a) Term/right attached to equity shares

The Company has only one class of equity shares having a par value of ' 5 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive the remaining assets of the Company after distributions of all preferential amounts. However, no such preferential amount exist currently. The distribution will be in the proporation to the number of equity shares held by the shareholders.

Pursuant to a resolution of Board of Directors dated 05^th April, 2021 and the shareholders meeting dated 06^th April, 2021, the Authorised Share Capital of the Company has been increased from ? 2,000 Lakh consisting of 40,000,000 Equity Shares of ? 5/- (Rupees Five only) each to ? 16,000 Lakh consisting of 320,000,000 Equity Shares of ? 5/- each.

The Board of Directors pursuant to a resolution dated 05^th April, 2021 and the shareholders special resolution dated 06^th April, 2021 have approved the issuance of seven bonus equity shares of face value ? 5 each for every one existing fully paid up equity share of face value ? 5 each and accordingly 252,000,000 bonus equity shares were issued and allotted in accordance with the Section 63 of the Companies Act, 2013.

Nature and purpose of the reserves Share Premium:

Share Premium is used to record the premium (amount received in excess of face value of equity shares) on issue of shares. The reserve can be utilised only for limited purposes such as issuance of bonus shares in accordance with the provisions of Section 52 of Companies Act, 2013. The Company has utilsed the Share Premium in issue of bonus equity shares in the previous year.

General reserve:

Under the erstwhile Companies Act, 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations. The purpose of these transfers was to ensure that if a dividend distribution in a given year is more than 10% of the paid up share capital of the Company for that year, then the total dividend distribution is less than total distributable reserve for that year.

Consequent to introduction of the Companies Act, 2013, the requirement to mandatorily transfer a specified percentage of net profit to general reserve has been withdrawn. However the amount previously transferred to the general reserve can be utilised only in accordance with the specific requirements of the Companies Act, 2013.

Retained earnings:

Retained earnings are the profits that a company has earned to date, less any dividends or other distributions paid to the Shareholders, net of utilisation as permitted under applicable regulations.

Share Option Outstanding Account:

The grant date fair value of equity-settled share-based payment transactions with employees and directors are recognised in the Statement of Profit and Loss with the corresponding credit to this account over the vesting period.

1. AY 2020-21- Demand of ' 8,643.89 Lakh was raised by the officer during assessment proceedings. Credit for dividend distribution tax (DDT) of ' 6,783.24 Lakh was not provided by the officer and consequently, interest on DDT of ' 2,287.80 Lakh was levied. High court has directed the Income-tax department to decide the rectification application filed and has granted stay ad-interim.

2. AY 2016-17- Demand of ' 3,910.12 Lakh was raised by the officer during reassessment proceedings. The demand was due to adhoc addition of ' 5,951.45 Lakh and consequential levy of interest. High court has directed the Income-tax department to decide the rectification application filed and has granted stay ad-interim.

3. AY 2013-14- Demand of ' 4,834.96 Lakh was raised by the officer during reassessment proceedings. The demand was due to nongranting of TDS credit. High court has directed the Income-tax department to decide the rectification application filed and has granted stay ad-interim.

(iii) Bank guarantee:

The Company has issued a bank guarantee of ? 2,468.25 Lakh to NSE for the purpose of IPO during FY2021-22 and the same is in force as on FY 2022-23.

NOTE: 24 MANAGEMENT RIGHTS

During financial year ended 31^st March, 2015 Aditya Birla Sun Life Trustee Company Private Limited took over the mutual fund schemes from ING Trust Company Private Limited and simultaneously the Company acquired the right to manage the said schemes from ING Asset Management (India) Private Limited.

The consideration paid to acquire the right to manage the said schemes along with the incidental expenditure incurred thereon aggregating to ' 378.51 Lakh has been treated as Investment Management Right. The Investment Management Right will be amortised over a period of 120 months. For the year ended 31^st March, 2023, an amount of ' 37.85 Lakh (Previous year ' 37.85 Lakh) has been amortised. Balance life of Investment Management Right is 18 months.

Above figures are excluding contribution to PF and Other Funds of ? 94.13 Lakh (Previous year ? 95.77 Lakh) reimbursed to related parties - Aditya Birla Financial Shared Services Limited & Aditya Birla Capital Limited.

b) Share based payments

Pursuant to ESOP Plan by ABCL, stock options were granted to the employees of the Company during the year. Total cost incurred by ABCL (net of reversals) till date is being recovered from the Company over the period of vesting of the ESOP grants. A sum of ? 56.50 Lakh (Previous year ? (4.71) Lakh) has been charged to the Statement of Profit and Loss. The balance sum of ? 4.76 Lakh will be recovered in future years as at 31^st March, 2023.

The impact of split of shares and issue of bonus shares are retrospectively considered for the computation of EPS as per the requirement of Ind AS 33.

NOTE: 28 SEGMENT INFORMATION

The CEO of the Company has been identified as the Chief Operating Decision Maker (CODM) as defined by Ind AS 108 - “Operating Segments”. The CODM evaluates the Company’s performance and allocates resources. The Company’s operations predominantly relate to providing asset management services, portfolio management and other advisory services. In the opinion of the CODM and Management, the risks and rewards attached to the business are similar in nature. Hence the separate Segment under Ind AS 108 on “Operating Segments” is not required to be reported as the Company’s business is restricted to single Operating Segment i.e., Asset Management Services.

NOTE: 30 CAPITAL MANAGEMENT

For the purpose of the Company’s capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company’s capital management is to maximise the shareholder value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.

No changes were made in the objectives, policies or processes for managing capital during the year ended 31^st March, 2023.

The management assessed that cash and cash equivalents, trade receivables, other financial assets, trade payables, lease liabilities and other financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. Accordingly, fair value hierarchy for these financial instruments have not been presented above.

Valuation techniques used to determine fair value: -

- Mutual Funds: - Net Asset Value (NAV) declared by the mutual fund at which units are issued or redeemed

- Alternative Investment Funds: - Net Asset Value (NAV) provided by issuer fund which is arrived at based on valuation from independent valuer for unlisted portfolio companies, quoted price of listed portfolio companies and price of recent investments

- Debt Securities: - Fair value of debt securities which are actively traded bonds, is derived on the basis of quoted price available on the National Stock Exchange

- Equity Instruments: - Discounted cash flow based on present value of the expected future economic benefit

In order to assess Level 3 valuations as per Company’s investment policy, the management reviews the performance of the investee companies (including unlisted portfolio companies of venture capital funds and alternative investment funds) on a regular basis by tracking their latest available financial statements / financial information, valuation report of independent valuers, recent transaction results etc. which are considered in valuation process.

NOTE: 32 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company’s principal financial liabilities comprise trade and other payables. The Company’s principal financial assets include trade and other receivables, and cash and cash equivalents that derive directly from its operations. The Company also holds investments in mutual fund units, debt and equity instruments.

The Company is exposed to market risk, credit risk and liquidity risk. The Company’s senior management oversees the management of these risks. The Company’s financial risk management is an integral part of how to plan and execute its business strategies. The Company’s financial risk management policy is set by Risk Management Committee and the auditors have relied on the same. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.

A. Market risk

Market risk is the risk of loss of future earnings, fair values or future cash flows related to financial instrument that may result from adverse changes in market rates and prices (such as foreign exchange rates, interest rates, other prices). The Company is exposed to market risk primarily related to interest rate risk and price risk.

(i) Interest Rate Risk

I nterest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The sensitivity of the portfolio towards the interest rate is mentioned in the table below

Sensitivity

The following table demonstrates the sensitivity to:

• Interest Rate Risk is basis impact on debt portfolios for 1% change in interest rates.

• Hybrid funds considered at 100% as a conservative basis for assessing interest rate impact on portfolio. (which form approximately 1% of the entire portfolio of schemes).

(ii) Foreign Currency Risk

The Company has insignificant amount of foreign currency denominated assets and liabilities. Accordingly, there is no significant exposure to currency risk.

(iii) Price Risk

Price risk is the risk that the value of the financial instrument will fluctuate as a result of changes in market prices and related market variables including interest rate for investments in debt oriented mutual funds and debt securities, caused by factors specific to an individual investment, its issuer and market.

The Company’s exposure to price risk arises from investments in Units of mutual funds, alternative investment funds, etc which are classified as financial asset at Fair Value through Profit and Loss and is as follows:

B. Credit Risk

Credit Risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company’s has clearly defined policies to mitigate counterparty risks. Cash and liquid investments are held primarily in mutual funds and banks with good credit ratings. Defined limits are in place for exposure to individual counterparties in case of mutual fund houses and banks.

Customer credit risk is managed by each business unit subject to the Company’s established policy, procedures and control relating to customer credit risk management. Company has major receivable from mutual fund schemes.

Expected Credit Loss on Financial Assets

The Company continuously monitors all financial assets subject to ECLs. In order to determine whether an instrument is subject to 12 month ECL or life time ECL, the Company assesses whether there has been a significant increase in credit risk or the asset has become credit impaired since initial recognition. For trade receivables, the Company applies a simplified approach in calculating ECLs. Therefore, the Company does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The company has determined based on historical experience and expectations that the ECL on its trade receivables is insignificant and was not recorded. The company applies following quantitative and qualitative criteria to assess whether there is significant increase in credit risk or the asset has been credit impaired:

- Historical trend of collection from counterparty

- Company’s contractual rights with respect to recovery of dues from counterparty

- Credit rating of counterparty and any relevant information available in public domain

ECL is a probability weighted estimate of credit losses. It is measured as the present value of cash shortfalls (i.e., the difference between the cash flows due to the Company in accordance with contract and the cash flows that the Company expects to receive).

The Company has three types of financial assets that are subject to the expected credit loss:

- Cash and cash equivalent

- Trade and other receivables

- Investment in debt securities measured at amortised cost

Trade and Other Receivables:-

Exposures to customers’ outstanding at the end of each reporting period are reviewed by the Company to determine incurred and expected credit losses. Historical trends of collection from counterparties on timely basis reflects low level of credit risk. As the Company has a contractual right to such receivables as well as the control over such funds due from customers, the Company does not estimate any credit risk in relation to such receivables.

Cash and Cash Equivalents:-

The Company holds cash and cash equivalents and other bank balances as per note 3 and 4. The credit worthiness of such banks and financial institutions is evaluated by the management on an ongoing basis and is considered to be high.

Investment in Debt Securities measured at amortised cost:-

Funds are invested after taking into account parameters like safety, liquidity and post tax returns etc. The Company avoids concentration of credit risk by spreading them over several counterparties with good credit rating profile and sound financial position. The Company’s exposure and credit ratings of its counterparties are monitored on an ongoing basis.

C. Liquidity risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations or at a reasonable price. The Company’s Finance department is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management.

Since all the options were granted/lapsed, at the same exercise price per option under the respective category of ESOPs, the weighted average exercise price per option for all these line items under the respective category of ESOPs is the same.

Fair valuation

The fair value at grant date is independently determined by valuer using Black-Scholes Merton Model which takes into account the exercise price, the term of the option, the share price at grant date and historical volatility of the Peer companies and Index, the expected dividend yield and the risk-free interest rate for the term of the option.

Apart from stock options granted as above, the Nomination, Remuneration and Compensation Committee has granted 645,337 ESOPs & 13,192 PRSU under the Scheme titled “Aditya Birla Sun Life AMC Limited Employee Stock Option Scheme 2021” in 2 categories of Long-Term Incentive Plans (“LTIP”) identified as LTIP 1 & LTIP 2 respectively. The Scheme allows the Grant of Stock options to employees of the Company (whether in India or abroad) that meet the eligibility criteria. Each option comprises one underlying Equity Share. There are no cash settlement alternatives. The Group accounts for the employees stock option scheme as an equity-settled plan.

The Company had completed its Initial Public Offering (IPO) of 38,880,000 equity shares of face value of ? 5/- each for cash at an issue price of ? 712/- per equity share aggregating to ? 276,825.60 Lakh, consisting of an offer for sale of 38,880,000 equity shares aggregating to ? 276,825.60 Lakh by the selling shareholders. The equity shares of the Company were listed on BSE Limited and National Stock Exchange of India Limited on 11^th October, 2021.

NOTE: 38

With regard to the new amendments under “Division III of Schedule III” under “Part I - Balance Sheet - General Instructions for preparation of Balance Sheet” there are no balances that are required to be disclosed or there are no ratios which are applicable/ calculable with regard to the following clauses WA, WB (i),(ii),(iii),(iv),(v),(viii),(ix),(x),(xii),(xiii),(xv) and (xvi) for the Company.

With regard to the new amendments under “Division III of Schedule III” under “Part II - Statement of Profit and Loss - General Instructions for preparation of Statement of Profit and Loss” there are no transactions that are required to be disclosed with regard to the following clauses 11(v) and 11(vii) for the Company.

NOTE: 40 EVENTS AFTER THE REPORTING PERIOD

The Board of Directors have proposed a final dividend of ? 5.25 per equity share (face value of ? 5 each) for the year ended 31^st March, 2023, subject to the approval of the shareholders at the ensuing Annual General Meeting. Please refer note 16 for details.

NOTE: 41 PRIOR PERIOD COMPARATIVES

Previous year’s figures have been regrouped/reclassified wherever necessary to correspond with the current year’s classification/ disclosure.