018 already sent to all the Shareholders. Notice is further given that the following items of business shall be included in the aforesaid notice as a new Item No. 3 and 4 under Special Business: 3. To consider and, if thought fit, to pass with or without modification(s), the following resolution

as a Special Resolution: ALTERATION OF THE MEMORANDUM OF ASSOCIATION OF THE COMPANY “RESOLVED THAT pursuant to the provisions of Sections 13 of the Companies Act, 2013 (including any statutory modification or re-enactment thereof for the time being in force) read with the Rules framed thereunder, as amended from time to time and the Articles of Association of the Company, the approval of the shareholders be and is hereby accorded to amend the existing Memorandum of Association of the Company in the following manner: a) The existing Clause I of the Memorandum of Association of the Company be deleted and

replaced with new Clause I as under: “The name of the Company is Principal Asset Management Private Limited”

b) The existing name of the Company to be replaced with “Principal Asset Management Private Limited”, wherever appearing in the Memorandum of Association of the Company

4. To consider and, if thought fit, to pass with or without modification(s), the following resolution as a Special Resolution: ALTERATION OF THE ARTICLES OF ASSOCIATION OF THE COMPANY

“RESOLVED THAT pursuant to the provisions of Sections 14 of the Companies Act, 2013

(including any statutory modification or re-enactment thereof for the time being in force) read with the Rules framed thereunder, as amended from time to time and the Articles of Association of the Company, the approval of the shareholders be and is hereby accorded to amend the existing Articles of Association of the Company to replace the existing name of the Company with “Principal Asset Management Private Limited”, wherever appearing in the

Articles of Association of the Company.”

EXPLANATORY STATEMENT

(Pursuant to the provisions of Section 102 of the Companies Act, 2013)

ITEM NO. 3

ALTERATION OF THE MEMORANDUM OF ASSOCIATION OF THE COMPANY

The Board of Directors in their meeting held on August 28, 2018, approved certain alteration to

the existing Memorandum of Association of the Company including the change in name of the

Company from “Principal Pnb Asset Management Company Private Limited” to “Principal Asset

Management Company Private Limited”, which was approved by the members of the Company

in the meeting held on August 28, 2018. However, in accordance with the rules and procedures

prescribed under the Companies Act, 2013, the jurisdictional Registrar of Companies, vide

approval letter dated September 19, 2018 permitted the Company to use the name “Principal

Asset Management Private Limited”, thereby requiring partial modification of the resolution

passed in this context to the extent stated herein.

In accordance with the provisions of Section 13 of the Companies Act, 2013 read with the

applicable Rules, the consent of the members of the Company by way of a Special Resolution is

required for alteration of the Memorandum of Association of the Company to capture the

aforementioned approved name of the Company.

None of the directors and Key Managerial Personnel or their relatives are in any way concerned

or interested in the proposed resolution.

The Board recommends the resolution as stated in item no. 3 for the approval of the Members as

a Special Resolution.

ITEM NO. 4

ALTERATION OF THE ARTICLES OF ASSOCIATION OF THE COMPANY

In accordance with the rules and procedures prescribed under the Companies Act, 2013, the

jurisdictional Registrar of Companies, vide approval letter dated September 19, 2018 permitted

the Company to use the name “Principal Asset Management Private Limited”.

In accordance with the provisions of Section 14 of the Companies Act, 2013 read with the

applicable Rules, the consent of the members of the Company by way of a Special Resolution is

required for alteration of the Articles of Association of the Company to change the existing name

of the Company to “Principal Asset Management Private Limited”, thereby requiring partial

modification of the resolution passed in this context to the extent stated herein.

None of the directors and Key Managerial Personnel or their relatives are in any way concerned

or interested in the proposed resolution.

The Board recommends the resolution as stated in item no. 4 for the approval of the Members as

a Special Resolution.

By Order of the Board of Directors

Sd/-

Nidhi Shah

Company Secretary

Date: September 24, 2018

Place: Mumbai

Principal Pnb Asset Management Company Private Limited

CIN: U25000MH1991PTC064092

Exchange Plaza, B Wing, Ground Floor,

NSE Building, Bandra Kurla Complex,

Bandra (East), Mumbai – 400051

Tel No.: 022 67720555 Fax: 022 67720512

Email: [email protected]



DIRECTORS’ REPORT Dear Shareholders, Your Directors have pleasure in presenting the Twenty Sixth (26th) Annual Report on the business and performance of the Company together with the audited financial statements for the Financial Year ended March 31, 2018.

FINANCIAL HIGHLIGHTS The Company's performance during the year ended March 31, 2018 as compared to the previous financial year, is summarized below:

(Rs. in lakh)

Particular For the Financial

Year ended

March 31, 2018

For the Financial

Year ended

March 31, 2017

Income

5,909.16 4,534.12

Less: Expenses

5,918.50 4,874.14

Profit/ (Loss) before tax and extraordinary items

(9.34) (340.02)

Less: Prior period Items

- 42.66

Profit/ (Loss) before tax

(9.34) (382.68)

Less: Provision for tax

- -

Income Tax of earlier years w/off

- -

Profit after Tax

(9.34) (382.68)

Earnings per Equity Share (Basic and Diluted)

(0.05) (2.20)

APPROPRIATION

(Rs. in lakh)

Interim Dividend

- -

Final Dividend

- -

Tax on distribution of dividend

- -

Transfer of General Reserve

- -

Balance carried to Balance sheet

(9.34) (382.68)


FUND PERFORMANCE The performance of various funds of the Company during the Financial year 2017-18 was as under:

Name of Fund Year of Launch 1 Year Return (%)

Principal Hybrid Equity Fund

(formerly known as Principal Balanced Fund)

Regular Plan - 14/01/2000 17.88

Direct Plan - 1/1/2013 19.63

Principal Dividend Yield Fund Regular Plan - 15/10/2004 20.36

Direct Plan - 1/1/2013 20.63

Principal Global Opportunities Fund Regular Plan – 29/03/2004 25.67

Direct Plan – 02/01/2013 26.22

Principal Multicap Growth Fund

(formerly known as Principal Growth Fund)

Regular Plan – 25/10/2000 16.99

Direct Plan - 1/1/2013 17.93

Principal Nifty 100 Equal Weight Fund (formerly known as Principal Index Fund – Nifty)

Regular Plan – 27/07/1999 10.67

Direct Plan - 1/1/2013 11.22

Principal Focused Multicap Fund

(formerly known as Principal Large Cap Fund)

Regular Plan – 11/11/2005 9.84

Direct Plan - 1/1/2013 10.59

Principal Personal Tax Saver Fund Regular Plan – 31/03/1996 9.21

Direct Plan - 1/1/2013 9.83

Principal Emerging Bluechip Fund Regular Plan – 12/11/2008 14.97

Direct Plan - 1/1/2013 16.35

Principal Low Duration Fund Regular Plan – 14/09/2004 7.21

Direct Plan - 1/1/2013 7.64

Principal Dynamic Bond Fund Regular Plan – 09/05/2003 4.27

Direct Plan - 1/1/2013 5.09

Principal Short Term Debt Fund (formerly known as Principal Short Term Income Fund)

Regular Plan - 09/05/2003 5.97

Direct Plan - 1/1/2013 6.88

Principal Equity Savings Fund Regular Plan - 23/05/2003 7.31

Direct Plan - 1/1/2013 8.18

Principal Corporate Bond Fund (formerly known as Principal Debt Savings Fund – Retail Plan)

Regular Plan – 30/12/2003 2.68

Direct Plan - 1/1/2013 3.94

Principal Cash Management Fund Regular Plan – 30/08/2004 6.82


Direct Plan - 1/1/2013 6.90

Principal Credit Risk Fund (formerly known as Principal Credit Opportunities Fund)

Regular Plan – 14/09/2004 7.32

Direct Plan - 1/1/2013 7.59

Principal Ultra Short Term Fund (formerly known as Principal Retail Money Manager Fund)

Regular Plan – 28/12/2007 6.14

Direct Plan - 1/1/2013 7.06

Principal Balanced Advantage Fund

(formerly known as Principal Smart Equity Fund)

Regular Plan – 16/12/2010 5.78

Direct Plan - 1/1/2013 7.35

Principal Tax Savings Fund Regular Plan – 31/03/1996 16.55

Direct Plan - 1/1/2013 16.97

Principal Retirement Savings Fund - Conservative Plan (formerly known as Principal Asset Allocation Fund-of-Funds – Conservative Plan)

Regular Plan – 1412/2015 6.91

Direct Plan – 14/12/2015 7.45

Principal Retirement Savings Fund - Moderate Plan (formerly known as Principal Asset Allocation Fund-of-Funds – Moderate Plan)

Regular Plan – 1412/2015 7.99

Direct Plan – 14/12/2015 8.75

Principal Retirement Savings Fund - Progressive Plan (formerly known as Principal Asset Allocation Fund-of-Funds – Aggressive Plan)

Regular Plan – 1412/2015 9.94

Direct Plan – 14/12/2015 10.62

Principal Arbitrage Fund Regular Plan – 21/04/2016 5.46

Direct Plan – 21/04/2016 6.17

OUTLOOK

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


OPERATIONS

Principal Mutual Fund as at March 31, 2018 offers twenty two Schemes. These include eleven Equity Schemes (including two Equity Linked Savings Schemes, one Balanced Scheme), one Fund of Fund Overseas (investing in international fund/s), three Fund of Funds Domestic Schemes, six Debt Schemes/ Plans and one Liquid Scheme. The Assets under Management (AuM) from all these Schemes as on March 31, 2018 was Rs. 6,607.39 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. 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 5 Members including one non-executive Chairman and one Managing Director. The existing Board consists of: Mr. M. M. Chitale

Chairman (Independent Non - Executive Director)

Mr. Lalit Vij Managing Director Mr. M. M. Kamath Independent Non - Executive Director Mr. Pedro Borda Non - Executive Director (Alternate Director: Mr. Kim Thean

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

with effect from November 21, 2017.

2. Appointment of Mr. Kim Thean Soo as an Alternate Director to Mr. Pedro with effect from February 06, 2018.


3. Resignation of Mr. Vimlesh Kumar as a Director with effect from August 20, 2018.

KEY MANAGERIAL PERSONNEL In Compliance of the Section 203 read with Rule 8A of the Companies Act 2013, the Company has following Key Managerial Personnel(s): a) Mr. Lalit Vij, Managing Director b) Ms. Nidhi Shah, Company Secretary The terms of appointment (s) of Key Managerial Personnel are approved by the Board of Directors in compliance with the applicable requirements. DIRECTORS’ RESPONSIBILITY STATEMENT In terms of Section 134(5) of the Companies Act, 2013, in relation to the audited financial statements of the Company for the year ended March 31, 2018, the Board of Directors hereby confirms that:

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

b. such accounting policies have been selected and applied consistently and the Directors made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2018 and of the profit/loss of the Company for that year;

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

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

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

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

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


Internal Audit also evaluates the effectiveness of internal controls in place. Gaps, if any, observed from the audit report are addressed by further strengthening the internal controls to avoid recurrence. BOARD MEETINGS During the Financial Year 2017-18, six meetings of Board of Directors were held as under:

DATE DAY NUMBER OF BOARD MEETING

April 27, 2017 Thursday 136th

July 13, 2017 Thursday 137th

August 22, 2017 Tuesday 138th

October 26, 2017 Thursday 139th

November 22, 2017 Wednesday 140th

February 08, 2018 Thursday 141st

AUDIT COMMITTEE:

During the Financial Year 2017-18, six meetings of Audit Committee were held as under:

DATE DAY NUMBER OF AUDIT COMMITTEE MEETING

April 27, 2017 Thursday 59th

July 13, 2017 Thursday 60th

August 22, 2017 Tuesday 61st

October 26, 2017 Thursday 62nd

November 22, 2017 Wednesday 63rd

February 08, 2018 Thursday 64th

CORPORATE SOCIAL RESPONSIBILITY During the Financial Year 2017-18, the Company was not required to constitute a Corporate Social Responsibility Committee of the Board as applicable under the provisions of Companies Act, 2013.

STATUTORY AUDITORS S. R. Batliboi and Associates LLP, Chartered Accountants, were appointed as Statutory Auditors of the Company in place of S. V. Ghatalia & Associates LLP, Chartered Accountants, for a term of 4 years to hold office from the conclusion of the 24th Annual


General Meeting until the conclusion of the 28th Annual General Meeting, pursuant to the provisions of Section 139 of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014. PUBLIC DEPOSITS During the Financial Year 2017-18, the Company did not accept any fixed deposits under the applicable provisions of the Companies Act, 2013.

STATUTORY AUDITORS’ REPORT The Board has duly examined the Statutory Auditors’ Report on the financial statements of the Company for the financial year ended on March 31, 2018. The clarifications wherever necessary, have been included in the section – ‘Notes to accounts’ of the Annual Report. The Statutory Auditors have, in their report under Companies (Auditor’s Report) Order, 2016, stated that while undisputed statutory dues including provident fund, income tax, service tax, cess and other statutory dues have generally been regularly deposited with the appropriate authorities, there has been significant delay in four cases ranging from 28 to 240 days in payment of Goods and services tax liable to reverse charge for amounts ranging from Rs. 58,410 to Rs. 59,184 (of which, the amount of Rs. 58,410 that remained outstanding for a period of more than six months at the year end, was paid on April 17, 2018) and slight delay in one case in payment of profession tax. The Board of Directors have taken note of the remarks made by the Statutory Auditors and the management has been advised to put in place additional controls to ensure that these delays do not recur.

EXTRACT OF ANNUAL RETURN In compliance with Section 92(3) of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of Annual Return in MGT-9 forms part of this Report annexed as Annexure I. CHANGE IN SHAREHOLDING Principal International India Ltd acquired the 3720,000 equity shares held by Punjab National Bank (“PNB”) (constituting 21.38% of the fully paid-up share capital of the Company) in the Company on August 24, 2018, after receipt of approvals from Securities and Exchange Board of India (“SEBI”) and Competition Commission of India (“CCI”). The transfer of said shares and the change in the shareholding pattern of the Company was noted by the Board of Directors of the Company in their meeting held on August 28, 2018. The Register of Members of the Company has also been duly updated in this regard. SHARE CAPITAL


During the financial year, no further shares were issued. The issued, subscribed and paid-up equity share capital of the Company as on March 31, 2018, is 17,400,014 Equity Shares of Rs. 10/- each. In August 2018, the Company increased its Authorized Share Capital from Rs. 250,000,000/- to Rs. 300,000,000/- by creation of 5,000,000 Equity Shares of Rs.10/- each. Further, the Company allotted 2,941,203 Equity shares and 799,800 Equity shares of Rs. 10/- each at a premium of Rs. 97/-, to Principal Financial Group (Mauritius) Limited, and Principal International India Ltd, respectively, on rights basis.

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

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

TRANSACTIONS WITH RELATED PARTIES The transactions with related parties are subject to the provisions contained in the Articles of Association of the Company and the applicable provisions of Companies Act, 2013 and are entered into with the approval of the Board of Directors and shareholders (wherever applicable). The Related Parties Transactions are reviewed by the Directors, to ensure that such transactions are in the best interest of the Company. There were no contracts / arrangements entered with the related parties during the Financial Year 2017-18. The transactions entered into with the related parties during the Financial Year 2017-18 are stated under ‘Notes to the Accounts’ in the Audited Financial Statements of the Company.

LOANS, GUARANTEES, INVESTMENTS AND SECURITIES


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

RISK MANAGEMENT APPROACH Risk Management is an integral part of the Company’s business. The Company has a Risk Management Framework in place under which the key financial and non-financial risks applicable to the Company and the mitigation measures are identified and are periodically monitored. DISCLOSURE UNDER SECTION 22 OF THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 The Company has duly constituted an Internal Complaints Committee in place in terms of the requirements of Section 4 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company has in place the Policy on matters relating to Workplace Safety in compliance with the requirements of the Act. No cases were reported during the Financial Year 2017-18.

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 2017-18, the foreign exchange earnings and outflow were as under:

(Amount in Rs.)

FY 2017-18

FY 2016-17

Actual Foreign Exchange earnings Nil Nil

Actual Foreign Exchange outgo

Travel Expenses - 1,848,157

Professional Charges 1,303,851 5,040,100

Software Maintenance / E - Communication - 599,850

Information/Wire-Service Expenses - 6,009,300

Seminar, Conference and Training Expenses 565,474 200,567

Total 1,869,325 13,697,974

(B) Conservation of Energy & Technology Absorption:


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

DIVIDEND The Board of Directors do not recommend any dividend for the financial year ended March 31, 2018. OTHER DISCLOSURES The financial statements for any of the previous years have not been reinstated by the Company. There were no recommendations of the Audit Committee which were not concurred or accepted by the Board of Directors.

ACKNOWLEDGEMENT The Board of Directors take this opportunity to thank the customers, shareholders, suppliers, bankers, business partners/associates, Securities and Exchange Board of India, Ministry of Corporate Affairs, financial institutions and Central and State Governments for their consistent support and encouragement to the Company.

For and on behalf of the Board of Principal Pnb Asset Management Company Private Limited Sd/- M. M. Chitale Chairman DIN: 00101004 Date: September 17, 2018 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




Annexure I

FORM NO. MGT-9

EXTRACT OF ANNUAL RETURN AS ON FINANCIAL YEAR ENDED ON MARCH 31, 2018

[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 Contact: 022 6772 0555

Whether listed company : No

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

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

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

Sl. No

Name and Description of main products / services

NIC Code of the Product/service

% to total turnover of the company

1. Asset Management Services 66301 100%


III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES

Sr. No.

Name and address of the Company

CIN / GLN Holding / subsidiary / associate

% of shares held

Applicable section

1 Principal Financial Group (Mauritius) Limited

- Holding Company

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

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

Equity)

(i) Category-wise Share Holding

Category of Shareholders

No. of Shares held at the beginning of the year

No. of Shares held at the end of the year

% Change during the year

Demat Physical

Total % of Total Shares

Demat Physical

Total % of Total Shares

A. Promoters

1) Indian

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

Central Govt - - - - - - - - -

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

Bodies Corp - - - - - - - - -

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

Any other

Sub-total(A)(1):

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

2) Foreign

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

Other Individuals

- - - - - - - - -

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

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

Any Other - - - - - - - - -


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

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

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

B. Public Shareholding

1. Institutions

Mutual Funds - - - - - - - - -

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

Central Govt. - - - - - - - - -

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

Venture Capital Funds

- - - - - - - - -

Insurance Companies

- - - - - - - - -

FIIs - - - - - - - - -

Foreign Venture Capital Funds

- - - - - - - - -

Others (specify)

- - - - - - - - -

Sub-total (B)(1):-

- - - - - - - - -

2. Non-Institutions

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

Indian - - - - - - - - -

Overseas - - - - - - - - -

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

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. 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.


Individual shareholders holding nominal share capital upto Rs. 1 lakh

- - - - - - - - -

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

- - - - - - - - -

c) Others

(specify)

- - - - - - - - -

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

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

- - - - - - - - -

C. Shares held by Custodian for GDRs & ADRs

- - - - - - - - -

Grand Total (A+B+C)

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

(ii) Shareholding of Promoters-

Sl. No

Shareholder’s Name

Shareholding at the beginning of the year

Shareholding at the end of the year

% change in shareholding during the year

No. of Shares

% of total

Shares of the compa

ny

% of Shares Pledged / encumbered to total shares

No. of Shares

% of total

Shares of the compa

ny

% of Shares Pledged / encumbered to total shares

3 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.


1


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

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

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

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

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

Holders of GDRs and ADRs) :

Sl. No.

For Each of the Top 10 Shareholders


Cumulative Shareholding during the Year

No. of shares

% of total shares of the company

No. of shares


1 At the beginning of the year

Not Applicable

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

Sl. No.

Particulars Shareholding at the beginning of the year

Cumulative Shareholding during the year

No. of shares


No. of shares


At the beginning of the year

No change

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

At the end of the year


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

(v) Shareholding of Directors and Key Managerial Personnel:

Sl. No.

For each of Directors and each Key Managerial Personnel


Cumulative Shareholding during the Year

No. of shares

% of total shares of the Company

No. of shares

% of total shares of the Company

1 At the beginning of the year

Not Applicable

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

3 At the end of the year

V. INDEBTEDNESS

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

Secured Loans excluding deposits

Unsecured Loans

Deposits Total Indebtedness

Indebtedness at the beginning of the financial year

i. Principal Amount Nil Nil Nil Nil

ii. Interest due but not paid Nil Nil Nil Nil

iii. Interest accrued but not due Nil Nil Nil Nil


Total (i+ii+iii)

Nil Nil Nil Nil

Change in Indebtedness during the financial year

* Addition Nil Nil Nil Nil

* Reduction Nil Nil Nil Nil

Net Change Nil Nil Nil Nil

Indebtedness at the end of the financial year

i. Principal Amount Nil Nil Nil Nil

ii. Interest due but not paid Nil Nil Nil Nil

iii. Interest accrued but not due Nil Nil Nil Nil

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

VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

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

(All figures in Rupees)

Sl. No.

Particulars of Remuneration Name of MD/WTD/ Manager

Total Amount

1 Name Mr. Lalit Vij

2 Gross salary

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

21,325,029 21,325,029

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

444,211 444,211

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)

814,080 814,080


Total (A)

22,583,320 22,583,320

Ceiling as per the Act

Not Applicable

B. Remuneration to other directors:

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

Sl. No.

Particulars of Remuneration

Name of Directors Total Amount

1 Independent Directors Mr. M. M. Chitale

Mr. Rustam Gagrat

Mr. M. M. Kamath

Fee for attending board and committee meetings

600,000 600,000 600,000 1,800,000

Commission

Others

Total (1) 600,000 600,000 600,000 1,800,000

2 Other Non-Executive Directors

Fee for attending board committee meetings

Commission

Others, please specify

Total (2) - - - -

Total (B)=(1+2) 600,000 600,000 600,000 1,800,000

Total Managerial Remuneration

Overall Ceiling as per the Act

Not Applicable

Not Applicable

Not Applicable

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

Sl. No

Particulars of Remuneration Key Managerial Personnel


Company Secretary Total

1. Gross salary Niyati Shah* Nidhi Shah#

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

184,402 498,313

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

- - -

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

- - -

2. Stock Option - - -

3. Sweat Equity - - -

4. Commission - - -

- as % of profit - - -

- others, specify - - -

5. Others, please specify - - -

Total 184,402 498,313

*Resigned from the position of Company Secretary with effect from August 04, 2017 # Appointed as the Company Secretary with effect from August 8, 2017

VII.PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES: NIL

Type Section of the

Companies Act Brief Description

Details of Penalty / Punishment/ Compounding fees imposed

Authority [RD / NCLT/ COURT]

Appeal made, if any (give Details)

A. COMPANY:

Penalty

Nil

Punishment

Compounding

B. DIRECTORS:

Penalty Nil

Punishment

Compounding


C. OTHER OFFICERS IN DEFAULT:

Penalty Nil

Punishment

Compounding


Annexure II

Information as per Section 197 of the Companies Act, 2013, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2013, and forming part of the Directors’ report for the year ended March 31, 2018 (Full Year / Part of the Year) The information is available for inspection at the registered office of the Company

INDEPENDENT AUDITOR’S REPORT

To the Members of


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, 2018,

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

Companies (Accounting Standards) Rules, 2006 (as amended) specified under section 133 of the Act,

read with 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 but not for the purpose of expressing an

opinion on whether the Company has in place an adequate internal financial controls system over

financial reporting and the effectiveness of such controls. 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, 2018, 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 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 Companies (Accounting

Standards) Rules, 2006 (as amended) specified under section 133 of the Act, read with the

Companies (Accounts) Rules, 2014;

(e) On the basis of written representations received from the directors as on March 31, 2018, and

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

March 31, 2018, from being appointed as a director in terms of section 164 (2) of the Act;

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

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

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

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

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

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

reporting; and

(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.R. Batliboi & Associates LLP

Chartered Accountants

ICAI Firm Registration Number: 101049W/E300004

Sd/-

per Sarvesh Warty

Partner

Membership Number: 121411

Place of Signature: Mumbai


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 were physically verified by the management in the previous year in

accordance with a planned programme of verifying them once in three years 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, included in property, plant and equipment/ fixed assets 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, accordingly, the requirements

under paragraph 3(ii) of the 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 any

loans, secured or unsecured to 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), (b) and (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 within the meaning of Sections 73 to 76 of the

Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the

provisions of clause 3(v) of the Order are not applicable.

(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, goods and

services tax, cess and other statutory dues have generally been regularly deposited with the

appropriate authorities though there has been significant delay in 4 cases ranging from 28 to

240 days in few cases in payment of Goods and services tax liable to reverse charge for

amounts ranging from Rs.58,410 to Rs.59,184 and slight delay in one case in payment of

profession tax. 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 and explanations given to us, undisputed dues in respect of

provident fund, income-tax, service tax, goods and service tax, cess and other statutory dues

which were outstanding, at the year end, for a period of more than six months from the date

they became payable, are as follows:

Name of

the Statute

Nature of

the Dues

Amount

(Rs.)

Period to which

the amount

relates

Due

Date

Date of

Payment

Remarks,

if any

Goods

and

Services

tax Act,

2017

Goods &

Services

Tax liable

to reverse

charge

58,410 July 2017 20

August

2017

17 April

2018

-

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

tax, goods and services tax, value added tax, customs duty, excise duty and cess which have

not been deposited on account of any dispute.

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

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

(ix) According to the information and explanations given by the management, the Company has

not raised any money way of initial public offer / further public offer / debt instruments and

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

commented upon.

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

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

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

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

the year.

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

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

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

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

3(xii) of the Order are not applicable to the Company and hence not commented upon.

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

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

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

required by the applicable accounting standards.

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

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

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

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

commented upon.

(xv) According to the information and explanations given by the management, the Company has

not entered into any non-cash transactions with directors or persons connected with him as

referred to in section 192 of Companies Act, 2013.

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

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

For S.R. Batliboi & Associates LLP

ICAI Firm Registration No. 101049W/E300004


Sd/-

per Sarvesh Warty

Partner

Membership No. 121411

Place: Mumbai


March 31, 2018 March 31, 2017

Notes Rs. Rs.

Equity and Liabilities

Shareholders' Funds

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

Reserves and Surplus ' 4 ' 393,207,336 394,141,433

Non-Current Liabilities

Long-term Provisions ' 5 ' 30,539,568 24,086,703

Current Liabilities

Trade Payables ' 6A '

total outstanding dues of micro enterprises and

small enterprises

- -

total outstanding dues of creditors other than

micro enterprises and small enterprises

59,367,071 38,818,121

Other Payables ' 6B ' 99,271,306 76,680,794

Short-term Provisions ' 5 ' 7,697,429 7,012,361

166,335,806 122,511,276

Total 764,082,850 714,739,552

Assets

Non-Current Assets

Fixed Assets:

Tangible Assets ' 7 ' 6,282,463 2,759,028

Intangible Assets ' 8 ' 250,407 1,062,549

Intangible Assets under Development 11,059,550 -

Non-Current investments ' 9A ' 81,067,498 92,102,498

Long-term Loans & advances ' 10 ' 27,933,082 28,009,640

Current Assets

Current Investments ' 9B ' 420,529,486 449,034,056

Trade Receivables ' 11 ' 65,998,471 39,285,394

Cash & Bank Balances ' 12 ' 9,417,500 7,275,945

Short Term Loans & Advances ' 10 ' 141,544,393 95,210,442

637,489,850 590,805,837

Total 764,082,850 714,739,552

Summary of Significant Accounting Policies ' 2.1 '

The accompanying notes are an integral part of the financial statements

As per our report of even date.

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

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


Sd/- Sd/- Sd/-

per Sarvesh Warty M. M. Chitale Lalit Vij

Partner Chairman Managing Director

Membership No. 121411 DIN : 00101004 DIN : 00533071

Sd/-

Nidhi Shah

Company Secretary

Mumbai, September 12, 2018 Mumbai, September 12, 2018


Balance Sheet as at March 31, 2018

Year ended Year ended

March 31, 2018 March 31, 2017

Notes Rs. Rs.

Income

Income from Operations ' 13 ' 531,067,466 420,887,251

Other Income ' 14 ' 59,848,649 32,525,375

590,916,115 453,412,626

Expenses

Employee Cost ' 15 ' 275,087,010 267,239,088

Administrative and Other Expenses ' 16 ' 314,465,505 216,843,379

Depreciation and Amortisation ' 17 ' 2,297,697 3,332,012

591,850,212 487,414,479

Profit/(Loss) before tax (934,097) (34,001,853)

Less: Prior period items - 4,265,929

Profit/(Loss) before tax (934,097) (38,267,782)

Tax Expenses

- Income Tax - -

- Deferred Tax - -

Total Tax Expense - -

Profit/(Loss) for the year from continuing operations (934,097) (38,267,782)

Earnings per Equity Share (Basic and Diluted)

[Nominal value of Share Rs. 10 (March 31, 2017: Rs. 10)] (0.05) (2.20)

Summary of Significant Accounting Policies ' 2.1 '

The accompanying notes are an integral part of the financial statements



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


Sd/- Sd/- Sd/-



Membership No. 121411 DIN : 00101004 DIN : 00533071

Sd/-

Nidhi Shah

Company Secretary



Statement of Profit and Loss for the Year ended March 31, 2018


March 31, 2018 March 31, 2017

Rs. Rs.

Cash Flow from Operating Activities

Profit/(Loss) before Tax (934,097) (34,001,853)

Non-Cash Adjustment to reconcile Profit/(Loss) before Tax to Net Cash Flows

Prior period items - (4,265,929)

Depreciation and Amortisation 2,297,697 3,332,012

(Profit) / Loss on Sale of Fixed Assets 213,700 (95,415)

Net (Profit) / Loss on Sale of Current Investments (considered seperately) (57,989,080) (25,154,092)

Operating Profit/(Loss) before Working Capital Changes (56,411,780) (60,185,277)

Movements in Working Capital

Increase / (Decrease) in Long Term Provisions 6,452,865 19,820,448

Increase / (Decrease) in Trade Payables 20,548,950 (7,793,816)

Increase / (Decrease) in Other Payables 22,590,512 14,683,683

Increase / (Decrease) in Short Term Provisions 685,068 (960,091)

(Increase) / Decrease in Long-term Loans and Advances 76,558 (22,519,186)

(Increase) / Decrease in Trade Receivables (26,713,077) (8,018,270)

(Increase) / Decrease in Short-term Loans and Advances (7,931,521) 13,774,545

Less: Taxes paid (38,402,430) (370,675)

Net Cash Flow from Operating Activities (A) (79,104,855) (51,568,639)

Cash Flow from Investing Activities

Purchase of Fixed Assets (5,292,390) (1,959,125)

Sale of Fixed Assets 69,700 105,500

(Increase)/Decrease in Intangible Assets under Development (11,059,550) -

Purchase of Non-Current Investments - (5,000,000)

Purchase of Current Investments (411,329,150) (1,788,832,635)

Sale of Current Investments 508,857,800 1,814,074,434

Net Cash Flow from Investing Activities (B) 81,246,410 18,388,174

Cash Flow from Financing Activities

Proceeds from Issuance of Share Capital - -

Net Cash Flow from Financing Activities (C) - -

Net Increase / (Decrease) in Cash and Cash Equivalents (A + B + C) 2,141,555 (33,180,465)

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

Cash and Cash Equivalents at the end of the Year 9,417,500 7,275,945



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


Sd/- Sd/- Sd/-



Membership No.121411 DIN: 00101004 DIN: 00533071

Sd/-

Nidhi Shah

Company Secretary



Cash Flow Statement for the Year ended March 31, 2018

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

Statements' notfied under section 133 of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014. Cash and Cash

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

Principal Pnb Asset Management Company Private Limited Notes forming part of the financial statement for the year ended March 31, 2018

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.

As of March 31, 2018, the share holding pattern of Principal Pnb Asset Management Private Limited (“PPAMC”) is Principal Financial Group (Mauritius) Ltd, the holding company-78.62% and Punjab National Bank-21.38%.

During the Year the shareholders of the Company entered into a Share Purchase agreement, whereby Principal International India Limited (“PIL”) (an affiliate of Principal Financial Group (Mauritius) Ltd), agrred to buy and Punjab National Bank agreed to sell and transfer its stake in the Company. The Securities and Exchange Board of India approved the change in controlling interest on July 30, 2018 and the transaction was exceuted on August 24, 2018

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 in accordance with the Companies (Accounting Satndards) Rules 2006 (as amended) specified under section 133 of Act, read with the Companies (Accounts) Rules, 2014. 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. 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. Cash and Cash Equivalents

Cash and Cash equivalents represents cash and balance with scheduled banks in current account.


d. 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.

e. Fixed assets and depreciation / amortisation

(a) Property, plant & equipment and depreciation

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

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

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

Asset Type As per

Schedule II As per Estimated

Life

Furniture and fixtures 10 years 4 years

Office equipments 5 years 3 years

Mobile Phones 5 years 2 years

Computers 3 years 3 years

Electrical installations 10 years 4 years

Motor cars 8 years 4 years

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

(b) Intangible assets and amortisation

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

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


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

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

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

f. 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.

g. 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.

h. 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.

i. 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.

j. 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.

k. 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.

l. 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.

m. 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.

n. 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.

o. Earning per share

Basic Eraning per share is computed by dividing the net profit / (loss) after tax by the weighted average number of equity shares outstanding during the year. Diluted earning per share is computed by dividing the net profit / (loss) after tax by the sum of weighted avaearge number of equity shares and dilutive potential equity shares outstanding during the year.

March 31, 2018 March 31, 2017

Rs. Rs.

3. SHARE CAPITAL

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

25,000,000 (31 March 2017: 25,000,000) equity shares of Rs. 10 each

250,000,000 250,000,000

Issued, Subscribed and Fully Paid-up shares

17,400,014 (31 March 2017: 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 Year

Equity Shares March 31, 2018

No. Rs. No. Rs.

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

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

b. Terms/Rights attached to Equity Shares

c. Shares held by Holding Company

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

March 31, 2018 March 31, 2017

Rs. Rs.

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

13,680,014 (March 31, 2017: 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, 2018 March 31, 2017

% 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 78.62% 13,680,014 78.62%

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

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, 2018 March 31, 2017

Rs. Rs.

4. RESERVES AND SURPLUS

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

Share Premium Account

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

Add: Premium on issue of equity shares - -

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

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

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

Balance as per last financial statements (1,013,172,304) (974,904,522)

Profit/(Loss) for the Year (934,097) (38,267,782)

Net Surplus / (Deficit) in the Statement of Profit & Loss (1,014,106,401) (1,013,172,304)

393,207,336 394,141,433 Total Reserves and Surplus

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.

March 31, 2017


Notes forming part of the Financial statement for the year ended March 31, 2018

Non-Current Current

March 31, 2018 March 31, 2017 March 31, 2018 March 31, 2017

Rs. Rs. Rs. Rs.

5. PROVISIONS

Provision for Employee Benefits

Provision for gratuity 25,135,270 20,012,896 7,000,000 6,400,636

Provision for leave benefits 5,404,298 4,073,807 697,429 611,725 Total 30,539,568 24,086,703 7,697,429 7,012,361

March 31, 2018 March 31, 2017

Rs. Rs.

6. CURRENT LIABILITIES

Trade Payables (A) 59,367,071 38,818,121

Other Payables

Statutory Dues Payable 7,423,920 25,998,770

Rent Equalisation 4,500,581 1,585,043

Other Liabilities 87,346,805 49,096,981

(B) 99,271,306 76,680,794

Total (A + B) 158,638,377 115,498,915



7. TANGIBLE ASSETS

Office Furniture & Computers Leasehold Electrical Total

Equipments Fixtures Improvements Installations

Cost

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

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

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

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

Additions 509,593 1,382,016 1,281,985 2,069,236 - 5,242,830

Disposals - (197,374) (691,249) - - (888,623)

As at March 31, 2018 6,655,198 2,942,809 24,222,464 3,210,673 15,215 37,046,359

Depreciation

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

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

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

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

Additions 160,217 110,061 1,079,940 369,177 - 1,719,395

Disposals - (197,374) (691,249) - - (888,623)

As at March 31, 2018 6,106,698 1,583,349 22,609,362 449,272 15,215 30,763,896

Net Block

As at March 31, 2017 199,124 87,505 1,411,057 1,061,342 - 2,759,028 As at March 31, 2018 548,500 1,359,460 1,613,102 2,761,400 - 6,282,463

8. INTANGIBLE ASSETS

Asset Computer Total

Management Software

Rights

Gross Block

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

Additions - 71,994 71,994

Disposals / Write offs - - -

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

Additions - 49,560 49,560

Disposals / Write offs - (3,137,486) (3,137,486)

As at March 31, 2018 91,655,275 18,887,080 110,542,355

Amortisation

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

Charge for the year - 1,482,469 1,482,469

Disposals / Write offs - - -

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

Charge for the year - 578,302 578,302

Disposals / Write offs - (2,854,086) (2,854,086)

As at March 31, 2018 85,731,288 18,636,673 104,367,961

Imapirment Loss

As at March 31, 2016 5,923,987.00 - 5,923,987.00

Charge for the year - - -

Reversals for the year - - -

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

Charge for the year - - -

Reversals for the year - - -

As at March 31, 2018 5,923,987 - 5,923,987

Net Block

As at March 31, 2017 - 1,062,549 1,062,549 As at March 31, 2018 - 250,407 250,407



Face Value

Rs. Quantity Rs. Quantity Rs.

9 A. NON - CURRENT INVESTMENTS

Non Current Investments

Unquoted Mutual Funds

Principal Index Fund-Mid Cap-Direct-Growth (Note 4) 10 - - 101,394.060 1,035,000

Principal Dividend Yield Fund -Direct Plan -Growth 10 136,462.880 5,000,000 136,462.880 5,000,000

Principal Emerging Blue ChipFund -Direct Plan -Growth 10 75,483.092 5,000,000 75,483.092 5,000,000

Principal Low Duration Fund-Direct Plan -Growth 1000 2,282.840 5,000,000 2,282.840 5,000,000

Principal Credit Opportunities Fund-Direct Plan -Growth 1000 178.790 380,789 178.790 380,789

Principal Growth Fund -Direct Plan-Growth 10 53,078.556 5,000,000 53,078.556 5,000,000

Principal Government Securities Fund-direct Plan-Growth (Note 5) 10 - - 181,346.680 5,000,000

Principal Global Opportunities Fund-Direct Plan-Growth 10 107,864.050 2,371,402 107,864.050 2,371,402

Principal Dynamic Bond Fund -Direct Plan-Growth 10 209,885.610 5,000,000 209,885.610 5,000,000

Principal Short Term Income Fund -Direct Plan -Growth 10 205,202.290 5,000,000 205,202.290 5,000,000

Principal Large Cap Fund -Direct Plan - Growth 10 108,271.980 5,000,000 108,271.980 5,000,000

Principal Cash Management Fund -Direct Plan -Growth 1000 3,742.560 5,000,000 3,742.560 5,000,000

Principal Equity Savnig Plan -Direct Plan MIP-Growth 10 95,628.622 2,691,305 95,628.622 2,691,305

Principal Money Manager Fund-Direct Plan-Growth (Note 1) 1000 1,432.081 2,223,839 1,432.081 2,223,839

Principal Debt Savings Fund -Direct Plan -Growth (Note 2) 10 104,585.712 2,553,502 104,585.712 2,553,502

Principal Bank CD Fund-Direct -Growth (Note 3) 10 - - 2,825.538 5,000,000

Principal Smart Equity Fund -Direct Plan-Growth 10 302,663.438 5,000,000 302,663.438 5,000,000

Principal Balance Fund -Direct Plan-Growth 10 33,970.780 1,710,089 33,970.780 1,710,089

Principal Personal Tax Saver Fund-Direct Plan-Growth 10 32,860.150 5,000,000 32,860.150 5,000,000

Principal Tax Saving Fund-Direct Plan -Growth 10 36,030.840 5,000,000 36,030.840 5,000,000

Principal Index Fund Nifty-Direct Plan -Growth 10 15,234.930 876,572 15,234.930 876,572

Principal Asset Allocation Fund of Fund - Conservative Plan -Direct Plan -Growth 10 439,000.000 4,390,000 439,000.000 4,390,000

Principal Asset Allocation Fund of Fund - Aggressive Plan -Direct Plan -Growth 10 118,000.000 1,180,000 118,000.000 1,180,000

Principal Asset Allocation Fund of Fund - Moderate Plan -Direct Plan -Growth 10 219,000.000 2,190,000 219,000.000 2,190,000

Principal Arbitrage Fund- Direct Plan -Direct Plan -Growth 1 500,000.000 5,000,000 500,000.000 5,000,000

Investment in Equities

MF utilities India Pvt Ltd 1 500,000.000 500,000 500,000.000 500,000

81,067,498 92,102,498

9 B. CURRENT INVESTMENTS

Current Investments (valued at lower of cost and fair value)

Unquoted Mutual Funds

Principal Cash Management Fund - Direct - Growth Plan 1000 36,699.532 61,983,094 13,046.740 20,323,807

Principal Low Duration Fund - Direct Plan Growth 1000 - - 170,266.404 428,710,249

Principal Low Duration Fund - Direct Plan Dividend Monthly Reinvestment 1000 93,561.871 107,155,166 - -

Principal Debt Savings Fund - Regular Plan Dividend Monthly Reinvestment 10 2,532,602.725 25,848,503 - -

Principal Credit Opportunities Fund - Direct Plan Dividend Monthly Reinvestment 1000 172,510.465 214,507,723 - -

Principal Index Fund Nifty-Direct Plan -Growth (Note 4) 10 43,385.633 1,035,000 -

Principal Dynamic Bond Fund -Direct Plan-Growth (Note 5) 10 211,381.929 5,000,000 - -

Principal Short Term Income Fund Plan-Direct Plan -Growth (Note 3) 10 201,200.519 5,000,000 - -

420,529,486 449,034,056

Note 2-With effect from May 1, 2017, name of the scheme has been changed from "Principal Debt Savings Fund Retail -Direct Plan -Growth" to "Principal Debt Savings Fund -Direct

Plan -Growth"

Note 3-On May 19, 2017 "Principal Bank CD Fund-Direct -Growth" has been merged with "Principal Short Term Income Fund Plan-Direct Plan -Growth"

Note 4-On June 9, 2017 "Principal Index Fund-Mid Cap-Direct-Growth" has been merged with "Principal Index Fund Nifty-Direct Plan -Growth"

Note 5-On September 29, 2017 "Principal Government Securities Fund-direct Plan-Growth" has been merged with "Principal Dynamic Bond Fund -Direct Plan-Growth"



March 31, 2018 March 31, 2017

Note 1-With effect from June 9, 2017, name of the scheme has been changed from "Principal Retail Money Manager Fund-Direct Plan-Growth" to "Principal Money Manager Fund-

Direct Plan-Growth"

Non-Current Current

March 31, 2018 March 31, 2017 March 31, 2018 March 31, 2017

Rs. Rs. Rs. Rs.

10. LOANS AND ADVANCES

Capital Advances

Secured, considered good - - - -

Unsecured, considered good - - - -

(A) - - - -

Security Deposit


Unsecured, considered good 27,778,742 27,131,932 2,927,704 2,642,070

Doubtful 715,387 715,387 - -

28,494,129 27,847,319 2,927,704 2,642,070

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

(B) 27,778,742 27,131,932 2,927,704 2,642,070

Advances recoverable in cash or kind


Unsecured, considered good - 456,522 39,410,258 34,664,330

Doubtful - - 868,930 1,140,106

- 456,522 40,279,188 35,804,436

Provision for doubtful advances - - 868,930 1,140,106

(C) - 456,522 39,410,258 34,664,330

Other Loans and Advances

Advance Income Tax (net of provision for taxation) - - 90,462,048 52,059,618

Prepaid Expenses 154,340 421,186 8,701,583 5,844,424

Loans to Employees - - 42,800 -

Doubtful - - 569,218 569,218

154,340 421,186 99,775,649 58,473,260

Provision for doubtful Fringe Benefit Tax - - 569,218 569,218

(D) 154,340 421,186 99,206,431 57,904,042

Total (A+B+C+D) 27,933,082 28,009,640 141,544,393 95,210,442

11. TRADE RECEIVABLES

Trade Receivables

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

due for payment

Unsecured, considered good 65,998,471 39,285,394 65,998,471 39,285,394

12. CASH AND BANK BALANCES

Cash and cash equivalents

Balances with Banks

Current accounts 9,373,163 7,237,662

Cash in hand 44,337 38,283

9,417,500 7,275,945




March 31, 2018 March 31, 2017

Rs. Rs.

13. INCOME FROM OPERATIONS

Details of Services Rendered

Fees from Mutual Fund Operations 531,067,466 420,887,251

531,067,466 420,887,251

14. OTHER INCOME

Net Profit on sale of Current Investments 57,989,080 25,154,092

Dividend Income 352 -

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

Other Non-Operating Income 1,859,217 7,275,868

59,848,649 32,525,375

15. EMPLOYEE COST

Salary, bonus and allowances 247,602,112 239,569,226

Contribution to Provident and Other Funds 22,551,645 22,901,524

Welfare Expenses 4,933,253 4,768,338 275,087,010 267,239,088

16. ADMINISTRATIVE AND OTHER EXPENSES

Rent 49,025,200 47,837,626

Electricity 6,046,747 4,826,774

Repairs and Maintenance

Office Equipments 1,327,354 1,539,014

Others 5,956,357 8,691,726

Travel and Entertainment 15,123,155 19,961,455

Admin and Office/Sales Support 13,128,438 7,735,998

Legal and Professional Fees 45,160,890 41,643,625

Auditors' Remuneration: (net of service tax/GST)

Audit Fees 600,000 600,000

For Tax Audit - 150,000

For Other Services 100,000 200,000

Service TaxOut of Pocket Expenses 70,853 57,648

Computer Expenses 7,509,845 6,391,634

Telecommunication Expenses 5,503,672 6,041,546

Subscription to Databases, Books & Periodicals 11,544,842 12,226,632

Printing, Stationery, Postage and Courier 3,013,861 2,756,317

Advertisement and Publicity 7,549,794 1,789,194

Membership/Registration fees 1,177,436 790,264

Scheme Administration Expenses 115,815,024 43,259,136

Insurance Expenses 592,228 529,430

Rates and Taxes 6,136,787 696,266

SEBI Filing Fees 255,351 619,071

Loss on sale of fixed assets (net) 213,700 -

Coference & Seminar Expenses 6,420,709 2,627,442

Miscellaneous Expenses 12,193,262 5,872,581 314,465,505 216,843,379

17. DEPRECIATION AND AMORTISATION

Depreciation of Tangible Assets 1,719,395 1,849,543

Amortisation of Intangible Assets 578,302 1,482,469 2,297,697 3,332,012




18. Managerial Remuneration

(a) Director’s Remuneration: -

(Amount in Rs.)

Particulars 2017-2018 2016-2017

Salaries and Allowances 21,325,089 19,558,801

Contribution to Provident and Other Funds 814,080 768,000

Perquisites 444,211 24,423

Total 22,583,320 20,351,224

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 2017-2018 2016-2017

Sitting Fees Paid to Directors 1,800,000 1,300,000

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

19. Expenditure in foreign currency: -

(Amount in Rs.)

Particulars 2017-2018 2016-2017

Travel Expenses - 1,848,157

Professional Charges 1,303,851 5,040,100

Software Maintenance/E-Communication - 599,850

Information/Wire-Service Expenses - 6,009,300

Seminar, Conference and Training expenses 565,474 200,567

Total 1,869,325 13,697,974

20. Foreign Currency Exposures:

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

Particulars 2017-2018 2016-2017

Rs. USD Rs. USD

Liability for Employee Stock Purchase Plan (ESPP)

3,990,280 61,347 8,010,357 123,536

Professional Charges 325,201 5,000 324,193 5,000


21. Segment Reporting:

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

22. Related Party Disclosures:

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

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

Nature of Relationship Name of the Related Party

Ultimate Holding Company Principal Financial Group, Inc.

Holding Company of Principal Financial Group (Mauritius) Limited

Principal Financial Services, Inc.

Subsidiary of Principal Financial Services, Inc. Principal International, Inc.,

Step-down subsidiaries of Principal Financial Services, Inc.

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

Holding Company Principal Financial Group (Mauritius) Limited

Substantial Shareholder Punjab National Bank

Fellow Subsidiaries Principal Trustee Company Private Limited

Principal Retirement Advisors Private Limited

Key Management Personnel Mr. Lalit Vij, Managing Director

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

Nature of Relationship Name of the Related Party

Company Secretary Ms. Niyati Shah

Company Secretary Ms. Nidhi Shah


B. Transaction with Related Parties

(Amount in Rs.)

Name of the related party

Particulars 2017-2018

2016-2017

Principal International (Asia) Limited

Payment relating Asia sales Conference Meet

346,100 -

Principal International, Inc.

Professional Services 1,303,851 1,334,893

Balance Receivable/(Payable) (325,201) (324,193)


Closing Balance of Shares Subscribed

136,800,140

136,800,140

Principal Retirement Advisors Private Limited

Net Recovery relating to sharing of common expenses

5,747,703 10,301,718

Payments relating to sharing of common infrastructure

332,591 3,157,292

Recovery Relating to sharing of deposit for premises

-

8,149,395

Payment Relating to sharing of deposit for premises

-

8,219,626

Balance Receivable/(Payable) 489,440 (7,756,773)

Principal Consulting (India) Private Limited

Net Recovery relating to sharing of common expenses

6,388,694

6,187,473

Recovery relating to sharing of common infrastructure

40,869 342,991

Payment relating to service fees 21,035,833 21,843,059

Balance Receivable/(Payable) (842,708) (418,419)

Principal Trustee Company Private Limited

Recovery relating to sharing of common expenses

291,347 672319

Balance Receivable/(Payable) 397,955 -

Mr. Lalit Vij

Remuneration Paid

22,583,320 20,351,224

Ms. Niyati Shah# 184,402 553,532

Ms. Nidhi Shah# 498,313 -

# For Part of the year in 2017-18

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. 49,025,200 (Previous Year Rs. 47,837,626) towards lease payments in the statement of profit and loss.

24. Earnings Per Share (EPS):

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

(Amount in Rs.)

Particulars 2017-2018 2016-2017

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

(934,097) (38,267,782)

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

Basic and Diluted EPS (0.05) (2.20)

Nominal value per share 10 10


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

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. 3,990,280 (Previous Year Rs. 8,010,357) have been included as part of “Other Liabilities”.

27. Miscallenous expenses include foreign currency exchange loss (net) of Rs. 84,203 (Previous Year loss (net) of Rs Nil). Other non-operating income includes foreign currency exchange gain (net) of Rs Nil (Previous Year Rs. 276,142)

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, 2018, 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. 10,027,907 (Previous Year Rs. 10,109,443) 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, 2018

March 31, 2017

Rs. Rs.

I Change in defined benefit obligation

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

Interest Cost 2,059,936 1,746,356

Current Service Cost 5,275,847 3,654,441

Benefit Paid From the Fund (3,041,200) (10,091,094)

Past Service Cost 459,725 -

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

3,614,925 3,780,175

Actuarial (Gains)/Losses on Obligations - Due to Experience 1,648,439 8,867,885

Present Value of Benefit Obligation at the End of the Period 40,222,009 30,204,337

II Changes in the Fair Value of Plan Assets

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

Expected Return on Plan Assets 537,134 1,014,955

Contributions by the Employer 6,800,000 -

Benefit Paid from the Fund (3,041,200) (10,091,094)

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

Fair Value of Plan Assets at the End of the Period 8,086,739 3,790,805

III Expenses recognized in the Statement of Profit and Loss

Current Service Cost 5,275,847 3,654,441

Interest Costs 2,059,936 731,401

Expected return on Plan Assets (537,134) (1,014,955)

Actuarial (Gains)/Losses 5,263,364 12,710,478

Expenses Recognized in the Statement of Profit or Loss 12,521,738 17,096,320

IV Amount recognized in the Balance Sheet

Present Value of Benefit Obligation at the end of the Period (40,222,009) (30,204,337)

Fair Value of Plan Assets at the end of the Period 8,0867,39 3,790,805

Funded Status (Surplus/ (Deficit)) (32,135,270) (26,413,532)

Net (Liability)/Asset Recognized in the Balance Sheet (32,135,270) (26,413,532)

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

Investments with Insurer

100%

100%

VI Actuarial Assumptions

Discount Rate 7.50% 6.82%

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

Expected return on plan assets 6.82% 7.90%

VII Actual Return on Plan Assets 537,134 952,537


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. 7,000,000 to gratuity in the next year (Previous Year Rs. 6,400,636).

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

As at

March 31, 2018 March 31, 2017 March 31, 2016 March 31, 2015 March 31, 2014

Rs. Rs. Rs. Rs. Rs.

Defined benefit obligation

40,222,009 30,204,337 22,246,574 26,364,533 21,300,705

Plan assets 8,086,739 3,790,805 12,929,362 21,109,018 25,278,937

Surplus/(deficit) (32,135,270) (26,413,532) (9,317,212) (5,255,515) 3,978,232

Experience adjustment on plan liabilities

1,648,439 8,867,885 3,693,375 2,628,304 625,941

Experience adjustments on plan assets

280,298 (62,418) 263,092 (297,739) 380,919

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. 2,209,431 has been charged in the current year (Previous Year Rs. 3,008,448) to the Statement of Profit and Loss in this respect.

31. Contingent Liabilities and Capital Commitments

a) Claims relating to service tax matters, future cash outflows in respect of the above items are which is dependent on judgments pending before relevant authorities of Rs 16,864,856 (Previous Year Rs Nil)

b) Estmiated amount of Contracts remaining to be executed on capital account and not provided for (net of advances) is Rs 8,007,829 (Previous Year Rs Nil)


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

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

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


Sd/-

Sd/- Sd/- per Sarvesh Warty M. M. Chitale Lalit Vij

Partner

Chairman Managing Director

Membership No. 121411 DIN: 00101004 DIN: 00533071

Sd/-

Nidhi Shah

Company Secretary


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TWENTY-SIXTH (26th ANNUAL REPORT 2017-18 · Nidhi Shah Company Secretary ACS No.: A39461 Date:...

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