Aditya Birla Nuvo Limited Annual Report

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3 Mr. Aditya Vikram Birla Our legendary leader. His ideals guide us. Integrity, Commitment, Passion, Seamlessness and Speed

4 The Chairman s Letter to Shareholders The Chairman s Letter to Shareholders Dear Shareholder, GLOBAL ECONOMY The global scenario continues to be trapped in a low growth trajectory, despite the steep drop in crude oil and commodity prices. Furthermore, a barrage of monetary stimulus has driven down interest rates close to zero in many of the advanced economies. With the monetary stimulus option by and large exhausted, governments are more likely growth. The IMF projects global growth to inch up from 3.1% in 2015, to 3.2% in 2016, and increasing to 3.5% in Growth in the advanced economies is projected at 1.9% in 2016, with US growth pegged at 2.4%, Europe at 1.5% and Japan at 0.5%. Growth in the emerging markets in 2016, overall, is projected at 4.1%, much of it coming from China, India and the ASEAN region. Growth in Latin America is expected to be only 0.5%, on account of a 3.8% decline in growth in Brazil. No sustained upside is seen in oil and commodity prices in The path ahead for the global economy remains challenging, with greater uncertainties thrown in. Concerns persist about the slowdown in China and its ability to shift smoothly from exportled to domestic-led growth. Fiscal pressures will accentuate in the oil producing countries, Growth in the emerging markets in 2016, overall, is projected at 4.1%, much of it coming from China, India and the ASEAN region. i

5 Company Overview including the rich Middle East countries. Financial markets remain nervous and exchange rate volatility has been pronounced. This is reinforced by the impending reversal of the interest rate cycle in the US. INDIAN ECONOMY Against the backdrop of a muted global economy, India s economy is an outperformer. For FY , GDP growth is projected at 7.5%. This would make it the fastest growing among the large economies. This is particularly creditable in the context of two successive unfavourable monsoons and a decline in exports. Recent data indicate a 5.7% year-on-year growth in eight of the key core sector industries, against 2.3% growth registered last year. rise in the consumer price index averaged 4.9% in FY , down from 5.9% in the previous year. The wholesale price index declined 2.5% on an averaged basis, compared to a rise of 2.0% in the previous year. In FY , merchandise exports and imports each fell FY was USD billion, a decline of 14% narrowed sharply from USD 26.1 billion to USD 22.0 billion, representing 1.4% of GDP. India s foreign exchange reserves, as at March-end 2016 were USD billion. The Government is also target of 3.5% of GDP. Overall, the economic fundamentals are sound. There have also been positive moves on the policy front, in areas related to ease of doing business, promoting start-ups, rationalising the tax structure Against the backdrop of a muted global economy, India s economy is an outperformer. For FY , GDP growth is projected at 7.5%. and administration, and opening up more areas for foreign investment through the automatic route. The Government is substantially stepping up infrastructure spending. Having said that, some issues come to the fore. For instance, capital investment will take time to revive, given stretched corporate balance sheets, low capacity utilisation (at only 72.5% in the organised industrial sector) and competition from imports. Slow global output and trade growth will continue to impact exports. There is also the overhang of non-performing assets in the banking sector. Much more also needs to be done to monsoon-proof the Indian economy. Your Company recorded a consolidated revenue of USD 3.6 billion (` 23,129 Crore) during FY EBITDA expanded by 13% to USD 1 billion (` by 33% to USD 290 million (` 1,886 Crore). STRATEGIC MOVES As part of its growth strategy, your Company has strengthened its portfolio to include Solar Power, Payments Bank and Health Insurance. Towards this your Company has entered into a 51:49 Joint Venture with the Abraaj Group (Dubai) for Solar ii

6 The Chairman s Letter to Shareholders Power, Idea Cellular for Payments Bank and MMI Holdings (South Africa) for Health Insurance. new ventures. Your Company has won 60 MW Solar Power Projects in Karnataka in March The Power Purchase Agreement has been signed in June 2016 and the commissioning of the plants is expected by the end of FY The in-principle approval has already been obtained for the Payments Bank and Aditya Birla Idea Payments Bank Ltd. has been set up. We expect to commence services by the end of In the Health Insurance sector, we have already IRDAI is awaited, consequent to which your Company s Health Insurance business will go on stream. Your Company continues to invest in the growth opportunities in the existing business portfolio. I would also like to talk about two major developments at your Company. With the de-merger of its Madura Fashion division into its subsidiary Pantaloons Fashion & Retail Ltd., your Company has created India s largest pure play listed branded apparel Company viz. Aditya Birla Fashion & Retail Ltd. (ABFRL). This move provides shareholders an opportunity to participate directly in the fashion space through ABFRL. With the FDI limit in the life insurance sector raised to 49%, Sun Life Financial, your Company s life With the de-merger of its Madura Fashion division into its subsidiary Pantaloons Fashion & Retail Ltd., your Company has created India s largest pure play listed branded apparel Company viz. Aditya Birla Fashion & Retail Ltd. insurance business partner, raised its stake in Birla Sun Life Insurance (BSLI) from 26% to 49% for ` 1,664 Crore. Aditya Birla Financial Services (ABFS) is one of India. It ranks among the top 5 fund managers in India with over USD 28.4 billion (` 184,276 Crore) of assets under management. Aditya Birla Finance Ltd., the NBFC business, continues to grow ahead of the market. Its USD 4 billion (` 25,755 Crore) growing at an astounding rate of 47% year-on-year. The Housing Finance business has scaled up its loan book to close to ` 2,000 Crore. Birla Sun Life Insurance has gained momentum in the individual life segment. It is the number 1 private life insurer in the Group segment. Birla Sun Life Asset Management has improved its equity AUM ranking to 4 th in India. MyUniverse, India s number 1 online personal iii

7 Company Overview of more than 2.6 million registered users who are managing close to ` 20,000 Crore through this portal. That ABFS has built a broad based and well- segments in a short span, despite being a nonbank player, is indeed impressive. In the telecom business, Idea Cellular continues to outperform the industry. It has the enviable track record of being the fastest growing large Indian mobile operator for the 8 th straight year with 14% annual revenue growth in FY That, the incremental market share of Idea was 44% over that of the preceding year is indeed commendable. To capitalise on the data opportunity, Idea is aggressively expanding its 3G and 4G footprint, leveraging its strong spectrum bank. On the ` 10,000 Crore, Idea is competitively well positioned to support its growth plans. from the Divisions cushions your Company s standalone balance sheet and supports its growth capital requirements. Driven by the favourable gas pooling policy aimed production, Indo-Gulf Fertilisers recorded its highest-ever production and sales volume. Indian Rayon posted its highest ever earnings spurred by volume growth and better realisation in both the Viscose Filament Yarn and the Caustic Soda segments. Aditya Birla Insulators has improved. Regrettably, new projects have been That ABFS has built a broad based and well-diversified portfolio with 12 lines of business segments in a short span, despite being a non-bank player, is indeed impressive. adversely impacted, as demand in the domestic market continues to be sluggish, given the Jaya Shree Textiles despite lower linen volumes, compensated by higher woollen off-take. Plans to double your Company s linen yarn capacity from 3,400 TPA to 6,200 TPA are on the anvil. OUR PEOPLE: OUR PRIDE us. And for this, I would say a big thank you to all of them. OUTLOOK India is moving on to a higher growth trajectory and to that extent, the sectors in which your Company is present, are poised for a pick-up in growth. With its ability to pool cash resources coupled with the proceeds from the stake sale in the life insurance business and the steady free cash standalone balance sheet is strong enough to fund its growth plans. iv

8 The Chairman s Letter to Shareholders THE ADITYA BIRLA GROUP: IN PERSPECTIVE At the Group level, we have done well both in terms of revenue and earnings. As a matter of fact, the EBITDA attained has been the highest ever. Having worked extensively on the people front for over a decade, I am happy to state that our leadership processes are now mature. At the management level we have built quality bench strength. The Chairman s Series launched last year for senior and personal leadership saw 150 of our senior most leaders recourse to these learning interventions. To create a leadership pipeline to the Business Head roles within the next couple of years, we have created the Aditya Birla Fellows programme. The managers who have won this recognition are put in charge of critical Group-wide projects under my personal oversight. Up until now, we have named 14 managers who have tremendous potential to rise to the stature of Business Heads, going forward. A slew of other initiatives have been set afoot to grow leaders from within. To do so, we have announced a hiring freeze at the middle and senior management levels for the next 3 years. It paves the way for accelerated talent growth. In this context, I am happy to state that our accelerated leadership programme Cutting Edge, which prepares high potential leaders for P&L positions across our Group is gaining traction. It was launched last year. Up until now, 20 of the 35 graduates of this programme have already moved roles to take on higher responsibilities. To create a leadership pipeline to the Business Head roles within the next couple of years, we have created the Aditya Birla Fellows programme. The managers who have won this recognition are put in charge of critical Group-wide projects under my personal oversight. Furthermore, the 250+ youngsters who joined us over 6 years ago as Group Management Trainees, in our Leadership Associate Programmes (Lead) and Leadership Programme for Experienced youngsters (Leap), are shaping well. In the last 2 years, nearly a 100 from this slot have moved across functions and businesses. Additionally, we have 25 mid-career participants who have joined us in the Group Manufacturing Leadership Programme. our manufacturing business units. Board, (a programme designed specially for high calibre women) graduated commendably to higher roles. The second batch of 39 women leaders is making good progress on their way to greater responsibilities. As of now, we have nearly 5,000 women 14 percent in the managerial cadre. v

9 Company Overview In the last 3 years, we have had more than 1,100 inter-business and over 1,000 intra-business transfers of employees across levels. At Gyanodaya, the Aditya Birla Global Centre for Leadership Learning over 2,000 managers enrolled for learning programmes. With a mix of academics and live case studies, these programmes enable our people to keep abreast of the developments in their area and stay contemporary. Side by side the Gyanodaya Virtual Campus hosts more than 500 e-learning modules in multiple languages. During the year, over 25,000 employees chose to access these programmes. The Aditya Birla Group Leadership Programme aimed at securing young talent from the top tier Business Schools of India has become aspirational. I am happy to record that our Group s brand attractiveness has taken a quantum leap across 35 top B-Schools in India. Our Group features among the formidable Top-5 in the A C Nielsen CRI Campus Recruitment India Index IN SUM All these moves are a testament to our commitment to accord a World of Opportunity for our people and they are leveraging it. Our people are fully aware Our people are fully aware of what business needs to succeed. They are committed to contribute their best to our values based, performance driven, meritocratic culture. We are future ready. of what business needs to succeed. They are committed to contribute their best to our values based, performance driven, meritocratic culture. We are future ready. Yours sincerely, Kumar Mangalam Birla vi

10 Contents Forward-looking statements Certain statements made in this Annual Report may not be based on historical information or facts and may be forward-looking statements within the meaning of applicable securities laws and regulations, including, but not limited to, those relating to general business plans & strategy of Aditya Birla Nuvo Limited ( ABNL or The Company ), its future outlook & growth prospects, competition & regulatory environment and management s current views & assumptions which may not remain constant due to risks and uncertainties and hence actual results may differ materially from these forward-looking statements. This Annual Report does not constitute a prospectus, offering circular or offering memorandum or an offer to acquire any of the Company s equity shares or any other security and should not be considered as a recommendation that any investor should subscribe for or purchase any of the Company s shares. The Company, as such, makes no representation or warranty, express or implied, as to, and does not accept any responsibility or liability with respect to, the fairness, accuracy, completeness or correctness of any information or opinions contained herein. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements on the basis of any subsequent developments, information or events or otherwise. Unless otherwise stated in this Annual Report, the information contained herein is based on management information and estimates. The Across This Report COMPANY OVERVIEW 02 Board of Directors 03 Our Team 04 Welcome to 06 A Snapshot 08 Financial Performance 10 Corporate Milestones 12 Big on Growth 14 Based on Strong Fundamentals 16 We are Future Ready 36 5-Year Financial Highlights STATUTORY REPORTS 38 Management Discussion and Analysis 72 Directors Report 115 Sustainability and Business Responsibility Report 126 Corporate Governance Report 141 Shareholders Information 148 Social Report FINANCIAL STATEMENTS Standalone 153 Independent Auditors Report 160 Balance Sheet Cash Flow Statement 164 Notes Forming Part of Financial Statements Consolidated 223 Independent Auditors Report 228 Balance Sheet Cash Flow Statement 232 Notes Forming Part of Financial Statements 1

11 Company Overview Board Of Directors 2

12 Board of Directors / Our Team Our Team KEY MANAGERIAL PERSONNEL / SENIOR MANAGEMENT TEAM MANAGING DIRECTOR Mr. Lalit Naik CHIEF FINANCIAL OFFICER Mrs. Pinky Mehta COMPANY SECRETARY Mr. Ashok Malu ADITYA BIRLA FINANCIAL SERVICES Mr. Ajay Srinivasan Chief Executive Officer Mr. Pankaj Razdan Dy. Chief Executive Officer MD & CEO, Birla Sun Life Insurance Co. Limited TELECOM Mr. Himanshu Kapania Business Head MANUFACTURING DIVISIONS AGRI / INSULATORS / RAYON Mr. Lalit Naik Business Director Mr. Rahul Kohli CEO - Agri Mr. Raj Narayanan CEO - Domestic Chlor Alkali Chemicals & Viscose Filament Yarn Mr. Rohit Pathak CEO - Insulators TEXTILES Mr. Thomas Varghese Mr. S. Krishnamoorthy Business Head (Textiles) CEO Domestic Textiles CORPORATE FINANCE DIVISION Mr. Shriram Jagetiya President AUDITORS / SOLICITOR / REGISTRAR AUDITORS M/s. Khimji Kunverji & Co. M/s. S R B C & CO LLP OTHER BRANCH AUDITORS M/s. K. S. Aiyar & Co. SOLICITOR M/s. Cyril Amarchand Mangaldas COST AUDITORS M/s. Ashwin Solanki & Associates M/s. R. Chakraborty & Associates M/s. S. S. Puranik & Associates M/s. K. G. Goyal & Associates Registrar and Share Transfer Agents: Karvy Computershare Private Limited Karvy Selenium Tower B, Plot No , Gachibowli, Financial District, Nanakramguda, Hyderabad Tel: adityabirlanuvo.ris@karvy.com Registered Office: Indian Rayon Compound, Veraval , Gujarat, India Telephone abnlsecretarial@adityabirla.com CIN: L17199GJ1956PLC Website: 3

13 Company Overview Welcome to A USD 3.6 billion conglomerate At (ABNL), we trace our journey to a very modest beginning in 1956; and over the decades that followed we have consistently evolved to be in step with an aspirational India and a globalised business environment. Our vision To be a premium conglomerate building leadership in businesses and creating value for all the stakeholders Our mission Investing in promising sectors Building leadership in businesses A platform to drive synergy of resources Delivering best value to all the stakeholders To be a responsible corporate citizen Guided by its vision and mission, ABNL s well thought out strategy of investing into the service sector its manufacturing businesses went into execution over past one-and-a-half decade transforming the Company from a small manufacturing company in late nineties to a large conglomerate today. ABNL various promising sectors and has invested close to USD 2 billion during this period to build its presence and strengthen its leadership in these sectors. Since then, ABNL has grown 22 times in revenues to USD 3.6 billion and 47 times in market capitalisation to about USD 2.5 billion (as on 30 th June 2016). ABNL commands a leadership position across its Financial Services, Telecom and Manufacturing businesses. The Company touches the lives of more communication and agri products. It has promoted and created more than 20 distinguished brands. Birla Sun Life Insurance, Birla Sun Life Mutual Fund, Aditya Birla Finance, Aditya Birla Money MyUniverse, Idea Cellular, Linen Club, Birla Shaktiman, Aditya Birla Insulators and Ray One are among the most admired brands in India in respective sectors. Having multiple businesses into different stages of life cycle, the Company acts as an incubator and provides support to its businesses during their investment phase. With its ability to pool capital resources, the Company invests in its business to build scale and strengthen its scale and is capable of funding its future growth capital requirement on its own, the Company endeavours to unlock value for the shareholders. ABNL is a part of the Aditya Birla Group, a USD 41 billion Indian multinational. The Aditya Birla Group is in the league of Fortune 500. Driven by a dynamic workforce of over 120,000 people, belonging to 42 nationalities, the Aditya Birla Group operates in 36 countries globally. overseas operations. Note: 1 USD = ` 65 4

14 Welcome to +YP]LU I` WV^LY VM Ä]L ]HS\LZ Our Values provide us with our roots and they provide us with our wings No business can exist without people. It is a transaction of honesty and respect. A business, like relationships, needs to be built, moulded and nurtured. Mr. Kumar Mangalam Birla Chairman THE POWER OF FIVE VALUES DRIVES US AS A COMPANY, MOTIVATES US AS AN ORGANISATION, BINDS US AS A FAMILY. Integrity Commitment Passion Honesty in every action Acting and taking decisions in a manner that is fair and honest Deliver on the promise On the foundation of Integrity, doing all that is needed to deliver value to all the stakeholders Energised action An energetic, intuitive zeal that arises from emotional engagement with the organisation that makes work joyful and inspires each one to give his or her best Seamlessness Speed Boundary less in letter and spirit Thinking and working together across functional groups, hierarchies, businesses and geographies One step ahead always Responding to internal and external customers with a sense of urgency 5

15 Company Overview ABNL s Business Architecture The Company has taken organic as well as inorganic route to grow and emerge stronger. It has initiated various corporate actions including mergers, demergers, acquisitions and divestments during its transformation journey. This voyage on the designated path has moulded the Company into the following corporate structure. A USD 3.6 BILLION CONGLOMERATE Manufacturing Divisions Life Insurance (51%) $ Aditya Birla Financial Services Ltd. (100%)^ Telecom $# (23.26%) Solar Power (51%) $ (49%) Jaya Shree* NBFC (100%)^ Housing Finance (100%)^ Asset Management (51%) $ Payments Bank (51%) $ Agri* General Insurance Advisory (50.01%)^ Rayon* Private Equity (100%)^ Broking (75%)^# Wealth Management (100%)^ Insulators* Online Personal Finance Management (93.7%)^@ Health Insurance (51%) $ *Represents Divisions ^Represents Subsidiaries $ Represents Joint Ventures IFC has invested in CCPS Note 2: Major investments include 9.1% shareholding in Aditya Birla Fashion & Retail Ltd. 6

16 A Snapshot Business verticals - Financial Services, Telecom, Manufacturing Divisions and Solar Power Prominent brands across all business verticals Touching lives of millions of Indians 11% (Like-to-Like) 24 % (Like-to-Like) 30 % (Like-to-Like) Y-o-Y growth in revenues in FY 16 Y-o-Y growth in EBITDA in FY 16 Mn Snapshot of businesses Financial Services One of the largest services players with portfolio of 12 business segments. Ranks among the top 5 fund managers in India (excluding LIC). Revenue FY ,229 FY ,926 EBIDTA 1 Y-O-Y: 17% FY ,064 FY Y-O-Y: 17% We are India s third largest cellular operator with a revenue market share of 18.9%. Revenue FY ,935 FY ,527 Fastest growing large Indian mobile operator for the 8 th straight year. EBIDTA FY FY Y-O-Y: 14% 11,281 13,257 Telecom Y-O-Y: 18% Our manufacturing divisions include four businesses: Linen & Woollen Textiles Fertilisers, Seeds & Agrochemicals Viscose Filament Yarn & Chlor-Alkali Insulators Revenue FY ,466 FY ,405 EBIDTA Y-O-Y: 1% FY FY Manufacturing Divisions Y-O-Y: 24% Note 1: Interest cost of NBFC business, being an operating expense as per AS-17, is deducted from EBITDA of the Financial Services business 7

17 Company Overview Financial Performance (Consolidated) Revenue (` Crore) EBITDA (` Crore) FY16* 23,129 FY15 26,516 FY14 25,892 FY13 25,490 FY12 21,840 FY16* 6,535 FY15 5,798 FY14 4,927 FY13 4,137 FY12 3,247 Net Profit (` Crore) Net Worth (` Crore) FY16* 1,886 FY15 1,416 FY14 1,143 FY13 1,059 FY FY16 14,535 FY15 12,871 FY14 11,189 FY13 9,384 FY12 7,517 Stock Information (as on 30 th June 2016) Equity Share Price : ` 1,221 per share Trusted by 133,929 shareholders Promoters & Promoter Group holding: 58.4% Equity Shares Outstanding: Million Market Capitalisation: ` 15,900 Crore Stock Codes BSE : NSE : ABIRLANUVO Top Institutional Shareholders Shareholding % Life Insurance Corporation of India 4.7% Reliance Nippon Life Asset Management Limited 3.8% HSBC Global Investment Funds 1.3% UTI Asset Management Company Ltd. 1.0% Dimensional Emerging Markets Value Fund 0.7% Tata Asset Management Limited 0.7% L&T Investment Management Limited 0.7% *Pursuant to the demerger of ABNL s Madura Fashion division into its subsidiary Pantaloons Fashion & Retail Ltd. (PFRL), the st April The IT-ITeS business was divested w.e.f. 9 th (` Crore) Consolidated Financials (Like-to-Like) (Reported) Like-to-Like Growth (%) Revenue 20,798 23,129 11% EBITDA 5,272 6,535 24% 1,447 1,886 30% 8

18 Financial Performance Book Value per share (`) Earnings per share (`) FY16 1,116 FY FY FY FY FY FY FY FY FY Segment Revenue (%) Segment EBIT (%) ` 23,129 Crore Financial Services 40 Telecom 36 Manufacturing Divisions 24 ` 3,101 Crore Financial Services 31 Telecom 48 Manufacturing Divisions 21 Key Financial Ratios Ratios Unit FY FY FY FY FY Interest Cover (EBITDA 1 / Finance Costs 2 ) Net Debt to Equity (Net Debt 3 / Net Worth) Net Debt to EBITDA (Net Debt 3 / EBITDA 1 ) ROACE (EBIT 4 / Average Capital Employed 5 ) ROAE x x x % % Note: Total Debt less Cash Surplus and Current Investments and Capital Employed excluding Life Insurance Policyholders' Fund and NBFC borrowings 9

19 Company Overview LEADERSHIP ACROSS DECADES The beginning ( ) Indian Rayon Corporation Ltd., engaged in incorporated in 1956 and is later acquired by Aditya Birla Group in Transformation into a premium conglomerate ( ) Becomes the largest shareholder in Idea Cellular Ltd. through enhancement of strategic stake from 4.28% to 35.74% in 2005 & Expands Financial Services portfolio through merger of Asset management and NBFC businesses in , acquisition of a broking company in 2009 and launch of private equity fund in Indian Rayon is re-christened as Aditya Birla new-age businesses Augments Fashion offerings through acquisition of Pantaloons. Launches MyUniverse, India s #1 online The ( ) Acquisitions and Partnerships ( ) Jaya Shree Textiles & Industries Ltd., a textiles and insulators manufacturing company, is merged with Indian Rayon Corporation Ltd. in 1976 which is renamed as Indian Rayon & Industries Ltd. in Forays into the Carbon Black business in Partnership with Sun Life Financial, Canada for Asset Management business Enters fashion business through acquisition of Madura Forays into Life Insurance business in Joint Venture with Sun Life Financial, Canada Acquires TransWorks, an Indian BPO, to enter IT-ITeS business and later acquires Minacs, a leading Canadian BPO, in 2006 to provide scale to the business. 10

20 Corporate Milestones Reaching new heights ( ) 2013 Divestment of the Carbon Black business considering sector dynamics. the Rayon business Divestment of the IT-ITeS business to ensure focus on other businesses. Expands Linen Yarn and Fabric capacities. Commences Housing Finance business. Foray into new ventures (2015) 2015 Forays into the Solar Power business through a 51:49 JV with the Abraaj Group. Receives in-principle approval from RBI to set-up a Payments Bank as promoter, in a 51:49 JV with Idea Cellular. Enters into a 51:49 JV agreement with MMI Holdings Ltd. (a leading South African launch health insurance business in India. Value Unlocking (2016) 2016 The scheme of demerger of Madura division into Pantaloons Fashion & Retail Ltd. (PFRL) becomes effective. PFRL is rechristened as Aditya Birla Fashion & Retail Ltd. (ABFRL). ABFRL becomes the largest pure play branded apparels company in listed space in India in terms of revenue and market capitalisation and ceases to be a subsidiary of ABNL w.e.f. 1 st April Shareholders of ABNL get direct shareholding in ABFRL. Sun Life raises its stake in Life Insurance venture from 26% to 49% for ` 1,664 Crore. 11

21 Company Overview BIG IDEAS NEED CAREFUL NURTURE Over the years, we have incubated and built large-scale businesses from scratch. We identify emerging opportunities and turn them into scalable and value accretive businesses. Mergers and acquisitions have also played a key role in this growth journey. 12

22 Big on Growth Our Big on Growth strategy has helped us transform to a USD 3.6 billion premium conglomerate. Over the years, here is how some of our growth-focused initiatives have translated into encouraging outcomes: BRANDED APPAREL RETAILING We acquired Madura Garments, a ` 200 Crore readymade garments division of Madura Coats Ltd., a subsidiary of Coats Viyella PLC, UK in We transformed it from primarily a shirting player to a complete fashion and lifestyle proposition; from a wholesale focused business to India s largest branded apparel retail player having revenue of over USD 900 million (` 6,060 Crore) and market capitalisation of USD 1.7 billion (` 10,970 Crore). LIFE INSURANCE In 2001, we entered into the life insurance space, when it was opened up for private sector players, in a JV with Sun Life, Canada. Today, Birla Sun Life Insurance Co. Ltd. is the 4 th largest private life insurer in India with new business premium market share at 7.6% and AUM of USD 4.7 billion (` 30,811 Crore). It is #1 in group segment with 25.6% new business market share. ` NON-BANKING FINANCIAL COMPANY (NBFC) in early 1990s. In , the Aditya Birla Group s NBFC business was consolidated under ABNL. Aditya Birla Finance Ltd. (ABFL), the NBFC business, had a modest book size of ` 547 Crore in March 2006 and was operating in two verticals. Today, ABFL ranks among the top 10 non-housing, non- PSU NBFCs in India, operating in more than 12 verticals and having a loan book size of USD 4 billion (` 25,755 Crore). ` ASSET MANAGEMENT In , the Aditya Birla Group s asset management business was consolidated under ABNL. With an AUM size of ` 16,400 Crore, Birla Sun Life Asset Management Co. Ltd. ranked 6 th with 6.5% market share in industry s domestic AUM. Since then, its AUM has grown almost 10 times to reach USD 23.5 billion (` 152,427 Crore) today with 10.1% domestic AUM market share and its industry ranking has moved up to #4 in total AUM and to #5 in equity assets. TELECOM We acquired the controlling stake in Idea Cellular Ltd. in 2006 and became its largest shareholder. Idea Cellular got listed in Since then, Idea has grown in stature from being a #6 operator in 2008 having regional presence in 11 circles and a meager 9.6% revenue market share to India s 3 rd largest cellular operator with pan-india operations and a revenue market share of 18.9% today. ` ONLINE PERSONAL FINANCE MANAGEMENT Personal Finance Management Platform - Aditya Birla Money million registered users who are managing close to ` 200 billion through this platform. SOLAR POWER The government s focus on clean energy has created a huge potential market for Solar Power business. To tap the sector opportunity, we have entered into a 51:49 JV with the Abraaj Group in October 2015 to build a 500 MW solar power generation platform in India. We have won 60 MW projects in March 2016 and expect to commence the operations by March PAYMENTS BANK Having received an in-principle approval from RBI, we have incorporated Aditya Birla Idea Payments Bank Ltd. as promoter in a 51:49 JV with Idea Cellular in February The payments the last-mile connectivity; and we are proud to contribute to this endeavour. Our JV is likely to commence its operations by the HEALTH INSURANCE We have entered into a 51:49 joint venture with MMI Holdings Ltd. to foray into health insurance sector in India. Being the fastest growing segment in the insurance space, the health insurance sector offers an attractive growth opportunity. Having received FIPB approval, we are targeting to launch services from IRDAI. 13

23 Company Overview BIG PICTURE EVOKES OPTIMISM The opportunity landscape for our businesses is encouraging. With the Government s focus on fostering business friendly environment across sectors, and enhancing the ease of doing business in India through a series of reforms, the road ahead is promising. Besides, India s stellar economic performance is creating more opportunities for both existing businesses as well as for emerging business models. 14

24 Based on Strong Fundamentals FINANCIAL SERVICES Indians are great savers but the share of unproductive physical assets and bank deposits is very high when it comes to investing the money. services and products indicates a huge scope of diverting wealth from physical assets and Domestic credit penetration in India at 97% is paltry compared to 165% to 447% in large economies. Life Insurance premium density per capita at USD 43 is meagre in India compared to global average of USD 346. With an AUM to GDP ratio of 6.6%, India is far behind the global average. The Government s initiatives like Jan Dhan Yojana, Mudra loan scheme and issuance inclusion in India. TELECOM India s VLR (active subscribers) penetration remains low at 74% vis-a-vis Global average of 92%. Rural subscribers penetration is even lower at 51% signalling large headroom for subscribers addition in India. Low wireless internet user penetration at 31% and mobile broadband user penetration at meagre 11.8% points out at mobile data to be the next big opportunity for the telecom industry. The Government s Digital India initiative is resulting in a huge uptake in new applications and data consumption. MANUFACTURING DIVISIONS Currently about 70% of Linen Yarn demand in India is being met through imports denoting an expansion opportunity for domestic players. VFY has a niche market globally, however, premium and growth is driven by quality and value added yarns. Agri reforms by the Government viz., allowing 100% production of neem coated urea and gas pooling policy, aimed at encouraging higher production The Government s ambitious Make in India initiative state utilities are expected to improve the demand scenario for T&D sector and in turn for Insulators. SOLAR India is projected to be among the top 3 solar markets in the world by The share of solar power in India s total installed power generation capacity is projected to rise from 1% currently to 25% by WE ARE BIG ON GROWTH. WE ARE READY TO CAPITALISE ON THE FUTURE GROWTH OPPORTUNITIES BASED ON STRONG FUNDAMENTALS OF OUR BUSINESSES. 15

25 Company Overview At Aditya Birla Nuvo Ltd., two simple words define our universe of operations, driving leadership and value creation across diverse sectors. FUTURE READY. 16

26 We are Future Ready We have always looked beyond challenges of economic volatilities and industry cycles to invest in emerging businesses and promising sectors. We have invested consistently in a wide to telecom to fashion to manufacturing. economic prosperity across India s vast urban and rural landscape for decades on end. And will continue to do so to make the most of India s creative optimism. That s the reason why consistent GROWTH remains BIG on our agenda; and we pursue it passionately. and foresight. Our robust balance sheet structure also enables us to fund our future growth strategies. Like the preceding years, FY as well was exciting and eventful for us. We entered into the Solar Power sector to contribute to the movement for green energy in a world threatened by climate change. We are venturing into Payments Bank and Health and help millions of Indians secure their health and wellness. We have created India s largest branded apparel retail company to unlock shareholders value by consolidating our branded apparels businesses under the listed entity Aditya Birla Fashion & Retail Ltd. We touch the lives of over 180 million Indians through best-in-class products and services, rendered by about 39,500 employees, supported by the linkages with our business associates. As we look towards the future, we are inspired to leap to the next orbit of value creation. We are Future Ready. 17

27 Company Overview Aditya Birla Financial Services Making millions of dreams come true services market. With our strong growth rates and favourable demographics, we should expect many years of strong growth in this sector. The future is going to be about companies with strong, trusted and emotionally connected brands who are able to reach mass India and provide products and services that are relevant and help customers in meeting their dreams. Our customers place a lot of trust when they choose it buying a dream home or investing their hard earned money in mutual funds or for meeting their retirement or child s education or protection needs or taking a business loan for expansion. At Aditya Birla Financial Services (ABFS), our endeavour is choice for all our customers needs across their life cycle - a brand that customers will not only just trust but also happily endorse. And that s not easy in today s times, where our customer has many choices and is able to switch easily. Being future ready means living up to the trust that our customers place on us by ensuring that our people are adequately trained and our systems are robust, scalable and deliver a desirable user experience. Building reach means leveraging all the assets we can, including technology to provide access to customers, when and where they want. Being relevant and solving customer problems means constantly keeping our ears to the ground and using analytics to know what customers might want. At ABFS, we are committed to making the dream of every Indian a reality. Yes, we are future ready to market. Mr. Ajay Srinivasan Business Head Aditya Birla Financial Services 18

28 We are Future Ready Aditya Birla Financial Services (ABFS) is an businesses of the Aditya Birla Group. ABFS has a asset management, corporate lending, project wealth management and distribution, general insurance broking, pension fund management the health insurance businesses in India. Among the Top 5 fund managers in India (excluding LIC) USD 28.4 Bn Funds under management USD 4.3 Bn Lending Book 8.8 Mn Customers >11,500 Committed employees ~1,350 Branches and touch-points OUR BRANDS 19

29 Company Overview POWERING INDIA S GROWTH ASPIRATIONS Aditya Birla Finance Ltd. Incorporated in 1991, Aditya Birla Finance Ltd. (ABFL) is one of the pioneers and the most reputed NBFCs in India. With the seasoned management team having over 200 man ISO 9001:2008 across all its core functional processes in March 2013 by BSI, a leading global independent business services organisation. ABFL is among the top ten non-hfc, non-psu NBFCs in the country. ` CORE STRATEGY ABFL has consolidated its portfolios across Capital Market, Corporate Finance, Infra Finance and Mortgages segments while actively entering the retail segment with the launch of unsecured lending and personal loans segments targeted at MSMEs and individuals respectively. Proposed Digital Lending model will evolve as a paperless and resource light model to source, evaluate and service customers. ABFL is progressing well on its well thought through strategy of building the scale through mid and large ticket cases in the initial years and now shifting seamlessly long-term sustainable portfolio. CUSTOMER CENTRICITY ABFL s customers can reach it anytime over phone, through , visit their nearest branch or login to integrated website same service culture. They can also view their loan details ABFL s call centres received over 1,500 calls per month and generated over ` 100 Crore of business in FY PORTFOLIO QUALITY ABFL has one of the best approval turn around-time (TAT) in the industry. Besides its risk team, ABFL s 4 USD billion (` 25,755 Crore) loan book in March year CAGR of loan book dedicated business credit team also evaluates all the and security analysis, thus acting as an additional check point. ABFL relies heavily on an enhanced and early warning systems. The quality of portfolio speaks 31 st March 2016, its gross NPA improved y-o-y from 0.90% to 0.63% in stark contrast to the health of overall credit industry. GOING FORWARD ABFL s solution-oriented approach and ability to structure the deals to best suit the customers and processes is one of its biggest strengths. ABFL will continue to leverage its strengths and continue to empower India s growth aspirations. % 20

30 We are Future Ready SECURING FUTURE OF MILLIONS OF INDIANS Birla Sun Life Insurance Co. Ltd. Established in 2001, Birla Sun Life Insurance Co. Ltd. (BSLI) is a 51:49 joint venture between Aditya Birla Nuvo Ltd. and Sun Life Financial, Canada. With an experience of over to the growth and development of the life insurance industry in India and currently ranks amongst the leading private life insurers in the country. KNOWN FOR INNOVATION Known for its innovation and creating industry Period in India and later it was made mandatory by the regulator for the industry. BSLI also pioneered the launch of Unit Linked Life Insurance plans (ULIPs) in India. From introducing a multi-channel distribution strategy with Bancassurance, pioneering the highest NAV plan, the launch of the traditional endowment portfolio, the launch marketing channel, were all steps in the right direction. WIDTH AND BREADTH BSLI has a customer base of over 1.5 million policy holders. It offers a complete range of plans comprising protection, children s future, wealth with protection, health and wellness, retirement and savings with protection plans. It has an extensive distribution reach in over 500 cities through 489 branches, around 70,000 empanelled advisors, an online portal and over 150 partnerships with corporate agents, brokers and banks. Its assets under management stood at ` 30,811 Crore as on 31 st March IMPROVEMENT IN BUSINESS In FY , BSLI witnessed growth after a few years of downturn. All channels including agency, 4 th Largest private life insurer in India bancassurance and the direct marketing channel showed month-on-month growth throughout the year. All the quality parameters saw an uptick, with the best-in-class Persistency, Claims Repudiation Ratio and the highest sum assured to premium multiple in the industry. All reassuring BSLI s philosophy of the customer being at the core of its business. ENHANCING BRAND VISIBILITY At BSLI, our endeavour is to reach out to customers pan-india and help them realise the importance of uncertainties. With this objective, BSLI launched its brand campaign, Khud Ko Kar Buland, which has helped in strengthening the brand identity and resonate Trust amongst the consumers. GOING FORWARD With innovation and customer centricity embedded in its DNA, BSLI is well positioned to harness the India Insurance Opportunity which is gradually beginning to unfold with an underinsured billion gradually warming up to the importance and relevance of life insurance. 21

31 Company Overview CREATING WEALTH FOR MILLION OF INDIANS Birla Sun Life Asset Management Co. Ltd. Established in 1994, Birla Sun Life Asset Management Co. Ltd. (BSLAMC) is a joint venture between Aditya Birla Nuvo Ltd. and Sun Life Financial Inc, Canada. BSLAMC is the 4 th largest asset management company in India. Its total average assets under management (AAUM) for the quarter ended 31 st March 2016 at ` 152,427 Crore have grown at a ` CONSISTENT OUTPERFORMER BSLAMC has been consistently outperforming the industry and gaining domestic market share in total as well as equity AAUM, despite being a non-bank backed player. During from 9.1% to 10.1% and equity AAUM market share from 5.5% to 7.6%. Its equity AAUM ranking has moved up from 8 th in 2011 to 4 th currently. FOCUS ON RETAIL AND HIGH MARGIN ASSETS As a result of its strong focus on scaling up the retail and higher margin assets, the domestic equity assets of BSLAMC have grown almost three times to ` 31,891 to ` 13,718 Crore and PMS assets have grown nearly ` 1,205 Crore over past 5 years. Share of equity in domestic AAUM rose from 17.8% to 23.4% and monthly SIP book size has expanded more than 3 times to ` 282 Crore during this period. WIDTH AND BREADTH BSLAMC is helping over 2.9 million customers in achieving their wealth creation goals, through its extensive distribution reach comprising 109 branches, a robust online portal more than 47,000 Independent Financial Advisors and a number of national distributors. BSLAMC has always believed in leading the way and making mutual fund transactions simpler for a 4 th Largest Asset Management Company in India seamless customer experience. It enables investors to access their portfolio and transact online 24x7, 365 days a year through online account access facility. BEST-IN-CLASS FUND PERFORMANCE BSLAMC follows a long-term, fundamental research based approach to investment which involves identifying the companies having excellent growth prospects, competitive edge, sound management quality, sustainability of business model amongst other factors. In recognition of its strong fund performance across multiple asset classes, BSLAMC was adjudged as Runner up - overall AMC of the year and Runner-up Equity AMC of the year in Outlook Money Awards GOING FORWARD Expanding branch presence, building digital capabilities through E-KYC, website revamp, launch of Mobile Apps and reaching out to new customers through Payments Banks and other digital media is on the cards. Equipped with a strong brand equity and best-in-class fund performance, BSLAMC is well positioned to capitalise on the huge untapped market potential of Indian Mutual Fund industry. 22

32 We are Future Ready HELPING INDIANS TO MAKE BETTER FINANCIAL DECISIONS Aditya Birla Money MyUniverse integrated Online Personal Finance Management Platform. Though Indians are great savers, few end up creating long term wealth due to lack of guidance on saving and investing their hard earned money. MyUniverse aims to empower ` 2.6 Mn `200 Bn 7 Registered users Money under aggregation th Largest SIP distributor INTEGRATED AGGREGATION BASED MULTI-PRODUCT PLATFORM MyUniverse ( helps customers aggregating online, their bank, credit card, mutual fund, stock, insurance and loan accounts. MyUniverse spending, smart saving and prudent investing. MyUniverse also helps customers realise the advice through its online multi product transaction platform. OCCUPYING POLE POSITION Launched in 2012, today MyUniverse is India s #1 Online Personal Finance Management (PFM) Platform users who are managing close to ` 200 billion through this portal. MyUniverse is also the 7 th largest distributor of new SIPs in numbers in India. INNOVATIVE OFFERINGS paperless, instant SIP product to life, which allows even non-kyc investors to start investing and reduces the innovations such as e-kyc and 1-click MF portfolio execution in practice. It has also launched India s save every time he swipes his card. MyUniverse is the globally to support account aggregation on mobile. GOING FORWARD MyUniverse is launching India s first completely automated instant personal loan, which will ensure instant credit of loan in the customer s account, on successful processing of loan application online. Theme based equity portfolio advisory is also in the pipeline. 23

33 Company Overview CATERING TO THE DIVERSE FINANCIAL NEEDS OF INDIANS HOUSING FINANCE Aditya Birla Housing Finance Ltd. (ABHFL) commenced its operations in October, To help customers realise their true worth and own their dream homes, ABHFL has launched Its loan book stood at ` 1,973 Crore as on 31 st March GENERAL INSURANCE ADVISORY Aditya Birla Insurance Brokers Ltd. (ABIBL) is a leading composite general insurance advisor. ABIBL specialises in providing general insurance broking and risk management solutions for corporates and individuals alike. ABIBL has a market share of 1.68% in the non-life industry s premium. PRIVATE EQUITY Aditya Birla Capital Advisors Pvt. Ltd. (ABCAP) provides private equity advisory and investment management to Aditya Birla Private Equity (ABPE) Trust, a venture capital fund registered with SEBI. ABPE has ` 1,037 Crore of funds under management (net) as on 31 st March, BROKING Aditya Birla Money Ltd. (ABML) is a broking company, offering equity and derivative trading through NSE and BSE and Currency Derivative on MCX-SX. ABML provides commodity trading on MCX and NCDEX through its subsidiary. WEALTH MANAGEMENT Aditya Birla Money Mart Ltd. (ABMM) is a wealth management and distribution player, offering third party products like mutual funds, company deposits, life insurance products, structured products, property services etc. ABMM also has a wealth management service arm to cater to HNI customers. HEALTH INSURANCE Aditya Birla Health Insurance Co. Ltd. (ABHICL) is a 51:49 JV between Aditya Birla Financial Services and MMI Holdings Ltd. ABHICL is targeting to launch its services during the second half of FY subject 24

34 We are Future Ready Future-ready strategies INVESTING IN TECHNOLOGY AND ANALYTICS TO BUILD DIGITAL GO-TO-MARKET CAPABILITIES. LEVERAGING THE BRAND EQUITY AND DRIVING SYNERGIES ACROSS THE BUSINESSES. FORAY IN THE HEALTH INSURANCE AND WELLNESS SPACE TO EXPAND OUR FINANCIAL SERVICES BOUQUET. FOCUS ON PRODUCT INNOVATION AND DIFFERENTIATION TO ADD VALUE TO THE CUSTOMERS ACROSS THEIR LIFECYCLE. 25

35 Company Overview Telecom Future-Ready India Loves To Connect With The World The Indian Mobility Sector, the crown jewel in the success stories of India s economic liberalization and privatization efforts, is the world s 2 nd largest market by subscriptions with over 1 billion connections. Over the last two decades, the wireless industry, especially the private sector, has built one of form of a mobile voice highway connecting over 5 Lakhs towns and villages across India. With an active subscriber penetration of 73.7%, the Indian new subscriber addition. The Indian telecom industry is gradually transitioning from a pure voice market to a mix of voice and data services. Internet as a category has, thus far, witnessed a slow and steady adoption and the country ranks amongst the lowest in terms of mobile broadband penetration. However, the top Indian private mobile operators are now working at breakneck speeds to create a world class digital highway. With massive investments in expansion of mobile broadband networks and capacity enhancement, aided by a rapid growth in smartphone adoption and a growing ecosystem of digital services and applications, India appears to be at the cusp of a digital revolution. The Indian mobility sector is also expected to undergo major market structure changes. Mobile voice market is likely to consolidate and may be limited to 5 to 6 players. However, the mobile data segment will witness an increase in the competitive intensity, though it may be restricted to the top 4 to 5 large pan India operators including the new entrant. To capitalise on the emerging data opportunity, Idea is in the midst of building wide and deep mobile broadband infrastructure with massive expansion of 3G and 4G networks. To catalyse the uptake of mobile broadband services through an expanded ecosystem of digital services and applications, Idea is also working on developing its own Digital Content Services. Further, Idea already has its own digital wallet offering Idea Money and is now working with Aditya Birla Nuvo Ltd. towards launch of Payments Bank services. Mr. Himanshu Kapania Business Head - Telecom Managing Director - Idea Cellular Ltd. 26

36 We are Future Ready Idea Cellular is the 3 rd largest cellular operator in India and the 6 th largest in the world. Idea s pan-india customer reach spans 8,000+ exclusive outlets and 1.6 million transacting retailers. Idea is a pan-india integrated GSM operator, offering 2G services in all 22 service areas, 3G services in 21 service areas and 4G services in 10 service areas across more than 390,000 towns and villages. Idea has an enviable track record of being the fastest growing large operator for the 8 th straight year. Mirroring the brand popularity and quality of its services, Idea s active subscribers ratio at 104.4% as of February 2016, is the highest in the industry. Idea is also the leading net subscribers gainer in the mobile number portability programme. Post allocation of the spectrum won in March 2015 auction, Idea has 87.6% of its total spectrum holding acquired through auction which provides on the consumer demand and development of ecosystem. To capitalise on the data opportunity, Idea is aggressively expanding its 3G and 4G footprints, leveraging its strong spectrum bank. Idea s own 87% of its revenue. Idea is listed on NSE and BSE, with a market capitalisation of ` 397 billion as on 31 st March, rd Largest mobile operator in India 1 6 th Largest mobile operator in the world 2 `10,120 cr Standalone 3 generated in FY Mn Active Subscribers base 18.9 Revenue Market share 1 % 44 % Incremental Revenue market share 1 Note 1: Based on gross revenue for FY for UAS and mobile licenses only (Source: TRAI) Note 2: In terms of subscribers, based on operations in a single country (Source: GSMA, December, 2015) Note 3: Standalone = Idea Cellular and its 100% subsidiaries 27

37 Company Overview Mobile Data is the Future of Communication Mobile data represents an attractive plethora of opportunity. Low internet penetration, coupled with aggressive data network infrastructure expansion by telecom operators augur well for the industry, going forward. INDUSTRY OPPORTUNITY Low wireless internet users penetration at 30.9% (312 million subscribers) of total mobile subscribers. There are about 600 million mobile users who are yet to adopt mobile data services. Nascent 11.8% penetration of mobile broadband (3G+4G) users (120 million subscribers). Emerging revenue streams: Mobile banking & digital wallet, launch of 4G services on LTE platform, M2M, IoT & Cloud, WiFi, digital content services, viz., music, movies & videos, games, rich messaging, VoIP etc. GROWING DATA BUSINESS About 44 million Idea subscribers are on 2G EDGE, 3G HSPA and 4G LTE services. About 22.9 million Idea subscribers, i.e., less than 13% of its total subscribers use 3G mobile data services. Idea is aggressively expanding its 3G and 4G footprint and has more than doubled 3G+4G cell sites year-on-year. Idea s own 3G and 4G spectrum covers 87% of its revenue. Idea has its own digital wallet offering through Idea Money and is now working with ABNL to launch Payments Bank services. 28

38 We are Future Ready Future-ready strategies BUILDING WIDE AND DEEP BROADBAND INFRASTRUCTURE TO TAP DATA OPPORTUNITY. STAYING AHEAD OF THE CURVE THROUGH DIFFERENTIATED CUSTOMER SERVICE AND NETWORK QUALITY. ENTRY INTO DIGITAL CONTENT SERVICES AND PAYMENTS BANKING SERVICES. INNOVATIVE DISTRIBUTION AND SERVICING MODEL TO CAPITALISE ON NETWORK EXPANSION. 29

39 Company Overview Manufacturing Divisions Make-in-India for a Future-Ready India VFY has a niche market globally. Premium and growth is driven by quality and value added yarns. To tap this growth, Indian Rayon is expanding its capacities In the fertilisers business, being a highly regulated industry, for future growth, Indo-Gulf is scaling up its agri-inputs trading business and widening its offerings to capitalise on its brand equity and the vast reach of its urea distributors. At present, demand in domestic insulators market is sluggish. However, the medium term demand scenario is expected to improve, driven by the Government s ambitious Make-in-India initiative and reforms like UDAY. Aditya Birla Insulators is focusing on maximising its capacity utilisation and enhancing With the proposed scaling up and asset sweating plans, ABNL is future ready to steer its manufacturing businesses from strength to strength. Mr. Lalit Naik Business Director - Agri, VFY, Chemicals and Insulators Managing Director - Aditya Birla Nuvo Ltd. 30

40 We are Future Ready Jaya Shree Textiles is the only integrated linen manufacturer in India. It has single-handedly created the linen fashion category in India and made Linen Club a lifestyle fashion symbol in India. It has expanded the market size for linen by creating product and brand awareness and by entering into new segments. It has scaled up its retail footprint under the Linen Club Fabric brand from just 21 exclusive brand outlets (EBOs) in March 2009 to 131 EBOs in March Increasing popularity of Linen as a comfort and style fabric will continue to drive its domestic demand. To meet the growing linen demand in India, currently about 70% of Linen Yarn demand in India is being met through imports. Jaya Shree Textiles, itself, imports about 55% to 60% of its annual linen yarn requirement. This denotes an expansion opportunity for domestic players. To maintain its #1 position in India and to be future ready to tap the sector growth, Jaya Shree Textiles is expanding its linen yarn capacities from current 3,400 tons to 6,200 tons per annum by June Mr. Thomas Varghese Business Head - Textiles 31

41 Company Overview Aditya Birla Nuvo s manufacturing divisions have a strong market positioning across linen, agri, rayon and insulators businesses. Our manufacturing divisions are among the leaders in their respective Jaya Shree is the largest manufacturer of linen yarn and linen fabric in India. It is also a leading manufacturer of wool tops and worsted yarn in India. Jaya Shree is retailing its linen fabric under the Linen Club brand through 131 exclusive brand outlets and over 4,000 multi brand outlets. Indian Rayon is the largest manufacturer and exporter of Viscose Filament Yarn (VFY) in India. comfort of cotton and the lustre of silk. Indian Rayon also manufactures and sells caustic soda and allied chemicals. Indo-Gulf fertilisers has positioned itself as a total agri solutions provider offering a full range of agri inputs fertilisers, seeds, agrochemicals and specialties right from sowing till harvesting. Birla Shaktiman enjoys a market leadership position in the entire zone of Uttar Pradesh, Bihar, Jharkhand and West Bengal, Indo-Gulf s core markets, through its excellent product quality and customer servicing. Aditya Birla Insulators is India s largest and the world s fourth largest manufacturer of insulators. The Aditya Birla Insulators products have been running successfully in 58 countries around the world, with focus on markets in Europe and the US. th 1 8 Largest 1 # # Linen player in India Largest manufacturer of urea in India Manufacturer and exporter of VFY in India Manufacturer of insulators in India and 4 th largest globally 32

42 We are Future Ready Future-ready strategies FOCUSING ON RETAIL CHANNEL EXPANSION AND BRAND PROMOTION TO FORTIFY LINEN CLUB FABRIC BRAND. EXPANDING LINEN YARN CAPACITY TO CAPITALISE ON THE SECTOR DEMAND. SCALING UP AGRI-INPUTS TRADING BUSINESS TO CAPITALISE ON THE INDO-GULF S BRAND EQUITY. EXPLORING NEW GEOGRAPHIES IN EXPORTS MARKET IN THE INSULATORS BUSINESS. DRIVE BRAND BUILDING TO TRANSFORM INDIAN RAYON S VFY INTO A DESIRABLE PREMIUM BRAND ACROSS THE VALUE CHAIN. Our brands 33

43 Company Overview Our Balance Sheet is Future-Ready The Company s standalone balance sheet has been its growth engine and a platform to drive synergy of capital resources for decades. Hence, it is an imperative to keep the balance sheet in shape, while meeting the growth requirements of our businesses. Today, more than 70% of standalone capital employed is deployed in long term investments. Aditya Birla Nuvo Limited (ABNL) has invested about USD 2 billion to fund the growth capital requirements of its businesses over the past one-and-a-half decade, while keeping the balance sheet healthy. growth driver for the Company. In particular, NBFC, Housing Finance and MyUniverse will require capital support from ABNL besides the new ventures viz., Solar Power, Payments Bank and Health Insurance. Considering ABNL s proven ability to pool cash resources coupled with the proceeds from the stake sale in the life insurance business and the steady free balance sheet is future-ready to fund its growth plans. Mrs. Pinky Mehta Aditya Birla Nuvo Ltd. 34

44 We are Future Ready At ABNL, our growth strategies derive support from the standalone balance sheet. Over the years, we have steadily enhanced our investments to cater to the growth capital needs of our various businesses. At the same time, we have endeavoured to keep our balance sheet strengthened. Consequently, our balance sheet is turbocharged to elevate us to a higher altitude of growth and sustainability. Over the years, Aditya Birla Nuvo has built many large-scale businesses from scratch. Mergers and acquisitions have also played a key role in the Company s transformational journey from a small manufacturing company in the late nineties to a USD 3.6 billion conglomerate today. The exponential growth of the Company has gone hand-in-hand with an optimal capital structure which is an outcome of prudent fund management, dynamic capital allocation and timely corporate actions enumerated below: requirements. During the past 5 years, the Company has invested close to ` 5,800 Crore in its businesses towards the capex and capital infusion requirements. Standalone divisions have generated pre-tax cash ` Dividend receipts of about ` 500 Crore and equity infusion of ` 1,500 Crore during this period have also supported the balance sheet. Considering the sector dynamics and to focused on other businesses, ABNL divested Carbon Black business in 2013 at an enterprise value (EV) of ` 1,451 Crore and IT-ITeS business in 2014 at an EV of about ` 1,600 Crore. While Standalone Net Debt to EBITDA and Net Debt to Equity stood at 4.5 times and 0.44 times respectively as on 31 st March 2016, adjusting for the proceeds of ` 1,664 Crore received from the sale of 23% stake in Birla Sun Life Insurance and realisation of fertilisers subsidy to the tune of ` 489 Crore in April 2016, the leverage stands at a comfortable position and the balance sheet stands geared up to fund its future growth plans. Standalone Net Debt (` Crore) Standalone Ratios FY16 3,786 FY15 3,584 FY14 3,196 FY13 3,630 FY12 3, FY12 FY13 FY14 FY15 FY16 Net Debt/EBITDA Net Debt/Equity Standalone Capital Employed (%) Long term Investments Birla Sun Life Insurance Co. Ltd. Aditya Birla Finance Ltd. ` Crore 1,751 2,903 ` 12,637 Crore (March 2016) Long term Investments 75 Net Fixed Assets 13 Net Working Capital 12 Other Financial Services Idea Cellular Ltd. 1,100 2,356 Aditya Birla Fashion & Retail Ltd. 1,151 Hindalco Industries Ltd

45 Company Overview 5-Year Financial Highlights CONSOLIDATED PROFIT & LOSS ACCOUNT ` Crore ` Crore ` Crore ` Crore ` Crore USD Million 15 Financial Services 2 6,384 6,283 6,637 7,926 9,299 1,431 Telecom 3 4,933 5,662 6,669 7,467 8,361 1,286 Manufacturing Divisions 4 4,301 5,300 4,979 5,405 5, Fashion & Lifestyle 5 2,243 3,802 4,759 5, IT-ITeS 6 2,082 2,466 2, Carbon Black 4 1,943 2, Solar Inter-segment elimination (46) (58) (50) (16) (4) (1) Revenue 21,840 25,490 25,892 26,516 23,129 3,558 EBITDA 3,247 4,137 4,927 5,798 6,535 1,005 Less : Depreciation & Amortisation 1,092 1,295 1,609 1,703 1, EBIT 2,154 2,842 3,318 4,095 4, Less: Finance Costs related to NBFC ,105 1, Less : Other Finance Costs Earnings before Tax & Exceptional Items 1,330 1,526 1,767 2,338 2, Add: Exceptional Gain / (Loss) 7 (104) - 5 (13) Less : Tax Expenses ,010 1,184 1,222 1,491 2, ,059 1,143 1,416 1, BALANCE SHEET ` Crore ` Crore ` Crore ` Crore ` Crore USD Million 15 Net Fixed Assets (Including Capital Advances and CWIP) 9,354 10,677 13,045 12,342 19,052 2,931 Goodwill 3,177 4,825 4,982 3,973 2, Life Insurance Investments 21,110 22,929 24,764 30,147 30,727 4,727 Long term Investments NBFC Lending (Including Housing Finance) 3,425 8,000 11,550 17,706 27,728 4,266 Cash Surplus & Current Investments 8 1,518 2,415 1,089 4,246 1, Net Working Capital 1,497 1, Total Funds Utilised 40,399 50,974 56,569 68,981 82,039 12,621 Net Worth 7,517 9,384 11,189 12,871 14,535 2,236 Life Insurance Policyholders Fund 9 19,964 21,576 23,557 28,839 29,375 4,519 Total Debt 9,328 11,778 10,893 11,299 13,570 2,088 NBFC borrowings (Including Housing Finance) 2,973 6,867 9,647 14,686 22,914 3,525 Minority Interest Deferred Tax Liabilities (Net) ,399 50,974 56,569 68,981 82,039 12,621 RATIOS & STATISTICS Unit Interest Cover (EBITDA 10 / Finance Costs 11 ) x Net Debt to Equity (Net Debt 12 / Net Worth) x Net Debt to EBITDA (Net Debt 12 / EBITDA 10 ) x ROACE (EBIT 13 / Average Capital Employed 14 ) % % Basic Earnings Per Share (Weighted Average) ` (USD 2.2) Book Value per Equity share ` (USD 17.2) No. of Equity Shareholders Numbers 146, , , , ,903 Closing Price as on 31 st March (NSE) ` ,091 1, (USD 12.7) Market Capitalisation (NSE) ` Crore 10,723 11,727 14,196 21,654 10,712 (USD 1.6 billion) Note 1: Pursuant to demerger of Madura Fashion & Lifestyle into Pantaloons Fashion & Retail Ltd. (PFRL), Madura & Pantaloons businesses ceased to be the division & the subsidiary of ABNL w.e.f. 1 st Note 2: Financial Services include NBFC, Life Insurance, Asset Management, Housing Finance, Private Equity, Broking, Wealth Management, Online Personal Finance Management & General Insurance Broking businesses. Asset Management business has been proportionately consolidated at 50% till 9 th October 2012, being a 50:50 Joint Venture and thereafter consolidated as subsidiary since Aditya Birla Financial Services holds 51% w.e.f. 10 th October Note 3: Represents ABNL s share. Being a joint venture, Idea has been consolidated at ~ 25.3% from 2 nd March 2010 till 10 th June 2014, at 23.63% till 23 rd July 2014 and at ~ 23.3% thereafter as per AS 27. Note 4: Manufacturing Divisions include Jaya Shree, Agri, Rayon and Insulators. The Carbon Black division was divested through slump sale w.e.f. 1 st April Note 5: Represents Branded Apparels & Accessories business (Madura Fashion & Lifestyle and Pantaloons Fashion & Retail Limited). Note 6: ABNL IT & ITeS Ltd., a wholly owned subsidiary of ABNL, divested Aditya Birla Minacs w.e.f. 9 th May Note 7: In , exceptional loss of ` 13 Crore pertains to the divestment of Minacs. This loss is without considering deferred consideration of ~` 42 Crore receivable over next 3 years. In , exceptional gain includes (a) ` 357 Crore w.r.t. cessation of PFRL as subsidiary pursuant to de-merger of Madura, (b) ` 50 Crore received for ` 6.4 Crore received as deferred consideration w.r.t. divestment of Minacs. Note 8: Cash Surplus & Current Investments include cash & bank balances and fertilisers bonds Note 9: Including Fund for Future Appropriations Note 14: Capital Employed excluding Life Insurance Policyholders Fund and NBFC borrowings Note 15: 1 USD = ` 65; 10 Million = 1 Crore 36

46 5-Year Financial Highlights STANDALONE PROFIT & LOSS ACCOUNT ` Crore ` Crore ` Crore ` Crore ` Crore USD Million 7 Revenue 8,433 9,754 8,021 8,938 5, EBITDA 1,050 1,116 1,246 1, Less : Finance Costs Earnings before Depreciation and Tax Less : Depreciation and Amortisation Earnings before Tax and Exceptional Items Add: Exceptional Gain/ (Loss) 2 (104) Earnings before Tax Less : Tax Expenses Less : Dividend (Including Corporate Tax on Dividend) BALANCE SHEET ` Crore ` Crore ` Crore ` Crore ` Crore USD Million 7 Net Fixed Assets (Including Capital Advances and CWIP) 1,976 2,226 1,866 1,879 1, Long term Investments 5,598 5,857 7,952 8,695 9,465 1,456 Cash Surplus & Current Investments Net Working Capital 2,117 2,556 1,574 1,635 1, ,398 10,992 11,949 12,314 12,637 1,944 Share Capital Share Warrants Reserves and Surplus 5,565 6,510 7,978 8,389 8,429 1,297 Net Worth 5,679 6,854 8,108 8,519 8,559 1,317 Total Debt 4,561 3,983 3,753 3,688 3, Deferred Tax Liabilities (Net) ,398 10,992 11,949 12,314 12,637 1,944 RATIOS & STATISTICS Units Interest Cover (EBITDA / Finance Costs) x ROACE (EBIT/ Average Capital Employed) % ROACE 5 (Excluding Long Term Investments) % % Net Debt to Equity (Net Debt 6 / Net Worth) x Net Debt to EBITDA (Net Debt 6 / EBITDA) x Dividend per Equity Share ` (8 Cents) % Basic Earnings Per Share (Weighted Average) ` (43 Cents) Cash EPS (Weighted Average) ` (USD 58 Cents) Book Value per Equity share ` (USD 10.1) Capital Expenditure (Net) ` Crore (USD 17 million) Note 1: Pursuant to demerger of Madura Fashion & Lifestyle into Pantaloons Fashion & Retail Ltd.(PFRL), Madura business ceased to be the division of ABNL w.e.f. 1 st April Note 2: In FY16, exceptional gain includes ` ` 6.4 Crore received as deferred consideration w.r.t. divestment of Minacs. ` 209 Crore on account of one-off items being (a) book gain of ` 24 Crore and net tax credit of ` 41 Crore on divestment of the Carbon Black business and (b) gain of ` 144 Crore on buyback of equity shares by Life Insurance subsidiary. Note 4: Cash Surplus & Current Investments include cash & bank balances, fertilisers bonds and short term ICDs Note 5: (EBIT excluding Dividend Income) / (Average Capital Employed less Long Term Investments) Note 6: Total Debt less Cash Surplus & Current Investments Note 7: 1 USD = ` 65; 10 Million = 1 Crore 37

47 Statutory Reports Management Discussion & Analysis GLOBAL ECONOMY According to the latest International Monetary Fund s (IMF) World Economic Outlook, global economy is recovering at a sluggish pace. Geographies and uncertainty, as they did for most of Global growth declined marginally from 3.4% in 2014 to 3.1% in The IMF projects global growth to inch up to 3.2% in 2016 increasing to 3.5% in In the US growth is expected to be marginal; as gains from an improving housing and labour market are expected to be offset by declining exports due to a stronger dollar and an adverse global trade scenario. The EU economies are recovering at a modest pace. However, with a mounting refugee crisis and UK s exit from the EU, economic risks have suddenly escalated in the region. A moderate slowdown in China is expected, as excess capacity continues to unwind and its economy rebalances from investment to consumption. INDIA OUTSHINES Amidst the challenges at global level, the growth in India was quite reassuring. India s GDP is estimated to grow by 7.6% in FY vis-a-vis 7.2% recorded in the previous year. There was a noteworthy reduction in Control on price rise continued and a remarkable commodity and crude oil prices. The Average WPI- in the negative territory till December CPI average the Reserve Bank of India (RBI) to cut interest rates to spur economic growth. The Government is assertively implementing reforms in the agricultural, manufacturing and services sectors to take the economy on a higher and sustainable growth trajectory. With the Government s Make in India campaign, India is on the path of becoming a manufacturing hub for global manufacturing giants. The Make in India week held in Mumbai in February 2016, received an overwhelming response from investors with ` 15.2 trillion (USD 222 billion) in investment commitments. Implementation of reforms such as liberalising FDI in Insurance and Defence sectors and continuous pursuit of ease of doing business has and will lead to increase in foreign investments in India. to 1.4% of GDP during April-December 2015 from 1.7% in the corresponding period of the previous of 3.9% of GDP for FY India s per capita income at current prices rose by 7.3% to ` 93,231 in FY , compared to ` The Indian economy crossed the USD 2 trillion mark to hit its highest-ever value in June 2016 (Source: expected to continue, led by the Government s focus on infrastructure development, implementation of 7 th Pay commission and projected above normal monsoon after two consecutive weak seasons. These factors will drive growth in agriculture sector, rural demand and investment cycle in the economy. The IMF forecasts India s GDP to grow at 7.5% in 2016 and remain the world s fastest growing economy, ahead of China. ADITYA BIRLA NUVO : A USD 3.6 BILLION CONGLOMERATE ( ABNL or the Company ), is a USD 3.6 billion conglomerate having a leadership position across its Financial Services, Telecom and Manufacturing businesses. The Company has built many large scale businesses from scratch. Mergers and acquisitions have also played a key role in Aditya Birla Nuvo s transformational journey from a small manufacturing company in the late nineties to a large conglomerate today. Well recognised for its market leadership and cost management in industrial businesses till late nineties, the Aditya Birla Group today has a successful and marked presence in the consumer centric service sector space through ABNL. 38

48 Management Discussion and Analysis During FY , the Company continued to progress in line with its mission: Investing in promising sectors Building leadership in businesses A platform to drive synergy of resources Delivering best value to all the stakeholders To be a responsible corporate citizen INVESTING IN THE PROMISING SECTORS During the year, the Company has forayed into three promising sectors for driving its future growth - Solar Power, Payments Bank and Health Insurance. In all these three new ventures, the Company has entered into a 51:49 Joint Venture (JV) with strong partners which will not only share the risk-reward but also bring in the sector expertise on the table. Solar Power: The Government s focus on clean energy has created a huge potential market for Solar Power. To tap the sector opportunity, the Company entered into a 51:49 JV with the Abraaj Group in October In March 2016, the Company won 60 MW Solar Power Projects in Karnataka. The power purchase agreement has been signed in June 2016 and the commissioning is targeted by the end of The Company had received in-principle approval to set up Payments Bank as promoter in September It has incorporated Aditya Birla Idea Payments Bank Ltd. in a 51:49 JV with Idea Cellular in February The JV is in the process of appointing senior management team, selecting the right IT system processes. It is planning to launch services by the end of , after requisite approvals from RBI are in place. Health Insurance: The Company entered into a 51:49 JV with MMI holdings Ltd. a leading South African into health insurance sector in India. Having received approval from FIPB, the JV is planning to launch its services during the second half of , subject to BUILDING LEADERSHIP POSITION IN BUSINESSES Besides promoting the new ventures, the Company continues to invest in the existing businesses to tap the growth opportunities and to fortify its leadership position in these businesses. The business wise highlights are as follows: Aditya Birla Financial Services (ABFS) services player having portfolio of 12 businesses. Ranks among the top 5 fund managers in India (excluding LIC). Funds under management at USD 28.4 billion 1 (` 184,276 Crore), grew y-o-y by 12%. Lending book in the NBFC business (including Housing Finance) reached USD 4.3 billion (` 27,728 Crore) mark registering a 57% year-on-year growth. Annual revenue from the established businesses 2 reached USD 1.4 billion (` 9,192 Crore) and Earnings before Tax reached USD 171 million (` 1,100 Crore), recording a growth of 16% and 21% respectively. Trusted by 8.8 million customers and anchored by over 11,500 committed employees, ABFS has a strong nation-wide presence through about 1,350 branches /touch points and around 1,20,000 agents / channel partners. 3 The Company has forayed into three promising sectors for driving its future growth - Solar Power, Payments Bank and Health Insurance Note 1: Includes AUM of Life Insurance, Private Equity and quarterly AAUM of Asset Management businesses Note 2: Established businesses include Life Insurance, Asset Management, NBFC, Private Equity, Broking, Wealth Management and General Insurance Advisory. New businesses include Housing Finance, MyUniverse and Health Insurance. 39

49 Statutory Reports Telecom (Idea Cellular) Idea is the world s sixth largest 1 cellular operator. Idea is the third largest cellular operator in India with revenue market share (RMS) growing year-on-year from 17.5% to 18.9% 2. Garnered Incremental RMS of 44% 2. Revenue at USD 5.5 billion (` 35,935 Crore) up by 14%. EBITDA at USD 2 billion (` 13,257 Crore) up by 18%. Strong standalone 3 (` 10,120 Crore), a rise of 19%. Healthy balance sheet with standalone Net Debt to EBITDA at 3.25 times as on 31 st March, Manufacturing Divisions (Jaya Shree, Agri, Rayon & Insulators) India s largest Linen, Viscose Filament Yarn (VFY) and Insulators manufacturer and one of the leading manufacturers of urea. Revenue at USD 841 million (` 5,466 Crore). EBITDA at USD 117 million (` 764 Crore) up by 24%. (` 671 Crore), a year-on-year rise of 30%. Strong Return on Average Capital Employed (ROACE) at 21% per annum. A PLATFORM TO DRIVE SYNERGY OF RESOURCES Standalone balance sheet has been ABNL s growth engine and a platform to drive synergy of capital resources. During FY , the Company spent a capex of ` 113 Crore for its divisions and infused capital of ` 967 Crore in the Financial Services businesses. The standalone net debt increased from ` 3,584 Crore in March 2015 to ` 3,786 Crore in March Net Debt to EBITDA stood at 4.5 times and Net Debt to Equity at 0.44 times. During April 2016, ABNL received ` 1,664 Crore from the sale of 23% stake in BSLI and also realised fertilisers subsidy of ` 489 Crore. Adjusting for these, Net Debt to EBITDA stands comfortable for funding the future growth capital requirements. For , ABNL plans to incur a capital expenditure of about ` 325 Crore for its divisions including ` 191 Crore and ` 40 Crore towards the expansion of Linen Yarn and VFY capacities respectively. Besides, there will be a capital requirement to the tune of about ` 750 Crore in the Financial Services businesses (mainly towards NBFC, Housing Finance and MyUniverse businesses) and equity funding requirement to the tune of ` 150 Crore put together for ABNL s 51% share in the new ventures viz., Solar Power, Payments Bank and Health Insurance. ABNL s standalone balance sheet stands strong enough to fund its growth plans, factoring in the proceeds from stake sale in life insurance business from divisions and its ability to pool capital resources. DELIVERING BEST VALUE TO ALL THE STAKEHOLDERS In the direction of unlocking / discovering value for the shareholders, the Company has undertaken following corporate actions during the year: De-merger of Fashion business In a bid to capitalise on its large market presence in the branded fashion space in India, ABNL on 3 rd May, 2015, announced consolidation of its branded apparels businesses under its listed subsidiary - Pantaloons Fashion & Retail Limited ( PFRL ) through a composite scheme of arrangement ( Scheme ). Madura Fashion, the branded apparel retailing division of ABNL and Madura Lifestyle, a luxury branded apparel retailing division of ABNL s subsidiary - Madura Garments Lifestyle Retail Co. Ltd. - stand transferred to and vested in PFRL on scheme becoming effective on 9 th the operations post consolidation, PFRL was renamed as Aditya Birla Fashion & Retail Limited ( ABFRL ) w.e.f. 12 th January ABFRL allotted 26 equity shares to the shareholders of ABNL for every 5 equity shares held by them in ABNL. The newly allotted shares were listed and permitted for trading on BSE & NSE w.e.f. 4 th February With the reduction in resultant holding of ABNL in ABFRL (erstwhile PFRL) to 9.1%, ABFRL has ceased to be the subsidiary of ABNL w.e.f. the appointed date, i.e., 1 st April Note 1: In terms of subscribers, based on operations in a single country (Source: GSMA, December 2015) Note 2: Based on gross revenue for UAS & Mobile licenses for FY (Source: TRAI) Note 3: Standalone = Idea Cellular and its 100% subsidiaries 40

50 Management Discussion and Analysis Largest Created India s largest pure play listed branded apparel retail Company- Aditya Birla Fashion & Retail Ltd. ` 1,664 Crore Garnered by ABNL from the sale of 23% stake in Life Insurance arm This move has created India s largest pure play Fashion & Lifestyle Company, with a strong bouquet of leading fashion brands and retail formats, bringing India s #1 branded menswear and womenswear players together. The consolidation has unlocked value for the shareholders by providing them an opportunity to participate in the promising branded fashion space directly through ABFRL. Stake sale in Life Insurance Venture With the relaxation of FDI in the insurance sector by the Government and pursuant to an agreement with ABNL, the life insurance JV partner Sun Life Financial has raised its stake in the life insurance arm, Birla Sun Life Insurance (BSLI), from 26% to 49% for ` 1,664 Crore, valuing BSLI at ` 7,235 Crore. ABNL has received the proceeds in April It continues to hold the controlling stake in BSLI at 51%. The proceeds were utilised to reduce the debt of ABNL. Considering the current growth plan and with about 2 times solvency margin, BSLI is well capitalised. However, ABNL and Sun Life are committed to fund the growth requirements of BSLI, if and when required. A RESPONSIBLE CORPORATE CITIZEN Even as India has made a mark on the globe as a reservoir of intellectual capital, as a nation we are grappling with quality of life challenges. More so, in the hinterland, where poverty is a ground reality. To address these larger issues, the Company work in tandem with the Government, the district authorities and various NGOs. We, at ABNL, believe in the trusteeship concept of management. Simply put, in the context of social earned into programmes, which results in the larger good of the society. ABNL s community engagement spans 163 villages, inclusive of 14 model villages. Its CSR work is in proximity to its 5 manufacturing units across 3 states of the Country. ABNL has spent ` 7.4 Crore in FY on CSR activities in the areas of Education, Healthcare, Sustainable Livelihood, Women Empowerment & Infrastructure Development. ABNL has also mobilised ` 22.1 Crore through various Government schemes, acting as a catalyst for the community. 41

51 Statutory Reports Consolidated Financials - FY Earnings Revenue Y-o-Y 11% (` Crore) Earnings Mix Segment Revenue (%) FY16 Reported FY15 Like-to-Like 1 23,129 20,798 ` 23,129 Crore Financial Services 40 Telecom 36 Manufacturing Divisions 24 EBITDA (` Crore) Y-o-Y 24% FY16 Reported FY15 Like-to-Like 1 6,535 5,272 Segment EBIT (%) Net Profit Y-o-Y 30% (` Crore) ` 3,101 Crore Financial Services 31 Telecom 48 Manufacturing Divisions 21 FY16 Reported 1,886 2 FY15 Like-to-Like 1 1,447 Pursuant to the demerger of the Company s Madura Fashion division into its subsidiary Pantaloons Fashion & Retail Ltd., the resultant company has ceased to be ABNL s subsidiary and hence has been excluded from its st April The IT-ITeS business of the Company was divested w.e.f. 9 th May Hence, Fashion and IT-ITeS businesses from previous year s reported results, the consolidated earnings registered a robust year-on-year growth. Revenue grew by 11% to ` 23,129 Crore, EBITDA surged by 24% to ` 6,535 Crore ` 1,886 Crore. Outlook The Company remains Big on Growth. It is not only promoting new ventures in the promising sectors but also investing in the existing businesses to tap sector growth has always been Based on Strong Fundamentals. Thrust on offering best-in-class products and services, building quality asset portfolio, optimum sweating of assets to enhance productivity, investing in building leadership embedded in the Company s DNA. A strong balance sheet, an experienced management team, salient brand equity, leadership positions across businesses and a talented human asset are the key drivers which will support future growth of ABNL and the Company will continue to create value for all the stakeholders. A report on business-wise industry scenario, performance and outlook follows. Note 1: Pursuant to the demerger of Madura Fashion & Lifestyle into Pantaloons Fashion & Retail Ltd. (PFRL), w.e.f. 1 st April 2015 and the divestment of the IT-ITeS business w.e.f. 9 th ` 357 Crore on account of cessation of PFRL as subsidiary of ABNL. 42

52 Management Discussion and Analysis Financial Services (Aditya Birla Financial Services) Financial Services Sector Overview India is today one of the most vibrant global economies, on the back of robust banking and sector is undergoing rapid expansion, both in terms entities in the market. The Government has taken various steps to availability of capital resources. RBI has recently paved inclusion agenda. The Government has also allowed FDI in the insurance and pension sectors up to 49% under automatic route. The Prime Minister of India has launched the Micro Unit would in turn provide loans to small and vulnerable sections of the business community. At ABFS, our vision is to be a leader and role model business. We are committed to being a leader in all facets of our businesses, as the top 10 players pools in that segment. Being a role model means setting high standards in all that we do, so that we can continue to earn the trust of our customers. To broad-base our offerings allows us to meet all the needs of our customers across their life cycle. And an integrated business allows us to derive synergies, allows our people a world of opportunities across our many lines of businesses and delivers our customers portfolio of 12 lines of businesses and being positioned among the top players in many segments, along with driving synergy across the platform, we believe we are on course with our slated vision. Business Head - Aditya Birla Financial Services PROGRESSION OF ADITYA BIRLA FINANCIAL SERVICES 1991 Foray in the NBFC business 1994 Foray in the Mutual Fund business 1999 Acquisition of schemes of Apple mutual fund 2001 Foray in the Life Insurance business through JV with Sun Life, Canada Launched Private Equity Fund 2009 Entered retail broking through acquisition of Apollo Sindhoori 2005 businesses under Aditya Birla Nuvo Acquisition of Alliance mutual fund 2012 Launched MyUniverse, India s #1 online personal 2014 Foray in the Housing Finance business Acquired mutual fund schemes & portfolio accounts of ING Mutual Fund in MyUniverse 2016 Entered into JV with MMI Holdings to foray into health insurance business in India Sun Life raised its stake in life insurance JV from 26% to 49% 43

53 Statutory Reports ADITYA BIRLA FINANCIAL SERVICES Aditya Birla Financial Services (ABFS) is an umbrella life insurance, asset management, corporate lending, equity, broking, wealth management & distribution, pension fund management, general insurance advisory has plans to foray into the health insurance business in India, soon. In line with its vision, ABFS has transformed itself in India. It ranks among the top 5 fund managers in India (excluding LIC) with USD 28.4 billion 3 (` 184,276 Crore) of funds under management. ABFS, and services, caters to the life assurance, investment, their lifecycles. It is the 4 th largest private life insurer in India in terms of new business premium market share. It is the 4 th largest asset management company in India. It is among the top 10 non-hfc, non-psu NBFCs in India with USD 4 billion of loan book. Its online personal in India with 2.6 million registered users. Anchored by over 11,500 employees and trusted by 8.8 million customers, ABFS has a nation-wide reach through about 1,350 branches and more than 1,20,000 agents and channel partners. Aditya Birla Financial Services 1 (` Crore) Business Revenue Earnings Before Tax Aditya Birla Finance Ltd. (NBFC) 1,776 2, Birla Sun Life Insurance Co. Ltd. 5,267 5, Birla Sun Life Asset Management Co. Ltd Aditya Birla Insurance Brokers Ltd Aditya Birla Money Ltd. (Broking) Aditya Birla Money Mart Ltd. (Wealth Management) (9) Aditya Birla Capital Advisors Pvt. Ltd. (Private Equity) Others / Elimination (18) (20) (7) (4) Established businesses 2 7,920 9, ,110 New businesses (Housing Finance, MyUniverse & Health Insurance) (67) (115) Total ABFS 7,926 9, Funds under Management 3 (` Crore) Revenue (` Crore) Earnings Before Tax (Established businesses 2 ) (Established businesses 2 ) 5-Year CAGR 16% 5-Year CAGR 8% 5-Year CAGR 19% (` Crore) Mar 16 Mar 15 1,84,276 1,64,775 12% FY16 FY15 9,192 7,920 FY16 1,110 16% 21% FY Mar 11 88,201 FY11 6,304 FY Management Co. Ltd., Aditya Birla Insurance Brokers Ltd. and Aditya Birla Money Ltd. Note 2: Established businesses include Life Insurance, Asset Management, NBFC, Private Equity, Broking, Wealth Management and General Insurance Advisory. Note 3: Includes AUM of Life Insurance, Private Equity and quarterly AAUM of Asset Management businesses. 44

54 Management Discussion and Analysis To fortify its market positioning and expand its portfolio, ABFS continues to invest in the existing as well as new lines of businesses. It has scaled up its operations from portfolio of 12 lines of businesses today including planned foray in the health insurance business. rose by 17% to ` 9,299 Crore led by the NBFC, Life Insurance and Asset Management businesses. Earnings before tax soared by 17% from ` 848 Crore to ` 995 Crore, driven by the NBFC and Asset Management ` 650 Crore grew by 2%. Outlook sector remains robust. The country is projected to 2020, as per a joint report by KPMG-Confederation of Indian Industry (CII). According to India Brand Equity Foundation, Gross national savings in India is expected to reach USD 1.2 trillion by the end of India s HNWIs (high net worth individual) wealth is also likely to expand at a CAGR of 19.7% to reach around USD 3 trillion by The average investment by Indian retail investors in stock market is about 2% which the Government is aiming to increase to 10 15% by Technology will remain at the centre during this growth journey. The data management and analytics are going to play an important role. Major players in the sector are now looking to use data to understand their customer or using mobile money to reduce cash dependence, the industry will have to rely on emerging technologies to gain results. Aditya Birla Financial Services (ABFS), having a well opportunities offered by the under-served Indian market. Its presence across a wide spectrum of provide end-to-end services to its customers through needs, to covering their life and non-life related risks, Consistent strengthening of market positioning across its businesses, unrelenting focus on product innovation, strong brand equity and an experienced management team makes ABFS future ready. ADITYA BIRLA FINANCE LTD. (NBFC) Aditya Birla Finance Limited (ABFL) is one of the India s leading and the most reputed non-banking across all its core functional processes in March 2013 by BSI, a leading global independent business services organisation. It offers customised solutions in the areas of Capital Market, Corporate Finance, Commercial Real Estate and Mortgages and Infrastructure Project and Structured Finance. Industry Overview The Indian economy continues to be in a bright spot. The country s credit industry is at a unique juncture in its history with fundamental changes in the banking from strength to strength. Overall credit growth over the coming decade in India is expected to remain robust, and NBFC growth in particular has a much larger potential. NBFCs grew by 18.8% year-on-year for nine months ended 31 st December 2015 vis-à-vis 14.5% growth attained in FY Credit market activity was weighed down by a weak demand due to sluggish industrial and corporate activity; and the presence of a considerable slack. In addition, risk aversion by banks owing to Over the past 10 years, NBFCs have slowly but steadily gained share in the total credit in India from 10% in 2005 to 13% in Due to the nature of India s segments of the economy that banks cannot adequately USD 28.4 Bn (` 184,276 Crore) Funds Under Management of Aditya Birla Financial Services 45

55 Statutory Reports USD 4.0 Bn Lending book at ` 25,755 Crore registered a 5-year CAGR of 69% TOP 10 Among the top 10 non-hfc, non-psu NBFCs in India 15.4 % p.a. 16 x Return on Average Equity Net Worth grew from ` 235 Crore in March 2010 to ` 3,696 Crore in March 2016 Performance Review Lending Book of ABFL grew year-on-year by 47% to reach ` 25,755 Crore mark as on 31 st March 2016 placing it among the top 10 non-hfc, non-psu NBFCs in India. The Corporate Finance and Infrastructure Finance segments were the largest contributors to the growth, followed by the Mortgages segment. Lending book in Infrastructure Finance, Corporate Finance, Mortgages and Capital Market segments surged by 82%, 72%, 30% and 6%, respectively. The sound growth in the loan book has been accompanied by strong credit appraisal and risk management practices. As on 31 st March, 2016, ABFL had a healthy loan book with Gross NPA ratio of 0.63% (Previous Year: 0.90%) and Net NPA ratio of 0.22% (Previous Year: 0.32%) based on 150 days past due. growth. Earlier in 2011 it entered into mortgages and combined together account for 54% of total loan book. Recently ABFL has entered into unsecured business loans ABFL has expanded its loan book at a CAGR of 69%. The business has received a capital infusion of about ` ABFL expanded its branch network from 9 cities in 2011 to 18 cities in March 2016 having 29 branches today. ABFL is targeting to expand its reach to 30 cities in the next two years and deepen its penetration in current and new geographies with multi locations. To create greater brand awareness, the business is planning a balanced mix of tactical and above the line marketing. Mortgages segment offers customised property backed loans to fund business growth requirements comprising loan against property (48%), lease rental discounting in 2011, it has grown multi-fold to reach ` 6,600 Crore mark. Gross disbursements were to the tune of ` 3,900 Crore during FY 16. Almost 100% of the loan book is secured. With increased focus on retail segment as a driver of future growth, ABFL is planning to expand its retail footprint through deepening of geographical presence in existing and new locations. capital market securities to the customers to meet their liquidity requirements. Its book at ` 4,407 Crore comprises Promoter Funding (41%), Retail lending (32%), Loan against Bonds (8%) and Broker Funding (19%). Securities based lending market size has doubled in the last four years. ABFL has improved its market ranking in this segment from #6 in 2011 to #1 in December 2014 and maintained its leadership position till date. Gross disbursements were to the tune of ` 10,400 Crore during the year. needs of SMEs, mid and large corporate clients through term loans (67%), working capital demand loans (17%), portfolio at ` 6917 Crore comprises funding to SME (40%), large corporate (34%) and mid corporate (26%). The number of accounts in this segment has grown over four times over the past four years. Gross disbursements were to the tune of ` 11,900 Crore during FY

56 Management Discussion and Analysis Lending Book 5-Year CAGR 69% (` Crore) Segment-wise loan book (%) FY16 25,755 FY15 17,564 FY11 1,850 47% ` 25,755 Crore (March 2016) Infra Finance 28 Corporate Finance 27 Mortgages 26 Capital Market 17 Others 2 Revenue (` Crore) EBT (` Crore) Net Worth (` Crore) 5-Year CAGR 66% 5-Year CAGR 63% 5-Year CAGR 49% FY16 FY15 2,442 1,776 37% FY16 FY Mar 16 3,696 52% 43% Mar 15 2,585 FY FY11 55 Mar Infrastructure Finance segment provides project and structured funding to infrastructure and other emerging sectors. Debt syndication team helps raise debt and equity funding. Commenced in 2011, the lending book in this segment has grown multi-fold to ` 7,336 Crore. Its for more than 15% of the infra segment loan book. Having an average ticket size of about ` 100 Crore, the average tenure of the loan book stands at less than 5 years. Gross disbursement stood at ` 5,657 Crore during the year and Debt Capital Market & Debt syndication at ` 2,300 Crore. ABFL has very recently started providing retail unsecured business loans to SMEs and MSMEs and personal Loans to salaried Individuals. The book size stood at ` 22 Crore as on 31 st March Given the changing technological landscape, ABFL is parallely developing digitised modes of acquiring and servicing customers. Proposed digital lending model will evolve as paperless and resource light model to source, evaluate and service customers. During FY , ABFL s revenue soared by 37% from ` 1,776 Crore to ` 2,442 Crore, driven by strong growth in the lending book and fee based income. Its earnings before tax rose by 52% from ` 411 Crore to ` ` 271 Crore to ` 409 Crore. Return on average equity expanded by 80 basis points to 15.4% p.a.; and return on average assets enhanced by 8 basis points to 2.1% p.a. ABFL received a capital infusion of ` 702 Crore during the year, a large part of which was funded during the fourth quarter. This supported the growth, while keeping leverage at optimum levels. Its net worth expanded yearon-year by 43% from ` 2,585 Crore to ` 3696 Crore led by capital infusion and internal accruals. The business is growing at a good pace and will require further capital for future growth. with 70% of total borrowings being long-term. Capital Adequacy ratio stood at 16.2% (Tier 1 : 13.7% and Tier II : 2.5%). It has highest A1+ rating for short term debt and AA+ rating for long term debt from ICRA and India Ratings. 0.63% Gross NPA ratio Best-in-Class in the industry. 47

57 Statutory Reports NPA Trend (%) Mar 12 Mar 13 Mar 14 Mar 15 Mar 16 Gross NPA Net NPA Opex to Net Interest Income (%) FY12 FY13 FY14 FY15 FY16 Return on Avg. Equity and Assets (%) FY16 FY15 FY14 FY FY Return on Avg. Equity Return on Avg. Assets (%) FY15 FY16 Total Income / Average Loan book Interest Cost / Average Loan book Net Interest Income (Including Fee income) Opex / Average Loan book Provisions & Write-offs / Average Loan book Earnings before Tax / Average Loan book (` Crore) Loan Book 17,564 25,755 Revenue 1,776 2,442 Earnings before Tax Net Worth 2,585 3,696 Borrowings 14,594 21,409 Leverage (times) Outlook India as a percentage of GDP at 97% remains very low compared to 165% to 447% in large economies like China, US, Japan and UK. NBFC credit as percentage of GDP is even lower at 13% compared to 33% to forecast, Seventh Pay Commission, the Government Initiatives like Make in India and StartUp India will help bolster consumption and investment in the economy. The lower credit penetration and huge capital formation requirement of the country paints bright long term outlook for the NBFCs. Technology will play a big role in realising the inherent growth potential of NBFCs. Aditya Birla Finance Ltd., through its customised to partner with the entrepreneurial India in pursuing and executing its ambitious growth strategies. ABFL will continue to pursue its future growth strategies through deepening of its relationships across segments. It is planning to further diversify its offerings for sustainable growth. Besides, sustaining the asset quality, effective use of technology to enhance productivity and broad basing its liability mix will remain the key focus areas. 48

58 Management Discussion and Analysis ADITYA BIRLA HOUSING FINANCE LTD. Aditya Birla Housing Finance Limited (ABHFL) is the National Housing Bank (NHB) Act, ABHFL enables its customers to own their dream homes such as home loans, home improvement and home construction loans, balance transfer and top-up loans, Industry Overview The total housing credit outstanding in India as on 31 st December 2015 crossed ` 11.9 trillion growing at an annualised rate of 18% over ` 10.5 trillion of credit outstanding as on 31 st March The share of Housing Finance Companies (HFCs) and 37% as on 31 st December The growth for HFCs and NBFCs has largely been driven by higher growth in the portfolio of smaller HFCs. The market has multiple players operating in the housing increasing steadily. Most of these new entrants focus on the relatively under-penetrated low-ticket home loan segment or affordable housing segment or on selfemployed segment. Besides, six companies have applied to NHB for HFC licenses, which are under process. Performance Review ABHFL, which commenced operations in October 2014, business. From ` 142 Crore of loan book and a base of 109 active customers in March 2015, ABHFL has ended March 2016 with a loan book of ` 1,973 Crore and about 2,600 active customers. On an average, more than 200 customers have been added every month with an average monthly disbursement of over ` 150 Crore. A sum of ` 189 Crore was infused during the year to fund the loan book growth. (` Crore) Loan Book 142 1,973 Revenue Earnings before Tax (5) (30) Net Worth There was a strong focus on building distribution capabilities and delivery infrastructure, which led to ABHFL s footprint expanding from 15 markets in March 2015 to 32 markets in March Over 700 channel partners were empanelled this year to improve our indirect sourcing capabilities. In the direct sourcing space, online customer acquisition, builder associations and the Aditya Birla Group ecosystem were effectively leveraged. ABHFL has and processes for loan origination till on-boarding and servicing. The underlying message that ABHFL wants to deliver to its customers is Don t settle for less - Know your true worth - Get the home you truly deserve - Ghar wahi jo aapke kaabil ho!. ABHFL has combined the customer need and its product proposition to give birth to - a tool that helps home buyers realise their true worth. ABHFL has built a communication campaign around this idea that is currently running across multiple touch points. Outlook sector remains favourable owing to the Government of India s focus on Housing for All by 2022, which could push the overall housing credit growth upwards of 20% p.a. over next 5 years to reach a projected ` 31 trillion loan book size. Individual Home Loans, at ` st December 2015, denoting three times opportunity compared to other mortgages loans. book through optimal product-sourcing-customer mix. Thrust will be on tactical marketing for branding and customer acquisition, quality customer service for better customer retention and improving operating ` 1,973 Crore Lending book as on 31 st March

59 Statutory Reports BIRLA SUN LIFE INSURANCE CO. LTD. Birla Sun Life Insurance Co. Ltd. (BSLI) is a 51:49 JV between ABNL and Sun Life Financial Inc., a Canada. With an experience of over a decade, BSLI has contributed to the growth and development of the Indian life insurance industry; and currently is one of the India s leading life insurance companies. BSLI is serving a large customer base of over 1.5 million policy holders through an extensive reach of 489 branches, about 70,000 direct selling agents and over 150 corporate agents, brokers and banks. Industry Overview The Indian life Insurance industry currently comprises 23 private life insurers and one public sector life insurer LIC. The top 7 out of 23 private life insurers contributed to 74% of the private sector s total new business premium in In , the life insurance industry s new business premium grew by 11% to ` 59,690 Crore. While LIC grew by 9%, private sector grew by 14%. Consequently, the share of private players in total new businesses increased from 47% to 48%. In terms of Individual Life new business, private life insurers grew by 14%, while LIC grew by 3%. (Source: IRDAI, www. irda.gov.in). The private sector s new business growth was mainly driven by players having large private banks as bancassurance partners. In a major positive development for the insurance industry, the Government of India has increased FDI limit in the insurance sector from 26% to 49%. of the industry and help in bringing foreign capital and global best-practices. The proposed open architecture for corporate agents and banks presents reach within the country and also through exploring POS opportunities. Performance Review BSLI is the 4 th largest private life insurer in India with new business 1 market share of 7.6% for the year ended 31 st March, BSLI continued to rank # 1 among USD 4.7 Bn (` 30,811 Crore) Assets under management 25.6% BSLI is # 1 in Group segment with new business market share of 25.6% 1 private players in Group new business premium with 25.6% 1 market share up from 23.1% market share in the previous year. BSLI recorded a gross premium income at ` 5,580 Crore, registering a growth of 7% over previous year. New business premium income was up by 15% at ` 2,220 Crore. While new business premium income from the Group segment surged by 28%, individual life segment premium declined by 7%. On a like-tolike basis, i.e., excluding sales from Citi Bank from last year, individual life premium grew y-o-y by 5% driven by Agency channel. The Agency channel gained momentum through deeper penetration and enhanced productivity and posted a growth of 10% in individual ` 285 Crore to ` 140 Crore primarily on account of decline in the in-force book over past few years and due to higher expense gap. Assets under Management enhanced by 2% to ` 30,811 Crore. Equity and non-equity assets contributed to 29% and 71% of the total AUM respectively. BSLI continued to deliver superior investment returns to its policyholders, consistently beating benchmarks. Besides premium growth coming back, there has been improvement in the quality of business as well. As a result of disciplined expense management, the Opex to Premium ratio (including Commission) has reduced yearon-year by 90 basis points to 20.1%. The 13 th month persistency ratio improved by 250 basis points to 64.7% Note 1: In terms of Annualised Premium Equivalent (APE) 2 among private sector players Note 2: APE = 100% of regular premium + 10% of single premium 50

60 Management Discussion and Analysis No capital infusion has been required since past six years as the business is generating adequate internal accruals to fund its growth requirements. Pursuant to an agreement with ABNL, Sun Life Financial has bought 23% stake in BSLI from ABNL for ` 1,664 Crore in April 2016, valuing BSLI at ` 7,235 Crore. ABNL continues to hold the controlling stake in BSLI at 51%. (` Crore) Individual First Year Premium Group First Year Premium 1,177 1,509 Total First Year Premium 1,938 2,220 Renewal Premium 3,295 3,359 Total Premium Income (Gross) 5,233 5,580 Less: Reinsurance ceded & Service tax (267) (268) Total Premium Income (Net) 4,966 5,312 Other Operating Income Revenue 5,267 5,708 Earnings Before Tax Assets Under Management 30,185 30,811 Net Worth 1,542 1,681 Outlook The life insurance sector is likely to expand in a sustainable manner for the next three to four years. Growth is back for private players after a long gap. Indian Life Insurance industry ranks among the top 10 markets in the world in terms of premium volumes. However, in terms of life insurance density, India ranks 56 th globally. Life Insurance density in terms of premium per capita is meagre USD 43 in India compared to global average of USD 346. The enhanced 49% FDI limit, the improvement in the macro-economic environment, and more stability in regulations augurs well for the industry growth. BSLI is embracing itself to tap into the sector opportunities with a strong focus on building new engines for growth, continual improvement in agency dynamics, balancing product and channel mix and maintaining leadership in the group segment. Enhancing improvement in persistency are also the focus areas. BIRLA SUN LIFE ASSET MANAGEMENT CO. LTD. Established in 1994, Birla Sun Life Asset Management Co. Ltd. (BSLAMC) is a 51:49 joint venture between Aditya Birla Nuvo and Sun Life Financial Inc, Canada. It offers a range of investment options, including and monthly income funds, a wide range of debt and treasury products and offshore funds, and so on. Industry Overview The Indian mutual fund industry comprises 42 asset management companies. The top 10 asset management companies continued their dominance, capturing about 80% of the industry s domestic average AUM (AAUM). The AAUM of Indian mutual fund industry grew year-on year by 14% to reach its highest ever ` 13.5 trillion. Industry s Equity Assets grew year-on-year by 15% to ` 4.2 trillion contributing to 33% of industry s AUM growth during past one year. During the quarter ended 31 st March 2016, the share of equity AAUM in the total industry AAUM stood at 31%. Debt and Liquid assets grew by 12% and 16% respectively to ` 6.1 trillion and ` Performance Review The total AAUM of BSLAMC expanded year on year by 14% to ` 152,427 Crore. Its market positioning as 4 th largest asset management company in India got cemented with an improved market share of 10.1%. Its domestic Equity AAUM surged y-o-y by 23% to ` 31,891 Crore driven by 10% growth in equity net sales. 4 th Largest Asset Management Company in India USD 23.5 Bn (` 152,427 Crore) Average assets under management 51

61 Statutory Reports Growth in AAUM 5-Year CAGR 18% (` Crore) Rising Market Share (%) Q4FY16 31, ,612 15, , Q4FY15 133, ,881 93,871 13,718 Q4FY11 67,560 Q4FY11 Q4FY15 Q4FY16 11,313 52,383 3,864 Equity Fixed Income Offshore & Alternate Assets Domestic AAUM Share Equity AAUM Share BSLAMC is consistently gaining market share with a strong focus on scaling up retail and higher margin assets. Its equity ranking improved to #4 with market share improving from 7.11% to 7.61%. Share of equity assets in domestic AAUM rose y-o-y by 175 bps to 23.4%. Its monthly SIP book size increased by 59% y-o-y to reach ` 282 Crore, and live SIP market share increased by 82 bps y-o-y to 9.69%. Its domestic Equity AAUM has grown almost 3 times in past 5 years and its offshore assets have grown more than 5 times to ` 13,718 Crore. In recognition of its strong fund performance across multiple asset classes, BSLAMC was adjudged as Runner up - overall AMC of the year and Runner up Equity AMC of the year in Outlook Money Awards (` Crore) Average Assets under Management 1 Equity 25,881 31,891 Debt and Liquid 93,871 1,04,612 Domestic 1,19,752 1,36,503 Offshore 12,028 13,718 Real Estate Fund 967 1,001 PMS 722 1,205 Total 1,33,470 1,52,427 Revenue (Fee Income) Earnings Before Tax Net Worth Note 1: Average AUM for the quarter ended 31 st March of the respective year. The portfolio management services (PMS) AAUM of BSLAMC rose by 67% to ` 1,205 Crore. The client base of BSLAMC increased y-o-y by 21% to 2.9 million customers served by 109 advisors. Led by strong growth in assets under management, BSLAMC posted sound earnings growth. Revenue grew by 28% to ` 765 Crore. Earnings before tax rose by 73% to ` ` 203 Crore. Its Net worth has swelled by 35% to ` 779 Crore. Outlook Mature economies like United States and United Kingdom have developed a high AUM to GDP ratio over the years at 91% and 40% respectively. Infact, developing countries like Brazil, Spain and Mexico have higher AUM to GDP ratio at 42%, 19.5% and 9.3% respectively compared to 6.6% for India. It clearly indicates that there is a huge scope of assets in India. BSLAMC will continue to lay thrust on increasing its market share in equity and expanding its investor base. Increasing contribution from beyond top 15 markets will remain a focus area besides strengthening digital presence as a customer acquisition engine. 52

62 Management Discussion and Analysis ADITYA BIRLA INSURANCE BROKERS LTD. Aditya Birla Insurance Brokers Ltd. (ABIBL) is a leading composite general insurance intermediary, licensed by IRDAI. ABIBL specialises in providing general insurance broking and risk management solutions for corporate and individuals alike. ABIBL offers reinsurance solutions to general insurance companies; and has developed strong relations with Indian as well as global insurers operating in India and many others in South Asia, the Middle East and South East Asia. Industry Overview Gross premium underwritten by the non-life insurers in India has grown by 14% from ` 84,802 Crore to ` 96,394 Crore (Source: GIC Council). Motor Insurance, Health & Personal Accident Insurance and Fire Insurance segments attained premium growth of 13%, 21% and 8% respectively and remained the top 3 contributors to the non-life Industry premium with about 44%, 28% and 9% share. Performance Review ABIBL has been consistently outperforming industry and gaining market share. Its premium placement grew by 43% year-on-year from ` 1,132 Crore to ` 1,624 Crore while industry premium grew by 14%. Premium placement growth was driven by 58%, 17% and 31% growth in Motor Insurance, Health & Personal Accident Insurance and Fire Insurance segments. Its market share in non-life industry premium enhanced from 1.33% to 1.68%. In line with growth in premium placement, ABIBL s revenue rose by 33% from ` 73 Crore to ` 97 Crore and earnings before tax increased by 23% to ` 33 Crore. It ` 21 Crore vis-a-vis ` 18 Crore in the previous year % Market share in non-life industry premium ABIBL Market share (%) FY12 FY13 FY14 FY15 FY16 Outlook India s insurance industry is the world s 12 th largest with a total premium of about ` 470,000 Crore in calendar year It ranks 10 th in the world in the life insurance segment and 18 th in the non-life segment. Non-life insurance density in 2015, measured in terms of premium per capita, is meagre at USD 11.5 in India compared to global average of USD The sheer size and growth potential due to lower penetration makes India one of the most attractive markets. ABIBL will continue to focus on expanding its customer base in a cost-effective manner to grow its business. ADITYA BIRLA CAPITAL ADVISORS PVT. LTD. (PRIVATE EQUITY) Aditya Birla Capital Advisors Pvt. Ltd. ( ABCAP ) provides investment management and advisory services to Aditya Birla Private Equity Trust, a venture capital fund registered with SEBI. ABCAP has been formed with the aim of advising, launching and managing a series of private equity funds to invest in and harvest business growth opportunities created by the strong economic prospects of the Indian economy. Industry Overview Private equity industry saw robust growth with investments touching an all time high of USD 16.8 billion in Calendar Year (CY) 2015 vis-à-vis USD 11.2 billion in CY The volatility in the global markets in early CY 2016 however has dampened the investment climate, A perceptible change was witnessed during CY 2015 with buyout deals at USD 3 billion vis-à-vis only USD 631 million in CY [Source: Venture Intelligence] 53

63 Statutory Reports Performance Review Aditya Birla Private Equity (ABPE) is managing a ` 1,037 Crore of net corpus under two sector-agnostic funds. Aditya Birla Private Equity Fund I manages ` 750 Crore of net corpus and provides growth capital to the established companies across sectors. Aditya Birla Private Equity Sunrise Fund manages ` 287 Crore of net corpus and provides growth capital to emerging companies in sunrise sectors. Both Fund I and Sunrise Fund have invested their net deployable corpus as on 31 st March, 2016, and ABPE is planning to launch a 3 rd fund soon. During , ABCAP reported revenue of ` 20 Crore ` 5 Crore. Outlook The capital adequacy norms of banks and the limit on the minimum size of contribution by investors under AIF Regulation continues to impact the ability to raise further capital in the domestic markets. Aditya Birla Private Equity is planning to make a foray into the offshore markets in FY for raising funds with an aim of investments into India. While the short term outlook for India continues to be cautiously optimistic, the tenets for an economic recovery are in place viz., lower commodity prices, interest rates. ABPE intends to handhold the portfolio companies over this growth phase for ultimately generating optimum returns for the investors. ADITYA BIRLA MONEY LTD. (BROKING) Aditya Birla Money Ltd. (ABML) is a broking company, offering equity and derivative trading through NSE and BSE and currency derivative on MCX- SX. It is registered as a Depository Participant with both NSDL and CDSL and provides commodity trading on MCX and NCDEX through its subsidiary. Industry Overview After going through a bull phase in FY , the equity markets remained weak during the most of FY Muted growth and weak sentiments at global level affected the domestic capital markets as rate hike in almost a decade by the US Central Bank and other geo-political risks continued to weigh heavily on the ` 1,037 Crore Net Private Equity Fund under management domestic markets. Market volumes fell by 8% in retail cash equity segment while grew by 16% in retail F&O and by 11% in commodity segments. Retail participation in total equity market volumes increased from 39% to 46%. The product mix in equity markets continued to favour the low yielding derivative segment with 91.6% share. The daily cash volume de-grew by 5% to ` 20,274 Crore while the daily derivatives volume de-grew marginally by 3% to ` 2,22,332 Crore. This continuing trend also indicates speculative activities taking precedence over investment led activities in the capital market. Performance Review cash equity segment, grew from 0.64% to 0.72% in commodity segment while it de-grew from 2.48% to 1.42% in retail F&O segment. Despite year-on-year decline of 12% in the average daily brokerage, ABML maintained its revenue at ` 120 ` 3 Crore vis-a-vis ` 6 Crore attained in the previous year. Outlook Indian broking industry is expected to show sign of The broking industry will continue to face pricing challenges with institutional brokerage commission being capped at 12 bps for cash market and 5 bps for year. The yield in the F&O segment also remained under pressure due to intense competition in the segment. ABML will continue to thrust on improving its market share by creating product and service differentiation across segments. Extensive use on technology, driving customer acquisition and retention, expanding network partners and providing value added services to its clients will be key focus areas. 54

64 Management Discussion and Analysis ADITYA BIRLA MONEY MART LTD. (WEALTH MANAGEMENT) Aditya Birla Money Mart Ltd. (ABMM) is a wealth management and distribution player, offering thirdparty products like mutual funds, company deposits, life insurance products, structured products, alternate investments, property services etc. ABMM also has a premier wealth management service arm to cater to the HNI customers. Industry Overview While there are a few large wealth management players in India; the mutual fund distribution industry is very fragmented. Advisory asset management and tax planning has one of the highest demands among wealth management services by High Net Worth Individuals Performance Review ABMM is one of the largest corporate distributors in terms of assets under advisory. Direct plan for investment in mutual funds continued to impact the assets under advisory across the industry. The quarterly Assets under Advisory (AUA) of ABMM stood at ` 7,814 Crore for the quarter ended 31 st March, 2016, a decline of 12% over last year. However, average equity assets under advisory expanded by 20% to ` 2,185 Crore. Revenue of ABMM de-grew from ` 86 Crore to ` 60 Crore. It posted a net loss of ` 9 Crore vis-a-vis net ` 5 Crore attained during the previous year. The capping of upfront commission on distribution of mutual funds schemes at 1% with effect from 1 st April 2015 has affected the earnings of the distributors across the industry. Outlook The capping of upfront commission was a dampener in the short run. However, the long term outlook for the strong. Higher gross national savings rate and rising size of high net worth individuals coupled with increasing of professional advisors present a considerable growth opportunity for the wealth management players. ABMM s thrust will be on building mutual fund and PMS assets and expanding its customer base by providing value added wealth management solutions to its clients through product innovation and technology support. ADITYA BIRLA MONEY MYUNIVERSE (ONLINE PERSONAL FINANCE MANAGEMENT) A integrated Online Personal Finance Management decisions. Though Indians are great savers, few end up creating long term wealth due to lack of guidance on saving and investing their hard earned money. MyUniverse helps customers get a complete, live their bank, credit card, mutual fund, stock, insurance and loan accounts. Apart from generating various spending, smart saving and prudent investing. million registered users who are managing close to ` 200 billion through this platform. MyUniverse has been providing money management in the country and the 2 nd app in the world to support account aggregation on mobile. It has more than 1 million downloads across Android and ios and more than 1.2 million monthly visits. MyUniverse had launched ZipSIP in February 2015, product to life, which allowed even non-kyc investors bring innovations such as e-kyc and 1-click MF portfolio execution. Presently through ZipSIP, MyUniverse is the 7 th largest distributor of new SIPs in numbers in India # 1 platform in India ` 200 Bn Money under aggregation 55

65 Statutory Reports 7 th Largest SIP distributor in India with market share and ranking improving from 0.6% and 19 th during April-June 2015 to 3% and 7 th during January-March Maxit, which allows customers to save every time he swipes his card. Maxit does this by understanding one s cards, spends and location, and delivering the right offer, at the right place and the right time. completely automated instant personal loan, which will ensure that the customer will have funds credited in his account, once he passes successfully through the online loan application process, instantly. Apart from this, theme based equity portfolio advisory is in the pipeline. In December 2014, International Finance Corporation During FY , revenue of MyUniverse grew from ` 3 Crore to ` 6 Crore. It posted net loss of ` 70 Crore vis-a-vis ` 61 Crore in the previous year as the business is investing in technology for seamless and secure digital customer experience, in brand for accelerating customer acquisition and in products for leveraging this platform to cross sell and scale up transactions. ADITYA BIRLA HEALTH INSURANCE CO. LTD. Industry Overview Indian health insurance sector is the fastest growing segment in the insurance space. It grew at a CAGR of 25% in the past 5 years and is expected to grow at a CAGR of 18% over next 10 years. In India, about 76% of healthcare expenditure is out of pocket due to absence of social security and a large population being self employed or working in the unorganised sector. The drivers for healthcare market are demographic transformation and increased life expectancy, increasing incidents of lifestyle diseases, increasing cost of medication and increased affordability and awareness. Performance Review ABNL and its 100% subsidiary Aditya Birla Financial Services Ltd. (ABFS), had entered into a joint venture agreement with MMI Holdings Ltd. (MMI) in June 2015 to foray in the health insurance business in India. Having received the FIPB approval, MMI Strategic Investments (PTY) Limited, a wholly owned subsidiary of MMI Holdings Ltd. acquired 49% stake in the health insurance venture Aditya Birla Health Insurance Co. Ltd. (ABHICL) in June ABFS owns the controlling stake in ABHICL at 51%. ABHICL is targeting to launch of its services during the second half of FY subject to the approval from IRDAI. ABFS has incorporated a separate 100% subsidiary for the wellness business which is also proposed to be a 51:49 joint venture with MMI. Outlook Healthcare expenditure as a percentage of GDP at 5% in India is among the lowest compared to 17% in the US, 9% each in UK, South Africa and Brazil and 6% in China. However, with the rising costs, the healthcare spend as a percentage of total household expenditure has increased from 7% in 2005 to 9% in 2015 and is expected to increase to 13% by Indians are also beginning to spend increasingly on preventive care to stay away from hospitals. With the cost per hospital incident going up for retail customers and cost of sickness going up for corporate, a large opportunity exists for the private sector players in the health insurance and wellness space. Aditya Birla Health Insurance Co. Ltd. is all set to tap the sector growth opportunity. 18% Projected CAGR of Health Insurance Industry over next 10 years 56

66 Management Discussion and Analysis Telecom (Idea Cellular Limited) Idea Cellular Limited ( Idea ) is the third largest wireless operator in India with a Revenue Market Share (RMS) of 18.9% 1 and active subscribers base of 184 million customers. Idea is the sixth largest mobile telecommunications company in the world 2. Idea s pan- India customer reach spans 8,000+ exclusive outlets and 1.6 million transacting retailers. Idea is a pan-india integrated GSM operator covering over 390,000 town & villages and offering 2G services in all 22 service areas and 3G service in 21 service areas of India (except Orissa), including thorough Intra-Circle Roaming (ICR) arrangements with other operators for eight service areas. Idea now also offers 4G services in 10 service areas. Industry Overview Total wireless subscribers base in India increased yearon-year by 7% from 970 million to 1,034 million as of March 31, Pan India mobility rural penetration at 50.9% will be key growth driver. In FY16, about 48% of new subscriber addition came from rural sector. The regulatory changes have impacted the overall growth of the industry in FY viz. reduction in IUC settlement charges, sharp drop in roaming and SMS charges coupled with the increase in service tax etc. Industry has also faced intense battle for new subscribers in Voice segment and slower than anticipated new customer uptake for wireless broadband services against colossal supply increase both, by existing 3G operators expanding coverage and launch of new 3G and 4G services from spectrum acquired by telecom licensees in the Auctions of 2014 and Despite slow revenue growth of telecom industry, Idea continues its enviable track record of being the fastest growing large operator for the 8 th straight year. During wireless sector grew moderately by 5.4% to USD 29.7 billion (` 1.93 trillion) vis-a-vis growth of 10.8% attained in the previous year. Idea cellular outperformed the industry by registering 14% revenue growth. (Source: TRAI). During FY , Idea extended its stupendous track record of outperforming the industry by growing at more than 2 times the industry growth rate. It remains the fastest growing Indian Telco, now for 8 th year in a row. While Idea s legacy revenue market share stands at 18.9%, Idea is a clear #2 in terms of incremental revenue market share over the past three years. On the back of ` 10,000 Idea, wide distribution channel reach and rapid network expansion, Idea stays nimble, agile, emerging opportunities in Mobile Voice and Data Market. Business Head - Telecom Performance Review Post allocation of the spectrum won in March 2015 auction, Idea has MHz of spectrum acquired in auction which is 87.6% of its total spectrum holding. The offer any service (2G, 3G or 4G), based on the consumer demand and development of eco-system. To capitalise on the data opportunity, Idea is aggressively expanding its 3G and 4G footprints, leveraging its strong spectrum bank. Idea s own 3G/4G wireless broadband spectrum now covers 87% of its revenue. # 6 Mobile operator in the world 2 Note 1: Based on gross revenue for FY for UAS and mobile licenses only (Source: TRAI) Note 2: In terms of subscribers, based on operations in a single country (Source: GSMA, December 2015) 57

67 Statutory Reports Idea s pan-india revenue market share 1 rose from 17.5% in FY to 18.9% in FY Idea contributed to 44% of the industry s incremental mobile revenue during FY Mirroring the brand popularity and quality of its services, Idea s active subscriber ratio at 104.4% as of February 2016, is the highest in the industry. Idea is also the leading net subscribers gainer in the mobile number portability programme. Robust growth in Subscribers & MOUs FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 Minutes of Use (billion minutes) Subscribers (million) Idea is listed on NSE and BSE, with a market capitalisation of ` 397 billion as on 31 st March, In , Idea generated 786 billion minutes of use (MoU), registering a strong 15% y-o-y growth. Data volumes grew by 72.7% to 298 billion Mega Bytes. Led by strong growth in MoU and data volumes, Idea s top-line rose by 14% to ` 35,935 Crore. EBITDA surged by 18% to ` 13,257 Crore. EBITDA margin was improved y-o-y despite competitive pressure on voice & data realisation coupled with higher opex on account of networks roll-outs and faster subscriber growths. Idea generated strong post tax standalone 2 ` 10,120 Crore a growth of 19% y-o-y. Rise in depreciation and interest cost on account of rapid expansion of 3G/4G services and renewal of ` 3,080 Crore marginally declined y-o-y by 4%. In , Idea incurred a capex of ` 78 billion, # 3 Mobile operator in India with 18.9% RMS 1 capex guidance for stands at ` billion, excluding spectrum related payments. Standalone 2 balance sheet remained healthy with Net Debt to EBITDA at 3.25 times. Idea has proposed an equity dividend at 6% of equity share capital. Overall payout including dividend distribution tax will be ` 260 Crore. (` Crore) Revenue 31,527 35,935 EBITDA 11,281 13,257 Segment EBIT 5,508 6,379 3,193 3,080 Cash Surplus 13,080 2,155 Net Worth 23,029 25,768 Total Debt 26,859 41,503 ABNL's shareholding in Idea (%) 23.28% 23.26% Outlook The trends emerging from Spectrum Trading and Sharing deals as well as lack of participation by smaller operators during spectrum auctions, indicate competition intensity to recede specially in voice segment. Mobile data is the next big opportunity in the telecom sector. Low wireless internet user penetration at 31% and mobile broadband user penetration at meagre 11.8% coupled with aggressive data network infrastructure expansion by Telcos augurs well for the telecom industry. Emerging revenue streams viz., Mobile Banking and Digital Wallet, M2M, IoT & Cloud, Digital content Services etc. will be the gen-next growth drivers for the telecom industry. Idea Cellular remains nimble, agile, adaptable and Mobile Voice and Data markets. On the back of strong positioned to support its growth plans. Note 1: Based on gross revenue for FY for UAS & Mobile licenses only. (Source: TRAI) Note 2: Standalone = Idea Cellular and its wholly owned subsidiaries 58

68 Management Discussion and Analysis Manufacturing Divisions Aditya Birla Nuvo has a strong market positioning in Linen, Urea, Viscose Filament Yarn (VFY) and Insulators sectors through its divisions. Jaya Shree Textiles, Indian Rayon and Aditya Birla Insulators are the largest manufacturers of Linen Yarn & Fabric, Viscose Filament Yarn and Insulators in India. Indo-Gulf Fertilisers is the 8 th largest urea manufacturer and among the top 2 Steady Free Cash Flow (FCF) generation from divisions provides cushion to ABNL s standalone balance sheet and supports the Company s growth capital requirements. Over past 5 years, these manufacturing divisions, combined about ` 1,000 Crore. 21% p.a. Combined ROACE of Manufacturing Divisions Indian Rayon posted its highest ever earnings led by improved volumes and realisation across both VFY and Caustic Soda segments. It is planning to expand VFY capacities. Domestic Urea and Insulators manufacturers were impacted till last year on policy front. With the levy of antidumping duty on cheaper imports of Insulators till September 2019, Aditya Birla Insulators posted strong earnings growth in FY16. The shutdown for over a month for the last two years due to unremunerative policy for urea production beyond 100% capacity, Indo-Gulf Fertilisers achieved its highest ever urea production and sales volumes in FY Business Director - Agri, VFY, Chemicals & Insulators Revenue (` Crore) EBITDA (` Crore) Free Cash Flow to Firm (Pre Tax) (` Crore) 5-Year CAGR 12% 5-Year CAGR 8% 5-Year CAGR 23% FY16 FY15 5,466 5,405 1% FY16 FY % FY16 FY % FY11 3,101 FY FY INDO-GULF FERTILISERS (AGRI) Indo Gulf, manufactures urea and markets agricultural seeds and agrochemicals. The business has positioned itself as a total agri solutions provider offering a full range of agri inputs - fertilisers, seeds, agrochemicals and specialties - right from sowing till harvesting. Birla Shaktiman enjoys market leadership in the entire zone of Uttar Pradesh, Bihar, Jharkhand and West Bengal, being Indo-Gulf s core markets, through excellent product quality and customer servicing. Industry Overview Urea demand remained almost stagnant at about 30.4 million tonnes in due to second consecutive year of deficient monsoon. Urea imports remained flat at 8.5 million tonnes due to increase in production by domestic manufacturers post Gas Pooling Policy becoming effective from 1 st June However, India still remains heavily dependent on urea imports which accounted for 28% of the domestic urea demand. 59

69 Statutory Reports 8 th 1.2 mn tonnes Largest urea manufacturer and among the Highest ever urea production & sales volume During FY , the Government has taken certain initiatives towards improving the productivity in the fertilisers sector. These initiatives include allowing production of neem coated urea upto 100% of urea production and gas pooling policy. These initiatives promoting higher production and reducing the subsidy receivables. This has led to an increase in indigenous urea production by 8.3% from 22.6 million tonnes to 24.5 million tonnes. Performance Review Indo-Gulf Fertilisers (IGF) enjoys a strong farmer connect and is strategically located in the heartland of Indo-Gangetic plains. Birla Shaktiman Urea - Neem among farmers in IGF s core markets. After taking shutdown for over a month for the last two years due to unremunerative policy for urea production beyond 100% capacity. Indo-Gulf has achieved its highest ever production in at million tons, up y-o-y by 18% and sales volumes at million tons, up y-o-y by 17%. Despite higher urea sales volume, revenue marginally degrew to ` 2,498 Crore, due to pass through of reduction in natural gas prices on account of gas pooling policy becoming effective from 1 st June EBITDA surged by 41% to ` 209 Crore, driven by higher sales volumes of neem coated urea and lower repairs cost on account of shutdown in the previous year. Higher contribution on production beyond 100% capacity due to lower gas prices on account of gas pooling policy also augmented bottom-line. Outstanding fertilisers subsidy was at ` 1,112 Crore compared to ` 1,193 Crore in the previous year. IGF received ` 489 Crore of subsidy in April (` Crore) Indo-Gulf Fertilisers Revamped Urea Capacity (MTPA) 11,02,200 11,02,200 Urea Production (MT) 10,21,447 12,08,066 Manufactured Urea Sales (MT) 10,24,970 11,96,221 Revenue 2,557 2,498 Manufacturing (Fertilisers) 2,248 2,189 Trading (Fertilisers, Seeds, Agro Chemicals) EBITDA Segment EBIT Capital Employed 1,641 1,525 ROACE (%) 7% 11% With reduction in gas prices and gas pooling policy in place, urea subsidy is expected to reduce further. Outlook Domestic production of urea had severely been impacted during past few years due to unfavourable government policy for urea production beyond 100% capacity as permissible under pricing mechanism. However, with the favourable reforms like New Urea policy 2015 and Gas pooling Policy, the Government is focusing on promoting indigenous production to reduce the Country s dependence on imports. A public-private partnership model is also being evaluated where the government agencies, universities and private companies, will facilitate the transfer of new technology to farmers in a sustainable manner. This is opening up new business opportunities for value added products and services. Indo Gulf Fertilisers, with its strong farmer connect and customer centric approach is well positioned to take advantage of these opportunities. It s location at Jagdishpur in the middle of the agricultural heartland of the Indo-gangetic plains, gives it access to a large growing market. 60

70 Management Discussion and Analysis INDIAN RAYON (VISCOSE FILAMENT YARN & CHEMICALS) I yarn (VFY), caustic soda and allied chemicals. It is the largest manufacturer of VFY in India with a 44% domestic production share. It also accounts for 61% of VFY exports from India, making it the largest exporter of VFY from available in more than 600 shades. The yarn comes in a wide array of colours, including natural whites. Industry Overview comfort of cotton and lustre of silk. It is used in georgette and crepe fabrics, home textiles, embroidery, and so on. During FY , the domestic demand of VFY de-grew by 7.5% to 49,952 MT. Domestic VFY production has increased by 2.2% to 45,354 MT. VFY exports decreased slightly to 5,522 MT. Imports decreased substantially to half at 8,141 MT during the year. Indian leading to improvement in realisation. Domestic players due to the reduction in the Chinese imports. Chlor-Alkali market is broadly categorised into three segments, namely caustic soda, chlorine and soda detergents, pulp and paper and textile processing industries. Chlorine is a by-product and is widely used during PVC manufacturing, drinking water disinfection and pharmaceutical production. Performance Review In FY , Indian Rayon s revenue from the VFY segment grew by 7% to ` 745 Crore, despite an industry slowdown. Higher VFY revenue was driven by lower volume mix. Revenue from the Chemicals segment surged by 11% to ` 184 Crore owing to higher caustic soda volumes and increase in caustic prices led by improved international prices and lower imports. Total revenue grew by 7% at ` 928 Crore. Indian Rayon posted its highest ever EBITDA at ` 266 Crore on account of higher volumes and improved realisation across both VFY and Caustic Soda segments. ROACE enhanced year-on-year from 21% p.a. to 30% p.a. Largest Manufacturer and exporter of VFY in India 30% p.a. ROACE The business is taking initiatives for building the VFY from Indian Rayon brand. The brand has been named Raysil with the sign-off as The Fashion Yarn. Raysil stands for a 100% natural yarn that provides for an easy, vibrant and enjoyable fashion experience. It has been commercially launched during the year. The brand building will focus on creating a consumer recognisable brand to transform Indian Rayon s VFY into a desirable premium brand across the textile value chain till the end consumer. Indian Rayon is scaling up VFY capacity at a capex of ` (` Crore) VFY Capacity (MTPA) 19,800 20,750 Production (MT) 19,182 19,840 Manufactured VFY Sales (MT) 18,839 20,412 Revenue (Including allied chemicals) Chemicals Caustic Soda Capacity (MTPA) 91,250 91,250 Caustic Soda Production (MT) 79,687 83,075 Caustic Soda Sales (MT) 80,162 83,014 Revenue Total Revenue EBITDA Segment EBIT Capital Employed ROACE (%) 21% 30% 61

71 Statutory Reports Outlook market seems to remain stable. With the ramp-up of Indian Rayon is well positioned to improve its market share and earnings. However, the decreasing trend of domestic demand and high volatility in exchange rate is adversely affecting the yarn prices in India. The Chlor-Alkali market in India is projected to register a CAGR of around 7% during Chlorine demand in chlorine production in the west, which may affect the demand and supply balance. #1 Manufacturer of insulators in India and 4 th largest globally 22% p.a. ROACE ADITYA BIRLA INSULATORS Aditya Birla Insulators (ABI) is India s largest and the world s fourth largest manufacturer of porcelain insulators. ABI provides a comprehensive range of high-performance insulators to its global clientele that includes leading power utilities and national and international power equipment manufacturers. ABI s products have been running successfully in 58 countries around the world with focused exports markets being the US and the Europe. Industry Overview The power generation, transmission and distribution sector is the key growth driver for the insulators industry. Over the past few years, demand in domestic insulators market has been sluggish, primarily due to poor new projects and delay in the execution of on-going projects. Additionally, increased acceptance of alternate technologies and impending land acquisition bill has further impacted the domestic insulators industry. While the Government of India is putting emphasis on power sector reforms in overcoming impediments, it will however take some time before on-ground demand improvement is visible. Government s ambitious Make turnaround of state-utilities are expected to improve the demand scenario, though in the medium to long term. The imposition of anti-dumping duty on imports of insulators from China had provided respite to the industry as imports have reduced from 39,976 MT in FY to an estimated 21,000 MT in FY Performance Review In the backdrop of weak market conditions, revenue grew year-on-year by 6% at ` 581 Crore, led by 6% growth in volumes primarily in the transmission segment. Last year, operations of the Rishra plant were disrupted / suspended for 42 days due to labour unrest. EBITDA soared by 19% y-o-y to ` 114 Crore. Higher volumes and an increase in realisation contributed to the earnings growth. (` Crore) Capacity (MTPA) 45,260 45,260 Production (MT) 38,401 41,152 Sales Volume (MT) 38,581 40,897 Revenue EBITDA Segment EBIT Capital Employed ROACE (%) 17% 22% Outlook Government initiatives are expected to catalyse demand improvement in the second half of FY With Government s focus on Power for All by 2019 the medium to long term fundamentals look encouraging. However, the key to resurgence and sustainable growth state utilities through the UDAY scheme. Aditya Birla Insulators will continue to focus on enhance its market competitiveness besides exploring new geographies in the exports market. 62

72 Management Discussion and Analysis JAYA SHREE TEXTILES Jaya Shree Textiles (JST) operates in two business segments, viz., Linen and Wool. A leading player in the domestic linen and worsted yarn segment, textiles market by popularising linen in India across a wide customer base. JST is the largest manufacturer of linen yarn and linen fabric in India. Industry Overview The linen industry registered a moderate demand CAGR of 19% in linen yarn and 14% in pure linen fabric during FY Globally the wool combing units continued to operate at 70% since last year, worsted spinning capacity utilisation in the Far East and Europe is at 75%, whereas in India it is between 75% and 93%. Performance Review Jaya Shree has revolutionised the journey of linen from a commodity to a lifestyle symbol in India and expanded its market size by creating product / brand awareness and entering into new segments. Jaya Shree is focusing on expansion of high margin retail channel and strengthening of the Linen Club brand. It opened 17 new EBOs during the year to reach a total of 131 exclusive brand outlets besides retailing linen fabric through over 4,000 multi-brand outlets. The expansion of linen capacities has led to an increase in its share in the overall business. Share of linen segment in Jaya Shree s total revenue has jumped from 39% in to 50% in During , the revenue of Jaya Shree grew marginally to ` 1,459 Crore. Revenue from the Linen segment de-grew marginally by 4% due to decline in linen yarn volumes by 11% & linen fabric volumes by 3% owing to subdued demand during the second half of FY Reduction in prices demand in the linen segment. Revenue from the Wool segment rose by 8% led by higher volumes. The ` 175 Crore. management, Jaya Shree is operating at a sound ROACE of 44% per annum. subdued consumer demand witnessed across the textiles value chain. Reduction in prices of as a cheaper option has also impacted the demand with a whole host of new players entering the market. However, medium to long term prospects of linen remains promising and Jaya Shree is going to almost double its linen yarn capacities in the next one year. We are also continuously increasing our fabric reach, through EBO and new geographical expansions. Business Head Textiles (` Crore) Revenue 1,435 1,459 Linen Wool EBITDA Segment EBIT Capital Employed ROACE (%) 53% 44% Outlook Presently, around 70% of India s linen yarn demand is being met through imports. Jaya Shree also imports close to 55%-60% of its linen yarn requirements annually. This translates into expansion opportunity for the domestic players. To fortify its market positioning and tap into sector growth opportunity, Jaya Shree is expanding its linen yarn capacity from the current 3,400 MTPA to 6,200 MTPA at capex of ` 191 Crore by the 6,200 MTPA Almost doubling linen yarn capacity from 3,400 to 6,200 MTPA 63

73 Statutory Reports New Ventures SOLAR POWER ABNL has entered into a 51:49 JV with the Abraaj Group, a leading investor operating in global growth markets, to build a 500 MW solar power platform in India. The solar power platform, will bid for projects tendered at national and state auctions, with the intent to develop and operate utility-scale solar power plants that can provide clean and cost-effective electricity to the national grids across several key states in India. Industry Overview The demand for power in India is rising as a result of the country s growing population, rapid urbanisation and increasing economic activities. The Indian Government has created favourable regulatory environment to foster the use of renewable energy, including setting an explicit target to achieve 100 GW of solar power capacity by 2022 compared to the current installed capacity of approximately 6.8 GW. These factors create an immense investment opportunity for the private sector, helping Performance Review ABNL has won a total of 60 MW Solar Power projects 20 MW each in the three talukas - Ramadurg, Shirahatti and Mulbagal - of Karnataka in March The tariff ranges between ` 4.86 per KWh to ` 4.97 per KWh. The Power Purchase Agreement has been signed in June 2016 and the commissioning of the solar power plants is targeted by the end of FY Outlook India is projected to be among the top 3 solar markets in the world by The share of Solar power in India s total installed power generation capacity is projected to rise from 1% currently to 25% by To promote renewable energy and energy security, cabinet has approved amendments in power tariff policy mandating 8% share of Solar energy in total electricity consumption (excluding hydro power) by March The key growth drivers for renewable energy are increasing cost of conventional power, environmental concerns, falling solar power tariffs, high solar irradiation and short gestation to install solar power capacity. ABNL is all set to tap into the sector growth opportunity. PAYMENTS BANK Industry Overview Payments Bank is a differentiated bank that will A undertake only certain restricted banking functions that are allowed by RBI from time to time. These activities include acceptance of deposits, payments and remittance services, internet banking etc. Initially, they are allowed to accept deposits up to ` 1 lakh per individual. They can facilitate money transfers they can issue ATM/debit cards, but not credit cards. With an objective to bring unbanked masses under the ambit of formal banking, issuance of Payments technology is going to play a crucial role. Aditya Birla Idea Payments Bank Ltd. RBI had given in-principle approval to set-up the Payments Bank to ABNL as promoter, on 7 th September, ABNL has incorporated Aditya Birla Idea Payments Bank Limited as promoter in a 51:49 joint venture with Idea Cellular in February The JV is in the process of appointing senior management team, selecting the right IT system and before starting services. Post necessary regulatory approvals from RBI, the JV is likely to commercially launch its services by end of FY The JV will acquire and service new Payments Bank customers Online leveraging the power of Idea and Aditya Birla Group s about 45 million digital customers as 2 Million+ retail distribution channel across 390,000 towns and villages. The Payments Bank intends to promote a wide range of banking products and services including current and savings bank account, domestic remittances, merchant payments etc. while an appropriate time the existing Remittance (NEFT/ IMPS) and PPI business of Idea Cellular will be integrated with the proposed Payments Bank and will be run as a single entity. 64

74 Management Discussion and Analysis Robust Earnings Growth CONSOLIDATED FINANCIALS The Company registered a strong growth in earnings during FY Most of the businesses are competitively well placed and are contributing to the earnings growth. Posted consolidated revenue at ` 23,129 Crore and consolidated EBITDA at ` 6,535 Crore. On a like-to-like basis, the Company s revenue and EBITDA grew by 11% and 24%, respectively. year by 30% to ` 1,886 Crore. Pursuant to the demerger of Company s Madura Fashion division into its subsidiary Pantaloons Fashion & Retail Ltd., the resultant company has ceased to be ABNL s subsidiary and hence has st April The IT-ITeS business of the Company was divested w.e.f. 9 th May Hence if we look at the and IT-ITeS businesses from previous year s results, the consolidated earnings registered a robust yearon-year growth. Revenue grew by 11% to ` 23,129 Crore and EBITDA surged by 24% to ` 6,535 Crore. CFO, Aditya Birla Nuvo Ltd. Revenue (` Crore) EBITDA (` Crore) Net Profit (` Crore) Y-o-Y 11% (Like-to-Like) FY16** 23,129 FY15* 20,798 FY15** 26,516 *Like-to-Like 1 ** Reported Y-o-Y 24% (Like-to-Like) FY16** 6,535 FY15* 5,272 FY15** 5,798 Y-o-Y 30% (Like-to-Like) FY16** 1,886 FY15* 1,447 FY15** 1, Reported (` Crore) Reported Revenue 26,516 23,129 EBITDA 5,798 6,535 Less : Depreciation and Amortisation 1,703 1,727 Earnings Before Interest and Tax (EBIT) 4,095 4,808 Less : Finance costs related to NBFC 1,105 1,600 Less : Other Finance Costs Earnings Before Tax and Exceptional Items 2,338 2,491 Add : Exceptional Gain / (Loss) 2 (13) 414 Earnings before Tax 2,325 2,905 Less : Tax Expenses ,416 1,886 Note 1: Pursuant to the demerger of Company s Madura Fashion division into its subsidiary Pantaloons Fashion & Retail Ltd. (PFRL), the resultant company has ceased to st April The IT-ITeS business of the Company was divested w.e.f. 9 th May exclude Madura, Pantaloons and IT-ITeS businesses. Note 2: In FY , exceptional loss of ` 13 Crore pertains to divestment of Minacs. This loss is without considering deferred consideration of ~` 42 Crore receivable over next 3 years. In FY , exceptional gain includes (a) ` 357 Crore w.r.t. cessation of PFRL as subsidiary pursuant to de-merger of Madura, (b) ` 50 Crore received ` 6.4 Crore received as deferred consideration w.r.t. divestment of Minacs. 65

75 Statutory Reports Like-to-like Consolidated revenue of ABNL grew y-o-y by 11% from ` 20,798 Crore to ` 23,129 Crore, largely driven by the Financial Services and the Telecom businesses. 17% to ` 9,299 Crore led by lending book growth in the NBFC business, higher group premium income in the Life Insurance business and AUM growth in the Asset Management business. In the Telecom business, Idea Cellular registered a 14% growth in the top-line at ` 35,935 Crore (ABNL s share: ` 8,361 Crore). A strong 15% rise in total minutes of use, 72.7% growth in data volumes contributed. The combined revenue of the Manufacturing Divisions grew marginally to ` 5,466 Crore due to pass through of reduction in natural gas prices in the agri business on account of gas pooling policy effective from 1 st June (` Crore) Consolidated Revenue - Segmental Financial Services 1 7,926 9,299 Telecom 2 7,467 8,361 Manufacturing Divisions 3 5,405 5,466 Solar - 7 Inter-segment Elimination (0) (4) Consolidated Revenue (From Continuing Operations) 20,798 23,129 Aditya Birla Fashion & Retail 4 5,450 - IT-ITeS Inter-segment Elimination (16) - Consolidated Revenue (Reported) 26,516 23,129 Like-to-like Consolidated EBITDA spurred by 24% from ` 5,272 Crore to ` 6,535 Crore largely driven by the NBFC, Asset management, Telecom, Rayon and Agri businesses. Consolidated EBIT surged by 17% from ` 4,095 Crore to ` 4,808 Crore. (` Crore) Segment EBIT as per Accounting Standard ( AS ) Financial Services Telecom 2 1,305 1,484 Manufacturing Divisions Aditya Birla Fashion & Retail IT-ITeS 5 (16) - Solar - 1 Segment EBIT as per AS ,857 3,101 Add: Unallocated Income / (Expenses) (Net) Add: Finance Costs related to NBFC 6 1,105 1,600 Add: Consolidated Interest Income (Excluding Interest Income of NBFC) Consolidated EBIT 4,095 4,808 Note 1: Financial Services include NBFC, Life Insurance, Asset Management, Health Insurance, Housing Finance, Private Equity, Broking, Wealth Management, Online Personal Finance Management and General Insurance Advisory businesses. In accordance with AS-17 on Note 2: Represents ABNL s share in Idea Cellular s earnings. Being a joint venture, Idea has been consolidated at ~ 25.3% till 10 th June 2014, at 23.63% till 23 rd July 2014 and at ~23.3% thereafter Note 3: Manufacturing Divisions include Textiles, Agri, Rayon and Insulators Note 4: Madura Fashion & Lifestyle business has been de-merged into Pantaloons Fashion & Retail Ltd. w.e.f. 1 st April 2015 Note 5: Divested w.e.f. 9 th May 2014 arrive at Consolidated EBIT. In accordance with AS-17, interest income (excluding interest income of NBFC business) is not included in segment EBIT, hence added back to arrive at Consolidated EBIT. 66

76 Management Discussion and Analysis Segment EBIT of Financial Services business grew by 20% to ` 977 Crore, driven by the expansion of the lending book in the NBFC business and AUM growth in the asset management business. Life insurance EBIT is lower due to lower in-force book and higher expense gap. In the Telecom business, segment EBIT surged by 16% to ` 6,379 Crore (ABNL s share: ` 1,484 Crore) led by robust growth in voice and data usage, scale Segment EBIT of Manufacturing Divisions, combined together, rose by 29% to ` 639 Crore driven by the Agri and the Rayon businesses. Finance costs related to the NBFC business increased by 45% in line with the growth in the NBFC lending ` 652 Crore to ` 717 Crore, primarily due to higher interest cost in the Telecom business. Tax expenses increased primarily on account of Management businesses. by 30% from ` 1,447 Crore to ` 1,886 Crore. Net ` 357 Crore on account of cessation of PFRL as a subsidiary of ABNL. (` Crore) Consolidated Balance Sheet March 2015 Net Worth 12,871 14,535 Total Debt 11,299 13,570 NBFC borrowings (including Housing Finance) 14,686 22,914 Minority Interest Deferred Tax Liabilities (Net) ,142 52,665 Life Insurance Policyholders funds (Including Funds for Future Appropriation) 28,839 29,375 68,981 82,039 Net Fixed Assets (Including Capital Advances & CWIP) 12,342 19,052 Goodwill 3,973 2,209 Long Term Investments Life Insurance Investments 30,147 30,727 Policyholders Investments 28,595 29,022 Shareholders Investments 1,552 1,705 NBFC Lending Book (Including Housing Finance) 17,706 27,728 Net Working Capital Cash Surplus & Current Investments 1 4,246 1,749 Total Funds Utilised 68,981 82,039 Book Value per Equity Share (`) 989 1,116 Net Debt 2 /EBITDA (x) Net Debt 2 /Equity (x) Note 1: Include Cash, cheques in hand, remittances in transit, balances with bank, fertilisers bonds and current investments Note 2: Total Debt (Excluding NBFC borrowings) less Cash Surplus & Current Investments 67

77 Statutory Reports The net worth increased by ` 1,664 Crore to ` 14,535 Crore, Total debt (excluding NBFC borrowings) increased from ` 11,299 Crore to ` 13,570 Crore, mainly in the Telecom business due to deferred payment liability relating to spectrum won in March 2015 auction. NBFC borrowings (including Housing Finance) grew to ` 22,914 Crore in line with the growth in loan book. Net Block has increased by ` 6,710 Crore largely in the Telecom business on account of network expansion and acquisition of spectrum. Goodwill is lower by ` 1,764 Crore mainly due to cessation of PFRL as subsidiary pursuant to the demerger of Madura business. NBFC lending book (including Housing Finance) has grown by 57% to ` 27,728 Crore. Cash surplus and current investments are lower on account of the deployment of surplus funds, lying with Idea Cellular in the previous year, towards repayment of its debt during the year under review. STANDALONE FINANCIALS Standalone Profit & Loss Account (Reported) (Like-to-Like) (Reported) Revenue 8,938 5,405 5,466 EBITDA 1, Like-to-like Standalone revenue is marginally up year-on-year at ` 5,466 Crore due to pass through of reduction in natural gas prices in the agri business on account of gas pooling policy with effect from 1 st June Like-to-like Standalone EBITDA spurred by 19% from ` 710 Crore to ` 846 Crore. The Rayon and the Agri businesses were the largest contributors to the earnings growth. ABNL earned a dividend income of ` 54 Crore in compared to ` 89 Crore in the previous year. Finance costs increased from ` 263 Crore to ` 280 Crore in line with the increase in net debt from ` 3584 Crore to ` 3786 Crore on account of investment and Capex outlay of ` 1080 Crore. During , ABNL received a sum of ` 50 Crore towards facilitation for the development of distribution ` 6.4 Crore as deferred consideration with respect to the divestment of Minacs. These are recorded as exceptional gains. ` 325 Crore to ` 360 Crore. dividend of 50% (` 5 per equity share) for FY , entailing a total outgo of ` 75.5 Crore including dividend distribution tax. (` Crore) Standalone Balance Sheet March 2015 Net Worth 8,519 8,559 Total Debt 3,688 3,904 Deferred Tax Liabilities (Net) ,314 12,637 Net Fixed Assets (Including Capital Advances & CWIP) 1,879 1,589 Long Term Investments 8,695 9,465 Net Working Capital 1,635 1,464 Cash Surplus & Current Investments Book Value per Equity Share (`) Net Debt 3 /EBITDA (x) Net Debt 3 /Equity (x) ABNL s standalone balance sheet supported an investment and capex outlay of about ` 967 Crore and ` 113 Crore, respectively during the year. The standalone net debt to EBITDA stood at 4.5 times and net debt to equity at 0.44 times as on 31 st March In April 2016, ABNL has received a sum of ` 1,664 Crore from sale of 23% stake in its Life Insurance JV, Birla Sun Life Insurance and realised fertilisers subsidy of ` 489 Crore leading to reduction in its net debt. After adjusting for the sale proceeds and subsidy realisation, Net Debt / EBITDA stand at a comfortable position. Note 1: Pursuant to the demerger of Madura Fashion & Lifestyle into Pantaloons Fashion & Retail Ltd.(PFRL), Madura Fashion business ceased to be a division of ABNL w.e.f. 1 st Note 2: Include Cash, cheques in hand, remittances in transit, balances with bank, fertilisers bonds, short term ICDs and current investments Note 3: Total Debt less Cash Surplus & Current Investments 68

78 Management Discussion and Analysis (` Crore) Standalone Cash Flow Cash Flow from Operations (Net of Tax) 632 (Increase)/ Decrease in Net Working Capital (7) Net Cash from Operating Activities 625 Capital Expenditure (Net) (113) Investments in Subsidiaries / Joint Ventures (Net) (967) Demerger of Madura Business (Net of Cash and Cash Equivalents) 289 (Increase) / Decrease in Inter-Corporate Deposits to Subsidiaries (Net) 53 Merger of wholly owned subsidiaries 43 Interest / Dividend received 105 Net Cash from / (used in) Investing Activities (590) Proceeds from / (Repayment of) Borrowings (Net) 364 Proceeds from Issue of Shares 7 Dividend Paid (110) Interest Paid (282) Net Cash from / (used in) Financing Activities (21) Increase / (Decrease) in Cash Surplus & Current Investments 14 Add: Opening Cash Surplus & Current Investments Closing Cash Surplus & Current Investments Note 1: Include cash, Cheques in hand, remittances in transit, balances with banks, fertilisers bonds, current investments and short term ICDs Net Cash from Operations Cash Flow from Operations ` 632 Crore. The Rayon and Agri businesses were the largest contributors followed by the Insulators business. Net Working Capital The Company s net working capital increased by ` 7 Crore. Inventory increased by ` 57 Crore mainly in the Textiles business due to subdued demand in the linen segment. Reduction in trade receivables by ` 166 Crore was primarily on account of lower urea subsidy. Trade payables have decreased by ` 52 Crore mainly in the Textiles business. Net Cash from/(used in) Investing Activities Capital Expenditure The capital expenditure outgo was ` 113 Crore during the year mainly towards up-gradation, modernisation and maintenance of plants across the manufacturing businesses. Investments ABNL invested a sum of ` 967 Crore in its wholly owned subsidiary Aditya Birla Financial Services Private Ltd. to fund the growth capital requirement of the NBFC business, the Housing Finance business, Health Insurance and Online Personal Finance Management portal - MyUniverse. Net Cash from / (used in) Financing Activities Proceeds from / Repayment of borrowings ABNL raised the external commercial borrowing of ` 196 Crore and rupee term loan of ` 7 Crore towards capital expenditure commitments. ABNL also raised commercial paper and other short term debt of ` 406 Crore (net) during the year. Term loans aggregating to ` 245 Crore were repaid during the year. Pursuant to the demerger of Madura Fashion (erstwhile division of ABNL) into Aditya Birla Fashion & Retail Ltd. (ABFRL, erstwhile listed subsidiary of ABNL), debt amounting to ` 117 Crore was transferred to ABFRL and a sum of ` 289 Crore (net of cash & cash equivalents) was received. 69

79 Statutory Reports Best-in-class governance and processes RISK MANAGEMENT Governance, risk management and compliance processes form an integral part of ABNL s planning and review mechanism. The Company s risk management framework establishes risk management processes at each business, helping in identifying, assessing and mitigating risks that could materially impact the Company s performance in achieving its stated objectives. The components of risk management various factors, including the business model, business strategy, organisational structure, risk appetite and available dedicated resources. ABNL s structured risk management process provides are known and well managed. The risk management framework ensures compliance with the requirements of Clause 21 of Chapter III of Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations, monitored for each business separately. The risk management approach comprises three key components: (1) External and internal risk events, brand value, reputation and / or image of the risks are further evaluated by the senior management team of the respective business to assess the potential severity of their impact and the probability of occurrence. Based on the assessment, they develop and deploy mitigation strategies. The Risk Management Committee ( RMC ) is the apex body taking all decisions regarding risk management activities. The overall role of RMC is to review risk management process and implementation and effectiveness of risk mitigation plans. The Committee comprises two independent directors, the Managing Director and two business heads. The proceedings of meetings of RMC are discussed at the meetings of the Board of Directors from time to time. Business Risks Financial and Knowledge risks, which are further drilled down to market structure, process, systems, legal compliance, corporate governance and people culture. External Risks Apart from the internal business risks, the Company is exposed to external risks on account of interest rate, foreign exchange, commodity pricing and regulatory mechanism to mitigate foreign exchange and interest rate risks. The Company reviews these policies / mechanism periodically to align with the changes in market practices and regulations. HUMAN RESOURCES MANAGEMENT During , the Company channelised its resources towards strengthening its Employee Value Proposition in line with the Aditya Birla Group s A World of Opportunities. We undertook various initiatives for the development of people and to create a high-performance organisation. Planned leadership succession, development of successors through structured training & development, coaching and skill & competency development were driven across the organisation. The process of upgrading and improving facilities for employees at the Unit locations is underway in line with the Group s initiative of Add more to life. Human resources management at ABNL goes beyond the set norms of performance reviews, compensation and periodic trainings. The Company evaluates its team members competencies and improvement areas; and based on its analysis ensures timely intervention to help build a fruitful career. The Company has built a work culture that is entrepreneurial, meritocratic, empowering, caring, and encourages the development of personality. It believes in developing its teams to catalyse organisational growth. The Company s HR practices, employee care, people philosophy and engagement have been well recognised through a range of external honours and awards. The Company had about 10,300 employees on its rolls as on 31 st March, The combined team strength of the 70

80 Management Discussion and Analysis subsidiaries and joint ventures is over 39,500 employees. The Company s dynamic talent pool drives its operations and enables it to deliver superior performance consistently. ABNL s human resource functions have been covered in detail in the Directors Report. ENVIRONMENT, HEALTH AND SAFETY (EHS) The Company is conscious of its strong corporate reputation and the positive role it can play by focusing on EHS issues. Towards this objective, it has set very exacting standards in EHS management. The Company accords the highest priority to EHS issues in its operations and has established comprehensive indicators to track performance in these areas. We have an integrated system to manage quality, environment and occupational health and safety issues. The highlights of initiatives taken in the year are: We work to combat climate change and other forms of environmental degradation. We work towards reducing our carbon footprint by undertaking energy saving initiatives. Emissions generated as a result of our operations are monitored in detail and adequate steps are taken to minimise those. We have undertaken several initiatives to enhance conservation. We have implemented a world-class technology with highest safety standards to ensure security and safety of our employees. SUSTAINABILITY INITIATIVES Aditya Birla Group endeavours to become the leading Indian conglomerate for sustainable business practices across global operations by Aditya Birla Nuvo is committed to align its business strategy with the Aditya Birla Group s sustainability vision. Our integrated management systems are designed to meet the Aditya Birla Group s sustainability framework of policies and standards. We use the IT software ENABLON to collect and monitor our key performance indicators and manage our sustainability programme. Our businesses have formed sustainability committees both at the unit level and at the corporate level. Each committee is responsible for reviewing the sustainability performance, driving implementation of sustainability agenda across business functions and verticals, target change related issues and recommending action plans. ABNL s businesses are actively engaging with their stakeholders through various platforms to identify and understand their issues; and put in place action plans that are designed to continually improve their long-term relations. Your Board and the management teams across all businesses remain committed to a sustainable future for all. For more details please refer to Sustainability and Business Responsibility Report section of the Annual Report. INTERNAL CONTROL SYSTEM The Company has adequate internal control systems and regulations and so on. The internal control system is supplemented by extensive audits conducted by the Corporate Audit Cell. managerial positions have been institutionalised. Regular internal audits and checks ensure that responsibilities are executed effectively. The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of the internal control systems and suggests improvements. The Management Information System is the backbone of the Company s control mechanism. All operating parameters are monitored and controlled regularly. Any material change in the business outlook is reported to the Board of Directors. Material deviations from the annual planning and budgeting, if any, are reported on a quarterly basis to the Board of Directors. An effective budgetary control on all capital expenditure ensures that actual spending is in line with the capital budget. DISCLAIMER Certain statements made in this Management Discussion and Analysis may not be based on historical information or facts and may be forward looking statements within the meaning of applicable securities laws and regulations, including, but not limited to, those relating to general business plans & strategy of ( ABNL or The Company ), its future outlook & growth prospects, competition & regulatory environment and management s current views & assumptions which may not remain constant due to risks and uncertainties and hence actual results may differ materially from these forward-looking statements. This Management Discussion and Analysis does not constitute a prospectus, offering circular or offering memorandum or an offer to acquire any of the Company s equity shares or any other security and should not be considered as a recommendation that any investor should subscribe for or purchase any of the Company s shares. The Company, as such, makes no representation or warranty, express or implied, as to, and does not accept any responsibility or liability with respect to, the fairness, accuracy, completeness or correctness of any information or opinions contained herein. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements on the basis of any subsequent developments, information or events or otherwise. Unless otherwise stated in this Management Discussion and Analysis, the information contained herein is is considered to be equal to ` 65. The events and developments upto 11 th July 2016 have been covered in the Management Discussion and Analysis. 71

81 Statutory Reports Directors Report Dear Member, The Directors are pleased to present to you the 59 th Annual Report of along with the Audited Financial Statements for the year ended 31 st March, MACRO-ECONOMIC SCENARIO India s economy has shown sign of growth in fiscal , with estimated GDP growth at 7.6%, compared to 7.2% in FY India continues to be the fastest growing large economy, with stable macro-economic conditions. The government has maintained momentum by unveiling multiple new initiatives like Startup India, Standup India and Digital India, in addition to its focus on Make in India and Ease of Doing Business. These initiatives are expected to provide impetus to the Indian economy. A significant drop in commodity prices, led by crude oil and other measures, resulted in lower consumer inflation, which enabled easing of interest rates in the economy. The World Bank and the International Monetary Fund have forecast India s GDP will continue to grow at a robust rate. Despite challenging global headwinds, a stable macro performance will help India to remain an attractive investment destination. Execution of the reforms agenda and reviving the investment cycle will be key determinants of India s economic performance in the long term. CONSOLIDATED FINANCIAL PERFORMANCE Your Company has posted sound earnings growth and improved performance across most of the businesses. Pursuant to the demerger of the Company s Madura Fashion division (Madura) into its listed subsidiary Pantaloons Fashion & Retail Ltd. (PFRL), Madura & PFRL have ceased to be a division and a subsidiary, respectively, of your Company and hence not consolidated w.e.f. 1 st April Your Company s IT-ITeS subsidiary was divested w.e.f. 9 th May To that extent, the previous year s financials are not comparable. Like-to-like consolidated revenue of your Company, that is, excluding IT-ITeS and Fashion businesses, grew by 11% to ` 23,129 Crore. On a like-to-like basis, the Company s EBITDA rose by 24% to ` 6,535 Crore largely driven by the NBFC, the Asset Management, the Telecom, the Rayon and the Agri businesses. Net profit surged to ` 1,886 Crore. Key Highlights: Aditya Birla Financial Services, one of the largest non-bank financial services players, ranks among the top 5 fund managers in India (excluding LIC). Its assets under management rose year-on-year by 12% to ` 184,276 Crore. Its revenue grew by 17% to ` 9,299 Crore and earnings before tax by 17% to ` 995 Crore. The lending book of Aditya Birla Finance Ltd., at ` 25,755 Crore, continues to grow ahead of the market, posting a year-on-year rise of 47%. Aditya Birla Housing Finance Ltd., which commenced its operations in October 2014, has extended its loan book from ` 142 Crore in March 2015 to ` 1,973 Crore in March Birla Sun Life Insurance ranked 4 th among private players in India and remained the number 1 private life insurer in the Group segment. Birla Sun Life Asset Management cemented its position as India s 4th largest, with a consistently rising market share. The proposed Health Insurance partnership with MMI Holdings Ltd. has received an inprinciple approval from FIPB and is awaiting final approval from IRDAI. MyUniverse, India s number 1 online personal finance management portal, now enjoys the trust of more than 2.6 million registered users who are managing a portfolio close to ` 20,000 Crore through this portal. In the telecom business, Idea Cellular ranks 3 rd in India, with an improved revenue market share of 18.9%, up from 17.5% a year ago. To capitalise on the data opportunity, Idea is aggressively expanding its 3G and 4G footprints, and leveraging its strong spectrum bank. On the back of annual cash profit generation of over ` 10,000 Crore, Idea is competitively well-positioned to support its growth plans. Amongst the divisions, the Rayon business attained its highest ever profitability, on account of higher volumes and improved 72

82 Directors Report realisation in both VFY and caustic segments. The earnings of Agri business improved sharply year-on-year, led by its highest ever urea sales volume and increased contribution per tonne. The Insulators business posted healthy earnings growth, driven by higher volumes and realisation. While profitability of Jaya Shree textiles remained flat due to subdued demand in Linen segment, the business is planning to expand its Linen yarn Capacity from 3,400 TPA to 6,200 MTPA, considering the long term sector growth potential. STANDALONE FINANCIAL PERFORMANCE Your Company s standalone like-to-like revenue, that is, excluding Madura Fashion division, remained flat at ` 5,466 Crore. Revenue growth was constrained due to Agri business having to pass through a reduction in natural gas prices on account of the gas pooling policy, effective from 1 st June On a like-to-like basis, EBITDA at ` 846 Crore and Net Profit at ` 360 Crore surged by 19% and 11% respectively, driven primarily by the Rayon and the Agri businesses. NEW INITIATIVES AND CORPORATE ACTION Solar Power: With the renewed focus of the Indian Government on clean energy and in line with the vision of the Company to invest in promising sectors, your Company has forayed into the Solar Power business. Towards this initiative, Aditya Birla Renewables Limited (ABReL), a subsidiary of the Company was incorporated on 7 th August, 2015, to develop and operate utility-scale solar power plants that can provide clean and cost-effective electricity to the national grids across several key states in India and various state grids under its solar platform. Your Company has entered into a 51:49 partnership with the AEIF Mauritius SPV1 Limited (AEIF), an affiliate of the Abraaj Group. Accordingly, the Company and AEIF hold 51% and 49% of the paidup share capital respectively in ABReL. The partnership brings together highly experienced management and operations teams with strong execution capabilities. Your Company has won a total of 60 MW Solar Power projects in three talukas of Karnataka in March The Power Purchase Agreement has been signed in June 2016 and the commissioning of the solar power plants is targeted in the fourth quarter of FY Payments Bank: Your Company has received an in-principle approval from Reserve Bank of India (RBI) for setting up a Payments Bank as a Promoter. It has incorporated Aditya Birla Idea Payments Bank Ltd., a venture of the Company in 51:49 partnership with Idea Cellular Ltd. in February It is in the process of appointing senior management team, procuring the right technology and IT system and defining innovative products and cost efficient processes. It is planning to launch its services by the end of FY , after requisite approvals from RBI are in place. Health Insurance and Wellness: Your Company and Aditya Birla Financial Services Ltd. (ABFS), a 100% subsidiary of your Company, entered into a 51:49 agreement with MMI Holdings Ltd. (MMI) in June 2015 to foray in health insurance and wellness business in India. Having received FIPB approval, MMI Strategic Investments (PTY) Limited, a wholly owned subsidiary of MMI Holdings Ltd. has acquired a 49% stake in the health insurance venture Aditya Birla Health Insurance Co. Ltd. (ABHICL) in June ABHICL is targeting launch of its services in the second half of FY subject to approval from Insurance Regulatory and Development Authority of India. ABFS has incorporated a separate company Aditya Birla Wellness Private Ltd. (ABWPL). for the wellness business. ABWPL shall also be a 51:49 partnership with MMI. Sun Life Financial, Canada increases its stake in Birla Sun Life Insurance (BSLI) from 26% to 49% Pursuant to an agreement with your Company, Sun Life Financial has bought 23% stake in BSLI from the Company for `1,664 Crore in April Your Company has received the proceeds and it continues to hold the controlling stake in BSLI at 51%. Consolidation of Branded Apparels businesses To capitalise on its large market presence in the branded fashion space in India, your Company 73

83 Statutory Reports Aditya Birla Nuvo Ltd. ( ABNL ) had announced consolidation of its branded apparels businesses under its listed subsidiary - Pantaloons Fashion & Retail Ltd. ( PFRL ) now known as Aditya Birla Fashion & Retail Ltd. (ABFRL), through a Composite Scheme of Arrangement ( Scheme ) under Sections 391 to 394 of the Companies Act, As part of the Scheme, Madura Fashion, the branded apparel retailing division of ABNL and Madura Lifestyle, the luxury branded apparel retailing division of Madura Garments Lifestyle Retail Company Limited ( MGLRCL ) a subsidiary of ABNL, have been demerged from the respective companies into ABFRL. As the Scheme has become effective 9 th January, 2016, Madura Fashion and Madura Lifestyle divisions have been transferred to and vested in ABFRL with effect from the Appointed Date, i.e., 1 st April, 2015, as a going concern, in the manner more particularly provided in the Scheme. 21 st January, 2016 was fixed as the Record Date for determining the entitlement of the shareholders to receive, pursuant to the Scheme, fully paid up equity shares of the face value of ` 10 each of ABFRL. Equity shares have been allotted by ABFRL on 27 th January, 2016 to the eligible shareholders of the transferor companies as under:- Eligible Equity Shareholders of your Company have been allotted 26 equity shares of ABFRL for every 5 equity shares held in the ABNL pursuant to the demerger of Madura Fashion, Equity Shareholders of MGLRCL have been allotted 7 equity shares of ABFRL for every 500 equity shares held in MGLRCL pursuant to the demerger of Madura Lifestyle, and Preference shareholder of MGLRCL has been allotted 1 equity share of ABFRL. Consequent to the allotment of shares by ABFRL as aforesaid, it has ceased to be a subsidiary of the Company. Trading in the newly allotted shares of ABFRL commenced on 4 th February, The aforesaid consolidation has created India s largest pure-play branded apparel company by bringing India s #1 branded menswear and #1 branded women s wear retailers together. The move has given the shareholders of your Company an opportunity to participate in the promising fashion space directly through ABFRL. Amalgamation of Wholly Owned Subsidiaries: A) During the year under review, your Board, had approved the amalgamation of the following subsidiaries with the Company, viz., a) ABNL IT & ITES Limited, a wholly owned subsidiary of the Company, b) Aditya Birla Minacs BPO Pvt. Limited, a wholly owned subsidiary of ABNL IT & ITES Limited, and c) Indigold Trade and Services Limited, a wholly owned subsidiary of the Company on a going concern basis with effect from the Appointed Date i.e. 1 st October, 2015, in accordance with the Scheme of Amalgamation ( Scheme ). The Scheme has been made effective on 31 st March, 2016 after obtaining the requisite approvals and sanction from the Hon ble High Court of Gujarat pursuant to the provisions of Sections of the Companies Act, 1956 ( Act ) and as such the aforesaid three subsidiaries stands amalgamated with the Company. B) During the year under review, Madura Garments Lifestyle Retail Company Limited (MGLRCL), a wholly owned subsidiary of the Company, was merged with Aditya Birla Finance Limited (ABFL), another wholly owned subsidiary of the Company, on a going concern basis with effect from the Appointed Date i.e. 1 st July, 2015, in accordance with the Scheme of Amalgamation ( Scheme ). The Scheme has been made effective on 25 th January, As MGLRCL stands amalgamated with ABFL, MGLRCL has ceased to be a subsidiary of the Company. Termination of the Global Depository Receipts issued by the Company: Your Company had issued Global Depository Receipts (GDRs) representing the equity shares and had executed the Depository Agreement on 31 st January, 1994 with Citibank N.A., New York, the Depository. ICICI Bank Limited, Mumbai was appointed as a Custodian of the said GDRs. Each GDR was equivalent to one underlying equity share of the Company. During the year under review, your Company has terminated the GDR Program w.e.f. 8 th December, 2015 and as such there are no outstanding GDRs of the Company. 74

84 Directors Report FINANCIAL PERFORMANCE (` in Crore) Consolidated Standalone Profit Before Depreciation / Amortization, Interest and Tax , , Depreciation and Amortisation Expenses , Finance Costs , Profit Before Exceptional Items and Tax , Exceptional Items (13.33) Profit Before Tax , Tax Expenses Net Profit Before Minority Interest , Minority Interest Profit for the Year , Opening Balance as per last audited financial statement Amount Transferred on Stake Change/ Amalgamation of Subsidiaries/ Joint Venture (1.36) (81.57) (44.27) Amount on Merger of Subsidiaries Amount adjusted on demerger of Garment Business (24.35) Transfer from General Reserve Transitional Provision of Schedule II Impact (Net of Deferred Tax) (15.19) Share of Minority Interest Transitional Provision of Schedule II impact 3.09 Profit available for Appropriation , Appropriations : Debenture Redemption Reserve Special Reserve General Reserve Transfer to Capital Redemption Reserve Proposed Dividend on Preference Share Proposed Dividend on Equity Share Equity Dividend relating to Previous period Interim Dividend on Preference Share ß ß Corporate Tax on Proposed Equity Dividend of the Company Corporate Tax on Proposed Equity Dividend of Subsidiaries and Joint Venture Corporate Tax on Proposed Preference Dividend of Subsidiaries 0.17 Corporate Tax on Interim / Final Dividend of Joint Venture Company by its Joint Venture Corporate Tax on Interim Dividend on Preference Shares ß ß Corporate Tax on Dividend relating to previous year ß 0.44 Closing Balance of Surplus in the Statement of Profit &Loss Note: Figures of ` 50,000 or less have been denoted as ß. 75

85 Statutory Reports DIVIDEND Your Directors are pleased to recommend a dividend of ` 5 (Rupees Five only) per Equity Share of ` 10 each (last year ` 7 (Rupees Seven only) per Equity Share) for the financial year ended on 31 st March, 2016 for your consideration. The dividend on the equity shares, if approved by the shareholders, would involve cash outflow of ` Crore (including Corporate dividend Tax of ` Crore) compared to ` Crore (including Corporate Dividend Tax of ` Crore) paid for the year The equity shares as may be allotted upon the exercise of options granted under the Employees Stock Option Schemes and out of the Share Capital Suspense before the Book Closure for payment of dividend will rank pari passu with the existing shares and shall also be entitled to receive the aforesaid dividend. TRANSFER TO RESERVES The Company proposes to transfer an amount of ` 200 Crore to General Reserves. An amount of ` Crore is proposed to be retained in the Standalone Statement of Profit and Loss. SHARE CAPITAL During the year, the paid up equity share capital of the Company has increased from ` Crore to ` Crore consequent to the allotment of 85,665 equity shares to the eligible employees on exercise of Options granted under the Employees Stock Option schemes of the Company. Your Company has neither issued any shares with differential voting nor issued any sweat equity shares. FINANCE During the year , your Company has: Raised long term loans aggregating to ` Crore by way of foreign currency borrowings (excluding ` 2.99 Crore due to MTM of External Commercial Borrowings) and ` 6.77 Crore by way of Rupee Term Loan. Repaid term loans (including Foreign Currency Borrowings and Finance Lease Liability) aggregating to ` Crore. Credit rating agency ICRA has re-affirmed the long term rating of [ICRA] AA+ / Stable for your Company s fund based limits of ` 1,250 Crore, nonfund based limits of ` 1,500 Crore, term loans of ` 500 Crore and NCDs of ` 1,000 Crore. ICRA has also assigned [ICRA]AA+ / Stable rating to fresh ` 500 Crore NCD programme of your Company. ICRA has also reaffirmed short term rating of [ICRA] A1+ to ` 1,750 Crore Commercial paper programme of your Company. Credit rating agency CRISIL has re-affirmed the long term rating of Crisil AA+/Stable for ` 200 Crore NCD programme of your Company. PUBLIC DEPOSITS During the year under review, your Company has not accepted any deposits from the public falling under Section 73 of the Company Act 2013 ( Act ) and the Companies (Acceptance of Deposits) Rules, 2014 and as such no amount of principal or interest was outstanding as on the balance sheet date. PARTICULARS OF LOAN, GUARANTEE AND INVESTMENT Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Act read with Companies (Meetings of Board and its Powers) Rules, 2014 are given in the Notes to the Financial Statements. CORPORATE GOVERNANCE Your Company is committed to the adoption of best practices of Corporate Governance and its adherance in true spirit to the requirements set out by Securities and Exchange Board of India (SEBI). During the year under review, your Company was in compliance with the provisions of Regulation 27 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI LODR) with the Stock Exchanges pertaining to the corporate governance compliances. The Report on Corporate Governance as stipulated under Regulation 34 read with Schedule V of the SEBI LODR forms part of the Annual Report. The Statutory Auditors Certificate confirming compliance with Schedule V of the SEBI LODR is given in Annexure I and the same forms part of the Directors Report. 76

86 Directors Report MANAGEMENT DISCUSSION AND ANALYSIS In terms of the provisions of Regulation 34 (2) of the SEBI LODR the Management Discussion and Analysis is set out in this Annual Report. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES Subsidiary Companies: During the year, the following changes have taken place in the Subsidiary Companies: The Company entered into a definitive agreement to sell 23% stake in Birla Sun Life Insurance Company Limited (BSLI) to its partner Sun Life Financial, Canada for ` 1,664 Crore. The Company has completed the sale in April 2016 and received the sale consideration. It continues to hold the controlling stake in BSLI at 51%. Aditya Birla Financial Services Limited (ABFSL) was granted Certificate of Registration (CoR) as a Non Deposit taking Systemically Important Core Investment Company (CIC-ND-SI) on 16 th October, 2015 by Reserve Bank of India (RBI). The Company and ABFSL have signed an Agreement with MMI Strategic Investments (PTY) Ltd. and MMI Holdings Ltd. on 3 rd June, 2015 to enter into Health Insurance and Wellness Business in India. The Company had incorporated Aditya Birla Health Insurance Co. Ltd. (ABHICL) (formerly known as Aditya Birla Health Insurance Limited) on 22 nd April, 2015 for carrying on the Health Insurance business in India in partnership with MMI Holdings. ABFSL, upon receiving approval from Reserve Bank of India for making investment in Health Insurance business in India, has acquired all the shares of ABHICL from the Company on 28 th March, MMI Holdings Ltd. has acquired 49% stake in ABHICL in June 2016 after receiving approval from Foreign Investment Promotion Board (FIPB). ABHICL is expected to commence the business operations in the second half of FY after obtaining all the requisite approvals. The Company had incorporated Aditya Birla Idea Payments Bank Limited on 19 th February, 2016 for undertaking banking operations as per the Reserve Bank of India guidelines for Licensing of Payments Banks. The Company holds 51% stake in the same and balance is held by Idea Cellular Limited. ABCAP Trustee Company Pvt. Limited became the direct subsidiary of ABFSL on 25 th March, A new subsidiary in the name of Aditya Birla Renewables Limited has been incorporated on 7 th August, 2015 for setting up and for execution / commissioning of Solar Power Projects; for providing Engineering, Procurement and Construction Services (EPC); for providing Operation and Maintenance Services (O&M); and allied activities. As mentioned herein above, during the year under review: Madura Garments Lifestyle Retail Company Limited has been amalgamated with Aditya Birla Finance Limited by way of a Scheme of Amalgamation, Appointed Date of the Scheme being 1 st July, ABNL IT & ITES Limited, Aditya Birla Minacs BPO Private Limited and Indigold Trade and Services Limited have been amalgamated with the Company by way of a Scheme of Amalgamation, Appointed Date of the Scheme being 1 st October, The Policy of determining material subsidiaries may be accessed on the Company s website at the link below: policy_material_subsidiaries.pdf JOINT VENTURE IDEA Cellular Limited is a Joint Venture of the Company and continues to be a Joint Venture, during the year under review. Idea Cellular ranks 3 rd in India with a revenue market share of 18.9%. Having a base of 184 million active subscribers, Idea is the 6 th largest cellular operator in the world in terms of subscribers, based on operations in a single country. In accordance with the provisions of Section 129(3) of the Companies Act, 2013 ( the Act ) read with the Companies (Accounts) Rules, 2014, a report on the performance and financial position of each of the subsidiaries, associates and joint venture companies is attached as Annexure II to this Report. 77

87 Statutory Reports The audited financial statements of your Company s subsidiaries and related information have been placed on the website of your Company viz. Any Member, who is interested in obtaining a copy of audited financial statements of your Company s subsidiaries, may write to the Company Secretary at the Registered Office of your Company. CONSOLDATED FINANCIAL RESULTS The Consolidated Financial Statements have been prepared in accordance with the provisions of the Section 129(3) of the Act, read with the Companies (Accounts) Rules, 2014, applicable Accounting Standards and the provisions of the SEBI LODR and pursuant to the provisions of Section 136 of the Act, the same forms part of this Annual Report. HUMAN RESOURCES During the year , your Company channelized its resources towards strengthening its Employee Value Proposition in line with Aditya Birla Group s A World of Opportunities. Various initiatives for development of people and creating a robust high performance organization were implemented. Programmes for planned leadership succession, development of successors through structured training & development, and coaching, skill and competency development across all levels were actively conducted across the organization. The process of upgrading and improving facilities for employees at the unit locations was underway in line with the Group s initiative of Add more to life. PARTICULARS OF EMPLOYEES Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, including any statutory modification(s) or re-enactment(s) thereof for the time being in force, are attached as Annexure III. In accordance with the provisions of Section 197(12) of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, including any statutory modification(s) or reenactment(s) thereof for the time being in force, the names and other particulars of employees are to be set out in the Directors Report, as an addendum thereto. However, having regard to the provisions of Section 136(1) of the Act, the Annual Report excluding the aforesaid information about the employees, is being sent to the Members of the Company. The said information is available for inspection at the Registered Office of your Company during the working hours. Any Member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company and the same will be furnished on request. EXTRACT OF ANNUAL RETURN In terms of the provisions of Section 92 (3) of the Act read with the Companies (Management and Administration) Rules, 2014, an extract of the Annual Return of your Company for the financial year ended 31 st March, 2016 is given in Annexure IV to this report. BUSINESS RESPONSIBILITY REPORT As per Regulation 34 (2)(f) of the SEBI (LODR), a separate section on Business Responsibility Reporting forms part of this Annual Report. RELATED PARTY TRANSACTIONS During the financial year, your Company entered into related party transactions, which were on an arm s length basis and in the ordinary course of business. There were no material transactions with any related party as defined under Section 188 of the Act read with the Companies (Meetings of Board and its Powers) Rules, All related party transactions were approved by the Audit Committee of your Company and the same are being reviewed by it on a periodical basis. The Policy on the Related Party Transactions as approved by the Audit Committee and the Board of your Company is posted on the Company s website viz. The details of contracts and arrangement with related parties of your Company for the financial year ended 31 st March, 2016 is given in Note No. 41 to the financial statements of your Company. RISK MANAGEMENT Your Directors have constituted a Risk Management Committee which has been entrusted with the responsibility to review the risk management plan / process of your Company. This Committee identifies the potential risks, assesses their potential 78

88 Directors Report impact and takes timely actions to mitigate the same. The Risk Management framework and the Risk Management approach are covered in the Management Discussion and Analysis forming part of this Annual Report. INTERNAL FINANCIAL CONTROL AND THEIR ADEQUACY Your Company has in place adequate internal control systems commensurate with the size of its operations. The internal control systems, comprising of policies and procedures, are designed to ensure sound management of your Company s operations, safekeeping of its assets, optimal utilization of resources, reliability of its financial information and compliance. Clearly defined roles and responsibilities have been institutionalized. Systems and procedures are periodically reviewed to keep pace with the growing size and complexity of your Company s operations. DIRECTORS RESPONSIBILITY STATEMENT The audited accounts for the year under review are in conformity with the requirements of the Act and the Accounting Standards. The financial statements reflect fairly the form and substance of transactions carried out during the year under review and reasonably present your Company s financial condition and results of operations. Based on the information and explanations obtained by your Directors from the management of your Company, your Directors confirm that: i) in the preparation of the Annual Accounts for the financial year ended 31 st March, 2016, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any; ii) iii) the Directors have selected such accounting policies and applied them consistently and 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 31 st March, 2016 and of the profit of the Company for the year ended on that date; the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the iv) assets of the Company and for preventing and detecting frauds and other irregularities; the Directors have prepared the Annual Accounts of the Company on a going concern basis; v) the Directors have laid down internal financial controls and that such internal financial controls are adequate and were operating effectively; and vi) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and were operating effectively. EMPLOYEE STOCK OPTION SCHEMES 2006 and 2013 (ESOS 2006 & ESOS 2013) ESOS 2006 During the year under review, the Nomination and Remuneration Committee ( the Committee ) has allotted 62,331 equity shares of ` 10/- each of your Company upon exercise of Stock Options by the employees. ESOS 2013 During the year 23,651 Stock Options have vested in the option grantees in terms of the provisions of the Company s Employee Stock Option Scheme ( Scheme 2013 ). However, no Restricted Stock Units have vested in the option grantees in terms of the provisions of Scheme The Committee has allotted 23,334 equity shares of ` 10 each of your Company upon exercise of Stock Options by the employees. Consequent to the Composite Scheme of Arrangement of the branded apparel business as mentioned herein above in this Report having become effective on 9 th January, 2016, in respect of the Stock Options (Options) and the Restricted Stock Units (RSUs) granted by the Company to the eligible employees, the Grant Price and related plan elements required an adjustment so as to ensure fair and equitable treatment for the concerned employees under ESOS In view of the same: a. an additional grant of 48,777 Options and 26,551 RSUs under ABNL ESOS 2013 was made to the concerned grantees; 79

89 Statutory Reports b. the Exercise Price under various tranches of Options granted under ABNL ESOS 2013 has been reset as under: (i) (ii) (iii) Tranche I : ` per Option as against ` per Option; Tranche II : ` per Option as against ` per Option; Tranche III : ` per Option as against ` per Option In terms of the provisions of the SEBI (Share Based Employee Benefits) Regulations, 2014, the details of the Stock Options and Restricted Stock Units granted under the Company s Employees Stock Option Schemes are available on your Company s website viz. A certificate received from the Statutory Auditors of the Company on the implementation of the Employees Stock Option Schemes shall be placed at the ensuing Annual General Meeting for inspection by the Members. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO Information on conservation of energy, technology absorption, foreign exchange earnings and out go, required to be disclosed pursuant to provision of Section 134 of the Act read with the Companies (Accounts) Rules, 2014 is given in Annexure V to this Report. CORPORATE SOCIAL RESPONSIBILITY In terms of the provisions Section 135 of the Act read with Companies (Corporate Social Responsibility Policy) Rules, 2014, the Board of Directors of your Company has constituted a Corporate Social Responsibility ( CSR ) Committee which is Chaired by Mrs. Rajashree Birla. The other Members of the Committee are Ms. Tarjani Vakil, an Independent Director and Mr. Lalit Naik, the Managing Director of your Company. Dr. (Mrs.) Pragnya Ram, Group Executive President, Corporate Communications & CSR, is a Permanent Invitee to the Committee. Your Company also has in place a CSR Policy and the same is available on the website of the Company at Committee places before the Board the details of the activities to be undertaken during the year. Your Company is a caring corporate citizen and lays significant emphasis on the development of the host communities around which it operates. With this intent, the Company has identified several projects relating to Social Empowerment & Welfare, Infrastructure Developments, Sustainable Livelihood, Health Care and Education during the year and initiated various activities in neighbouring villages around the plant locations. The work on several CSR initiatives has gained momentum during the year, resulting in a spend of ` 7.40 Crore (the same being 2.11% of the average net profits of the last 3 years as defined for the purposes of CSR). A detailed report is attached as Annexure VI forming part of this report. DIRECTORS Changes in Board constitution Mr. Sushil Agarwal, Whole Time Director & Chief Financial Officer of your Company, has relinquished his office from the close of business on 30 th June, Mr. Gian Prakash Gupta, an Independent Director, has stepped down as a Director of the Company w.e.f. 9 th November, 2015 on health grounds. Mr. Tapasendra Chattopadhyay, Nominee of LIC of India (LIC) on the Company s Board has ceased to be the Non-Executive Director of the Company consequent to the withdrawal of his nomination by LIC. The Board places on record its deep appreciation for the services rendered by Mr. Sushil Agarwal, Mr. Gian Prakash Gupta and Mr. Tapasendra Chattopadhyay during their tenure as the Members of the Board. At the request of LIC, Mr. V. Chandrasekaran, Executive Director of LIC, has been appointed as an Additional Director of the Company w.e.f. 14 th April, 2016 and accordingly, his appointment is placed for your approval at the ensuing AGM. Mrs. Rajashree Birla and Mr. Lalit Naik, Directors of the Company, retire from office by rotation and being eligible, have offered themselves for re-appointment. Further details on the Board of Directors are provided in the Corporate Governance Report forming part of this Annual Report. Your Directors recommend the said appointment / re-appointments. Items seeking your approval on the above appointment / re-appointments are included in the Notice convening the Annual 80

90 Directors Report General Meeting. Brief resumes of the Directors seeking appointment / re-appointments form part of the Notice of the ensuing Annual General Meeting. Meetings of the Board During the year, the Board of Directors of your Company met 6 times to deliberate on various matters. The details of Board Meetings held are given in the Corporate Governance Report. Composition of the Audit Committee The Audit Committee of the Board comprises of Ms. Tarjani Vakil, Mr. Baldev Raj Gupta, Mr. Pejavar Murari and Mr. Subhash Chandra Bhargava, the Independent Directors, as its members. Other details of the Audit Committee are listed in the Corporate Governance Report. The Audit Committee met 7 times during the year under review. Independent Directors Ms. Tarjani Vakil, Mr. Baldev Raj Gupta, Mr. Pejavar Murari and Mr. Subhash Chandra Bhargava, the Independent Directors of the Company, hold office for a fixed term of five years and are not liable to retire by rotation. In accordance with Section 149(7) of the Act, each Independent Director has given a written declaration to the Company confirming that he/ she meets the criteria of Independence as mentioned under Section 149(6) of the Act and SEBI LODR. Policy on Appointment and Remuneration of Directors and Key Managerial Personnel The appointment and remuneration of Directors and KMPs is as per policy of your Company. Formal Annual Evaluation The evaluation framework for assessing the performance of the Directors of your Company comprises of contributions at the meetings, strategic perspective or inputs regarding the growth and performance of your Company, among others. Pursuant to the provisions of the Act and the Listing Regulations, the Directors have carried out the annual performance evaluation of the Board, Independent Directors, Non-Executive Directors, Executive Directors, Committees of the Board and the Chairman of the Board. The manner of evaluation is provided in the Corporate Governance Report. Details of the familiarisation programme for the Independent Directors of the Company is available on the Company s website Remuneration Policy The Nomination and Remuneration Committee has formulated the Remuneration Policy of your Company which is attached as Annexure VII to this report. The Policy is available on the Company s website viz. KEY MANAGERIAL PERSONNEL In terms of the provision of Section 203 of the Act, Mr. Lalit Naik, Managing Director; Mrs. Pinky Mehta, Chief Financial Officer (w.e.f. 1 st July, 2015); and Mr. Ashok Malu, Company Secretary are the Key Managerial Personnel of your Company. AUDITORS Statutory Auditors and their Report In terms of the provisions of Section 139 of the Act read with the Companies (Audit and Auditors) Rules, 2014, an audit firm can hold office as statutory auditor for 2 terms of 5 consecutive years i.e. for a maximum period of 10 years. Such audit firm can be re-appointed after a cooling period of 5 years. In computing the period of 10 years, the period for which the auditor has held office before the commencement of the Act i.e. before 1 st April, 2014 is also required to be considered. Your Company has M/s. Khimji Kunverji & Co., Chartered Accountants, Mumbai (Reg. No W) as the Joint Statutory Auditors and in compliance with the provisions of the Act, they will continue in office till the ensuing AGM. M/s. S R B C & CO LLP Chartered Accountants, Mumbai (Reg. No E), the other Joint Statutory Auditor is eligible for re-appointment. M/s. S R B C & CO LLP, Chartered Accountants, Mumbai (Reg. No E), will continue to hold the office as the Joint Statutory Auditors of the Company from the conclusion of ensuing Annual General Meeting until the conclusion of 60 th Annual General Meeting of the Company. M/s. S R B C & CO LLP, has given its consent in writing and have furnished a certificate to the effect that their re-appointment, if made, would be in 81

91 Statutory Reports accordance with the provisions of Section 139(1) of the Act and that it meet with the criteria prescribed under Section 141 of the Act. Your Directors recommend their re-appointment at the ensuing Annual General Meeting. New Joint Statutory Auditor M/s. Khimji Kunverji & Co., Chartered Accountants, Mumbai, the Joint Statutory Auditor, has been in office for more than ten years and in compliance with the provisions of the Act, your Company will have to appoint a new auditor in their place. The Board of Directors has, at its meeting held on 11 th July, 2016, recommended the appointment of M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, Mumbai, (Reg. No W/W ), as one of the Joint Statutory Auditors of your Company in place of M/s. Khimji Kunverji & Co., to hold office from the conclusion of this AGM until the conclusion of the 64 th AGM of your Company, subject to ratification by the Members at every AGM till the 63 rd AGM. Resolutions seeking your approval on appointment/ re-appointment of Statutory and Branch Auditors are included in the Notice convening the AGM. The observation made in the Auditor s Report are self explanatory and therefore, do not call for any further comments under Section 134(3)(f) of the Act. The Auditors Report does not contain any qualification, reservation or adverse remark. Cost Auditors In terms of the provisions of the Section 148 of the Act read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the Board of Directors of your Company have, on the recommendation of the Audit Committee, appointed the following Cost Auditors for conducting the audit of the cost records of the Company for the financial year at the remuneration as mentioned in the Notice convening the AGM:- i) M/s. Ashwin Solanki & Associates, Cost Accountants, (Registration Number ) for Indian Rayon, Veraval for Viscose Filament Yarn and Chemicals ii) M/s. K. G. Goyal & Associates, Cost Accountants, (Registration Number ) for Indo Gulf Fertilisers, Jagdishpur- for Fertilisers iii) iv) M/s. R. Chakraborty & Co., Cost Accountants, (Registration Number ) for Jaya Shree Textiles, Rishra for Textiles, and M/s. S. S. Puranik & Associates, Cost Accountants, (Registration Number ) for Insulators Halol & Rishra As required under the Act, the remuneration payable to the Cost Auditor is required to be placed before the Members at the general meeting for their ratification. Accordingly, a Resolution seeking Members ratification for the remuneration payable to Cost Auditors is included in the Notice convening the Annual General Meeting. The Members are requested to ratify the remuneration payable to the Cost Auditors for Your Company has filed the Cost Audit and Compliance Report for Financial Year 2015 with the Government. Secretarial Auditors In terms of the provision of the Section 204 of the Act read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Board has appointed M/s. BNP & Associates, Company Secretaries, Mumbai as the Secretarial Auditors for conducting the Secretarial Audit of your Company for the financial year ended 31 st March, The report of the Secretarial Auditors is attached as Annexure VIII. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. AWARDS AND RECOGNITION Some of the significant accolades earned by your Company during the year include: Indo Gulf Fertlisers: i) National Energy Conservation Award 2015 by Ministry of Power, Government of India, First Prize in the Fertilizers Sector (Sub-sector Urea) ii) Global CSR Excellence & Leadership Awards for Best use of CSR practices in Manufacturing iii) Asian CSR Leadership Award for Community Development in Manufacturing awarded by World CSR Congress, 82

92 Directors Report Aditya Birla Insulators Halol Division: i) Certificate of Export Recognition being Special Export Award received from CAPEXIL on 28 th January, 2016 DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 During the year under review, your Company has not received any complaint under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, VIGIL MECHANISM/ WHISTLE BLOWER POLICY In compliance with the provisions of Section 177 (10) of the Act and Regulation 4(2)(d) of the SEBI (LODR), your Company has in place a vigil mechanism for the directors and employees to report concerns about unethical behaviour and actual or suspected fraud or violation of your Company s Code of Conduct. Adequate safeguards are provided against victimization to those who avail of the mechanism and access to the Chairman of the Audit Committee in exceptional cases is provided to them. The vigil mechanism is available on the Company s website at OTHER DISCLOSURES There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and the Company s operations in future. There were no material changes and commitments affecting the financial position of your Company between end of the financial year and the date of this report. There was no revision in the financial statements. APPRECIATION Your Directors take this opportunity to express their sincere appreciation for the excellent support and co-operation extended by the shareholders, customers, suppliers, bankers and other business associates. Your Directors gratefully acknowledge the ongoing cooperation and support provided by Central and State Governments and all Regulatory bodies. Your Directors place on record their deep appreciation for the exemplary contribution made by the employees of the Company at all levels. Their dedicated efforts and enthusiasm have been pivotal to your Company s growth. For and on behalf of the Board Kumar Mangalam Birla Chairman Mumbai, 11 th July, 2016 (DIN: ) 83

93 Statutory Reports ANNEXURE - I To The Members of AUDITORS CERTIFICATE We have examined the compliance of conditions of corporate governance by (the Company ), for the year ended on March 31, 2016, as stipulated in clause 49 of the Listing Agreement of the Company with Stock Exchanges for the period April 01, 2015 to November 30, 2015 and as per the relevant provisions of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ( Listing Regulations ) for the period December 01, 2015 to March 31, The compliance of conditions of corporate governance is the responsibility of the management. Our examination was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company. In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in above mentioned Listing Agreement / Listing Regulations, as applicable. We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company. For and on behalf of Khimji Kunverji & Co. Chartered Accountants ICAI Firm Registration Number: W For and on behalf of S R B C & CO LLP Chartered Accountants ICAI Firm Registration Number: E/E per Shivji K Vikamsey per Vijay Maniar Partner Partner Membership Number: 2242 Membership Number: Mumbai Mumbai Date: May 20, 2016 Date: May 20,

94 Directors Report AOC-1 Statement pursuant to first proviso to sub-section (3) of Section 129 of the Companies Act 2013, read with Rule 5 of Companies (Accounts) Rules, 2014 in the prescribed Form AOC-1 relating to subsidiary companies Part - A - Subsidiary Companies (Information as on 31 st March, 2016) ANNEXURE - II Name of Subsidiary Aditya Aditya Aditya Aditya Aditya Aditya Birla Birla Birla Birla Birla Birla Financial Capital Customer Trustee Money Commodities Services Advisors Services Company Limited Broking Limited Private Limited Private Limited Limited Limited Currency ` in Crore ` in Crore ` in Crore ` in Crore ` in Crore ` in Crore Share Capital (Equity and Preference) 2, Reserves and Surplus (28.36) (2.24) Total Assets (Non-Current Assets + Current Assets) 3, Total Liabilities (Non-Current Liabilities + Current Liabilities) ß Investments 3, Revenue from Operations Profit/(Loss) before Tax (70.00) Tax Expenses Profit/(Loss) for the Year after Tax (0.48) 4.52 (70.00) Proposed/Interim Dividend (including Dividend Tax) (including on Preference Share) Percentage Holding as on 31 st March % % 93.70% % 75.00% 75.00% Exchange Rate as on 31 st March 2016 N.A N.A N.A N.A N.A N.A Name of Subsidiary Aditya Aditya Aditya Aditya Aditya Birla ABCAP Birla Birla Birla Birla Money Trustee Financial Finance Insurance Money Insurance Company Shared Limited Brokers Mart Advisory Private Services Limited Limited Services Limited Limited Limited Currency ` in Crore ` in Crore ` in Crore ` in Crore ` in Crore ` in Crore Share Capital (Equity and Preference) Reserves and Surplus , (138.27) (4.46) (0.01) Total Assets (Non-Current Assets + Current Assets) , Total Liabilities (Non-Current Liabilities + Current Liabilities) , Investments Revenue from Operations - 2, Profit/(Loss) before Tax (6.81) (2.28) - Tax Expenses Profit/(Loss) for the Year after Tax (0.07) (6.81) (2.28) - Proposed/Interim Dividend (including Dividend Tax) (including on Preference Share) Percentage Holding as on 31 st March % % 50.01% % % % Exchange Rate as on 31 st March 2016 N.A N.A N.A N.A N.A N.A 85

95 Statutory Reports Name of Subsidiary Aditya Birla Birla Sun Life Aditya Birla Sun Life AMC Aditya Birla Sun Life Housing Asset Pte. Ltd., Singapore AMC Limited, Dubai Finance Management Limited Company Limited 86 Currency ` in Crore ` in Crore SGD in Mn. ` in Crore US $ in Min. ` in Crore Share Capital (Equity and Preference) Reserves and Surplus (34.49) (10.94) (53.64) (2.34) (15.55) Total Assets (Non-Current Assets + Current Assets) 1, Total Liabilities (Non-Current Liabilities + Current Liabilities) 1, Investments Revenue from Operations Profit/(Loss) before Tax (30.22) (1.42) (6.67) (0.15) (1.00) Tax Expenses Profit/(Loss) for the Year after Tax (30.22) (1.42) (6.67) (0.15) (1.00) Proposed/Interim Dividend (including Dividend Tax) (including on Preference Share) Percentage Holding as on 31 st March % 51.00% 51.00% 51.00% Exchange Rate as on 31 st March 2016 N.A N.A SGD = Rs USD = Rs Name of Subsidiary Birla Sun Life AMC India Advantage International Opportunities (Mauritius) Limited Fund Limited Fund SPC Currency US $ in Mn. ` in Crore US$ in Lakh ` in Crore US $ ` in Crore ( ) ( ) ( ) ( ) Share Capital (Equity and Preference) ß Reserves and Surplus Total Assets (Non-Current Assets + Current Assets) ß Total Liabilities (Non-Current Liabilities + Current Liabilities) Investments Revenue from Operations Profit/(Loss) before Tax Tax Expenses Profit/(Loss) for the Year after Tax Proposed/Interim Dividend (including Dividend Tax) (including on Preference Share) Percentage Holding as on 31 st March % 51.00% 51.00% Exchange Rate as on 31 st March 2016 USD = Rs USD = Rs USD = Rs Name of Subsidiary Birla Aditya ABNL Shaktiman Birla Birla Aditya Sun Life Birla Investment Mega Sun Life Sun Life Birla Trustee Health Limited Food Insurance Pension Renewables Company Insurance Park Company Manage- Limited Private Co. Private Limited ment Limited Limited Limited Limited Currency ` in Crore ` in Crore ` in Crore ` in Crore ` in Crore ` in Crore ` in Crore Share Capital (Equity and Preference) , Reserves and Surplus 0.49 (15.20) 4.43 (0.43) (219.64) (0.14) (0.94) Total Assets (Non-Current Assets + Current Assets) , Total Liabilities (Non-Current Liabilities + Current Liabilities) (0.00) 30, Investments , Revenue from Operations , Profit/(Loss) before Tax 0.06 (15.19) 3.13 (0.01) (0.71) Tax Expenses Profit/(Loss) for the Year after Tax 0.05 (15.20) 2.19 (0.01) (0.94) Proposed/Interim Dividend (including Dividend Tax) (including on Preference Share) Percentage Holding as on 31 st March % % % % 74.00% 74.00% 51.00% Exchange Rate as on 31 st March 2016 N.A N.A N.A N.A N.A N.A. N.A.

96 Directors Report Notes: A. During the year, following entities have ceased to be subsidiaries 1. Pursuant to the effectiveness of the Composite Scheme of Arrangement between the Company, Madura Garments Lifestyle Retail Company Limited (MGLRCL) and Pantaloons Fashion & Retail Limited (PFRL) now known as Aditya Birla Fashion and Retail Limited (ABFRL) on 9 th January, 2016 and allotment of shares by ABFRL pursuant to the Scheme, ABFRL has ceased to be a subsidiary of the Company (Appointed Date being 1 st April, 2015). 2. Pursuant to the effectiveness of Scheme of Amalgamation of Madura Garments Lifestyle Retail Company Limited (MGLRCL) and Aditya Birla Finance Limited (ABFL) on 25 th January, 2016, MGLRCL has been merged with the ABFL and consequently ceased to be a subsidiary of the Company (Appointed Date being 1 st July, 2015). 3. Pursuant to the effectiveness of Scheme of Amalgamation of ABNL IT&ITES Limited and Aditya Birla Minacs BPO Private Limited and Indigold Trade and Services Limited with the Company on 31 st March, 2016, ABNL IT&ITES Limited and Aditya Birla Minacs BPO Private Limited and Indigold Trade and Services Limited wholly owned subsidiaries of the Company, have been merged with the Company and consequently ceased to be a subsidiary of the Company. (Appointed Date being 1 st October, 2015). B. The Company jointly with Idea Cellular Limited (IDEA), has incorporated a new subsidiary namely Aditya Birla Idea Payments Bank Limited (ABIPBL) wherein the Company holds 51% shares and balance 49% shares are held by IDEA. ABIPBL has been formed to set up a Payments Bank under the Guidelines for Licensing of Payments Banks issued on 27 th November, 2014 by the Reserve Bank of India. First full financials of ABIPBL shall be prepared for the period ended 31 st March, 2017 hence the same has not been consolidated. Statement pursuant to Section 129 (3) of the Companies Act, 2013 read with Rule 5 of Companies (Accounts) Rules, 2014 related to Associate Companies and Joint Ventures in the prescribed Form AOC-1 Part B : Joint venture Sr.No. Name of the Joint Venture Idea Cellular Limited 1 Latest audited Balance sheet Date 31 st March, Shares of Joint Ventures held by the Company on the year end i) Number 83,75,26,221 ii) Amount of Investment in Joint Venture (` in Crore) 2, iii) Extend of Holding% 23.26% 3 Description of how there is significant influence N.A. 4 Reason why the joint venture is not consolidated N.A. 5 Net worth attributable to shareholding as per latest audited Balance Sheet (` in Crore) 5, Profit for the year (` in Crore) i) Considered in Consolidation ii) Not considered in Consolidation N.A. For and on behalf of the Board KUMAR MANGALAM BIRLA Chairman LALIT NAIK Managing Director PINKY MEHTA Chief Financial Officer RAJASHREE BIRLA TARJANI VAKIL P. MURARI B. R. GUPTA S. C. BHARGAVA V. CHANDRASEKARAN Directors Mumbai, May 20, 2016 ASHOK MALU President & Company Secretary 87

97 Statutory Reports ANNEXURE - III The information required under Section 197(12) of the Companies, 2013 read with Rule 5(1) of Companies (Appointment and Remuneration) Rules, 2014 are given below: 1. Ratio of the remuneration to each Directors and Key Managerial Personnel (KMP) to the median remuneration of the employees of the Company for the financial year ended 31 st March 2016: Name of the Director(s) Designation Remuneration % Increase / Ratio to median and Key Managerial (` in Lakh) (Decrease) in remuneration Personnel (KMP) Remuneration of employees Mr. Kumar Mangalam Birla Chairman & Non-Executive Director (36.41) Mrs. Rajashree Birla Non-Executive Director 8.10 (46.89) 3.31 Mr. P. Murari Independent Director Mr. B. R. Gupta Independent Director 3.40 (27.66) 1.39 Ms. Tarjani Vakil Independent Director 3.60 (35.14) 1.47 Mr. S. C. Bhargava Independent Director 2.40 (50.00) 0.98 Mr. G. P. Gupta a Independent Director 1.30 _ Not Applicable Mr. T. Chattopadhyay b Non-Executive Director 1.85 _ Not Applicable Mr. Lalit Naik c Managing Director (7.62) Mr. Sushil Agarwal d Whole- time Director & Chief Financial Officer _ Not Applicable Mrs. Pinky Mehta e Chief Financial Officer _ Not Applicable Mr. Ashok Malu f Company Secretary _ Not Applicable Notes: Remuneration paid to Non Executive and Independent Directors includes commission payable for the year ended 31 st March, 2016 which is within the overall ceiling approved by the Members of the Company. Sitting fees paid are excluded. Remuneration paid to Key Managerial Personnel (KMP) consists of salary, variable pay, stock options and allowances as computed under the Income Tax, 1961 and contribution made to Provident and other funds. The remuneration includes variable pay for the year ended 31 st March, 2015 which was paid during the financial year to the Key Managerial Personnel. a Mr. G P Gupta ceased to be the Director of the Company with effect from 9 th November, 2015 and hence remuneration paid is not comparable. b Mr. T. Chattopadhyay is nominee of Financial Institution and the commission is paid to the Financial Institution. c Mr. Lalit Naik was appointed as a Managing Director with effect from 1 st July, 2014 and remuneration paid during the financial year and the financial year are not comparable. d Mr. Sushil Agarwal was Whole-Time Director and Chief Financial Officer up to 30 th June, 2015 and remuneration paid during the financial year was for part of the year and hence it is not comparable with the financial year The remuneration for financial year includes Rs Lakhs on account of exercise of stock options. e Mrs. Pinky Mehta was appointed as a Chief Financial Officer with effect from 1 st July 2015 and remuneration paid during the financial year was for part of the year including Rs.8.91 Lakhs on account of exercise of stock options and hence it is not comparable. f Mr. Ashok Malu was appointed as a Company Secretary with effect from 1 st March, 2015 and remuneration paid during the financial year and the financial year are not comparable. 2. During the financial year , there was an increase of 13.43% in the median remuneration of employees. 3. There were 10,320 permanent employees on the rolls of Company as on 31 st March, During the financial year , the average percentage increase made in the salaries of employees other than the Key Managerial Personnel was 11.97% and the Key Managerial Personnel remuneration was (7.62%). 5. It is hereby affirmed that the remuneration paid is as per the Remuneration Philosophy / Policy of the Company. For and on behalf of the Board Kumar Mangalam Birla Chairman Mumbai, 11 th July, 2016 (DIN: ) 88

98 Directors Report ANNEXURE - IV Form No. MGT 9 EXTRACT OF ANNUAL RETURN as on the financial year ended on 31 st March, 2016 Pursuant to section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014 I. REGISTRATION AND OTHER DETAILS i) CIN L17199GJ1956PLC ii) Registration Date iii) Name of the Company iv) Category / Sub-Category of the Company Public Limited Company / Limited by Shares v) Address of the Registered office Indian Rayon Compound, Veraval , and contact details Gujarat. Tel No abnlsecretarial@adityabirla.com vi) Whether Listed company Yes/No Yes vii) Name, Address and Contact details of Registrar and Transfer Agent, if any. 1 st April, 2015 to 30 th September, 2015 : In-House RTA Activity by Company 1 st October, 2015 to 26 th April, 2016 : Sharepro Services (India) Private Limited, 13 AB Samhita Warehousing Complex, 2 nd Floor, Sakinaka, Andheri (E), Mumbai Maharashtra W.e.f. 27 th April, 2016 : Karvy Computershare Private Limited, Karvy Selenium Tower B, Plot 31-32, Gachibowli, Financial District, Nanakramguda, Hyderabad II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY All the business activities contributing 10% or more of the total turnover of the company are given below: Sl. Name and Description of main NIC Code of the % to total turnover No. products/services Product/ service of the Company 1 Textiles (Linen Yarn and Fabric, Worsted Yarn and Wool Tops) % 2 Agri - business (Fertilisers, Agro-Chemicals and Seeds) 201 & % 3 Rayon (Viscose Filament Yarn, Caustic Soda and Allied Chemicals) 201 & % 4 Insulators % 89

99 Statutory Reports III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES Sl. Name of the Address of the CIN /GLN Holding/ % of shares Applicable No. Subsidiary Company Company Subsidiary/ held Section Associate 1 ABNL Investment Limited Indian Rayon Compound, U65910GJ1994PLC Subsidiary % 2(87)(ii) Junagadh Veraval Road, Gujarat Shaktiman Mega Food Park Survey No. 1507, U45209GJ2010PTC Subsidiary % 2(87)(ii) Private Limited Indian Rayon Compound, Junagadh, Veraval, Gujarat Adity Birla Renewables Limited A-4, Aditya Birla Centre, U40300MH2015PLC Subsidiary 51.00% 2(87)(ii) S K Ahire Marg, Worli, Mumbai Aditya Birla Idea Payments A4, Aditya Birla Centre, U65923MH2016PLC Subsidiary 51.00% 2(87)(ii) Bank Limited S. K. Ahire Marg, Worli, Mumbai Birla Sun Life Insurance Company One Indiabulls Centre, U99999MH2000PLC Subsidiary 74.00% 2(87)(ii) Limited (BSLICL) Tower 1, 16th Floor, Jupiter Mill Compound, 841, S. B. Marg, Elphinstone Rd. Mumbai Birla Sun Life Pension Management One Indiabulls Centre, U66000MH2015PLC Subsidiary 74.00% 2(87)(ii) Limited (Subsidiary of BSLICL) Tower 1, 16th Flr, Jupiter Mill Compound, 841, S. B. Marg, Elphinstone Rd. Mumbai Aditya Birla Financial Services Indian Rayon Compound, U67120GJ2007PLC Subsidiary % 2(87)(ii) Limited (ABFSL) Veraval, Gujarat Aditya Birla Capital Advisors One Indiabulls Centre, U74140MH2008PTC Subsidiary % 2(87)(ii) Private Limited * Tower 1, 18th Flr, Jupiter Mill Compound, 841, S. B. Marg, Elphinstone Rd. Mumbai Aditya Birla Customer Services Aditya Birla Centre, U93000MH2008PLC Subsidiary 93.70% 2(87)(ii) Limited * S.K. Ahire Marg, Worli, Mumbai Aditya Birla Trustee Company Aditya Birla Centre, U74999MH2008PTC Subsidiary % 2(87)(ii) Private Limited * S.K. Ahire Marg, Worli, Mumbai Aditya Birla Financial Shared One Indiabulls Centre, U65999MH2008PLC Subsidiary % 2(87)(ii) Services Limited * Tower 1, 18th Floor, Jupiter Mill Compound, 841, S. B. Marg, Elphinstone Rd. Mumbai Aditya Birla Finance Limited * Indian Rayon Compound, U65990GJ1991PLC Subsidiary % 2(87)(ii) Veraval, Gujarat Aditya Birla Insurance Brokers Indian Rayon Compound, U99999GJ2001PLC Subsidiary 50.01% 2(87)(ii) Limited * Veraval, Gujarat ABCAP Trustee Company Private A-4, Aditya Birla Centre, U74120MH2013PTC Subsidiary % 2(87)(ii) Limited * S K Ahire Marg, Worli, Mumbai Aditya Birla Health Insurance Co. A-4, Aditya Birla Centre, U66000MH2015PLC Subsidiary % 2(87)(ii) Limited * S K Ahire Marg, Worli, Mumbai

100 Directors Report Sl. Name of the Address of the CIN /GLN Holding/ % of shares Applicable No. Subsidiary Company Company Subsidiary/ held Section Associate 16 Birla Sun Life Trustee Company One India bulls, U74899MH1994PTC Subsidiary 50.85% 2(87)(ii) Private Limited * Tower 1, 17th Floor, Jupiter Mills, Senapati Bapat Marg, Elphinstone Rd. Mumbai Aditya Birla Housing Finance Indian Rayon Compound, U65922GJ2009PLC Subsidiary % 2(87)(ii) Limited * Veraval, Junagadh, Gujarat Birla Sun Life Asset Management One Indiabulls, Tower 1, U65991MH1994PLC Subsidiary 51.00% 2(87)(ii) Company Limited (BSAMC) * 17th Floor, Jupiter Mills, Senapati Bapat Marg, Elphinstone Rd. Mumbai Birla Sun Life AMC (Mauritius) Ltd. IFS Court, Twenty Eight, Foreign Company Subsidiary 51.00% 2(87)(ii) (Subsidiary of BSAMC) ** Cybercity Ebene Mauritius 20 Aditya Birla Sun Life AMC Ltd., Unit 05, Floor-7, Foreign Company Subsidiary 51.00% 2(87)(ii) Dubai (Subsidiary of BSAMC) ** Currency House - Building 1, Dubai International Financial Centre, Dubai, , United Arab Emirates 21 Aditya Birla Sun Life AMC Pte. Ltd., 1 Marina Boulevard # Foreign Company Subsidiary 51.00% 2(87)(ii) Singapore (Subsidiary of BSAMC) ** 28-00, One Marina Boulevard, , Singapore 22 India Advantage Fund Limited IFS Court, Twenty Eight Foreign Company Subsidiary 51.00% 2(87)(ii) (Subsidiary of BSAMC) ** Cybercity Ebene Mauritius 23 International Opportunities Fund 3rd Floor, Queens Foreign Company Subsidiary 51.00% 2(87)(ii) SPC (IOF) (Subsidiary of BSAMC) ** Gate House, 113 South Church Street, Grand Cayman, KY Aditya Birla Money Limited Indian Rayon Compound, L65993GJ1995PLC Subsidiary 75.00% 2(87)(ii) (ABML) * Veraval, Gujarat Aditya Birla Commodities Broking Indian Rayon Compound, U51501GJ2003PLC Subsidiary 75.00% 2(87)(ii) Limited (Subsidiary of ABML) ** Veraval, Gujarat Aditya Birla Money Mart Limited Indian Rayon Compound, U61190GJ1997PLC Subsidiary % 2(87)(ii) (ABMML) * Veraval, Gujarat Aditya Birla Money Insurance Indian Rayon Compound, U67200GJ2001PLC Subsidiary % 2(87)(ii) Advisory Services Limited Veraval, Gujarat (Subsidiary of ABMML) ** 28 ABNL IT & ITES Limited (ABNLIT) Indian Rayon Compound, U72300GJ2013PLC Subsidiary % 2(87)(ii) (Ceased to be a subsidiary Veraval, Junagadh, w.e.f. 31 st March 2016) Gujarat Aditya Birla Minacs BPO Indian Rayon Compound, U72400GJ1998PTC Subsidiary % 2(87)(ii) Private Limited (100% Subsidiary Veraval, Junagadh, of ABNLIT) (Ceased to be a Gujarat subsidiary w.e.f. 31 st March 2016) 30 Indigold Trade and Services Indian Rayon Compound, U18101GJ2007PLC Subsidiary % 2(87)(ii) Limited (ITSL) (Ceased to be a Junagadh Veraval, subsidiary w.e.f. 31 st March 2016) Gujarat

101 Statutory Reports Sl. Name of the Address of the CIN /GLN Holding/ % of shares Applicable No. Subsidiary Company Company Subsidiary/ held Section Associate 31 Madura Garments Lifestyle Retail Indian Rayon Compound, U18101GJ2007PLC Subsidiary % 2(87)(ii) Company Limited (Ceased to be a Veraval, Gujarat subsidiary w.e.f. 3 rd February 2016) 32 Aditya Birla Fashion and Retail , 7th Floor, L18101MH2007PLC Subsidiary 72.62% 2(87)(ii) Limited (Formerly known as Skyline Icon Business Pantaloons Fashions and Retail Park, Off A. K. Road, Limited) (Subsidiary of ITSL) Marol Village, (Ceased to be a subsidiary Andheri East, w.e.f. 9 th January 2016) MUMBAI JOINT VENTURES 1 IDEA Cellular Limited Suman Tower, Plot No.18, L32100GJ1996PLC Joint Venture 23.26% 2(6) Sector-11, Gandhinagar, Gujarat ASSOCIATES - Nil NA NA NA NA NA * Direct subsidiary of Aditya Birla Financial Services Limited ** Step down subsidiary of Aditya Birla Financial Services Limited IV. SHARE HOLDING PATTERN (Equity Share Capital Breakup as percentage of Total Equity) (i) Category-wise Share Holding Category of No. of Shares held at the beginning of the year No. of Shares held at the end of the year shareholders (As on ) (As on ) % Change Demat Physical Total % of Total Demat Physical Total % of Total during the shares shares year A. Promoters 1 Indian (a) Individual/HUF 136, , , , (b) Central Govt (c) State Govt (s) (d) Bodies Corporate 74,308,494-74,308, ,917,124-75,917, (e) Banks / Financial Institution (f) Any Other Sub-total (A)(1) 74,444,697-74,444, ,053,327-76,053, Foreign (a) NRIs- Individuals (b) Other-Individuals (c) Bodies corp (d) Banks / Financial Institution (e) Any Other Sub-total (A)(2): Total holding of Promoter and Promoter Group (A)=(A)(1)+(A)(2) 74,444,697-74,444, ,053,327-76,053, B. Public Shareholding 1 Institutions (a) Mutual Funds 5,592,805 26,059 5,618, ,644,869 26,059 10,670,

102 Directors Report i) Category-wise Share Holding (Continued) Category of No. of Shares held at the beginning of the year No. of Shares held at the end of the year shareholders (As on ) (As on ) % Change Demat Physical Total % of Total Demat Physical Total % of Total during the shares shares year (b) Banks/Financial Institution 7,445,695 12,767 7,458, ,495 11,569 93, (c) Central Government ,271-5, (d) State Government(s) (e) Venture Capital Funds (f) Insurance Companies 1,469, ,469, ,305,220 5,686 7,310, (g) Foreign Institutional Investors 20,381,529 3,695 20,385, ,660,834 3,695 15,664, (h) Foreign Venture Capital Funds (i) Any Other Sub-total (B)(1): 34,889,176 42,546 34,931, ,697,689 47,009 33,744, Non-Institutions (a) Individuals 0.00 (i) Individual shareholders holding nominal share capital upto ` 1 lakh 9,326,572 2,025,571 11,352, ,057,254 1,941,577 11,998, (ii) Individual shareholders holding nominal share capital in excess of ` 1 lakh 1,053,406 34,990 1,088, ,402,694-2,402, (c) Others (specify) Bodies Corporate 3,754,729 67,243 3,821, ,383,685 67,011 4,450, NRI 654, , , , , , OCB - 1,441 1, ,800 1,441 3, Trust 340,299 2, , ,800 2, , Sub-total (B)(2): 15,129,025 2,463,290 17,592, ,109,218 2,315,615 20,424, Total Public Shareholding (B)=(B)(1)+(B)(2) 50,018,201 2,505,836 52,524, ,806,907 2,362,624 54,169, TOTAL (A)+(B) 124,462,898 2,505, ,968, ,860,234 2,362, ,222, C. Shares held by Custodian for GDRs & ADRs Promoter and Promoter Group 1,425,000-1,425, Public 1,742, ,743, Grand Total (A+B+C) 127,630,686 2,506, ,137, ,860,234 2,362, ,222,

103 Statutory Reports IV. (ii) SHARE HOLDING PATTERN (Equity Share Capital Breakup as percentage of Total Equity) Shareholding of Promoters Sl. Shareholder s name Shareholding at the beginning of the year Share holding at the end of the year % Change in No. (As on ) (As on ) shareholding No. of shares % of total % of Shares No. of shares % of total % of Shares during the Shares of the Pledged / Shares of the Pledged / year company encumbered company encumbered to total to total shares shares 1 Aditya Vikram Kumar Mangalam Birla HUF Mr. Kumar Mangalam Birla Mrs. Rajashree Birla Mrs. Neerja Birla Mrs. Vasavadatta Bajaj Birla Group Holdings Pvt.Ltd TGS Investment and Trade Pvt. Ltd Trapti Trading and Investments Pvt. Ltd Turquoise Investments and Finance Pvt. Ltd Birla Consultants Ltd Birla Industrial Finance (India) Ltd Birla Industrial Investments (India) Ltd ECE Industries Limited Grasim Industries Limited Hindalco Industries Limited IGH Holdings Private Limited Manav Investment & Trading Co. Ltd Pilani Investment & Industries Corporation Ltd Umang Commercial Company Private Limited TOTAL 74,444, ,053, IV. (iii) SHARE HOLDING PATTERN (Equity Share Capital Breakup as percentage of Total Equity) Change in Promoters Shareholding (please specify, if there is no change) Sl. Particulars Shareholding at the beginning Cumulative Shareholding No. of the year during the year No. of shares % of total No. of shares % of total shares of the shares of the company company 1 TGS Investment and Trade Private Limited At the beginning of the year 13,506, Acquisition on , ,721, Acquisition on , ,671, At the end of the year 14,671, Turquoise Investments and Finance Private Limited At the beginning of the year 6,441, Acquisition on , ,885, At the end of the year 6,885,

104 Directors Report IV. SHARE HOLDING PATTERN (Equity Share Capital Breakup as percentage of Total Equity) iv. Shareholding pattern of top ten shareholders (other than Directors, Promoters and Holders of GDRs and ADRs) Sl. Name of the Shareholder Shareholding at the beginning Date Increase / Reason Cumultive Shareholding No. of the year (as on ) Decrease in during the year shareholding No. of shares % of total No. of % of total at the beginning shares of the shares shares of the ( ) / end company company of the year ( ) 1 Life Insurance Corporation 7,259, ,259, of India (55,569) Sell 7,203, (322,988) Sell 6,880, (184,044) Sell 6,696, (185,790) Sell 6,511, (116,514) Sell 6,394, (135,095) Sell 6,259, (40,443) Sell 6,219, (136,171) Sell 6,082, (21,991) Sell 6,060, ,060, ,060, HSBC Global Investment 1,996, ,996, Funds A/c HSBC GIF (7,268) Sell 1,989, Mauritius Ltd (59,674) Sell 1,929, (82,559) Sell 1,847, (9,839) Sell 1,837, (70,161) Sell 1,767, ,767, ,767, Reliance Capital Trustee 1,442, ,442, Co. Ltd. A/c Reliance (40,214) Sell 1,402, Growth Fund (14,340) Sell 1,387, (15,000) Sell 1,372, (22,000) Sell 1,350, ,388 Purchase 1,709, ,000 Purchase 1,759, ,759, ,759, FRANKLIN TEMPLETON 1,072, ,072, INVESTMENT FUNDS ,920 Purchase 1,104, ,080 Purchase 1,212, ,847 Purchase 1,404, ,200 Purchase 1,494, (157,239) Sell 1,337, (33,051) Sell 1,304, (357,929) Sell 946, (350,000) Sell 596, (92,000) Sell 504, (504,298) Sell MORGAN STANLEY ASIA 950, , (SINGAPORE) PTE (55,133) Sell 895, (3,000) Sell 892, (33,008) Sell 859, (30,616) Sell 828, (324,324) Sell 504, ,875 Purchase 524, Purchase 524, ,750 Purchase 568, (10,130) Sell 557, Purchase 558, (5,405) Sell 553, ,116 Purchase 557, (61,224) Sell 496, (4,503) Sell 491, (2,875) Sell 488, (43,060) Sell 445, ,851 Purchase 447, ,407 Purchase 448, ,852 Purchase 458, ,171 Purchase 461, ,624 Purchase 463, Purchase 463, ,121 Purchase 464, Purchase 465,

105 Statutory Reports iv. Shareholding pattern of top ten shareholders (other than Directors, Promoters and Holders of GDRs and ADRs) (continued) Sl. Name of the Shareholder Shareholding at the beginning Date Increase / Reason Cumultive Shareholding No. of the year (as on ) Decrease in during the year shareholding No. of shares % of total No. of % of total at the beginning shares of the shares shares of the ( ) / end company company of the year ( ) Purchase 466, Purchase 467, ,830 Purchase 468, (1,213) Sell 467, Purchase 468, (1,123) Sell 466, (2,021) Sell 464, ,750 Purchase 483, (11,419) Sell 472, ,559 Purchase 479, ,507 Purchase 636, ,811 Purchase 666, ,789 Purchase 851, ,541 Purchase 907, (24,146) Sell 883, (5,389) Sell 877, (97,377) Sell 780, ,790 Purchase 783, (74,382) Sell 708, (4,703) Sell 704, , ,795 Purchase 718, GENERAL INSURANCE 930, , CORPORATION OF INDIA (35,000) Sell 895, (15,000) Sell 880, (29,211) Sell 850, (50,000) Sell 800, (29,000) Sell 771, (45,000) Sell 726, (26,000) Sell 700, , , DIMENSIONAL EMERGING 802, , MARKETS VALUE FUND ,756 Purchase 809, ,489 Purchase 811, ,475 Purchase 816, ,760 Purchase 822, ,018 Purchase 823, ,643 Purchase 832, ,193 Purchase 834, ,997 Purchase 836, ,172 Purchase 842, ,265 Purchase 853, ,895 Purchase 857, ,246 Purchase 874, ,884 Purchase 900, ,260 Purchase 901, ,133 Purchase 902, Purchase 903, ,293 Purchase 907, ,462 Purchase 910, ,308 Purchase 913, ,872 Purchase 917, ,551 Purchase 923, ,551 Purchase 927, ,287 Purchase 952, ,845 Purchase 973, , , EASTSPRING INVESTMENTS 750, , INDIA EQUITY OPEN LIMITED ,342 Purchase 756, (40,371) Sell 715, (109,149) Sell 606, (27,213) Sell 579, (29,240) Sell 550, (28,590) Sell 521, (35,829) Sell 485,

106 Directors Report iv. Shareholding pattern of top ten shareholders (other than Directors, Promoters and Holders of GDRs and ADRs) (continued) Sl. Name of the Shareholder Shareholding at the beginning Date Increase / Reason Cumultive Shareholding No. of the year (as on ) Decrease in during the year shareholding No. of shares % of total No. of % of total at the beginning shares of the shares shares of the ( ) / end company company of the year ( ) (62,122) Sell 423, (92,027) Sell 331, (73,958) Sell 257, , , ROBECO CAPITAL 739, , GROWTH FUNDS (5,537) Sell 733, (65,000) Sell 668, ,000 Purchase 695, (18,765) Sell 676, (145,330) Sell 531, (107,513) Sell 423, (80,377) Sell 343, (21,300) Sell 322, (38,391) Sell 283, (110,729) Sell 173, (173,080) Sell GOVERNMENT OF 722, , SINGAPORE ,476 Purchase 728, (464) Sell 727, (15,348) Sell 712, (11,011) Sell 701, ,480 Purchase 702, (766) Sell 702, ,942 Purchase 716, ,049 Purchase 725, ,481 Purchase 730, ,586 Purchase 744, ,070 Purchase 828, (1,713) Sell 826, ,300 Purchase 922, ,596 Purchase 955, ,557 Purchase 958, (11,579) Sell 947, ,262 Purchase 981, (575) Sell 981, (8,327) Sell 972, (1,274) Sell 971, (909) Sell 970, (3,919) Sell 966, (2,515) Sell 964, (2,977) Sell 961, ,381 Purchase 970, (555) Sell 969, (266,473) Sell 703, , , KESORAM INDUSTRIES 614, , LIMITED (w.e.f. 08/05/2015) 614, (614,162) HSBC INDIAN EQUITY 585, , MOTHER FUND (24,000) Sell 561, (w.e.f. 14/08/2015) (8,000) Sell 553, (67,722) Sell 485, , , MORGAN STANLEY 117, , MAURITIUS COMPANY ,250 Purchase 123, LIMITED (w.e.f. 28/08/2015) ,625 Purchase 128, ,125 Purchase 163, ,562 Purchase 167, ,625 Purchase 378, ,874 Purchase 428, ,350 Purchase 442, ,375 Purchase 443, ,793 Purchase 488,

107 Statutory Reports iv. Shareholding pattern of top ten shareholders (other than Directors, Promoters and Holders of GDRs and ADRs) (continued) Sl. Name of the Shareholder Shareholding at the beginning Date Increase / Reason Cumultive Shareholding No. of the year (as on ) Decrease in during the year shareholding No. of shares % of total No. of % of total at the beginning shares of the shares shares of the ( ) / end company company of the year ( ) ,817 Purchase 528, ,625 Purchase 529, ,046 Purchase 611, ,250 Purchase 653, ,625 Purchase 654, ,250 Purchase 657, ,814 Purchase 673, ,500 Purchase 695, (36,022) Sell 659, (35,450) Sell 623, ,255 Purchase 627, , ,762 Purchase 657, MACQUARIE EMERGING MARKETS ASIAN TRADING PTE. LTD. (w.e.f. 30/10/2015) 392, , (20,500) Sell 371, (4,000) Sell 367, (43,000) Sell 324, (98,000) Sell 226, (142,583) Sell 84, (125) Sell 84, ,000 Purchase 97, ,125 Purchase 99, ,250 Purchase 123, (16,875) Sell 106, ,000 Purchase 115, (35,000) Sell 80, (17,125) Sell 63, (15,750) Sell 47, ,375 Purchase 64, ,875 Purchase 73, (54,875) Sell 18, (2,625) Sell 15, ,858 Purchase 23, ,625 Purchase 24, ,750 Purchase 38, (11,750) Sell 26, (3,475) Sell 23, ,447 Purchase 53, (45,250) Sell 8, (875) Sell 7, (750) Sell 7, ,125 Purchase 8, ,000 Purchase 20, ,250 Purchase 768, ,000 Purchase 792, ,500 Purchase 796, (40,000) Sell 756, Purchase 757, (44,000) Sell 713, ,479 Purchase 742, ,750 Purchase 767, ,000 Purchase 770, ,250 Purchase 775, (25,750) Sell 750, ,250 Purchase 772, (22,434) Sell 750, Purchase 750, , ,000 Purchase 760, INDIA OPPORTUNITIES GROWTH FUND LTD - PINEWOOD STRATEGY (w.e.f. 06/11/2015) ,869 Purchase 925,

108 Directors Report iv. Shareholding pattern of top ten shareholders (other than Directors, Promoters and Holders of GDRs and ADRs) (continued) Sl. Name of the Shareholder Shareholding at the beginning Date Increase / Reason Cumultive Shareholding No. of the year (as on ) Decrease in during the year shareholding No. of shares % of total No. of % of total at the beginning shares of the shares shares of the ( ) / end company company of the year ( ) ,425,000 Purchase 2,350, (30,000) Sell 2,320, ,000 Purchase 2,325, , (1,400,000) Sell 925, TATA BALANCED FUND (w.e.f. 04/12/2015) ,000 Purchase 52, ,000 Purchase 152, ,000 Purchase 400, ,000 Purchase 500, ,000 Purchase 535, ,000 Purchase 675, ,000 Purchase 750, , , ASHISH DHAWAN (w.e.f. 12/02/2016) ,000 Purchase 100, ,000 Purchase 160, ,000 Purchase 210, ,988 Purchase 319, ,595 Purchase 572, ,405 Purchase 814, ,918 Purchase 1,126, ,075 Purchase 1,360, ,000 Purchase 1,610, ,610, ,610, DB INTERNATIONAL 93, , (ASIA) LTD Purchase 93, (w.e.f. 18/03/2016) Purchase 94, ,750 Purchase 268, ,440 Purchase 289, Purchase 289, (1,821) Sell 287, Purchase 288, (2,542) Sell 285, ,365 Purchase 286, ,713 Purchase 305, Purchase 306, Purchase 306, ,193 Purchase 307, ,783 Purchase 310, (45) Sell 310, (6,238) Sell 303, ,676 Purchase 309, (2,196) Sell 307, ,816 Purchase 309, (7,644) Sell 301, Purchase 301, (1,313) Sell 300, Purchase 301, (738) Sell 300, ,304 Purchase 310, (1,324) Sell 309, (3,282) Sell 305, ,277 Purchase 308, (9,918) Sell 298, (5,773) Sell 292, ,891 Purchase 298, (18,038) Sell 280, (82) Sell 280, ,000 Purchase 730, ,000 Purchase 830, , (357) Sell 829,

109 Statutory Reports IV. SHARE HOLDING PATTERN (Equity Share Capital Breakup as percentage of Total Equity) v. Shareholding of Directors and Key Managerial Personnel Sl. For Each of the Directors and KMP Shareholding at the Cumultive Shareholding No. beginning of the year during the year No. of shares % of total No. of shares % of total shares of shares of the company the company 1 Mr. Kumar Mangalam Birla, Chairman At the beginning of the year 4, , At the end of the year 4, Mrs. Rajashree Birla, Director At the beginning of the year 127, , At the end of the year 127, Ms. Tarjani Vakil, Director At the beginning of the year At the end of the year Mr. G.P. Gupta (Ceased to be a Director w.e.f ) At the beginning of the year At the end of the year Mr. S C Bhargava, Director At the beginning of the year At the end of the year Mr. Lalit Naik, Managing Director At the beginning of the year At the end of the year Mr. Sushil Agarwal (Ceased to be WTD & CFO from the close of business on ) At the beginning of the year 2, , Allotment of shares against exercise of Stock Options 1, , do - 6, , do - 13, , At the end of the year 23, Mrs. Pinky Mehta, Chief Financial Officer (w.e.f ) At the beginning of the year 1, , Allotment of shares against exercise of Stock Options , At the end of the year 1, Mr. Ashok Malu, Company Secretary At the beginning of the year At the end of the year V. INDEBTEDNESS Indebtedness of the Company including interest outstanding/accrued but not due for payment. Indebtedness at the beginning of the financial year (` in Crore) Secured Unsecured Deposits Total Loans Loans excluding deposits i) Principal Amount 1, , , ii) Interest due but not paid iii) Interest accrued but not due Total (i+ii+iii) 1, , , Change in Indebtedness during the financial year Addition Reduction Net Change Indebtedness at the end of the financial year i) Principal Amount , , ii) Interest due but not paid iii) Interest accrued but not due Total (i+ii+iii) , ,

110 Directors Report VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL A. Remuneration to Managing Director, Whole-time Directors and/or Manager: (` in Lakh) Sl Name of MD/WTD/ Gross salary Stock Sweat Commission Others, Total Ceiling No. Manager Option Equity (PF and (A) as per SAF) the Act* (a) Salary (b) Value of (c) Profits in -As % of -Others, as per perquisites lieu of salary profit specify provisions u/s 17(2) under contained Income-tax section 17(3) in section Act, 1961 Income-tax 17(1) of the Act, 1961 Income-tax Act, Mr. Lalit Naik - Managing Director * 2 Mr. Sushil Agarwal - Wholetime Director and CFO (upto ) * TOTAL * * Ceiling as per the Act (being 10% of the net profit as worked out as per Section 198 of the Companies Act, 2013) for FY 2016 is Rs Lakhs VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL B. Remuneration to other Directors: (` in Lakh) Sl Particulars of Remuneration Total (B) Total Overall No. = (1+2) Manag- Ceiling (1) Independent Directors (2) Other Non-Executive Directors erial as per Name of Directors Fee for Comm- Others, Total Fee for Comm- Others, Total Remun- the attending ission please (1) attending ission please (2) eration Act Board/ specify Board/ specify ** *** Committee Committee Meetings Meetings 1 Mr. Kumar Mangalam Birla NA ** *** 2 Mrs. Rajashree Birla NA ** *** 3 Mr. Pejavar Murari NA 8.00 ** *** 4 Mr. Baldev Raj Gupta NA 8.95 ** *** 5 Ms. Tarjani Vakil NA ** *** 6 Mr. Subhash Chandra Bhargava NA 7.55 ** *** 7 Mr. Gyan Prakash Gupta (ceased to be a Director w.e.f. 9 th November, 2015) NA 4.05 ** *** 8 Mr. Tapasendra Chanttopadhyay (Nominee Director) (ceased to be a Director NA ** *** w.e.f. 7 th April, 2016) TOTAL ** *** ** Total Managerial Remuneration A + B = Rs Lakhs *** Overall Ceiling as per the Act (being 11% of the net profit as worked out as per Section 198 of the Companies Act, 2013) for FY 2016 is Rs Lakhs 101

111 Statutory Reports VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL C. Remuneration to Key Managerial Personnel other than MD / Manager / WTD: (` in Lakh) Sl. Name of Key Managerial Personnel Gross salary Stock Sweat Commission Others Total No. other than MD/Manager/ WTD Option Equity (PF and SAF) (a) Salary (b) Value (c) Profits - As % - Others, as per of in lieu of of profit specify provisions perquisites salary contained u/s 17(2) under in section Income-tax section 17(1) of the Act, (3) Income-tax Income-tax Act, 1961 Act, Mrs. Pinky Mehta, Chief Financial Officer (w.e.f ) Mr. Ashok Malu, Company Secretary TOTAL VII. PENALTIES/ PUNISHMENT/ COMPOUNDING OF OFFENCES Type Section Brief Details of Authority Appeal, if any of the Description Penalty/ [RD/NCLT/ (give details) Companies Punishment/ COURT] Act Compounding fees imposed A. COMPANY Penalty Nil NA NA NA NA Punishment Nil NA NA NA NA Compounding Nil NA NA NA NA B. DIRECTORS Penalty Nil NA NA NA NA Punishment Nil NA NA NA NA Compounding Nil NA NA NA NA C. OTHER OFFICERS IN DEFAULT Penalty Nil NA NA NA NA Punishment Nil NA NA NA NA Compounding Nil NA NA NA NA For and on behalf of the Board Mumbai, 11 th July, 2016 Kumar Mangalam Birla Chairman (DIN: ) 102

112 Directors Report ANNEXURE - V DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO [Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014] A. CONSERVATION OF ENERGY: (i) The steps taken or impact on conservation of energy The Company is engaged in the continuous process of energy conservation through improved operational and maintenance practices. Steps taken by various divisions of the Company towards the direction are as under: I. INDIAN RAYON Installation of Mist type combo vacuum system for Flash DE aerator saving 57,456 Kwh/pa. Installation of China Filters in place of Sand filters saving 36,500 Kwh/pa. Energy efficient distribution in Cooling Tower Energy efficient Pump for Air washer saving 1,26,720 Kwh/pa Installation of LED tube lights resulting into saving of 93,440 Kwh/pa Installation of Single Tank for condensate for reuse of condensate saving 26,280 Kwh/pa and TPA of steam Replacement of conventional Fluorescent Lamps by LED tubes (retrofit) in Cell house Electrolysers saving 29,200 Kwh/pa Replacement of High capacity centrifugal Pump by Adequate capacity & Energy efficient saving 38,325 Kwh/pa Replacement of Inefficient Chilled Water Pump saving 40,734 Kwh/pa Replacement of Inefficient Clarified Brine Pump saving 40,471 Kwh/pa Installation of one No. Boiler Feed Pump capacity 130 M3/hr@136 kg/ cm 2 pressure in CPP-1 Boilers saving 10,14,737 Kwh/pa Installation of Energy Efficient Motor for New MCT Fans saving 39,352 Kwh/pa Installation of Energy Efficient Motor for Auxiliary Cooling Tower pumps saving 33,120 kwh/pa Optimisation of instrument air compressor saving 5,69,400 Kwh/pa Reduced power consumption by Remembraning of Gen-II Elect-B(6.0 kwh/ton) The energy conservation measures taken in Rayon Division have resulted in energy saving and consequent decrease in cost of production Number of units saved - 23,02,685 Kwh/Annum Rupees - 1,26,64,767/- As a percentage of total energy consumed by the Unit % II. FERTILIZERS DIVISION The Unit has a strong technical team to continuously monitor & conserve energy in the Complex. Performance evaluations for Turbines, Compressor, Heat Exchangers, Boilers etc. are carried out to ensure optimum utilization of energy. The Unit implemented energy saving schemes which are techno economically viable. Some of these schemes implemented in FY are: Replacement of 2,600 Nos. 50 watt Tube lights with 20 Watt LED tube Light fittings in Plant area. Replacement of 1,350 Nos. 50 watt Tube lights with 20 Watt tube Light fittings in Control rooms. Replacement of 100 nos. Tube Lights with 40 Watt LED Light (Flame proof) in Power Plant. Replacement of 1,100 Nos. 50 watt Tube lights with 20 Watt LED tube Light fittings in township (Hospital, School, Guest House). Replacement of 80 Nos. 50 watt Tube lights with 12 watt LED light in township (Hospital, School, Guest House). 103

113 Statutory Reports Replacement of 130 Nos. 60 watt lights with 18 Watt LED tube Light fittings in township (Hospital, School, Guest House). Replacement of 1,145 Nos. 20 watt ceiling lights with 5 Watt LED tube Light fittings in staircases of township (Hospital, School, Guest House). Replacement of 24 nos. 200 watt under water light fittings in Township Central Park Fountain with 6 nos. 60 watt LED light. The impact of above Energy savings scheme will be as below: Number of units saved 1509 MKCL Rupees - 51,33,021/- As a percentage of total energy consumed by the Unit % III. INSULATOR DIVISION a. HALOL Installation of recuperators in two shuttle Kilns resulting in annual saving of 6.99% in fuel consumption for these Kilns. Modification of Kiln: 7 car structures resulted in reduction in Specific Fuel consumption by 3.60%. Installation of recuperators in five thermopaks resulting in annual saving of 3.40% in fuel consumption for these recuperators. The Fuel energy saved in terms of: Number of units saved SCM/Annum Rupees lacs per annum (@ Rs. 30/ SCM) As a percentage of total energy saving by the Unit- 3.25% b. RISHRA Elimination of idle operation in machines. Replacement of conventional lights by Led lights. Speed control in 2 Ball mills and 1 Pug mill by installing VFD. Number of units saved: 93,776 Kwh Rupees - 6,93,945/- As a percentage of total energy consumed by the Unit: % IV. JAYASHREE TEXTILES Installation of Heat Pumps is in progress, which shall result into saving upto ` lakhs. Usage of Heat Recovery effluent drain of fibre dye house saving upto Rs lakhs. Replacement of existing motors to IE- 3 Motors for conversion of low efficiency to high efficiency is in progress, saving upto ` 4.92 Lakhs. (ii) The steps taken by the Company for utilizing alternate sources of energy RAYON DIVISION Installation of Solar Power system Saving~ 50 Kwh (iii) The capital investment on energy conservation equipments I. RAYON DIVISION An amount of ` lakhs was invested invarious projects undertaken by the Company during the year. II. III. INSULATORS DIVISION-HALOL a) Capital investment on waste heat recovery system was ` Lakhs b) Cost of Kiln car design conversion to increase kiln loading ` 143 Lakhs. JAYASHREE TEXTILES DIVISION a) Installation of new system (in progress) involving capital investment of ` 71 Lakhs resulting into saving of ` Lakhs b) Heat recovery system from drain water of fibre dye house involving capital investment of ` 15 lakhs resulting into saving of ` 5.80 Lakhs c) Replacement of motor for conversion of low efficiency to high efficiency (in progress) involving capital investment of ` 8.35 Lakhs resulting into saving of ` 4.92 Lakhs 104

114 Directors Report B. TECHNOLOGY ABSORPTION: i. The efforts made towards technology absorption I. RAYON DIVISION An In-house development of the spool technology Spinning machine was undertaken which resulted in capital expenditure for six new machines. Joint projects with Aditya Birla Science & Technology Company Limited were carried out for improving yarn quality after treatment of the same. Various other initiatives were taken viz. a. Successful establishment of 2 nd Beam sizing at Surat unit b. Establishment of linear speed SSM (Safe Speed Monitoring module) making winding machine in textile department for uniform winding tension and pressure. c. Slub Catcher in Spool Spun Yarn Technology Spinning Machine to arrest defects d. Invertor in coning machine to reduce rejection. e. Automation in cake handling. Development of new shades for customers in premium segment. Joint projects with customers carried out for Core Spun Yarn operational efficiency improvement. Outsource coning activities relocated at one place near customer location to reduce cost. II. FERTILIZERS DIVISION Continuous efforts are made to prepare steam, power and material balances and to check on the actual performance against design. These measures have helped in increasing the productivity and reduction in overall energy consumption. We are working with technology suppliers and technological institutes etc. for exploring the possibility of further reduction in specific energy consumption. This would lead to reduction in Co 2 gas emissions, a greenhouse gas, thus abating global warming. III. Technology for the manufacture of specialty fertilizer such as Bentonite Sulphur, Water Soluble Fertilizer and Soil adjuvant such as Zyme has been developed & commercial production commenced. We are also working on seeding CF products for Bengal, Punjab and Haryana from Jagdishpur in UP. Soil analysis and formulation development work has been initiated for Bengal and Bihar. Various formulation studies are currently in progress in the above states by their respective state agricultural department. INSULATOR DIVISION a) HALOL Commissioned new technology Combination dryer with Humidity & Temperature controls eliminating two stage drying System to a single system. Provision of Supervisory control and data acquisition (SCADA) System in Blank conditioning process (Electrical Drying- ED) with total computer based system, for reliability and elimination of Human errors. Commission of continual Glaze slurry purification System in Glazing Production line to improve the quality of the products. Installation of waste heat recovery system in kiln K-3, K-6 and Thermopacks. New products for high end segments 400 kv and 765 kv hollow insulators have been developed for Alstom, ABB and 550 kv Hollow for Siemens have been developed, 132 kv to 245 kv hollow for Trench Canada insulators developed to meet new requirements for Circuit breakers, CT and CVT. Shop floor environment controlling System in Slip House to reduce the impact of seasonal changes on the Ceramic body properties thereby improving the consistency in the Process & Products LED lamps to replace the conventional lamps Conversion of 30 cars of K#7 to open type structure to enhance increasing the Loading volume in Kiln and creating flexibility for different product mix loading. 105

115 Statutory Reports Automation of Kiln- 2, Kiln- 3 and Kiln- 6 and installation of waste heat recovery system in Kiln- 8. b)rishra LAPP USA product development 210 KN, 420 KN HVDC Insulator Developments 210 KN, with new design (TRISHUL) ii. The benefits derived like product improvement, cost reduction, product development or import substitution I. RAYON DIVISION Quality improvement in existing range; Development of new market segments; Improvement in processes, Higher productivity and cost control; Increase in customer base and yield; Improvement in energy consumption and energy efficiency ; Reduction in input material consumption. II. FERTILIZERS DIVISION In the year , the Unit produced Lakhs MT of value added product Neem Coated Urea for the farmers under the brand name KRISHIDEV. The process patent has been obtained for the in-house developed technology. In a very short time, the Unit has established a leadership position in the field of Neem coated Urea and it has become the preferred choice by the farmer. The Ministry of Fertilisers has allowed the 100% production as Neem Coated Urea. Customized Fertilizer after the initial gestation period has become the preferred choice of the fertilizer. The farmers have experienced 12-15% enhanced crop yield for Wheat and Paddy and >20% yield for potato and sugarcane. Thus the foundation for a new concept and a strong product line has been established. This will give increasing commercial benefits in near future. In the year , the Unit achieved production of 0.27 Lakhs MT. III. INSULATOR DIVISION-HALOL a. The Fuel energy saved in terms of: Number of units saved SCM/ Annum Rupees lacs per annum (@ Rs. 30/ SCM) b. As a percentage of total energy saving by the Unit % IV. INSULATOR DIVISION-RISHRA Reduction of curing time from 5 days to 1 day. Improved Productivity. Creation of new markets and new business opportunities. iii. In case of imported technology (imported during the last three years reckoned from the beginning of the financial year) a) Details of Technology imported : Nano filtration Caustic recycling, USA b) The year of import : c) Whether the technology has been fully absorbed : Yes d) If not fully absorbed, areas where absorption has not taken place, and the reasons thereof : N.A. iv.expenditure incurred on Research & Development (R&D) The Company spent ` 2.17 crores for Research & Development work during the year, which was approximately 0.04% of the total revenue. C. FOREIGN EXCHANGE EARNINGS AND OUTGO: The information on foreign exchange earnings and outgo is contained in Notes to accounts as Note Nos. 27, 28 and 29. Mumbai, 11 th July, 2016 For and on behalf of the Board Kumar Mangalam Birla Chairman (DIN: ) 106

116 Directors Report Annual Report on CSR Activities for the Financial Year A brief outline of the Company s CSR policy, : To actively contribute to the social and economic including overview of projects or programs development of the communities in which we proposed to be undertaken and a reference operate. In so doing build a better, sustainable way to the web link to the CSR policy and projects of life for the weaker sections of society, to or programs contribute effectively towards inclusive growth and raise the country s human development index. Our projects focus on education, healthcare, sustainable livelihood, infrastructure development and social reform, epitomizing a holistic approach to inclusive growth. The Company s CSR Policy can be accessed on: 2. Composition of the CSR Committee : Mrs. Rajashree Birla, Chairperson Ms. Tarjani Vakil, Member Mr. Lalit Naik, Member Dr. (Mrs.) Pragnya Ram- Group Executive President Corporate Communications and CSR as a Permanent Invitee 3. Average net profit of the company for last : ` Crore* three financial years* 4. Prescribed CSR Expenditure (two percent : ` 7.01 Crore of the amount as in Item 3 above) ANNEXURE - VI 5. Details of CSR spent during the financial year: a. Total amount to be spent for the financial year : ` 7.01 Crore (against this, the CSR Spending for FY was ` 7.40 Crore) b. Amount unspent, if any : NIL c. Manner in which the amount spent during the : Details given below financial year April 2015 March 2016 * Exluding profits of erstwhile Madura Fashion & Lifestyle Division of the Company which has since been demerged into Aditya Birla Fashion & Retail Limited w.e.f 1 st April, 2015 (being the Appointed Date) pursuant to the Composite Scheme of Arrangement under Sections 391 to 394 of the Companies Act, (` in Lakh) (1) (2) (3) (4) (5) (6) (7) (8) Sr. CSR Projects or Activity Sector in Project or Programs Amount Amount Cumulative Amount No identified which 1) Local Area or others Outlay Spent on Expenditure Spent: project is 2) Specify the State (Budget) the Project up to Direct or covered and District where the Project or or Programs reporting through Projects or Program Subheads: period implementprograms are wise (1) Direct (` in Lakh) ation undertaken (` in Lakh) expenditure agency* on project/ programs (2) Overheads (` in Lakh) I 1. Preschool Education Education Veraval, Dist. Gir All expenses Project Somnath, Gujarat; incurred Balwadies/play schools/ Jagdishpur, Amethi directly by crèches; Strengthening Dist., UP; Rishra, company Anganwadis North 24, Parganas, WB, Hooghly District 2. School Education Program Jamo, Jagdishpur, Enrolment awareness Shukul Bazar, Singhpur, programmes/events; Tiloi of Amethi District, Formal schools; Education UP; KGBV Schools, 107

117 Statutory Reports (1) (2) (3) (4) (5) (6) (7) (8) Sr. CSR Projects or Activity Sector in Project or Programs Amount Amount Cumulative Amount No identified which 1) Local Area or others Outlay Spent on Expenditure Spent: project is 2) Specify the State (Budget) the Project up to Direct or covered and District where the Project or or Programs reporting through Projects or Program Subheads: period implementprograms are wise (1) Direct (` in Lakh) ation undertaken (` in Lakh) expenditure agency* on project/ programs (2) Overheads (` in Lakh) Material(Study materials, Krishanagiri Dist:, Uniform, Books etc.); Tamil Nadu; Veraval City Scholarship (Merit and Dist. Gir Somnath, Need based assistance) Gujarat; Rishra, School competitions/ Best Barasat, 24 Parganas, teacher award; Cultural WB; Halol, Gujarat, events Quality of Education Hooghly District (support teachers, Improve education methods); Specialised Coaching; Exposure visits/awareness Formal schools inside campus (Company Schools) Support to Midday Meal Project 3. Education support Jamo, Jagdishpur, programs: Shukul Bazar, Singhpur, Knowledge Centre/Library; Tiloi of Amethi District, Adult/Non Formal UP; KGBV schools, Education; Celebration of Krishanagiri National days; Computer Dist: Tamil Nadu; education; Reducing drop Veraval City, out and Continuing Dist. Gir Somnath, Education; Kastuba Gujarat; Rishra, Gandhi Balika Vidyalaya; Barasat, 24 Parganas, Career counselling WB; 4. Vocational and Rishra & Barasat, West Technical Education: Bengal; Jagdishpur, Strengthening ITI s; Skill Amethi Dist, UP; Based Individual training Veraval, Gir Somnath, Programmes Gujarat; 5. School Infrastructure: KGBV Schools, New School Building Veraval, Gir Somnath, Construction; Renovation Gujarat; Jagdishpur, and Maintenance of School Amethi Dist, UP; Halol, buildings; School Sanitation Gujarat & drinking Water; School Furniture & Fixtures. II. 1. Preventive Health Care: Health Jamo, Jagdishpur, All expenses Immunization; Pulse Polio Shukul Bazar, Singhpur, incurred Programme; Health Check up Tiloi of Amethi District, directly by camps; Mobile Dispensary; UP; KGBV Schools, company Malaria/Diarrhoea Control Krishanagiri, Program; School Health Dist, Tamil Nadu; Checkups; Yoga and fitness classes Veraval City, Dist. Gir Somnath, Gujarat; Rishra, Barasat, 24 Parganas, West Bengal 2. Curative Health Care Jagdishpur, Amethi program: District, UP; Veraval, Hospitals/ Dispensaries/ Dist. Gir Somnath, Clinics; General Health Check Gujarat; Rishra, up camps; Specialised Health Barasat,24 Parganas, Camps; Eye Camps; Surgical WB Camps; Tuberculosis, Skin care and Leprosy care centre 3. Reproductive and Child Veraval, Dist. Gir Health: Somnath, Gujarat; Mother and Child Care; Jagdishpur, Amethi. Adolescent Health Care; 108

118 Directors Report (1) (2) (3) (4) (5) (6) (7) (8) Sr. CSR Projects or Activity Sector in Project or Programs Amount Amount Cumulative Amount No identified which 1) Local Area or others Outlay Spent on Expenditure Spent: project is 2) Specify the State (Budget) the Project up to Direct or covered and District where the Project or or Programs reporting through Projects or Program Subheads: period implementprograms are wise (1) Direct (` in Lakh) ation undertaken (` in Lakh) expenditure agency* on project/ programs (2) Overheads (` in Lakh) Infant and Child Health; Support to Family Planning programmes; Nutritional Programmes for mother and Child 4. Quality / Support Jagdishpur, Amethi Program: District, UP; Veraval, Referral services; Treatment Dist. Gir Somnath, of BPL, Old age and Needy Gujarat; Rishra, Barasat, patients; HIV-AIDS 24 Parganas, WB, Awareness; RTI/STD Hooghly Dist. Awareness; Support to differently abled; Ambulance Services; Blood Donations / Grouping 5. Health Infrastructure: Jagdishpur, Amethi Renovation of Health centres; District, UP; Veraval, Village / Community Dist. Gir Somnath, Sanitations; Individual Toilets; Gujarat; Rishra, Repair and installation of new Barasat,24 Parganas, drinking water sources; WB; Water purifications. 6. Support for Hospital at Veraval City, Gir Veraval Somnath, Gujarat III. 1. Agriculture and Farm Environ- Jamo, Jagdishpur, All expenses Based: ment Shukul Bazar, incurred Agriculture and Horticulture and Singhpur, Tiloi of directly by trainings; Transfer of Livelihood Amethi District, UP; company technology; Support to Veraval Block Dist. Gir Demonstration Plots; Somnath, Gujarat. Agricultural implements and inputs; Exposure Visits; Integrated Agriculture / Horticulture programmes; Soil Health and Organic farming. 2. Animal Husbandry: Jamo, Jagdishpur, Animal Vaccination and Shukul Bazar, Singhpur, Treatment; Breed Tiloi of Amethi improvement; Milk District, UP; Veraval productivity improvement Block, Dist. Gir programmes and Trainings Somnath, Gujarat 3. Non-farm & Skills Based Jamo, Jagdishpur, Income generation Shukul Bazar, Singhpur, Program: Tiloi of Amethi District, Capacity Building UP; Veraval Block Programmes; Rural enterprise Gir Somnath, Development and Income Gujarat; Rishra, Generation programme (IGP) Barasat, 24 Parganas, support; Support to SHGs WB for IGP 4. Natural Resource Jamo, Jagdishpur, conservation programs & Shukul Bazar, Singhpur, Non-conventional Energy: Tiloi of Amethi District, Bio gas support Programme; UP; Veraval Block, Solar Energy Support; Other Dist. Gir Somnath, energy efficient supports; Gujarat, WB, Plantations; Soil Conservation; Hooghly Dist. Land development; Water Conservation and harvesting structures; Development of Common pasture land, Park Development; 109

119 Statutory Reports (1) (2) (3) (4) (5) (6) (7) (8) Sr. CSR Projects or Activity Sector in Project or Programs Amount Amount Cumulative Amount No identified which 1) Local Area or others Outlay Spent on Expenditure Spent: project is 2) Specify the State (Budget) the Project up to Direct or covered and District where the Project or or Programs reporting through Projects or Program Subheads: period implementprograms are wise (1) Direct (` in Lakh) ation undertaken (` in Lakh) expenditure agency* on project/ programs (2) Overheads (` in Lakh) IV. Rural Infrastructure Rural Jagdishpur, Jamo, All expenses development: Develop- Amethi Dist, UP; incurred Construction and Repair ment Rishra and Barasat, directly by of Health Education/ projects 24 Parganas, company livelihood projects: West Bengal; Veraval Block, Gir Somnath Dist, Gujarat V. 1. Institutional building & Social Jamo, Jagdishpur, All expenses strengthening: Empower- Shukul Bazar, Singhpur, incurred Strengthening and Formation ment Tiloi of Amethi District, directly by of Community Based UP; Veraval Block, company Organisations/ SHGs Dist. Gir Somnath, Gujarat; Rishra, Barasat, 24 Parganas, WB 2. Awareness programmes: Veraval City, Dist. Gir Community Awareness Somnath, Gujarat; programmes/ Campaign Rishra, Barasat, against social abuse, early 24 Parganas, West marriages, HIV prevention etc. BENGAL; 3. Social Events to Jamo, Jagdishpur, minimise causes of Shukul Bazar, Singhpur, poverty: Tiloi of Amethi District, Support to mass marriages, UP; KGBV Schools, widow remarriages; National Veraval City Dist. Gir 110 days celebrations; Support with basic amenities; Somnath, Gujarat; Rishra, Barasat, 24 Parganas, WB; Halol, Gujarat 4. Promotion of heritage/ Veraval City, Dist. Gir culture/sports: Somnath, Gujarat; Support to rural cultural programmes, Festivals & Melas. 5. Disaster Relief Programs: Jamo, Jagdishpur, Distribution of relief material to Shukul Bazar, Singhpur, the victims of earthquake & Tiloi of Amethi District, flood etc. UP; Veraval City, Dist. Gir Somnath, Gujarat; Rishra, Barasat, 24 Parganas, WB; Overheads All expenses incurred directly by company Grand Total (` in Lakhs) REASON FOR NOT SPENDING TWO PERCENT OF THE AVERAGE NET PROFIT OF THE LAST THREE FINANCIAL YEARS ON CSR: NOT APPLICABLE 7. RESPONSIBILITY STATEMENT The Responsibility Statement of the Corporate Social Responsibility Committee of the Board of Directors of the Company is reproduced below: The implementation and monitoring of CSR Policy is in compliance with CSR objectives and Policy of the Company. Lalit Naik Rajashree Birla Managing Director Chairperson, CSR Committee (DIN: ) (DIN: ) 11 th July, 2016

120 Directors Report Aditya Birla Group: Executive Remuneration Philosophy/Policy ANNEXURE - VII, an Aditya Birla Group Company, has adopted the Executive Remuneration Phiosophy/Policy as applicable across Group Companies. This Philosophy/Policy is detailed below. At the Aditya Birla Group, we expect our executive team to foster a culture of growth and entrepreneurial risk-taking. Our Executive Remuneration Philosophy/Policy supports the design of programs that align executive rewards including incentive programs, retirement benefit programs, promotion and advancement opportunities with the long-term success of our stakeholders. Our business and organizational model Our Group is a conglomerate and organized in a manner such that there is sharing of resources and infrastructure. This results in uniformity of business processes and systems thereby promoting synergies and exemplary customer experiences. I. Objectives of the Executive Remuneration Program Our executive remuneration program is designed to attract, retain, and reward talented executives who will contribute to our long-term success and thereby build value for our shareholders. Our executive remuneration program is intended to: 1. Provide for monetary and non-monetary remuneration elements to our executives on a holistic basis 2. Emphasize Pay for Performance by aligning incentives with business strategies to reward executives who achieve or exceed Group, business and individual goals. II. III. Executives Our Executive Remuneration Philosophy/ Policy applies to the following: 1. Directors of the Company 2. Key Managerial Personnel: Chief Executive Officer and equivalent (e.g.: Deputy Managing Director), Chief Financial Officer and Company Secretary. 3. Senior Management Business and Talent Competitors We benchmark our executive pay practices and levels against peer companies in similar industries, geographies and of similar size. In IV. addition, we look at secondary reference (internal and external) benchmarks in order to ensure that pay policies and levels across the Group are broadly equitable and support the Group s global mobility objectives for executive talent. Secondary reference points bring to the table, the executive pay practices and pay levels in other markets and industries, to appreciate the differences in levels and medium of pay and build in as appropriate for decision making. Executive Pay Positioning We aim to provide competitive remuneration opportunities to our executives by positioning target total remuneration (including perks and benefits, annual incentive pay-outs, long term incentive pay-outs at target performance) and target total cash compensation (including annual incentive pay-outs) at target performance directionally between median and top quartile of the primary talent market. We recognize the size and scope of the role and the market standing, skills and experience of incumbents while positioning our executives. We use secondary market data only as a reference point for determining the types and amount of remuneration while principally believing that target total remuneration packages should reflect the typical cost of comparable executive talent available in the sector. V. Executive Pay-Mix Our executive pay-mix aims to strike the appropriate balance between key components: (i) Fixed Cash compensation (Basic Salary + Allowances) (ii) Annual Incentive Plan (iii) Long-Term Incentives (iv) Perks and Benefits Annual Incentive Plan: We tie annual incentive plan pay-outs of our executives to relevant financial and operational metrics achievement and their individual performance. We annually align the financial and operational metrics with priorities/ focus areas for the business. 111

121 Statutory Reports VI. Long-Term Incentive: Our Long-term incentive plans incentivize stretch performance, link executive remuneration to sustained long term growth and act as a retention and reward tool. We use stock options as the primary long-term incentive vehicles for our executives as we believe that they best align executive incentives with stockholder interests. We grant restricted stock units as a secondary long term incentive vehicles, to motivate and retain our executives. Performance Goal Setting We aim to ensure that for both annual incentive plans and long term incentive plans, the target performance goals shall be achievable and realistic. Threshold performance (the point at which incentive plans are paid out at their minimum, but non-zero, level) shall reflect a base-line level of performance, reflecting an estimated 90% probability of achievement. Target performance is the expected level of performance at the beginning of the performance cycle, taking into account all known relevant facts likely to impact measured performance. Maximum performance (the point at which the maximum plan payout is made) shall be based on an exceptional level of achievement, reflecting no more than an estimated 10% probability of achievement. VII. Executive Benefits and Perquisites Our executives are eligible to participate in our broad-based retirement, health and welfare, and other employee benefit plans. In addition to these broad-based plans, they are eligible for perquisites and benefits plans commensurate with their roles. These benefits are designed to encourage long-term careers with the Group. Other Remuneration Elements Each of our executives is subject to an employment agreement. Each such agreement generally provides for a total remuneration package for our executives including continuity of service across the Group Companies. We limit other remuneration elements, for e.g. Change in Control (CIC) agreements, severance agreements, to instances of compelling business need or competitive rationale and generally do not provide for any tax gross-ups for our executives. Risk and Compliance We aim to ensure that the Group s remuneration programs do not encourage excessive risk taking. We review our remuneration programs for factors such as, remuneration mix overly weighted towards annual incentives, uncapped pay-outs, unreasonable goals or thresholds, steep payout cliffs at certain performance levels that may encourage short-term decisions to meet pay-out thresholds. Claw back Clause: In an incident of restatement of financial statements, due to fraud or non-compliance with any requirement of the Companies Act 2013 and the rules made thereafter, we shall recover from our executives, the remuneration received in excess, of what would be payable to him/her as per restatement of financial statements, pertaining to the relevant performance year. Implementation The Group and Business Centre of Expertise teams will assist the Nomination & Remuneration Committee in adopting, interpreting and implementing the Executive Remuneration Philosophy/Policy. These services will be established through arm s length, agreements entered into as needs arise in the normal course of business. 112

122 Directors Report ANNEXURE - VIII Form No. MR-3 SECRETARIAL AUDIT REPORT For the financial year ended 31 st March, 2016 [Pursuant to section 204(1) of the Companies Act, 2013 and Rule No.9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014] To, The Members Indian Rayon Compound, Veraval , Gujarat We have conducted the Secretarial Audit of the compliance of applicable statutory provisions and the adherence to corporate practices by Aditya Birla Nuvo Limited (hereinafter called the Company ) for the audit period covering the financial year ended on 31 st March, Secretarial Audit was conducted in a manner that provided us a reasonable basis for evaluating the corporate conducts / statutory compliances and expressing our opinion thereon. Based on our verification of the Company s books, papers, minute books, forms and returns filed and other records maintained by the Company and also the information provided by the Company, its officers, agents and authorized representatives during the conduct of Secretarial Audit and subject to our separate letter attached as Annexure I; we hereby report that in our opinion, the Company has, during the audit period generally complied with the statutory provisions listed hereunder and also that the Company has proper Boardprocesses and compliance mechanism in place to the extent, in the manner and subject to the reporting made hereinafter. We have examined the books, papers, minute books, forms and returns filed and other records maintained by the Company for the financial year ended on 31 st March, 2016 according to the provisions of: (i) The Companies Act, 2013 ( the Act ) and the Rules made thereunder and the Companies Act, 1956 (to the extent applicable to the Company); (ii) The Securities Contracts (Regulation) Act, 1956 (SCRA) and the Rules made thereunder; (iii) The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder; (iv) Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial borrowings; (v) The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 ( SEBI Act ) : (a) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011; (b) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015; (c) The Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014; (d) The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008; (e) The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client; (f) The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, We have also examined compliance with the applicable clauses of the following: (i) Secretarial Standards issued by the Institute of Company Secretaries of India related to meetings and minutes; (ii) Listing Agreements entered into by the Company with the Stock Exchanges. During the period under review, the Company has generally complied with the provisions of the Act, Rules, Regulations, Guidelines, etc. mentioned above. During the period under review, provisions of the following Act / Regulations were not applicable to the Company: (a) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009; (b) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009; (c) The Securities and Exchange Board of India (Buyback of Securities) Regulation, We further report that - The Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-Executive Directors and Independent Directors. The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act. Proper notice is given to all Directors to schedule the Board meetings in compliance with the provisions of Section 173(3) of the Companies Act, 2013, agenda and detailed notes on agenda were generally sent at least seven days in advance and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting. 113

123 Statutory Reports Decisions at the meetings of the Board of Directors of the Company were carried through on the basis of majority. There were no dissenting views by any member of the Board of Directors during the period under review. We further report that There are adequate systems and processes in the Company commensurate with the size and operations of the Company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines. We further report that during the audit period, the Company has: (a) Entered into a definitive Joint Venture agreement on 3 rd June, 2015 with MMI Holdings Ltd., a leading South African Insurance based financial services group and incorporated a subsidiary in the name of ADITYA BIRLA HEALTH INSURANCE CO. LIMITED on 22 nd April, 2015 (b) Received an in-principle approval to set up a payment bank from the Reserve Bank of India vide its letter issued on 7 th September, 2015 and incorporated a subsidiary in the name of ADITYA BIRLA IDEA PAYMENTS BANK LIMITED on 19 th February, 2016 for the purpose of carrying on the business of Payment Bank; (c) Entered into a definitive Share Subscription and Shareholders Agreement (SSA) on 6 th October, 2015 with AEIF Mauritius SPV 1 Limited, an Abraaj Group Company to build a renewable energy platform focused on developing utility-scale solar power plants in India and incorporated a subsidiary in the name of ADITYA BIRLA RENEWABLES LIMITED on 7 th August, 2015; (d) Effected a Composite Scheme of Arrangement by way of a demerger of its Madura Undertaking and MGL Retail Undertaking pertaining to Madura Garments Lifestyle Retail Company Limited (Collectively referred as the Demerged Undertakings ) and vesting the same into Aditya (e) (f) (g) Birla Fashion & Retail Limited`, formerly known as Pantaloons Fashion & Retail Limited ( Resulting Company ) as approved by the Hon ble High Court of Gujarat, Ahmedabad vide its order issued on 23 rd October, 2015; Consequent to the aforesaid Composite Scheme of Arrangement, has on 31 st March, 2016 granted additional 48,777 Stock Options and 26,551 Restricted Stock Units under Employees Stock Options Scheme to the concerned grantees and has re-priced the exercise price under various tranches as detailed below: (i) Tranche I : ` per option as against ` per option (ii) Tranche II : ` per option as against ` per option (iii) Tranche III : ` per option as against ` per option Executed a Share Sale and Purchase Agreement on 2 nd December, 2015 pursuant to which Sun Life Assurance Company of Canada has agreed to purchase additional 23% stake in Birla Sun Life Insurance Company Limited from the Company; Obtained an approval from the Hon ble High Court of Gujarat at Ahmedabad vide its order issued on 29 th February, 2016 with respect to a Scheme of Amalgamation of ABNL IT & ITES Limited, Aditya Birla Minacs BPO Private Limited and Indigold Trade and Services Limited, subsidiaries of the Company, with the Company; Place: Mumbai Date: 20 th May, 2016 For BNP & Associates Company Secretaries B. Narasimhan Partner FCS 1303 / CP No Annexure I to the Secretarial Audit Report for the financial year ended 31 st March, 2016 To, The Members, Our secretarial audit report of even date is to be read along with this letter. 1. Maintenance of Secretarial records and compliance of the provisions of corporate and other applicable laws, rules, regulations, standards are the responsibility of the management of the Company. Our responsibility is to express an opinion on these secretarial records and compliance based on our audit. 2. We have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the correctness of the contents of the Secretarial Records. The verification was done on the test basis to ensure that correct facts are reflected in secretarial records. We believe that the processes and practices, we followed provide a reasonable basis for our opinion. 3. We have not verified the correctness and appropriateness of financial records and Books of Accounts of the Company. 4. Wherever required, we have obtained the management representation about the compliance of laws, rules and regulations and happening of events etc. Place: Mumbai Date: 20 th May, 2016 For BNP & Associates Company Secretaries B. Narasimhan Partner FCS 1303 / CP No

124 Sustainability and Business Responsibility Report Sustainability and Business Responsibility Report Sustainability at the Aditya Birla Group: At the Aditya Birla Group, we endeavor to become the leading Indian conglomerate for sustainable business practices across our global operations by To achieve this vision, we are innovating from the traditional sustainability models to one consistent with our vision to build sustainable businesses capable of operating in the world we hope to see emerge in 2030 and It is in our own interests, to contribute to mitigate our impact in every way we can, and also prepare for further mitigation and potential adaption to planetary changes as we go forward. We began our quest with a question, If everyone and every business followed the law as written today, is the planet sustainable? We quickly concluded that around the year 2050, when the Earth s population reaches an estimated 9 billion, climate change, water scarcity, stress plus pollution and an overload of waste, if left unchecked, would set the planet on a possibly irreversible course to un-sustainability. It is therefore intuitive that laws be tightened over time and imperative that the Aditya Birla Group remain ahead of the curve. Our first step has been to set up a sustainability programme in our current operations, under the heading Responsible Stewardship. By doing so, we try to move from merely following local laws to aligning ourselves voluntarily with the international standards set by the global bodies of the International Finance Corporation (IFC), the Organisation for Economic Cooperation and Development (OECD), the International Standards Organisation (ISO), Occupational Health and Safety Advisory Services (OHSAS), the Global Reporting Initiative (GRI) and others. We are working hard to develop and improve our management systems and their performance by making sure that they conform to the Aditya Birla Group s Sustainability Framework of Policies, Technical Standards, and Guidance Notes by giving our employees the chance to train, learn, understand, and apply improvement techniques to reach higher standards of performance. So far, we have had much success with respect to reductions in energy use, water use, and improvements in safety performance. We are working towards achieving the World Business Council for Sustainable Development s Water and Sanitation and Hygiene pledge (WASH) to ensure that we provide safe drinking water, sanitation and hygiene in all our operations. Each of these achievements helps reduce and mitigate our impact on the planet and are hence imperative to building a platform for the future. However, if we are to create sustainable business models and systems, Responsible Stewardship by itself is not enough and we need other components to help us with a greater transformation. We need to understand how many laws will need to change in order to support a sustainable world. Our performance will need to be improved further to meet these laws, possibly by redesigning our business models. We call this Future Proofing our businesses. This has two components; the first, we call Strategic Stakeholder Engagement which involves scanning the time horizon for disruptions by discussing the global megatrends with experts in the fields of climate, water, human rights, supply chain management, biodiversity transparency and reporting, in order to understand what constraints might be placed on our businesses by 2030 and By doing so, we are able to build our capability to understand which external changes might heavily influence our value chains and business models in the future and what might be expected of our products and brands. For example, the world will need businesses that are able to mitigate and adapt to climate change, with robust and sustainable supply chains that are also impervious to all external forces that will inevitably begin to affect us in the future. The second part of our Future Proofing programme is to test our current business models and strategies against various scenarios designed to simulate what the world will potentially look like in 2030 and Building sustainable businesses will take time, particularly when we consider some 115

125 Statutory Reports of our complex supply chains. By pushing to be the leader today, we are giving ourselves the best possibility of achieving long-term success. We believe that natural resources are already feeling the strain. Pollution, biodiversity loss, growing levels of water stress and the need to manage the growth of electricity production decoupled from a country s carbon footprint will be the important focus areas for the future. This makes sustainable development an important element of business strategy. Aditya Birla Nuvo is committed to align its business strategy with the Aditya Birla Group s sustainability vision. All across the businesses we are following building integrated management systems and designed to meet the Aditya Birla Group s Sustainability Framework of policies and standards and using our IT software ENABLON to collect and monitor our key performance indicators and manage our sustainability programme. Our businesses have formed sustainability committees both at the unit level and at the corporate level. Each committee is responsible for reviewing the sustainability performance, driving implementation of sustainability agenda across business functions and verticals, target setting, reviewing identified key risks and other climate change related issues and recommending action plans. One of the key campaigns of the company is to raise our safety standards. Safety is accorded a high priority by our leadership teams and their focus on safety is evident through our various safety activities and a drive to align and certify to internationals standards. Improving Energy, Waste and Water management is another priority and investments in variable frequency motor drives and improved water treatment and zero liquid discharge at Indo Gulf Fertilizers (IGF), sludge reuse at our Insulator plant, and 170 solar panels giving a capacity of 5MW at Indian Rayon have all produced cost effective results. At your IGF business, we have commissioned a major energy saving project that has resulted in the reduction of Co 2 emission by 30,000 tonnes of Co 2 annually. Many of our energy saving projects have been registered with UNFCCC. An example of one initiative taken by IGF has been the Rs 1.25 million investment in the conversion of ordinary street lights to Light Emitting Diode (LED) lights in our township and factory locations. By , IGF plans to convert all their lighting to LED. Introducingimprovements to our wastewater treatment and aquifer recharge at IGF has resulted in a 60% improvement in specific water consumption versus the industry norm. ABI Halol has become a zero water discharge unit and now recycles at liquids within the plant. The sludge generated from effluent treatment is recycled back into the production plant. At Indian Rayon, the focus has been on developing cleaner production activities. Briquette powder formed from process sludge, cellulose waste, charcoal slurry, coal ash & binder is now used to power Indian Rayon s own boilers with the excess being sent to Ultratech Cement to help fire their kilns. All Aditya Birla Nuvo businesses are actively engaging with their stakeholders through various platforms to identify and understand their issues and put in place action plans that are designed to continually improve our long-term relations. Your board and management team across all the operations remain committed to a sustainable future. 116

126 Sustainability and Business Responsibility Report BUSINESS RESPONSIBILITY REPORT Section A: General Information about the Company 1. Corporate Identity Number (CIN) L17199GJ1956PLC of the Company 2. Name of the Company 3. Registered Address Indian Rayon Compound, Veraval , Gujarat, India. 4. Website ID 6. Financial Year Reported 1 st April, 2015 to 31 st March, Sector(s) that the Company is Name of the Sector Code engaged in (industrial activity Rayon code-wise) Textiles 0105 Fertilizers (Agri Business) Urea Liquid Argon Liquid Anhydrous Ammonia Customized Fertilizers Organic Manure Bentonite Sulphur Insulators (Power & Energy) List three key products/services that (i) Textiles (Linen Yarn & Fabric, Wool Top and Worsted Yarn) the Company manufactures/provides (as in the balance sheet) (ii) Agri Business (Fertilisers, Agro-Chemicals and Seeds) (iii) Rayon Viscose Filament Yarn 9. Total number of locations where i. Number of International Locations business activity is undertaken (Provide details of major 5): On a standalone by the Company basis, does not have any manufacturing Unit outside India. ii. Number of National Locations: 5 National Locations have Manufacturing Units. 10. Markets served by the Company Local State National International Section B: Financial Details of the Company 1. Paid-up Capital (INR) ` 13,022 lakhs 2. Total Turnover (INR) ` 5,46,645 lakhs 3. Total Profit after taxes (INR) ` 36,002 lakhs 4. Total Spending on Corporate Social The total spending on Corporate Social Responsibility (CSR) as percentage of profit after tax (%) Responsibility (CSR) is 2.11% of the average Net Profit of the Company for the previous three financial years. 5. List of Activities in which expenditure Education, Medical Relief, Rural Development, in 4 above has been incurred Healthcare, Sustainable Livelihood, Women Empowerment, Social Causes and Infrastructure Development, Vocational trainings for skill development and Disaster relief. 117

127 Statutory Reports Section C: Other Details 1. Does the Company have any Subsidiary Company/ Companies? Yes. The Company has 27 (twenty seven) subsidiaries 22 (twenty two) domestic and 5 (five) foreign. 2. Do the Subsidiary Company/Companies participate in the BR Initiatives of the parent company? If yes, then indicate the number of such subsidiary company(s): The Business Responsibility initiatives of the Parent Company apply to its subsidiaries.the Company encourages its subsidiary companies to participate in the community projects/programmes carried out under the aegis of the Aditya Birla Centre for Community Initiatives and Rural Development. 3. Do any other entity/entities (e.g. suppliers, distributors etc.) that the Company does business with, participate in the BR initiatives of the Company? If yes, then indicate the percentage of such entity/entities? [Less than 30%, 30-60%, More than 60%]: Other entities viz. suppliers, distributors etc. with whom the Company does business, do not participate in the Business Responsibility initiatives of the Company. Section D: BR Information 1. Details of Director/Directors responsible for BR a) Details of the Director/Directors responsible for implementation of the BR Policy/Policies DIN Number : Name : Mr. Lalit Naik Designation : Managing Director b) Details of the BR Head Sr. Particulars Details No. 1. DIN Number NA (if applicable) 2. Units Indian Rayon, Veraval Jaya Shree Textiles, Aditya Birla Insulators, Indo Gulf Fertilizers, Rishra Halol and Rishra Jagdishpur Name Mr. H.S. Dagur Mr. S. Krishnamoorthy Mr. Vikas Khosla Mr. Rajendra Sankhe 3. Designation Unit Head CEO-Domestic Textiles Unit Head Unit Head 4. Telephone Insulator, Halol /39 number Insulator Rishra id hs.dagur s.krishnamoorthy 118

128 Sustainability and Business Responsibility Report 2. Principle-wise (as per NVGs) BR Policy/Policies (Reply in Y/N) The National Voluntary Guidelines (NVGs) on Social, Environmental and Economic Responsibilities of Business released by the Ministry of Corporate Affairs has adopted nine areas of Business Responsibility. These briefly are as follows: P1 Businesses should conduct and govern themselves with ethics, Transparency and Accountability. P2 Businesses should provide goods and services that are safe and contribute to sustainability through their life cycle. P3 Businesses should promote the wellbeing of all employees. P4 Businesses should respect the interests of and be responsive towards all stakeholders, especially those who are disadvantaged, vulnerable and marginalized. P5 Businesses should respect and promote human rights. P6 Businesses should respect, protect and make efforts to restore the environment. P7 Businesses, when engaged in influencing public and regulatory policy, should do so in a responsible manner. P8 Businesses should support inclusive growth and equitable development. P9 Businesses should engage with and provide value to their customers and consumers in a responsible manner. 2a. Details of Compliances: Sr.No. Questions P1 P2 P3 P4 P5 P6 P7 P8 P9 1. Do you have policy/policies for Y Y Y Y Y Y Y Y Y 2. Has the policy been formulated in consultation with the relevant Y Y Y Y Y Y Y Y Y stakeholders? 3. Does the policy conform to any National/International Standards? If yes, specify? (50 Words). 4. Has the policy been approved by the Board? If yes, has it been signed by MD / Owner / CEO / Yes Appropriate Board Director? 5. Does the Company have a specified Committee of the Board/Director/ Official to oversee the Y Y Y Y Y Y Y Y Y implementation of the policy? 6. Indicate the link for the policy to be. viewed online? View restricted to employees. 7. Has the policy been formally The policies are communicated to key internal communicated to all relevant stakeholders and it is an ongoing process. internal and external stakeholders? 8. Does the Company have in-house structure to implement the policy/ Y Y Y Y Y Y Y Y Y policies? 9. Does the Company have a grievance redressal mechanism related to the policy/policies to address Y Y Y Y Y Y Y Y Y stakeholders grievances related to the policy/policies? 10. Has the Company carried out independent audit/evaluation of the Y Y Y Y Y Y Y Y Y working of this policy by an internal Internal Auditors of the Company from time to or external agency? time review implementation of these Policies. 119

129 Statutory Reports 2b. If answer to Sr. No.1 against any principle, is No, please explain why: (Tick up to 2 options) Sr.No. Questions P1 P2 P3 P4 P5 P6 P7 P8 P9 1. The company has not understood the Principles 2. The company is not at a stage where it finds itself in a position to formulate and implement the policies on specified Principles 3. The company does not have financial or manpower resources available for the task 4. It is planned to be done within next 6 months 5. It is planned to be done within the next 1 year 6. Any other reason (please specify) Not Applicable 3. Governance related to BR a) Indicate the frequency with which the Board of Directors, Committee of the Board or CEO to assess the BR performance of the Company. Within 3 months, 3-6 months, Annually, More than 1 year The Business responsibilities performance is assessed periodically by the management. b) Does the Company publish a BR or a Sustainability Report? What is the hyperlink for viewing this report? How frequently it is published? Business Responsibility Report, Social Report on Inclusive Growth and Synergizing Growth with Responsibility (Sustainable Development) are part of the Annual Report. It is published every year. It is also available on the Company s website or Section E: Principle wise performance (ABNL) is a part of the Aditya Birla Group, which has long standing policies on various aspects of doing business and managing its external interfaces. Principle 1: Businesses should conduct and govern themselves with Ethics, Transparency and Accountability. 1. Does the policy relating to ethics, bribery and corruption cover only the Company? Yes/No. Does it extend to the Group/ Joint Venture/ Suppliers/ Contractors/ NGOs/ Others? The Company s governance structure guides the organization keeping in mind the core values of Integrity, Commitment, Passion, Seamlessness and Speed. The Corporate Principles and Code of Conduct cover the Company and all its Subsidiaries and are applicable to all the employees of the Company and its subsidiaries. 2. How many stakeholder complaints have been received in the past financial year and what percentage was satisfactorily resolved by the management? If so, provide details thereof in about 50 words or so. No complaints have been received during the year. Principle 2: Businesses should provide goods and services that are safe and contribute to sustainability throughout their life cycle. 1. List upto 3 of your products or services whose design has incorporated social or environmental concerns, risks and/or opportunities. The Company is a responsible corporate citizen and is committed to sustainable development and looks at ways to preserve the environment and manage resources responsibly. Being aware of its obligations relating to social and environmental concerns, and risks, the Company s Customized Fertilizers Plant is designed for zero effluent. At various stages, emission control measures have been incorporated to keep environmental emission below the environmental norms. i. Production of Worsted yarn, Wool tops, Linen Yarn & Linen Fabrics are undertaken 120

130 Sustainability and Business Responsibility Report ii. iii. at Jaya Shree Textiles Unit and all of these are produced from natural fibres. To stop any accident due to speed or to avoid any environmental release in the atmosphere, Indian Rayon Unit has installed GPS (Global Positioning System) in Trucks carrying hazardous gases. Customized fertilizers have been launched to improve the nutrient level efficiency and reduce environmental losses. Indo Gulf Fertilisers Unit has developed and manufactured neem coated urea which promotes slow release of Nitrogen, consequential reduction in emission of Green House Gases and simultaneously enhancing the growth of farmers. The Unit also produces organic manure for improving organic content of the soil. The main Products are (i) Ammonia, (ii) Urea, and (iii) Customized Fertilizer / Value added Product. 2. For each such product, provide following details in respect of resource use (energy, water, raw material etc.) per unit of product (optional): At Indo Gulf Fertilizers (IGF) the customized fertilizer plant is designed for zero effluent. At various stages emission control measures have been incorporated to keep environmental emission below the environmental norms. For main products (Urea), there are two primary resources required (i) Natural gas which is supplied through pipeline and (ii) Water which is sourced from nearby river Gomti and is supplied to plant through pipeline. They have taken initiatives to reduce specific energy consumption and overall specific energy consumption in FY i. Reduction during sourcing/production/ distribution achieved since the previous year throughout the value chain? Several initiatives have been taken at Indo Gulf Fertilisers (IGF) to reduce consumption of energy during its uses. Energy consumption contributes to ~80% in total cost of production, therefore, key focus is on reducing energy consumption. In last 10 years IGF has implemented many innovative ideas and brought down energy consumption. In 14-15, IGF implemented Energy Storage System project to bring down Energy consumption. Today, IGF is the best ii. fertilizer plant amongst some vintage plants in India and among the top 2 energy efficient plants in India. Several initiatives have also been taken at IGF to reduce consumption of water during its use. They have inbuilt processes to treat process condensate generated in manufacturing and 93% of condensate generated is recycled / reused. Besides this they utilize about 55% of total treated effluent water for irrigation purpose before its disposal. They have taken several initiatives to optimize our industrial water consumption in the complex. In the year , it was 5.49 m 3 /MT Urea against CPCB norm of 8.0 m 3 /MT Urea. There also has been year to year improvement at Aditya Birla Insulators, Halol and Rishra Units of the Company. Jaya Shree Textiles Unit has achieved 20% reduction in consumption of Furnace Oil during the year. Reduction during usage by consumers (energy, water) has been achieved since the previous year? Customized Fertilisers improve agricultural productivity by 10-15% as compared to normal fertilizers, reduces environment losses. Neem Coated Urea are used at Fertilisers Unit which improve productivity due to higher nutrient efficiency. The Company takes several initiatives to reduce the electricity and thermal consumption. 3. Does the company have procedures in place for sustainable sourcing (including transportation)? (i) If yes, what percentage of your inputs was sourced sustainably? Also provide details thereof, in about 50 words or so. The Company has built up highly integrated horizontal and vertical integration processes in its operation. All the major inputs under the Company s control are sourced sustainably. Natural Gas is used in Indo Gulf Fertilisers Unit as major Raw material for Ammonia / Urea manufacturing. The gas is supplied through gas pipeline network of GAIL/ RGTIL. Fertilisers Unit has signed GSPA 121

131 Statutory Reports (Gas Sales & Purchase Agreement) and GTA (Gas Transportation Agreement) with M/s. GAIL / RIL / RGTIL. 100% of Natural Gas is sourced on sustainable basis. These agreements lay down various guidelines for the purpose of gas procurement, usage, billing etc. IGF is having dedicated pipeline for water supply from Gomti River to the plant. As a fall back arrangement, IGF is also having 7 bore wells to sustain water supply. At the Insulators Units located at Halol and Rishra, suppliers with no child and forced labour are preferred and encouraged, to have sustainable sourcing. Indian Rayon Unit of the Company encourages local sourcing for raw materials. 4. Has the company taken any steps to procure goods and services from local & small producers, including communities surrounding their place of work? If yes, what steps have been taken to improve their capacity and capability of local and small vendors? To ensure a positive impact of sourcing of raw materials and other resources, as well as product distribution and to create employment for the populace, the Company gives priority to procure goods and services from local suppliers and service providers over outside suppliers.the Company always prefers sourcing goods and services from local suppliers with the objective of development of vendors within the vicinity of the company and getting timely supplies besides the cost advantage in such sourcing. At Indian Rayon %of goods and services are procured from local and small producers. They are sourcing local raw materials based on their availability from local suppliers instead of procuring the same from outside suppliers so that they can be financially strengthened. At Jaya Shree Textiles Unit Wool & Linen fibres are imported as these are not available in India.However, bricks, sand, Iron Rods and other smaller chemicals, etc., which are available in surrounding area are used. At Indo Gulf Fertilisers Unit, HDPE bags/ Buckets are procuredfor packaging their final products. The key bag supplier is located adjacent to plant. They are also employing local service contractors for providing transport, construction, engineering, manpower supply for bagging, loading and unloading and other services.igf team visits these plants with a focus on cost optimization by (i) reducing losses during manufacturing stage (ii) Improve efficient use of energy. With the help of the bag suppliers they have taken new developmental initiatives. At the Insulators Units at Halol and Rishra, the Company always prefers sourcing goods and services from local suppliers with the objective of development of vendors within the vicinity of the company and getting timely supplies besides the cost advantage in such sourcing. R&D team of the unit is jointly working with local vendors for the supply of Cap/Pin/Security clips/ GI Spindles etc. for enhancing their capability. This also reduce pipeline inventory due to reduced transportation. Trainings are provided to Workmen and need based visits at vendor s site is in place. 5. Does the company have a mechanism to recycle products and waste? If yes what is the percentage of recycling of products and waste (separately as <5%, 5-10%, >10%). Also provide details thereof in 50 words or so. The Company has taken various initiatives towards waste management and continuously monitors with a view to ensure reduction in waste generation. Indian Rayon Unit, has taken various initiatives towards solid waste/ hazardous waste management and continuously monitoring with view to reduction in waste generation. The Company believes in 4R s (Reduce, Reuse, Recycle & Recovery). Ammonia / Urea manufacturing process at Indo Gulf Fertilisers is based on total recycling process and adequate measures are incorporated since design stage to recycle 100% of the unfinished/ unconverted components back to process. For Example: they have both dry and wet de-dusting system to 100% recycle of Urea dust particle carried with air during bulk urea transportation. Besides this, they have installed system to reuse treated effluent for irrigation purpose thus reducing quantity of effluent discharge. They have a Recharge pit to store rain water for recharging underground water table. 122

132 Sustainability and Business Responsibility Report At the Insulators Unit Halol, recycling of ~ 20% of water, Insulator Powder upto 5.5% and Effluent Treatment Plant slurry upto 100% is done & rejects from the processes are taken back for recycle and at the Insulators Unit located at Rishra, upto 5-10% gets recycled and the rejects from the processes are taken back for recycle. Principle 3 - Businesses should promote the wellbeing of all employees 1. Please indicate the Total number of employees. 10, Please indicate the Total number of employees hired on temporary/contractual/ casual basis. 4, Please indicate the Number of permanent women employees Please indicate the Number of permanent employees with disabilities Do you have an employee association that is recognized by management? Yes. 6. What percentage of your permanent employees is members of this recognized employee association? Practically all the non-supervisory permanent employees at manufacturing locations are members of recognized employee association. 7. Please indicate the Number of complaints relating to child labour, forced labour, involuntary labour, sexual harassment in the last financial year and pending, as on the end of the financial year. Sr. Category No. of complaints No. of complaints No. filed during the pending as at financial year end of the financial year 1. Child labour / forced Labour / involuntary labour NIL NA 2. Sexual harassment NIL NA 3. Discriminatory employment NIL NA 8. What percentage of your under mentioned employees were given safety & skill upgradation training in the last year? Sr. Category of Employees Safety Skill Up No. Training* gradation 1. Permanent Employees 80.8% 67.32% 2. Permanent Women Employees 82.4% 63.15% 3. Casual/Temporary/ Contractual Employees 82.4% 47.20% 4. Employees with Disabilities 70.67% 70.25% Principle 4:Businesses should respect the interests of, and be responsive towards all stakeholders, especially those who are disadvantaged, vulnerable and marginalized. 1. Has the company mapped its internal and external stakeholders? Yes/No Yes. 2. Out of the above, has the company identified the disadvantaged, vulnerable & marginalized stakeholders? Yes 3. Are there any special initiatives taken by the company to engage with the disadvantaged, vulnerable and marginalized stakeholders. If so, provide details thereof in 50 words or so. The Company endeavors to bring in inclusive growth and the same are channelized through the Aditya Birla Centre for Community Initiatives and Rural Development. Several initiatives for differently-abled people in local communities at various plant locations include: 1. Free Vocational Training Institute for the unemployed youths. 2. Free specialized coaching centre for students from underprivileged families. 3. Jute production cum training centre for the underprivileged women to support their regular income generation. Trainings & market linkages of the products prepared by the underprivileged women. 4. The Company s CSR activities focus on women s empowerment, child education, health care and vocational training. Apart from running Indo Gulf Jan Seva Trust Hospital, a Skin Care & Rehabilitation Centre is also being run by the Company, whereby leprosy patients are given free treatment. 123

133 Statutory Reports 5. Adoption of a Private School in the vicinity of Rishra where students from the underprivileged segment of the Society are studying. Principle 5: Businesses should respect and promote human rights. 1. Does the policy of the Company on Human Rights cover only the Company or extends to the Group/Joint Ventures /Suppliers / Contractors/NGOs/others? The Company has put in place a Human Rights Policy which extends to Units and Subsidiaries of the Company. 2. How many stakeholder complaints have been received in the past financial year and what percent was satisfactorily resolved by the management? No complaints were received during the year. Principle 6: Businesses should respect, protect, and make efforts to restore the environment. 1. Does the policy related to Principle 6 cover only the company or extends to the Group/ Joint Ventures /Suppliers / Contractors/ NGOs/others? The Company s Safety Health and Environment Policy cover its Units and Subsidiaries. 2. Does the company have strategies/ initiatives to address global environmental issues such as climate change, global warming, etc.? Y/N. If yes, please give hyperlink for webpage etc. Yes, the Company is committed to address issues of global warming and reduction of emission. Please refer to the Sustainability Report, at the beginning of this Report, for initiatives taken by the Company. The same is also available on the Company s website or 3. Does the company identify and assess potential environmental risks? Y/N Yes. The Company follows a structured risk management approach which encompasses identifying potential risks, assessing their potential impact mitigating them through taking timely action and continuous monitoring. 4. Does the company have any project related to Clean Development Mechanism? If so, provide details thereof in, about 50 words or so. If Yes, whether any environmental compliance report is filed? Yes.The projects undertaken by Indo Gulf Fertilizers Unit are monitored by United Nations Framework Convention on Climate Change and VFD in Humidification tower & Boiler automation project of Jaya Shree Textiles Unit has been completed and no Environmental Compliance report is required to be filed. 5. Has the Company undertaken any other initiatives on clean technology, energy efficiency, renewable energy, etc. Y/N. If yes, please give hyperlink for web page etc. The Company has taken several initiatives on clean technology, energy efficiency and renewable energy. Please refer to Annexure VI of the Directors Report of the Annual Report FY for energy conservation initiatives. The same is also available on the Company s website or 6. Are the Emissions/Waste generated by the Company within the permissible limits given by CPCB/SPCB for the financial year being reported? Yes, the emissions/wastes generated by the Company are within the permissible limits given by Central Pollution Control Board/State Pollution Control Board, and are reported. 7. Number of show cause/ legal notices received from CPCB/SPCB which are pending (i.e. not resolved to satisfaction) as on end of Financial Year. No such case was pending at the end of the financial year. Principle 7: Businesses, when engaged in influencing public and regulatory policy, should do so in a responsible manner. 1. Is your company a member of any trade and chamber or association? If Yes, Name only those major ones that your business deals with: The Company is a Member of several associations viz. Association of Man Made Fibre Industry Alkali Manufacturing Association Bombay Textiles Research Associations Chemical and Allied Export Promotion Council of India Conferderation of Indian Industry Federation of Indian Chamber of Commerce & Industry Federation of Indian Export Organization 124

134 Sustainability and Business Responsibility Report Fertiliser Association of India (FAI) Indian Electrical and Electronics Manufacturers Association Indian Woolen Mills Federation National Safety Council PHD Chamber of Commerce and Industry of Uttar Pradesh 2. Have you advocated/lobbied through above associations for the advancement or improvement of public good? Yes/No; if yes specify the broad areas (drop box: Governance and Administration, Economic Reforms, Inclusive Development Policies, Energy security, Water, Food Security, Sustainable Business Principles, Others) Yes, the broad areas are Water, Food, Economic reforms, Environment and Energy issues and sustainable business. The platform has been used to highlight and seek redressal on various issues impacting domestic industry survival. Also the Indian Electrical and Electronics Manufacturers Association platform has been used to highlight and seek redressal on issues impacting domestic industry survival trade facilitation laws. Principle 8: Businesses should support inclusive growth and equitable development. 1. Does the company have specified programmes/initiatives/projects in pursuit of the policy related to Principle 8? If yes details thereof. Yes the Company has formulated a well defined CSR Policy which focuses on Health, Education, Agriculture, Hygiene, Women Empowerment, Sustainable Livelihood Development, Infrastructure Support and Social Reforms etc. 2. Are the programmes / projects undertaken through in-house team / own foundation / external NGO /government structures/any other organization? The programmes/projects are undertaken through in-house teams/our foundations as well as in partnership with Non-Governmental Organizations (NGOs) and governmental institutions to serve areas of community growth and sustainable development. 3. Have you done any impact assessment of your initiative? Yes. 4. What is your Company s direct contribution to community development projects- Amount in INR and the details of the projects undertaken? Company has spent an amount of ` 740 lakhs on CSR activities on Education, Healthcare, Sustainable Livelihood, Women Empowerment and Infrastructure & Rural Development. 5. Have you taken steps to ensure that this community development initiative is successfully adopted by the community? Please explain in 50 words, or so. Yes, the Company has taken steps to ensure that the Community Development initiatives benefit the Community. Projects evolve out of the felt needs of the communities and they are engaged intensely in all of these. Principle 9: Businesses should engage with and provide value to their customers and consumers in a responsible manner. 1. What percentage of customer complaints/ consumer cases are pending as on the end of financial year. The Company has a well-defined system of addressing customer complaints. All complaints are appropriately addressed and resolved. 2. Does the company display product information on the product label, over and above what is mandated as per local laws? Yes / No / N.A. / Remarks (additional information) The requisite information as mandated as per the local laws is inscribed on the product label of the Company. 3. Is there any case filed by any stakeholder against the company regarding unfair trade practices, irresponsible advertising and/or anti-competitive behavior during the last five years and pending as on end of financial year. If so, provide details thereof, in about 50 words or so. No 4. Did your Company carry out any consumer survey/ consumer satisfaction trends? Yes, Consumer Satisfaction Surveys are being conducted by the external agencies as well as internal teams periodically to assess consumer satisfaction. 125

135 Statutory Reports Corporate Governance Report Governance Philosophy is committed to the adoption of best practices of corporate governance and its adherence in true spirit, at all times. Our governance practices are a product of self-desire, reflecting the culture of trusteeship that is deeply ingrained in our value system and reflected in our strategic thought process. At a macro level, our governance philosophy rests on five basic tenets, viz., Board accountability to the Company and shareholders, strategic guidance and effective monitoring by the Board, protection of minority interests and rights, equitable treatment of all shareholders as well as superior transparency and timely disclosures. In line with this philosophy, your Company, a flagship company of the Aditya Birla Group, is striving for excellence through adoption of best governance and disclosure practices. The Company, as a continuous process, strengthens the quality of disclosures, on the Board composition and its functioning, remuneration paid and level of compliance with various Corporate Governance Codes. Your Company continuously strives to achieve excellence in corporate governance through its values Integrity, Commitment, Passion, Seamlessness and Speed. Compliance with Corporate Governance Guidelines In terms of Regulations 34 and 53 read with Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 [SEBI (LODR)], the details of compliances for the year ended 31 st March, 2016 are as follows: BOARD OF DIRECTORS Composition of the Board As on 31 st March, 2016, your Company s Board comprised of 8 (Eight) Directors, which included 4 (Four) Independent Directors, 3 (Three) Non-Executive Directors (including a Nominee Director of LIC) and 1 (One) Executive Director. The Chairman of the Board is a Non- Executive Director. The composition of your Board is in conformity with the requirements of Regulation 17(1) of the SEBI (LODR) as well as the Companies Act, 2013 ( the Act ). Your Directors on the Board are experienced, competent and highly renowned persons in their respective fields. None of the Independent Directors serve as Independent Director in more than seven listed companies and the tenure of their appointment is in accordance with the Companies Act, 2013 and rules made thereunder. All the Directors are liable to retire by rotation except the 4 (Four) Independent Directors whose term of 5 consecutive years was approved by the shareholders of the Company in the Annual General Meeting held on 11 th September, The details of the Directors with regards to their other directorships and positions held in the Committees as on 31 st March, 2016 are as follows: Name of the Director Executive/ No. of Outside Outside Committee Non-Executive/ Directorship(s) Positions Held 3 Independent 1 in other Indian Public Member Chairman/ Companies 2 Chairperson Mr. Kumar Mangalam Birla (DIN: ) Non-Executive 8 Mrs. Rajashree Birla (DIN: ) Non-Executive 7 Mr. P. Murari (DIN: ) Independent Mr. B. R. Gupta (DIN: ) Independent

136 Corporate Governance Report Name of the Director Executive/ No. of Outside Outside Committee Non-Executive/ Directorship(s) Positions Held 3 Independent 1 in other Indian Public Member Chairman/ Companies 2 Chairperson Ms. Tarjani Vakil (DIN: ) Independent Mr. S. C. Bhargava (DIN: ) Independent Mr. G. P. Gupta 4 (DIN: ) Independent Not Applicable Mr. Lalit Naik (DIN: ) Managing Director 3 2 Mr. Sushil Agarwal 5 (DIN: ) Whole- time Director Not Applicable Mr. Tapasendra Chattopadhyay 6 Non Executive (DIN: ) (Nominee Director of LIC) Notes: 1 Independent Director means a Director as defined under Regulation 16 (1) (b) of SEBI LODR and in Section 149 of the Act. 2 Excluding Directorships held in foreign companies and companies under Section 8 of the Act. 3 Only two committees viz. the Audit Committee and the Stakeholders Relationship Committee of all public limited companies have been considered. 4 Mr. G. P. Gupta has resigned as a Director of the Company with effect from 9 th November, Mr. Sushil Agarwal has relinquished the office of the Whole- time Director & CFO of the Company from the close of business hours on 30 th June, Mr. Tapasendra Chattopadhyay has ceased to be a Director of the Company w.e.f. 7 th April, 2016, consequent to the withdrawal of his nomination by LIC 7 No Director is related to any other Director on Board, except Mr. Kumar Mangalam Birla and Mrs. Rajashree Birla, who are related as son and mother, respectively. Non-Executive Directors Compensation and Disclosure Sitting fees for attending the meetings of the Board / Committees and Commission paid to the Non- Executive Directors and the Independent Directors have been recommended by the Nomination and Remuneration Committee of the Board and approved by the Board of Directors. The Commission paid is within the overall limits as approved by the shareholders. Details of the Sitting fees / Commission paid to such Directors are given separately in this Report. Board s Functioning and Procedure The Company s Board of Directors plays a primary role in ensuring good governance and functioning of the Company. The Board s role, functions, responsibilities and accountabilities are well defined. All relevant information is regularly placed before the Board. The Board reviews compliance reports of all laws as applicable to the Company, as well as steps taken by the Company to rectify instances of non-compliances, if any. The members of the Board have complete freedom to express their opinion and decisions are taken after detailed discussions. The Board meets at least once every quarter to review the quarterly results and other items on the agenda and additional meetings are held as and when necessary. Six Board meetings were held during the year ended 31 st March, The details of the Board meetings held during the year under review, dates on which held and number of Directors present are as follows: Date of Board Board No. of Directors Meeting Strength Present 3 rd May, th May, th July, th August, th November, th February,

137 Statutory Reports Your Company s Board plays a pivotal role in ensuring good governance and functioning of your Company. The Directors are professionals, having expertise in their respective functional areas and bring a wide range of skills and experience to the Board. The Board has an unfettered and complete access to any information within your Company. Members of the Board have complete freedom to express their views on agenda items and can discuss any matter at the meeting with the permission of the Chairman. The Board periodically reviews all the relevant information, which is required to be placed before it pursuant to Schedule II-PART A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and that of the Listing Agreement with the stock exchanges and in particular reviews and approves corporate strategies, business plans, annual budgets, projects and capital expenditure, etc. The Board provides direction and exercises appropriate control to ensure that your Company is managed in a manner that fulfils stakeholder s aspirations and societal expectations. In addition to the quarterly meetings, the Board also meets to address specific needs and business requirements of your Company. The details of attendance of each Director at the Board meetings and at the last Annual General Meeting (AGM) are as follows: Name of Director Category No. of Attended Sitting fees Board Meetings Last paid Held Attended (Amount in `) Mr. Kumar Mangalam Birla Non- Executive 6 6 No 3,00,000 Mrs. Rajashree Birla Non-Executive 6 3 No 1,50,000 Mr. P. Murari Independent 6 6 No 3,00,000 Mr. B. R. Gupta Independent 6 6 Yes 3,00,000 Ms. Tarjani Vakil Independent 6 5 Yes 2,50,000 Mr. S. C. Bhargava Independent 6 6 Yes 3,00,000 Mr. G. P. Gupta* Independent 4 4 No 2,00,000 Mr. Lalit Naik Managing Director 6 6 Yes - Mr. Sushil Agarwal # Whole- time Director 2 2 No - Mr. Tapasendra Chattopadhyay^ Non Executive 6 6 No AGM held on 15 th September 2015 at the registered office of the Company-Indian Rayon Compound, Veraval * Mr. G. P. Gupta resigned as a Director of the Company with effect from 9 th November, # Mr. Sushil Agarwal has relinquished the office of Whole Time Director and Chief Financial Officer of the Company from close of business hours on 30 th June ^ Ceased to be a Director of the Company w.e.f. 7 th April, 2016, consequent to the withdrawal of his nomination by LIC. Code of Conduct In compliance with Regulations 17(5) and 26(3) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations, 2015 the Company has adopted a Code of Conduct for the Board Members and Senior Management Personnel (the Code ). The Code is applicable to all the Board Members and Senior Management of the Company. All the Board Members and Senior Management Personnel have confirmed compliance with the Code. A declaration by Managing Director affirming the compliance of the Code of Conduct for Board Members and Senior Management is annexed at the end of the Report. The Code is available on the Company s website. Board training and Induction A formal letter of appointment together with an induction kit is provided to the Independent Directors at the time of their appointment stating out their roles, functions, duties and responsibilities. The Independent Directors are familiarised with your Company s businesses and its operations. Interactions are held between the Independent Directors and senior management of your Company. The familiarization programme is available on the Company s website. 128

138 Corporate Governance Report Performance evaluation of Board A formal evaluation mechanism has been adopted for evaluating the performance of the Board, the Committees thereof, individual directors and the Chairman of the Board. The evaluation is based on criteria which include, among others, providing strategic perspective, chairmanship of Board and Committees, attendance, time devoted and preparedness for the meetings, quality, quantity and timeliness of the flow of information between the Board members and the management, contribution at the meetings, effective decision making ability, role & effectiveness of the Committees. The outcome of the Board evaluation for the financial year has been shared with the Nomination and Remuneration Committee and the Board. Independent Directors meeting In accordance with the provisions of Schedule IV of the Companies Act, 2013, Regulation 25 (3) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and SS 2.3 of the Secretarial Standards on Board Meetings a meeting of the Independent Directors of your Company was held on 14 th March, 2016 without the presence of the Nonindependent Directors and the members of the management. The Independent Directors discussed the matters inter alia including, the performance/ functioning of the Company, reviewing the performance of the Chairman, taking into account the views of Executive Directors and Non-Executive Directors, assess the quality, quantity and timeliness of flow of information between the management and the Board of Directors that is necessary for the Board of Directors to effectively and reasonably perform their duties, etc. Prevention of Insider Trading In terms of the provisions of the Securities and Exchange Board of India (Prevention of Insider Trading) Regulations, 2015 your Company has adopted the Code of Conduct for Dealing in Listed The composition, attendance and sitting fees paid are as follows: Securities of Group Companies ( the Code ). The Code aims at preserving and preventing misuse of unpublished price sensitive information. All the Directors and Designated Employees of your Company have been covered under the Code. The said Code also provides for periodical disclosures from Directors and Designated Employees of your Company. COMMITTEES OF BOARD Your Board has constituted the Committees with specific terms of reference as per the requirements of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the Act. There are 8 such Committees of the Board as elaborated under and the said Committees meet at such frequency as is required to discharge the functions assigned to them. 1) AUDIT COMMITTEE Qualified Independent Audit Committee The Company has an Audit Committee at the Board level with powers and role that are in accordance with Regulation 18 of SEBI LODR and Section 177 of the Act. Composition of Audit Committee, its meetings and attendance at meetings during the year and sitting fees paid The Audit Committee of the Board comprises of 4 (four) Independent Directors. As such, all the members of the Company s Audit Committee are Independent Directors and are financially literate. The composition of the Audit Committee meets the requirements of Section 177 of the Act and Regulation 18 of SEBI LODR. During the year, the Audit Committee met 7 times to deliberate on various matters. The meetings were held on 3 rd May, 2015, 14 th May 2015, 12 th August 2015, 9 th November 2015, 22 nd December 2015, 11 th February 2016 and 14 th March Name of Member Category No. of meetings Sitting fees paid (Amount in `) Held Attended Ms. Tarjani Vakil (Chairperson) Independent 7 7 1,75,000 Mr. P. Murari Independent 7 7 1,75,000 Mr. B. R. Gupta Independent 7 7 1,75,000 Mr. G. P. Gupta 1 Independent ,000 Mr. S.C Bhargava 2 Independent ,000 1 Ceased to be a member of the Audit Committee consequent to his resignation as a Director w.e.f. 9 th November, Appointed as a member of the Committee w.e.f. 9 th November, 2015 Ms. Tarjani Vakil Chairperson of the Committee and was present at the last AGM held on 15 th September,

139 Statutory Reports Permanent Invitees Mr. Lalit Naik - Managing Director Mrs. Pinky Mehta - Chief Financial Officer The Statutory and Internal Auditors of your Company are invited to attend the Audit Committee meetings. The Committee and the Company also engages outside experts and advisors to the extent it considers appropriate to assist in its functioning. The representatives of the Cost Auditors are invited to attend the Audit Committee meetings whenever matters relating to Cost Audit are considered. The Company Secretary acts as the Secretary to the Committee. The Committee acts as a link between the management, the statutory and internal auditors and the Board of Directors and oversees the financial reporting process. The Audit Committee monitors and supervises your Company s financial reporting process with a view to provide accurate, timely and proper disclosure and maintain the integrity and quality of financial reporting. The Audit Committee also reviews from time to time, the audit and internal control procedures, the accounting policies of your Company, oversight of your Company s financial reporting process so as to ensure that the financial statements are correct, sufficient and credible. Powers 1. To investigate any activity within its terms of reference. 2. To seek information from any employee. 3. To obtain outside legal or other professional advice. 4. To secure attendance of outsiders with relevant expertise, if it considers necessary. Role 1. Oversight of the company s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible. 2. Recommendation for appointment, remuneration and terms of appointment of auditors of the company. 3. Approval of payment to statutory auditors for any other services rendered by the statutory auditors. 4. Reviewing, with the management, the annual financial statements and auditor s report thereon before submission to the board for approval, with particular reference to: a. Matters required to be included in the Director s Responsibility Statement to be included in the Board s report in terms of clause (c) of sub-section 3 of section 134 of the Companies Act, 2013; b. Changes, if any, in accounting policies and practices and reasons for the same; c. Major accounting entries involving estimates based on the exercise of judgment by management; d. Significant adjustments made in the financial statements arising out of audit findings; e. Compliance with listing and other legal requirements relating to financial statements; f. Disclosure of any related party transactions; g. Qualifications in the draft audit report; 5. Reviewing, with the management, the quarterly financial statements before submission to the board for approval. 6. Reviewing, with the management, the statement of uses / application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer document / prospectus / notice and the report submitted by the monitoring agency monitoring the utilisation of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter. 7. Review and monitor the auditor s independence and performance, and effectiveness of audit process. 8. Approval or any subsequent modification of transactions of the company with related parties. 9. Scrutiny of inter-corporate loans and investments. 130

140 Corporate Governance Report 10. Valuation of undertakings or assets of the company, wherever it is necessary. 11. Evaluation of internal financial controls and risk management systems. 12. Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems. 13. Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit. 14. Discussion with internal auditors of any significant findings and follow up there on. 15. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the board. 16. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern. 17. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors. 18. To review the functioning of the Whistle Blower mechanism; 19. Approval of appointment of CFO (i.e., the whole-time Finance Director or any other person heading the finance function or discharging that function) after assessing the qualifications, experience and background, etc. of the candidate. 20. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee. Audit Committee reviews the following information 1. Management Discussion and Analysis of financial condition and results of operations; 2. Statement of significant related party transactions (as defined by the Audit Committee), submitted by management; 3. Management letters / letters of internal control weaknesses issued by the Statutory Auditors, if any; 4. Internal audit reports and discussion with the Internal Auditors on any significant findings and follow-up thereon; 5. The appointment, removal and terms of remuneration of the Internal Auditor. During the year, the Audit Committee has reviewed the internal controls put in place to ensure that the accounts of your Company are properly maintained and that the accounting transactions are in accordance with prevailing laws and regulations. In conducting such reviews, the Committee found no material discrepancy or weakness in the internal control system of your Company. The Committee has also reviewed the procedures laid down by your Company for assessing and managing the risks. 2) NOMINATION AND REMUNERATION COMMITTEE Composition, meetings, attendance during the year and sitting fees paid The Committee comprises of 2 (two) Independent Directors and 1 (one) Non Executive Director. Ms. Tarjani Vakil, an Independent Director, is the Chairperson of the Committee and was present at the last Annual General Meeting of the Company held on 15 th September, During the year, the Committee met four times to deliberate on various matters. The meetings were held on 3 rd May, 2015, 14 th May, 2015, 9 th November, 2015 and 9 th January The composition, attendance and sitting fees paid are as follows: Name of Member Category No. of meetings Sitting fees paid (Amount in `) Held Attended Mr. Kumar Mangalam Birla Non Executive ,000 Ms. Tarjani Vakil (Chairperson) Independent ,000 Mr. B. R. Gupta Independent ,

141 Statutory Reports Terms of reference of the Nomination and Remuneration Committee The Nomination and Remuneration Committee is authorized to: - set the level and composition of remuneration which is reasonable and sufficient to attract, retain and motivate directors and Senior Managers of the quality required to run the Company successfully; - set the relationship of remuneration to performance; - check whether the remuneration provided to directors and Senior Managers includes a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the Company and its goals; - formulate appropriate policies, institute processes which enable the identification of individuals who are qualified to become Directors and who may be appointed in senior management and recommend the same to the Board; - review and implement succession and development plans for Managing Director, Executive Directors and Senior Managers; - devise a policy on Board diversity; - formulate the criteria for determining qualifications, positive attributes and independence of directors - decide whether to extend or continue the term of appointment of the independent director, on the basis of the report of performance evaluation of independent directors. Employee Stock Options Scheme 2006 ( ESOS-2006 ) During the year, 843 Stock Options were vested on 7 th June, 2015 in the eligible employee, subject to the provisions of the Employee Stock Options Scheme 2006, statutory provisions including Securities and Exchange Board of India (Share Based Employee Benefit) Regulations, 2014 as may be applicable from time to time and the rules and procedures set out by your Company in this regard. Further, the Committee allotted 62,331 equity shares of ` 10/- each of your Company to Option Grantees pursuant to the exercise of Stock Options under the ESOS Employee Stock Options Scheme 2013 ( ESOS-2013 ) During the year under review, 23,652 Stock Options have vested in the grantees in terms of the provisions of the Employees Stock Option Scheme 2013, statutory provisions including Securities and Exchange Board of India (Share Based Employee Benefit) Regulations, 2014 as may be applicable from time to time and the rules and procedures set out by your Company in this regard. Further, the Committee has allotted 23,334 equity shares of ` 10/- each of your Company to Option Grantee pursuant to the exercise of Stock Options under the ESOS Composite Scheme of Arrangement Consequent to the Composite Scheme of Arrangement of the branded apparel business having become effective on 9 th January, 2016, the Grant Price and related plan elements in respect of the Stock Options and the Restricted Stock Units granted by the Company under ESOS 2013 to the eligible employees, have been suitably treated so as to ensure fair and equitable treatment for the concerned employees. Remuneration Policy Your Company has adopted Executive Remuneration Philosophy/Policy and follows the same. The Policy has been published in this Annual Report as an Annexure to the Directors Report. 3) RISK MANAGEMENT COMMITTEE Risk Management is the process that can contribute progressively to organisational improvement by providing management with a greater insight into risks and their impact. The Company has a robust Risk Management framework which proactively addresses risks and seizes opportunities so as to gain competitive advantage, and protects and creates value for our stakeholders, including owners, employees, customers, regulators, and society overall. Considering the market capitalization and post demerger of Apparel business, as a good governance, the Company continues with Risk Management Committee. In terms of the regulations of SEBI LODR, considering the market capitalization post 132

142 Corporate Governance Report demerger of Apparel business, as a good governance, the Company continues with Risk Management Committee, your Company has constituted the Risk Management Committee to review, identify and to develop risk mitigation strategies. The objectives and scope of the Risk Management Committee broadly include: Identification of risks relating to business; Assessment and classification of risks associated with the business; Mitigation plans to minimize risks; Monitoring various risks The Management Discussion and Analysis Report sets out the risks identified and the mitigation plans thereof. The Risk Management Committee comprises of 2 (two) Independent Directors, 1 (one) Executive Director and 2 (two) Business Executives. During the year, the Risk Management Committee met twice to deliberate on various matters. The meetings were held on 17 th December, 2015 and 22 nd December, The composition, attendance and sitting fees paid to the non-executive Directors are as follows: Name of Member Category No. of meetings Sitting fees paid (Amount in `) Held Attended Ms. Tarjani Vakil (Chairperson) Independent ,000 Mr. S C Bhargava Independent ,000 Mr. Lalit Naik Managing Director 2 1-4) STAKEHOLDERS RELATIONSHIP COMMITTEE Composition, meetings, attendance and sitting fees paid during the year: The Stakeholders Relationship Committee comprises of 2 (two) Independent Directors and 1 (one) Executive Director. During the year the Stakeholders Relationship Committee met on 22 nd December, 2015 and 14 th March, The composition, attendance and sitting fees paid are as follows: Name of Member Category No. of meetings Sitting fees paid (Amount in `) Held Attended Mr. S. C. Bhargava (Chairman) Independent ,000 Ms. Tarjani Vakil Independent ,000 Mr. Lalit Naik Managing Director Mr. S. C. Bhargava chaired the meetings of the Committee and he was present at the last Annual General Meeting of the Company held on 15 th September, The Company Secretary acts as Secretary to the Committee and is the Compliance Officer of the Company and also responsible for redressal of investor complaints. Your Company s shares are compulsorily traded in the dematerialised form. To expedite transfers in the physical segment, necessary authority has been delegated by your Board to the Directors and the Officers of your Company to approve transfers / transmissions of shares / debentures. Details of share transfers / transmissions approved by the Directors and Officers are placed before the Board. Role The terms of reference of the Committee are: - To monitor expeditious redressal of grievances of the Stakeholders and Investors complains relating to shareholders / debenture holders including complaints relating to transfer / transmission of shares / debentures etc. - To approve allotment of shares, debentures and other securities - To authorize officers of the Company to approve request transfer, transposition, deletion, consolidation, sub-division, in respect of shares, debentures and securities. 133

143 Statutory Reports - To ensure compliance of transfer of Unpaid Dividend to IEPF on or before the due date - To monitor the progress of release of unpaid dividend and process of dissemination of these records in accordance with the prescribed guidelines, rules and regulations - To review the results of any investigation / audit conducted by any statutory authority Number of shareholders complaint received so far / number not solved to the satisfaction of shareholders / number of pending complaints Details of complaints received, number of shares transferred during the year, time taken for effecting these transfers and the number of share transfers pending are furnished in the Shareholder Information section of this Annual Report. Details of non-compliance by the Company, penalties and strictures imposed on the Company by stock exchanges or SEBI or any other statutory authority, on any matter relating to capital markets, during the last three years: There has been no instance of non-compliance by the Company on any matter related to capital markets during the last three years and hence no strictures /penalties have been imposed on the Company by the stock exchanges or the Securities and Exchange Board of India (SEBI) or any other statutory authority. 5) CORPORATE SOCIAL RESPONSIBILITY COMMITTEE Composition, meetings, attendance and sitting fees paid during the year: In terms of the provisions of Section 135 of the Act and the Listing Agreement, your Company has constituted the Corporate Social Responsibility Committee at the Board level. The Corporate Social Responsibility Committee comprises of 1 (one) Independent Director, 1 (one) Non Executive Director and 1 (one) Executive Director. Dr. Pragnya Ram, Group Executive President, Corporate Communications & CSR is a permanent invitee. During the year the Corporate Social Responsibility Committee met once. The meeting was held on 16 th December, 2015 The composition, attendance and sitting fees paid are as follows: Name of Member Category No. of meetings Sitting fees paid (Amount in `) Held Attended Mrs. Rajashree Birla (Chairperson) Non Executive ,000 Ms. Tarjani Vakil Independent ,000 Mr. Lalit Naik Managing Director Mrs. Rajashree Birla chaired the meeting of the Committee. The Company Secretary acts as Secretary to the Committee. The Committee recommends to the Board the activities to be undertaken during the year and amount to be spent on these activities. During the year, your Company has carried out various activities as part of its CSR initiative. The focus areas have been health care, education, sustainable livelihood, infrastructure and social reform. 6) FINANCE COMMITTEE Your Company has Finance Committee comprising of Ms. Tarjani Vakil, Mr. S. C. Bhargava and Mr. Lalit Naik as its members. Ms. Tarjani Vakil chaired the meetings of the Committee. The Committee looks into the borrowings, if any, to be made from fund and non fund based limits for the business requirements of the Company, authorises officers to undertake the foreign currency contracts for hedging its foreign currency liabilities/ transactions, authorises Officers of the Company to open/operate/close bank accounts, approves the grant and execution of Power of Attorneys to the Officers of the Company, besides the other powers granted to it by the Board from time to time. During the year under review, the Committee met once on 22 nd December, 2015 to deliberate on various matters referred above. 134

144 Corporate Governance Report The composition, attendance and sitting fees paid are as follows: Name of Director Category No. of meetings Sitting fees paid (Amount in `) Held Attended Ms. Tarjani Vakil Independent ,000 Mr. S. C. Bhargava Independent ,000 Mr. Lalit Naik Managing Director 1 0-7) MADURA DEMERGER COMMITTEE: Your Board had constituted Madura Demerger Committee comprising of Ms. Tarjani Vakil, Mr. S. C. Bhargava and Mr. Lalit Naik as its members. Ms. Tarjani Vakil Chaired the meeting of the Committee. The Committee was authorised to look in matters pertaining to the implementation of the Composite Scheme of Arrangement between the Company, Madura Garments Lifestyle Retail Company Limited and Aditya Birla Fashion and Retail Limited (formerly known as Pantaloons Fashion and Retail Limited) ( the Scheme ) and to consider and approve matters pertaining thereto. During the year under review, the Committee had met on 9 th January, 2016 to make the Scheme effective upon receipt of the requisite approvals from the regulatory authorities. The composition, attendance and sitting fees paid are as follows: Name of Director Category No. of meetings Sitting fees paid (Amount in `) Held Attended Ms. Tarjani Vakil Independent ,000 Mr. S. C. Bhargava Independent ,000 Mr. Lalit Naik Managing Director ) ABNL AMALGAMATION COMMITTEE: Your Board had constituted ABNL Amalgamation Committee comprising of Ms. Tarjani Vakil, Mr. S. C. Bhargava and Mr. Lalit Naik as its members. Ms. Tarjani Vakil Chaired the meeting of the Committee. The Committee was authorised to look in matters pertaining to the implementation of the Scheme of Amalgamation of, ABNL IT & ITES Limited, Aditya Birla Minacs BPO Pvt. Limited and Indigold Trade & Services Limited, subsidiaries of the Company, with the Company, under the provisions of Sections of the Companies Act, During the year under review, the Committee had met on 31 st March, 2016 to make the Scheme effective upon receipt of requisite approvals from the regulatory authorities. The composition, attendance and sitting fees paid are as follows: Name of Director Category No. of meetings Sitting fees paid (Amount in `) Held Attended Ms. Tarjani Vakil Independent ,000 Mr. S. C. Bhargava Independent ,000 Mr. Lalit Naik Managing Director ) MEETING OF INDEPENDENT DIRECTORS: Pursuant to the provisions of Section 149 read with Schedule IV of the Companies Act, 2013 and Regulation 25 (4) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 the Independent Directors of the Company had met on 14 th March, 2016 without the presence of the Non- Independent Directors, Managing Director & members of the Management Team. 135

145 Statutory Reports Vigil Mechanism / Whistle Blower Policy The Company has in place a Vigil Mechanism under which a Committee has been appointed comprising of Directors and Senior Managers of the Company for attending the complaints received from the employees and to report concerns about the unethical behaviour, actual or suspected fraud and violation of the Code of Conduct or Ethics Policy by the Directors and the employees of the Company. The Policy provides for adequate safeguards against victimisation and all personnel have access to the Audit Committee. The Policy is in line with the Company s Code of Conduct, Vision and Values and forms part of good Corporate Governance and is available to all the employees on the Aditya Birla Group Intranet. Subsidiary Companies The Audit Committee reviews the consolidated financial statements of the Company and investments made by its unlisted subsidiary companies. The minutes of the board meetings along with a report on significant developments of the unlisted subsidiary companies are periodically placed before the Board of Directors of the Company. RELATED PARTY TRANSACTIONS During the financial year, your Company has entered into related party transactions which were on arm s length basis and in the ordinary course of business. There are no material transactions with any related party as defined under Section 188 of the Act. All related party transactions have been approved by the Audit Committee of your Company. Particulars of related party transactions are listed out in Note 41 of the Accounts. The policy on Related Party Transactions as approved by the Audit Committee and the Board is available on your Company s website viz. DISCLOSURES Pursuant to SEBI LODR, your Company has in place the following:- 1. Code of Conduct for Directors and Senior Management Personnel 2. Code of Conduct for SEBI (Prohibition of Insider Trading), Regulations, Policy for Preservation of Documents 4. Policy for determination of materiality of an event or information and for making disclosures 5. Policy for determining Material Subsidiary companies. The same is available on the Company s website. 6. Code of Conduct for making disclosures to the Stock Exchanges for fair disclosure of unpublished price sensitive information Disclosure of accounting treatment Your Company has followed all relevant Accounting Standards while preparing the financial statements. Management: - The Management Discussion and Analysis forms part of the Annual Report and are in accordance with the requirements laid out in Clause 34(2) (e) of the SEBI LODR. - No material transaction has been entered into by the Company with the Promoters, Directors or the Management, their subsidiaries or relatives etc. that may have a potential conflict with interests of the Company. - Your Company has instituted a comprehensive Code of Conduct in compliance with the SEBI regulations on prevention of insider trading. Proceeds from Public Issues, Right Issues, Preferential Issues etc.: The Company discloses to the Audit Committee, the uses/applications of proceeds/funds raised from public issues, private placement of nonconvertible debentures, preferential issue, etc., if any, as part of quarterly review of financial results. Remuneration of Directors: The Company has a system where all the directors and senior management of the Company are required to disclose all pecuniary relationship or transactions with the Company. No significant material transactions have been made with the Non- Executive Directors vis-à-vis the Company. Besides sitting of ` 50,000/- per meeting of the Board of ` 25,000/- per meeting of the Audit Committee of ` 20,000/- per meeting of the other Committees thereof, the Company also pays commission to the Non-Executive Directors of the Company. For the Financial year , considering the financial performance of the Company, the Board has decided to pay commission of ` 2.85 Crore (Previous Year: ` 4.50 Crore) to the Non-Executive Directors of the Company, which is within the limit of 1% of the net profits of the Company, and 136

146 Corporate Governance Report pursuant to the authority given by the Shareholders at the Annual General Meeting of the Company held on 15 th September, The amount of commission payable to the Non-Executive Directors is determined after assigning weightage to attendance and contribution (Board and Committee Meetings), type and significance of meetings and preparations required, time spent, etc. Based on the performance evaluation of the Directors and the remuneration policy, the amount of commission payable has been fixed by the Board. The Company also reimburses the out-ofpocket expenses incurred by the Directors for attending the meetings. Details of remuneration, shareholding of the non-executive directors and the sitting fees paid to the Directors for attending the meetings of Board and the Board Committees in the financial year are as follows: Name of the Director Commission Payable Sitting Fees Paid No. of Shares (Amount ` in lakh) (Amount ` in lakh) held Mr. Kumar Mangalam Birla ,609 Mrs. Rajashree Birla ,634 Ms. Tarjani Vakil Mr. P. Murari Mr. B. R. Gupta Mr. S. C. Bhargava Mr. G. P. Gupta $ Mr. T. Chattopadhyay # (Commission to be paid to LIC) $ # Resigned w.e.f. 9 th November, 2015 Resigned w.e.f. 7 th April, 2016 The details of remuneration paid to the Managing Director/ Whole-time Director is as follows: (Amount ` in Lakh) Managing Director / No of Whole - time Shares Remuneration during Director held All elements of Performance Service Stock option remuneration linked, incentives contracts, details, if any package i.e. along with notice period, salary, benefits, performance severance fee stock option, criteria pensions etc. Mr. Lalit Naik See note See note (5) Mr. Sushil Agarwal* 23, * (3 & 4) * Relinquished the office of the Whole Time Director & CFO from the close of business hours on 30 th June, The remuneration includes ` Lakhs on account of execise of stock options. Notes: 1. No Director is related to any other Director on the Board, except for Mr. Kumar Mangalam Birla and Mrs. Rajashree Birla, who are son and mother, respectively. 2. The Company has a policy of not advancing any loans to its Directors except to Executive Directors in the course of normal employment. 3. The appointment of Executive Director is subject to termination by three months notice in writing by either side. 4. No severance fees are paid to any Director of the Company. 5. In terms of your Company s Employee Stock Option Scheme ( ESOS-2013 ), during the Financial Year , 14,628 Stock Options have vested in Mr. Lalit Naik. 6. Performance Review System is primarily based on competencies and values. The Company closely monitors growth and development of top talent in the Company to align personal aspiration with the organization s purpose. All decisions relating to the remuneration of the Managing Director and the Whole time Director is taken by the Board based on the remuneration policy and in terms of the resolution passed by the shareholders of your Company. 137

147 Statutory Reports CEO/ CFO Certification: The Managing Director and the Chief Financial Officer of your Company have issued necessary certificate pursuant to the provisions of Regulation 33 (2) (a) of the SEBI LODR and the same is attached and forms part of the Annual Report. REPORT ON CORPORATE GOVERNANCE The Corporate Governance Report forms part of the Annual Report. Your Company complies with the provisions of Regulation 34 of the SEBI LODR. COMPLIANCE WITH CORPORATE GOVERNANCE REQUIREMENTS The Company has complied with the corporate governance requirements specified in regulation 17 to 27 and clauses (b) to (i) of sub-regulation (2) of regulation 46 of the SEBI LODR WEBSITE DISCLOSURES The information as required to be disseminated on the website of the Company pursuant to clauses (b) to (i) of sub-regulation (2) of Regulation 46 of the SEBI LODR, has been updated on the website of the Company- COMPLIANCE CERTIFICATE Compliance Certificate from the Statutory Auditors confirming compliance with all the conditions of Corporate Governance as stipulated in Regulation read with Schedule V (E) of the SEBI LODR forms part of the Annual Report. Details of new Directors and Directors seeking re-appointment: The Company has provided the details of new Director and Directors seeking appointment / re-appointment in the Notice of the Annual General Meeting. Quarterly Presentations on the Company results are available on the website of your Company ( / and the Aditya Birla Group website ( The results / press - release are sent to the concerned Stock Exchanges simultaneously so as to enable them to put the results and press-release on their notice board/ website. The Company also sends results / press - release by (wherever available) to shareholders immediately after the announcement of results. General Body Meetings: Details of Annual General Meetings: During the preceding three years, the Company s Annual General Meetings (AGMs) and also the Court Convened Meetings (CCM) were held at the Registered Office of the Company at Indian Rayon Compound, Veraval , Gujarat. The date and time of such meetings held during the last three years, and the special resolution(s) passed thereat, are as follows: Year AGM/EGM Date Time Special Resolution Passed AGM 6 th September, :30 A.M. Yes AGM 11 th September, :30 A.M. Yes AGM 15 th September, :30 A.M. Yes Court Convened 8 th September, A.M. Resolution passed Meeting approving the arrangement embodied in the Composite Scheme of Arrangement in respect of the Apparel Business of the Company 4 For approval of terms of Appointment and Remuneration of Whole-time Director(s) and approval of Employee Stock Options Scheme-2013 for the benefit of the employees of the Company and its Subsidiaries. For approval of terms of Remuneration to Non-Executive Directors and approval of the offer or invitation to subscribe to Non Convertible of Appointment of Whole-time Director(s) liable to retire by rotation and approval of payment of Debentures on a private placement basis. For approval of offer or invitation to subscribe to Non-Convertible Debentures on a private placement basis and appointment of M/s. Sharepro Services (India) Pvt. Ltd. as the Company s Registrars and Share Transfer Agents. For approval of the Composite Scheme of Arrangement amongst Aditya BirIa Nuvo Limited and Madura Garments Lifestyle Retail Company Limited and Pantaloons Fashion & Retail Limited and their respective shareholders and creditors under Sections 391 and 394 and other relevant provisions of the Companies Act, 1956.

148 Corporate Governance Report Postal Ballot & E-Voting: Purpose: To seek approval of the Public Shareholders for the Composite Scheme of Arrangement amongst Aditya BirIa Nuvo Limited and Madura Garments Lifestyle Retail Company Limited and Pantaloons Fashion & Retail Limited and their respective shareholders and creditors in accordance with the SEBI Circular No.s CIR/CFD/ DIL/5/2013 dated February 4, 2013 and CIR/CFD/ DIL/8/2013 dated May 21, Postal Ballot and E-Voting Period: August 8, 2015 to September 7, 2015 Details of Voting: Postal Ballot and E-Voting by Pubic Shareholders No. of Shares held by No. of valid No. of Votes No. of Votes Public Shareholders Votes polled in favour against 5,56,97,629 2,76,22,254 2,76,16,368 5,886 Person who conducted the Postal Ballot exercise: Mr. Bipin Makwana, Practising Company Secretary, Ahmedabad, was appointed to act as the scrutinizer for conducting the postal ballot and E-voting exercise. MEANS OF COMMUNCIATION Quarterly Results Newspaper in which normally financial results are published in: Newspaper Cities of Publication Business Standard All editions Economic Times All editions (Snapshot) Western Times Gujarati (Ahmedabad) Website, where displayed the information. Whether it also displays official news releases Presentations made to investors/analysts Shareholders Information : : Yes : Yes : Published as a separate section in this report. Status of Compliance of Non-Mandatory Requirements: 1) The Company maintains a separate office for the Non-Executive Chairman. All necessary infrastructure and assistance are made available to enable him to discharge his responsibilities effectively. 2) The position of the Chairman of the Board of Directors and the Managing Director are separate. 3) The Company s statutory financial statements are unqualified. 4) The Internal Auditor s report to the Audit Committee. 5) The quarterly, half-yearly and annual financial results of the Company are furnished to the Stock Exchanges and published in the newspapers as per the requirements of the SEBI LODR and the same are also posted on the website of the Company. 139

149 Statutory Reports CEO/CFO CERTIFICATION To, The Board of Directors. 1. We have reviewed the financial statements and the cash flow statement of for the year ended 31 st March, 2016 and to the best of our knowledge and belief: a) these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading; b) these statements together present a true and fair view of the Company s affairs and are in compliance with the existing accounting standards, applicable laws and regulations. 2. To the best of our knowledge and belief, no transactions entered into by the Company during the year ended, are fraudulent, illegal or violate the Company s Code of Conduct. 3. We accept responsibility for establishing and maintaining internal controls for financial reporting and we have evaluated the effectiveness of the internal control systems of the Company pertaining to the financial reporting. 4. We have disclosed to the Auditors and the Audit Committee, deficiencies in the design or operation of internal controls, if any, of which we are aware and the steps we have taken or proposed to be taken to rectify the deficiencies. 5. We have indicated to the Auditors and the Audit committee:- I. significant changes in the Company s internal control over financial reporting during the year; II. significant changes in accounting policies during the year and that the same have been disclosed in the notes to the financial statements; and III. instances of significant fraud of which we have become aware and involvement therein, if any, of the management or other employees having a significant role in the Company s internal control system over financial reporting. Place: Mumbai Lalit Naik Pinky Mehta Date: 20 th May, 2016 Managing Director Chief Financial Officer DECLARATION As provided under PART D of Schedule V of SEBI (LODR), I hereby declare that all the Directors and Senior Management personnel of the Company have affirmed the Compliance with the Code of Conduct for the year ended 31 st March, For Place: Mumbai Date: 20 th May, 2016 Lalit Naik Managing Director 140

150 Shareholders Information Shareholders Information 1. Annual General Meeting Date and Time : 27 th August, 2016 at a.m. Venue : Registered Office at The Club Auditorium at Indian Rayon Compound, Veraval , Gujarat, India 2. Financial Calendar for Reporting Financial reporting for the quarter ending June 30, 2016 : August, 2016 Financial reporting for the half year ending September 30, 2016 : November, 2016 Financial reporting for the quarter ending December 31, 2016 : February, 2017 Financial reporting for the year ending March 31, 2017 : May, 2017 Annual General Meeting for the year ended March 31, 2017 : August / September, Dividend Payment Date : On or after 30 th August, Registered Office : Indian Rayon Compound, Veraval , Gujarat, India Phone: (02876) abnlsecretarial@adityabirla.com Web: CIN: L17199GJ1956PLC (a) Listing Details: Equity Shares Non-Convertible Global Depository Debentures Receipts (GDRs) (GDR Program terminated w.e.f. 8 th December, 2015) 1. BSE Limited (BSE) BSE Limited (BSE) Luxembourg Stock Phiroze Jeejeebhoy Towers, Phiroze Jeejeebhoy Towers, Exchange (LSE) Dalal Street, Dalal Street, Societe de la Bourse de Mumbai Mumbai Luxembourg 2. National Stock Exchange of Postal Address: India Ltd (NSE) B.P. 165 L-2011 Exchange Plaza, Plot No. C-1, Luxembourg. G- Block, BandraKurla Complex, Mailing Address: Bandra (East), Mumbai A, Boulevard Joseph II, L-1840, Luxembourg. Note: 1. Listing Fees for the year has been paid to the BSE Limited (BSE) and the National Stock Exchange of India Limited (NSE). 2. No Listing fee for calendar year 2016 for the GDRs was required to be paid as the GDRs Program has been terminated by the Company on 8 th December,

151 Statutory Reports 5. (b) Overseas Depository for Citibank N.A., Depository Receipts GDRs (Till 8 th December, 2015) 388 Greenwich Street, New York, NY 10013, USA Phone: (c) Domestic Custodian of GDRs ICICI Bank Limited (Till 8 th December, 2015) Securities Market Services F7/E7 1st Floor, Empire Complex 414, Senapati Bapat Marg, Lower Parel, Mumbai Phone: (+91-22) (d) Debt Securities Wholesale Debt Market (WDM) segment of BSE 5. (e) Debenture Trustees: IDBI Trusteeship Services Limited (for 29 th, 30 th and 31 st series Debentures) Asian building, Ground Floor, 17, R. Kamani Marg, Ballard Estate, Mumbai Tel: Fax: itsl@idbitrustee.com 6. Stock Code: ISIN INE069A01017 Stock Code Reuters Bloomberg Bombay Stock Exchange ABRL.BO ABNL IB National Stock Exchange ABIRLANUVO ABRL.NS NABNL IN 7. Stock Price Data: Year/Month BSE Limited National Stock Exchange of India Limited High Low Close Volume High Low Close Volume (In `) (In Nos.) (In `) (In Nos.) Apr-' , ,771,646 May-' ,014, ,853,119 Jun-' , ,397,556 July-' , ,619,659 Aug' , ,296,723 Sep-' , ,283,312 Oct-' , ,288,741 Nov-' , ,543,015 Dec-' , ,813,520 Jan-' ,647, ,870,383 Feb-' , ,966,206 Mar-' ,973, ,533,

152 Shareholders Information 8. Indexed Stock Performance:* 150 ABNL SENSEX NIFTY Stock Performance and Returns: Absolute Returns (in %) 1 Year 3 Year 5 Year * 5.54% 80.01% % BSE Sensex -9.36% 34.54% 30.32% NSE Nifty -8.86% 36.18% 32.65% (Source: Bloomberg) Annualized Returns (in %) 1 Year 3 Year 5 Year * 5.54% 21.65% 16.61% BSE Sensex -9.36% 10.40% 5.44% NSE Nifty -8.86% 10.84% 5.81% * In order to consolidate its Branded apparels businesses, the Company has de-merged its Madura Fashion Division into Aditya Birla Fashion and Retail Limited (ABFRL) through a Court approved Scheme of Arrangement. The Scheme became effective on 9 th January 2016 and the stock price of the Company became ex-madura and got adjusted on the ex-date 20 th January 2016 to reflect the value of remaining businesses of the Company. The stock performance graph and returns have been adjusted for issue of shares by ABFRL to the shareholders of the Company against the demerger of Madura Fashion Division. (Source: Bloomberg) 10. Registrar and Transfer Agents (RTA): (For share transfers and other : Karvy Computershare Private Limited communication relating to share Unit: certificates, dividend and change Karvy Selenium Tower B, Plot 31-32, of address etc.) Gachibowli, Financial District, Nanakramguda, Hyderabad adityabirlanuvo.ris@karvy.com Tel. : Share Transfer System: : Share Transfer in physical form is registered normally within a period of 15 days from the date of receipt, provided that the documents are complete in all respects. 143

153 Statutory Reports Details of Shares Transferred during the Financial Year Transfer Period No. of Transfers No. of Shares % Cumulative (in Days) Total % and above Total No transfer of physical shares was pending as on 31 st March, Investor Complaints details: Nature of Complaints Received Attended Received Attended Complaints relating to Transfer, Transmission, Dividend, Demat, Non receipt of Shares on amalgamation / demerger etc. 13. Distribution of Shareholding as on 31st March, 2016: No. of Equity No. of % of No. of % of Shares Held Shareholders Shareholders Shares Held Shareholding and above Total Categories of Shareholding as on 31 st March, 2016: Category of No. of % of No. of % of Shareholders Shareholders Shareholders Shares Held Shareholding Promoters and Promoter Group ,053, Banks, Mutual Funds Financial Institutions and Insurance Companies UTI and other Mutual Funds ,670, Banks, Mutual Funds Financial Institutions and Insurance Companies ,409, Foreign Investors FIIs ,664, NRIs/OCBs 4, , Corporates 1, ,450, Other - Individual/Trusts 129, ,984, Total 135, ,222,

154 Shareholders Information 15. Dematerialisation of Shares and Liquidity : 98.19% of outstanding equity shares have been dematerialised as on 31 st March, Trading in shares of your Company is permitted only in the dematerialised form. 16. Details on use of public funds obtained : No public funds have been obtained in in the last three years last 3 years. 17. Outstanding GDRs/ADRS/ Warrants or any : Nil as the GDR Program has been terminated Convertible instruments, Conversion date by the Company on 8 th December, and likely impact on Equity 18. Other useful information for the shareholders: i. Equity shares of the Company are under compulsory demat trading by all investors, w.e.f. 5 th April, Considering the advantages of scripless trading, shareholders are requested in their own interest to consider dematerialisation of their shareholding so as to avoid inconvenience in future. ii. Non- Resident Shareholders: Non-resident members are requested to immediately notify the following to the Company in respect of shares held in physical form and to their DPs in respect of shares held in dematerialized form: Indian address for sending all communications, if not provided earlier; ID and Phone No. (s), if any. Change in their residential status on return to India for permanent settlement; Particulars of the Bank Account maintained with a bank in India, if not furnished earlier; (Please send a photocopy of cancelled cheque leaf) RBI permission with date to facilitate prompt credit of dividend in their Bank Accounts. iii. Shareholders holding shares in physical form are requested to notify to the Company, change in their Address / Pin Code number with proof of address and Bank Account details promptly by written request. Beneficial Owners of shares in demat form are requested to send their instructions regarding change of name, bank details, nomination, power of attorney, etc., directly to their DP. iv. To prevent fraudulent encashment of dividend warrants, members are requested to provide their Bank Account details (if not provided earlier) to the Company (if shares are held in physical form) or to DP (if shares are held in demat form) as the case may be, for printing of the same on their dividend warrants. v. In case of loss/misplacement of shares, investors should immediately lodge FIR/ Complaint with the Police and inform to the Company along with original or certified copy of the FIR/Acknowledged copy of Police complaint. vi. In accordance with the provisions of Sec 56(1) of the Companies Act, 2013, shares are required to be lodged with a period of 60 days from the date of execution of instrument of transfer. For expeditious transfer of shares in physical form, shareholders should fill in complete and correct particulars in the transfer deed. Wherever applicable, registration number of Power of Attorney should also be quoted in the transfer deed at the appropriate place. vii. Shareholders are requested to keep record of their specimen signature before lodgement of shares with the Company to obviate the possibility of difference in signature at a later date. viii. Shareholders of the Company who have multiple accounts in identical name(s) or holding more than one Share Certificate in the same name under different Ledger Folio(s) in physical form are requested to apply for consolidation of such Folio(s) and sent the relevant Share Certificates to the Company. ix. Section 72 of the Companies Act, 2013, extends nominate on facility to individuals holding shares in physical form in companies. Shareholders, in particular, those holding shares in single name, may avail the above facility by furnishing the particulars of their nominations in the prescribed Nomination Form, which can be downloaded from the website of the Company or obtained from Karvy Computershare Private Limited the Registrar and Share Transfer Agent of the 145

155 Statutory Reports Company by sending written request through any mode including on x. Shareholders are requested to visit the Company's website for Information on investor services offered by the Company. Downloading of various forms/formats, viz., Nomination form, ECS Mandate form, Indemnity, Affidavits, etc. Registering your ID with the Company to receive Notice of General Meetings, Audited Financial Statement, Directors' Report, Auditors' Report, etc., henceforth electronically. xi. NECS Facility: In terms of a notification issued by the Reserve Bank of India, with effect from 1st October, 2009, remittance of Dividend through ECS is replaced by National Electronic Clearing Service (NECS). Banks have been instructed to move to the NECS platform. The advantages of NECS over ECS include faster credit of remittance to the beneficiary's account, coverage of more bank branches and ease of operations. NECS essentially operates on the new and unique bank account number, allotted by bank postimplementation of Core Banking System of inward instructions and efficiency in handling bulk transactions. To enable remittance of dividend through NECS, Members are requested to provide their new account number allotted to them by their respective banks after implementation of Core Banking Solution. The account number must be provided to the Company in respect of shares held in physical form and to the depository participants in respect of shares held in electronic form. xii. Correspondence with the Company: Shareholders/Beneficial Owners are requested to quote their Folio No. /DP ID and Client ID, as the case may be, in all correspondence with the Company's RTA - Karvy Computershare Private Limited, Registrar and Transfer Agents of the Company (Karvy) at Hyderabad. All correspondence regarding shares of the Company should be addressed to Karvy. Karvy has also designated an exclusive ID adityabirlanuvo.ris@karvy.com for effective investor's services where they can register their complaints/queries to facilitate speedy and prompt redressal. xiii. Cost Audit Reports Ministry of Corporate Affairs (MCA) vide its General Circular no. 8/2012 dated 10th May, 2012 as amended on 09th June, 2012 has mandated that all the Cost Auditors and their concerned companies shall file their Cost Audit Reports and Compliance Reports from the financial year onwards (including the overdue reports relating to any previous year ) in XBRL mode. For this purpose, the applicable taxonomy, business rules, validation tools etc. and also the Product Group classification required for preparing the Cost Audit Report and Compliance Reports as per the notified Cost Accounting Records Rules, 2011 and Cost Audit Report Rules, 2011 have been prescribed. Accordingly, in compliance with the above circular, the Company has filed the Cost Audit Report and Compliance Report for the financial year in XBRL mode. Product Indian Rayon, Veraval Viscose Filament Yarn & Chemicals Indo Gulf Fertilisers, Jagdishpur Fertilisers Name and Address of Auditor M/s Ashwin Solanki & Associates 801-2, Goyal Trade Center, Above Sona Cinema, Shantivan, Borivali (E), Mumbai , Reg M. No M/s K. G.Goyal & Associates 289, Mahaveer Nagar - II, Maharani Farms, Durgapura, Jaipur Reg. M. No Jaya Shree Textiles, Rishra M/s R.Chakraborty & Co., 18, Textiles (Worsted Yarn) N.S. Road, 3rd Floor, Room No.10, Kolkata Reg. M. No Aditya Birla Insulators - Halol & Rishra Insulators M/s. S. S. PURANIK & ASSOCIATES FF-57, Suryakiran Complex Old Padra Road, Vadodara Reg M. No

156 Shareholders Information xiv. Unclaimed Shares in Physical Form Regulation 39 (4) of SEBI (Listing Obligations and Disclosure Requirements), 2015 provides the manner of dealing with the shares issued in physical form pursuant to a public issue or any other issue and which remains unclaimed with the Company. In compliance with the provisions of the said Clause, the Company has sent three reminders under Registered Post to the Shareholders whose share certificates were returned undelivered and are lying unclaimed. In case your shares are lying unclaimed with the Company, you are requested to claim the same by writing a letter to the Company. A report in respect of the Equity Shares issued in physical form pursuant to a public issue or any other issue and lying in the ABNL- Unclaimed Suspense Account as on 31st March, 2016 is as under:- Sr. Description Number of Number of No. Shareholders Equity Shares 1 Aggregate number of shareholders and the 5,423 1,78,286 outstanding shares lying in the Unclaimed Suspense Account as at 1 st April, Number of shareholders who have approached the issuer for transfer of shares from the Unclaimed Suspense Account during the year 3 Number of shareholders to whom shares were transferred from the Unclaimed Suspense Account during the year 4. Aggregate number of shareholders and the 5,401 1,77,376 outstanding shares lying in the Unclaimed Suspense Account as at 31 st March, Plant Locations: Rayon Division: Textile Division: Fertiliser Division: Indian Rayon Compound Jaya Shree Textiles Indo Gulf Fertilisers Veraval , Gujarat P.O. Prabhas Nagar P.O. Jagdishpur Industrial Area Phone: (02876) / Dist Hooghly, West Bengal Dist. Amethi irilveraval@adityabirla.com Phone: (033) Uttar Pradesh, Phone: (05361) E:mail: igfl@adityabirla.com Insulator Division: Insulator Division: Aditya Birla Insulators, Rishra Aditya Birla Insulators, Halol P.O. Prabhas Nagar, Rishra P.O. Meghasar Taluka, Halol Dist. Hoogly Dist. Panchmahal West Bengal Gujarat Phone: (033) Phone: (02676) abi@adityabirla.com abi@adityabirla.com 20. Investor Correspondence: Registered Office: Indian Rayon Compound, Veraval Gujarat Phone: (02876) abnlsecretarial@adityabirla.com Registrar & Share Transfer Agent: Karvy Computershare Private Limited Unit: Karvy Selenium Tower B, Plot 31-32, Gachibowli, Financial District, Nanakramguda, Hyderabad adityabirlanuvo.ris@karvy.com 147

157 Statutory Reports Social Report As a nation we have embarked on the journey of social change through inclusive growth. A shared sense of community through shared responsibilities, both by the Government and corporates is apparent today. We have always been engaged in reaching out to communities through the spirit and culture of giving and caring, the spirit of compassion and service, which has been a legacy passed on from the Birla family, generation after generation. Our CSR activities are focused and strategic. We plough in resources, both financial and manpower where our work truly impacts the lives of the underprivileged. At the Aditya Birla Group level through our outreach programmes we pan out to 7.5 million people across 5,000 villages. Mrs. Rajashree Birla Chairperson Aditya Birla Centre for Community Initiatives and Rural Development Our focus is on healthcare, education, sustainable livelihood, infrastructure, and social reform. HEALTHCARE This year, we conducted over 50 medical camps and 23 speciality medical camps servicing over 27,550 persons. Among these feature family welfare camps, health check-ups for ailments such as malaria, filaria, diarrhoea, diabetes, hepatitis, arthritis, skin diseases, gynaecological disorders and cardiac related issues. Thousands of villagers in the remotest areas also availed of the facilities offered by us through our rural mobile medical van services. Those afflicted with serious ailments were referred to our hospitals. A 33 bed multi-speciality hospital named Aditya Birla Hospital was set-up this year to provide quality medical services and to cater to the requirement of rural population at Veraval. Over 4,742 patients have been treated at this hospital. Our hospitals and medical centres at plant locations in remote areas of the country attended to more than 1,10,060 patients for minor and major ailments. Furthermore, health awareness camps, rural mobile camps, eye-check up and cataract camps, immunisation and pulse polio camps, family planning and mother-child health camps are routinely organised in Jagdishpur, Veraval, Rishra and Halol. Over 46 mobile camps were organised at Veraval benefiting 11,161 patients. At Indo Gulf Fertilisers, 99,140 patients availed of the company s facilities at its 50 bed multi-speciality hospital. At Rishra and Barasat in Kolkatta, 10,096 patients came to the Homeopathy Clinics Run by the Aditya Birla Jan Seva Trust. At the eye camps conducted by us, 2,065 patients were treated for cataract and other eyeailments. At Indo Gulf Fertilisers, Jagdishpur, under the [WASH] Water Sanitation and Health Project, 4,201 children benefited through hand wash and sanitation awareness. For effective hand wash, children were trained in a unique eight-step hand wash technique. Under the malaria/dengue/diarrhoea control programme at Indo Gulf Fertilisers 27,684 people in 6 villages were examined. In collaboration with the Gandhi Memorial Leprosy Foundation, Kolkata, the Rishra Unit of Jaya Shree Textiles, treated 6,464 patients under the Rishra Leprosy TB AIDS Control project (RISLEP). At Indo Gulf, Jagdishpur, 6,618 patients were looked after for various skin ailments at the unit s Skin Care & Rehabilitation Centre; of these, 66 patients were successfully treated for leprosy. More than 3.34 lakh people benefitted through the healthcare services provided by us this year. MOTHER AND CHILD HEALTH CARE We reached out to more than 5,000 children and mothers through pre and post-natal immunisation and vaccination camps organized by Indian Rayon, Veraval and Jaya Shree Textiles, Rishra. Additionally, across our company units 1,65,592 children were immunized against polio. This is a collaborative project with the District Health Department. 148

158 Social Report SAFE DRINKING WATER AND SANITATION At Indo Gulf Fertiliser, Jagdishpur, 65 community, and individual household hand pumps were repaired, benefiting 7,414 people. At Indian Rayon, Veraval, 2 new community hand pumps were installed aiding 1,299 people. All of our units are actively engaged in the Swachha Bharat Abhiyan and are contributing directly and mobilising government funds for the construction of individual household toilets. So far we have constructed 809 toilets through our units and 335 more toilets in partnership with the Swachha Bharat Abhiyan movement, thus enabling 8,828 people have decent sanitation facilities. Toilet blocks were also constructed by us in schools. EDUCATION: Across our plant locations, we support 93 schools, providing quality education to 15,076 children. Merit scholarships, coaching in English, Maths, Science, career guidance, giving note-books, uniforms and other educational aids, and supporting sports and cultural activity form the gamut of our engagement. We foster the cause of the girl child through encouraging and supporting 748 girl students at 8 Kasturba Gandhi Balika Vidyalayas (KGBV). At Indo Gulf Fertilisers (5 KGBVs: 500 girls), Indian Rayon (2 KGBVs: 148 girls) and Aditya Birla Insulators (1 KGBV: 100 girls). This programme is run in association with the Sarva Shiksha Abhiyan scheme. Our involvement extends to enrollment, merit scholarships, coaching in English, career guidance, health / hygiene awareness camps, distribution of uniforms and educational aids and organizing, health check-up camps. In addition, we run a tailoring training centre to accord them livelihood skills. Bicycles given by Indo Gulf Fertilisers to 17 collegegoing girls has facilitated their pursuing higher education. At Indo Gulf Fertilisers Adult Literacy Programme running across 10 centres, 250 rural women are enthusiastic first time learners. Project Gyanarjan, aimed at offering special coaching in maths and science to students appearing at board level exams has been a boon to the underprivileged students at Rishra and Barasat in Kolkata. The 589 students from the 10 th, 11 th and 12 th grades who have attended these extra tutorials have gained enormously, with most of them able to get admission in reputed colleges. SUSTAINABLE LIVELIHOOD: Through Project Kaushalya, we provide vocational skills to dropouts from the rural areas. This makes them employable. This year 830 students enrolled for the 6 trades at our 3 training centres at Indo Gulf Fertilisers and Jaya Shree Textiles. We have roped in Confederation of Indian Industry (CII) to conduct these skills training activities. These include Retail Sales, Electrical, BPO, Beauty and Health Care, Garments Design, Auto Mechanic and Mobile Repair. Mentored by Aditya Birla Retail through project Anya, we have enlisted 35 women at Rishra and Barasat for making jute bags, which are sold to MORE Megastores. These women are able to supplement their family income approximately with ` 5,000/-. At our 5 franchise tailoring centres and 9 rural extension tailoring centres coordinated by Indo Gulf Fertilisers, 508 women mastered tailoring. Additionally, at Indian Rayon yet another 126 women went through tailoring classes. BAIF is engaged with us at Indian Rayon in our farmer support programme. This includes breed improvement processes through artificial insemination in cattle. More than 8,436 farmers have leveraged our endeavours. Furthermore, NABARD and the District Horticulture Department proved great knowledge partners. Aligned with us they trained 848 farmers in developing kitchen gardens and commercial vegetable farming. Through our 101 farmers clubs at Indian Rayon, the skills of 591 farmers were further honed through familiarizing them with best in class farming practices. INFRASTRUCTURE DEVELOPMENT: Our activities here continue. As in the past, we have helped the locals through building of water harvesting structures, and approach roads, internal concrete roads in villages, drainage systems. Alongside we have constructed additional classrooms, repaired school buildings, and erected boundary walls, maintained playgrounds and health centres. Through our interventions, we have reached out to 22,809 people across all our units. ESPOUSING SOCIAL CAUSES: To bring in social reform through attitudinal changes, we work with communities. These include advocacy against child labour, illiteracy, child marriages, the marginalisation and abuse of the girl child and women, drunken behaviour, maintaining poor hygiene and so on. We also promote rural sports, cultural programmes and conduct mass marriage ceremonies. This year our programmes reached out to 11,240 people. OUR INVESTMENTS: For the year , our CSR spend was ` 7.40 Crore. In addition, we mobilised ` Crore through the various schemes of the Government, bank loans and partly from the beneficiaries as well. We act as catalysts for the community. This has enabled us expand our reach. Our Board of Directors, our Management and our colleagues across the Company are committed to inclusive growth. 149

159 Statutory Reports A glimpse of our work among communities in the hinterland of our Country 150

160 Independent Auditors Report FINANCIAL STATEMENTS 151

161 Standalone Financial Statements STANDALONE FINANCIAL STATEMENTS 152

162 Independent Auditors Report Independent Auditors Report To the Members of Report on the Standalone Financial Statements We have audited the accompanying standalone financial statements of ("the Company"), which comprise the Balance Sheet as at March 31, 2016, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information, in which are incorporated the branch's financial statements for the year ended on that date audited by the branch auditors of the Company's branch at Veraval. Management's Responsibility for the Standalone 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 standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 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 standalone 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 standalone 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 standalone 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 standalone 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 standalone financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company's management and Board of Directors, as well as evaluating the overall presentation of the standalone 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 standalone financial statements. Opinion In our opinion and to the best of our information and according to the explanations given to us, the standalone financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India of the state of affairs of the Company as at March 31, 2016, its profit, and its cash flows for the year ended on that date. 153

163 Standalone Financial Statements Report on Other Legal and Regulatory Requirements 1. As required by the Companies (Auditor's report) Order, 2016 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure 1 a statement on the matters specified in paragraphs 3 and 4 of the Order. 2. As required by section 143 (3) of the Act, we report that: (a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit; (b) In our opinion proper books of accounts required bylaw have been kept by the Company so far as it appears from our examination of those books and proper returns adequate for the purposes of our audit have been received from branch not visited by us; (c) The reports on the accounts of the branch office of the Company audited under section 143 (8) of the Act by branch auditors has been sent to us and have been properly dealt by us in preparing this report; (d) 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 and with the audited financial statements received from branch not visited by us; (e) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014; (f) On the basis of written representations received from the directors as on March 31, 2016, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2016, from being appointed as a director in terms of section 164 (2) of the Act; (g) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure 2" to this report; (h) 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 has disclosed the impact of pending litigations on its financial position in its standalone financial statements - Refer Note 46(iv)(b) to the financial statements; ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts Refer Note 46(iv)(a) to the standalone financial statements; iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company. Other Matter The accompanying standalone financial statements include total assets of ` Crores as at March 31, 2016, and total revenues of ` Crores for the year ended on that date, in respect of a branch, which has been audited by one of us jointly with other branch auditors, which financial statements, other financial information and auditor's reports have been furnished to us. Our opinion, in so far as it relates amounts and disclosures included in respect of the branch is based solely on such report. Our opinion is not modified in respect of this matter. For and on behalf of KHIMJI KUNVERJI & CO. Chartered Accountants ICAI Firm Registration Number: W For and on behalf of S R B C & CO LLP Chartered Accountants ICAI Firm Registration Number: E/E per Shivji K. Vikamsey per Vijay Maniar Partner Partner Membership Number: 2242 Membership Number: Mumbai Mumbai Date: May 20, 2016 Date: May 20,

164 Independent Auditors Report Annexure 1 referred to in paragraph 1 under the heading "Report on other legal and regulatory requirements "of our report of even date Re: (the Company) (i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. (b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification. (c) According to the information and explanations given by the management the title deeds of immovable properties, other than self-constructed buildings, included in fixed assets are held in the name of the Company except mentioned below: No. of Asset Gross Net Remarks Cases Category Block Block 1 Leasehold Titles deeds pending to be registered Land in the name of the Company. 2 Buildings Freehold land Title deeds are in the names of the entities which got merged with the Company in the past. As explained to us, steps are being taken to complete the name transfer formalities. (ii) The inventory has been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable. No material discrepancies were noticed on such physical verification. Inventories lying with third parties have been confirmed by them and no material discrepancies were noticed in respect of such confirmations. (iii) 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 Act. 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, provisions of section 185 and 186 of the Act in respect of loans to directors including entities in which they are interested and in respect of loans and advances given, investments made and, guarantees, and securities given have been complied with by the Company. (v) The Company has not accepted any deposits from the public. (vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148(1) of the Act, related to the manufacture or service of Company's products to which said rules are applicable, and are of the opinion that prima facie, the specified accounts and records have been made and maintained. We have not, however, made a detailed examination of the same. (vii) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees' state insurance, income-tax, sales-tax, service tax, duty of custom, duty of excise, value added tax, cess and other material statutory dues applicable to it. (b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees' state insurance, income-tax, service tax, sales-tax, duty of custom, duty of excise, value added tax, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable. (c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, service tax, duty of custom, duty of excise, value added tax and cess on account of any dispute, are as follows: 155

165 Standalone Financial Statements Name of the Nature of the Period Forum where Amount Statute Dues dispute is pending (` in Crores) Income Tax Tax Demand AY , Commissioner Act, 1961 AY to (Appeals) AY AY & ITAT 0.99 AY Customs Act, Tax Demand, , , High Court Interest and Penalty & , CESTAT , Commissioner 0.76 (Appeals) , , Assessing authorities Central Excise Excise Duty, , High Court 0.06 Act, 1944 Interest and Penalty , , CESTAT & , , & Commissioner , (Appeals) to to Commissioner/Deputy 0.05 Commissioner Sales Tax Act Entry Tax to High Court Sales Tax, Value , High Court 0.09 Added Tax, Central , Appellate Tribunal 0.99 Sales Tax, to Commissioner Non-Submission of (Appeals)/Divisional forms, Purchase Tax, Boards Trade Tax including , Assessing authorities 3.01 Interest Finance Act, 1994 Service Tax including , , CESTAT 4.61 (Service Tax) Interest and Penalty to , , Commissioner (Appeals) Gujarat Green Cess on generation to Supreme Court 2.29 Cess Act, 2011 of electricity through of India captive power generation plants (viii) In our opinion and according to the information and explanations given by the management, the Company has not defaulted in repayment of dues to a financial institution, bank or government or debenture holders. (ix) Based on the information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained other than temporary deployment Idle/surplus funds which have been invested in liquid assets. (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 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 managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act. 156

166 Independent Auditors Report (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 Act 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 based on our examination of the records of the Company, 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 hence 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 the Act. (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 and on behalf of KHIMJI KUNVERJI & CO. Chartered Accountants ICAI Firm Registration Number: W For and on behalf of S R B C & CO LLP Chartered Accountants ICAI Firm Registration Number: E/E per Shivji K. Vikamsey per Vijay Maniar Partner Partner Membership Number: 2242 Membership Number: Mumbai Mumbai Date: May 20, 2016 Date: May 20,

167 Standalone Financial Statements Annexure 2 to the Independent Auditor's Report of even date on the Standalone Financial Statements of. Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act") We have audited the internal financial controls over financial reporting of ("the Company") as of March 31, 2016 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date. Management's Responsibility for Internal Financial Controls The Company's Management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the "Guidance Note") issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act. Auditor's Responsibility Our responsibility is to express an opinion on the Company's internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing as specified under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. We believe that the audit evidence we have obtained and the audit evidence obtained by the other auditors in terms of their report referred to in the Other Matters paragraph below is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls system over financial reporting. Meaning of Internal Financial Controls over Financial Reporting A Company's internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Company's internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorisations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the Company's assets that could have a material effect on the financial statements. Inherent Limitations of Internal Financial Controls over Financial Reporting Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to 158

168 Independent Auditors Report error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Opinion In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2016, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note. Other Matter Our report under Section 143(3) (i) of the Act on the adequacy and operating effectiveness of the internal financial controls over financial reporting of the Company, insofar as it relates to one branch which is audited by one of us jointly with other auditors, is based on their corresponding report. For and on behalf of KHIMJI KUNVERJI & CO. Chartered Accountants ICAI Firm Registration Number: W For and on behalf of S R B C & CO LLP Chartered Accountants ICAI Firm Registration Number: E/E per Shivji K. Vikamsey per Vijay Maniar Partner Partner Membership Number: 2242 Membership Number: Mumbai Mumbai Date: May 20, 2016 Date: May 20,

169 Standalone Financial Statements Balance Sheet As at 31 st March, 2016 ` in Crores As at As at Note No. 31st March, st March, 2015 EQUITY AND LIABILITIES (A) Shareholders Funds Share Capital Reserves and Surplus 3 8, , Sub-Total - (A) 8, , (B) Non-Current Liabilities Long-term Borrowings 4A 1, , Deferred Tax Liabilities (Net) Other Long-term Liabilities 6A Long-term Provisions 7A Sub-Total - (B) 1, , (C) Current Liabilities Short-term Borrowings 4B 2, , Trade Payables - Total Outstanding Dues of 8 Micro Enterprises and Small Enterprises Creditors other than micro enterprises and Small Enterprises , Other Current Liabilities 6B Short-term Provisions 7B Sub-Total - (C) 3, , TOTAL (A) + (B) + (C) 13, , ASSETS (D) Non-Current Assets Fixed Assets Tangible Assets 9A 1, , Intangible Assets 9B Capital Work-in-Progress Intangible Assets under Development , , Non-Current Investments 10A 8, , Long-term Loans and Advances 11A Other Non-Current Assets 12A Sub-Total - (D) 10, , (E) Current Assets Current Investments 10B Inventories , Trade Receivables 14 1, , Cash and Bank Balances Short-term Loans and Advances 11B Other Current Assets 12B Sub-Total - (E) 3, , TOTAL (D) + (E) 13, , Significant Accounting Policies 1 The accompanying Notes are an integral part of the Financial Statements. As per our attached Report of even date For and on behalf of the Board of Directors For KHIMJI KUNVERJI & CO. For S R B C & CO LLP KUMAR MANGALAM BIRLA ICAI Firm Registration No W ICAI Firm Registration No E/E Chairman Chartered Accountants Chartered Accountants LALIT NAIK Managing Director 160 PINKY MEHTA Chief Financial Officer Per SHIVJI K. VIKAMSEY Per VIJAY MANIAR Partner Partner ASHOK MALU Membership No Membership No President & Company Secretary Mumbai, May 20, 2016 Mumbai, May 20, 2016 RAJASHREE BIRLA TARJANI VAKIL P. MURARI B. R. GUPTA S. C. BHARGAVA V. CHANDRASEKARAN Directors

170 Balance Sheet / Statement of Profit and Notes Loss Statement of Profit and Loss For the year ended 31 st March, 2016 ` in Crores Year Ended Year Ended Note No. 31st March, st March, 2015 Revenue from Operations 16 5, , Less: Excise Duty (194.90) (180.08) Net Revenue from Operations 5, , Other Income Total Revenue 5, , Expenses Cost of Materials Consumed 18 2, , Purchase of Stock-in-Trade , Changes in Inventories of Finished Goods, Work-in-Progress and Stock-in-Trade 20 (67.05) (43.66) Employee Benefits Expenses Power and Fuel Other Expenses , Total Expenses 4, , Profit Before Depreciation/Amortisation, Interest and Tax (PBDIT) , Depreciation and Amortisation Expenses Finance Cost Profit Before Exceptional Item and Tax Exceptional Items Profit Before Tax Tax Expenses Current Tax Write Back of Excess Provision for Tax Related to Earlier Years (32.88) (5.61) Deferred Tax Profit for the Year Profit Before Tax from Continuing Operations Tax Expense of Continuing Operations Profit from Continuing Operations (A) Profit/(Loss) Before Tax from Ordinary Activities of Discontinued Operations Tax Expense/(Credit) from Ordinary Activities of Discontinued Operations Profit from Discontinued Operations After Tax (B) 38A Profit for the Year (A) + (B) } Basic Earnings Per Share (`) Diluted Earnings Per Share (`) (Face Value of ` 10/- each) Significant Accounting Policies 1 The accompanying Notes are an integral part of the Financial Statements. As per our attached Report of even date For and on behalf of the Board of Directors For KHIMJI KUNVERJI & CO. For S R B C & CO LLP KUMAR MANGALAM BIRLA ICAI Firm Registration No W ICAI Firm Registration No E/E Chairman Chartered Accountants Chartered Accountants LALIT NAIK Managing Director PINKY MEHTA Chief Financial Officer Per SHIVJI K. VIKAMSEY Per VIJAY MANIAR Partner Partner ASHOK MALU Membership No Membership No President & Company Secretary Mumbai, May 20, 2016 Mumbai, May 20, 2016 RAJASHREE BIRLA TARJANI VAKIL P. MURARI B. R. GUPTA S. C. BHARGAVA V. CHANDRASEKARAN Directors 161

171 Standalone Financial Statements Cash Flow Statement For the year ended 31 st March, 2016 PARTICULARS ` in Crores A CASH FLOW FROM OPERATING ACTIVITIES Profit Before Tax Adjustments for: Depreciation and Amortisation Expenses Provision for Bad and Doubtful Debts, and Advances and Bad Debts written off Provision for Diminution in Value of Investments in Subsidiary 0.43 Diminution/(Reversal of Diminution) in Value of Fertiliser Bonds (1.54) Employee Stock Options Expenses Unrealised (Gain)/Loss on Foreign Exchange (9.42) Finance Costs Interest Income (51.81) (36.06) (Gain)/Loss on Fixed Assets Sold 0.31 (5.61) (Gain)/Loss on Sale of Investments (20.65) (8.32) Gain on Redemption of Preference Shares of Subsidiary (18.75) Dividend Income (53.60) (89.67) OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES , Adjustments for: Decrease/(Increase) in Trade Receivables (212.62) Decrease/(Increase) in Loans and Advances (32.98) Decrease/(Increase) in Other Assets (78.99) Decrease/(Increase) in Inventories (56.80) (143.28) Increase/(Decrease) in Trade Payables (51.62) Increase/(Decrease) in Other Liabilities (0.81) Increase/(Decrease) in Provisions (88.89) CASH GENERATED FROM OPERATIONS Income Taxes Refund/(Paid) (172.92) (154.82) NET CASH (USED IN)/FROM OPERATING ACTIVITIES B CASH FLOW FROM INVESTING ACTIVITIES Purchase of Tangible Assets (109.93) (227.33) Purchase of Intangible Assets (5.09) (6.67) Sale of Tangible Assets Acquisition of Additional Shares/ Investments in Subsidiary (977.36) (743.08) Redemption of Preference Shares of Subsidiary Proceeds from Liquidation of Subsidiary 0.84 Sale of Investment of Associate 0.01 Sale of Investments of Subsidiary

172 Cash Flow Statement Notes C ` in Crores PARTICULARS Demerger of Madura Business (Net of Cash and Cash Equivalents) Sale/(Purchase) of Current Investments (Net) (21.87) Sale of Long-term Investments 0.22 Inter-Corporate Deposits to Subsidiaries Given (54.38) (221.23) Inter-Corporate Deposits to Subsidiaries Received Back Other Bank Deposits (having original maturity more than three months) (45.01) Interest Received from Subsidiaries Interest Received Dividend Received from Subsidiaries Dividend Received from Joint Ventures Dividend Received on Other Long-term Investments Dividend Received on Current Investments 1.02 NET CASH (USED IN)/FROM INVESTING ACTIVITIES (595.29) (356.32) CASH FLOW FROM FINANCING ACTIVITIES Redemption of Preference Shares (0.10) Proceeds from Issue of Shares (including Securities Premium) Repayment of Long-term Borrowings (245.36) (227.88) Proceeds from Long-term Borrowings Proceeds/(Repayment) from Short-term Borrowings (Net) (177.76) Dividends Paid (91.12) (91.08) Corporate Dividend Tax Paid (18.55) (6.68) Interest Paid (281.97) (263.25) NET CASH (USED IN)/FROM FINANCING ACTIVITIES (20.62) (425.78) NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS (OPENING BALANCE) CASH AND CASH EQUIVALENTS (CLOSING BALANCE) (Refer Note: 15) Significant Accounting Policies Refer Note: 1 The accompanying Notes are an integral part of the Financial Statements. As per our attached Report of even date For and on behalf of the Board of Directors For KHIMJI KUNVERJI & CO. For S R B C & CO LLP KUMAR MANGALAM BIRLA ICAI Firm Registration No W ICAI Firm Registration No E/E Chairman Chartered Accountants Chartered Accountants LALIT NAIK Managing Director PINKY MEHTA Chief Financial Officer Per SHIVJI K. VIKAMSEY Per VIJAY MANIAR Partner Partner ASHOK MALU Membership No Membership No President & Company Secretary Mumbai, May 20, 2016 Mumbai, May 20, 2016 RAJASHREE BIRLA TARJANI VAKIL P. MURARI B. R. GUPTA S. C. BHARGAVA V. CHANDRASEKARAN Directors 163

173 Standalone Financial Statements Notes Forming Part of Financial Statements NOTE: 1 SIGNIFICANT ACCOUNTING POLICIES: I. BASIS OF PREPARATION The financial statements have been prepared in accordance with the generally accepted accounting principles in India (Indian GAAP) under the historical cost convention on an accrual basis in compliance with all material aspect of the Accounting Standard (AS) Notified under Section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules, The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year. All assets and liabilities have been classified as current or non-current as per the Company s normal operating cycle, and other criteria set out in the Schedule III of the Companies Act, Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as up to twelve months for the purpose of current/non-current classification of assets and liabilities. II. III. USE OF ESTIMATES The preparation of financial statements in conformity with Indian GAAP requires the management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and disclosure of contingent liabilities, at the end of the reporting period. Although, these estimates are based on the management s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods. TANGIBLE FIXED ASSETS AND DEPRECIATION Tangible Fixed Assets, capital work-in-progress are stated at cost, less accumulated depreciation and impairment loss, if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Each part of an item of property, plant and equipment, with a cost that is significant in relation to the total cost of the item, is depreciated separately. This applies mainly to components for machinery. When significant parts of fixed assets are required to be replaced at intervals, the Company recognises such parts as individual assets with specific useful lives and depreciates them accordingly. Any trade discounts and rebates are deducted in arriving at the purchase price. Depreciation on Tangible Fixed Assets is provided on Straight-Line method using the rates arrived at based on the useful lives as specified in the Schedule II of the Companies Act, 2013, or estimated by the management. The Company has used the following useful life to provide depreciation on its fixed assets. A: Assets where useful life is same as Schedule II Assets Useful Life as Prescribed by Schedule II of the Companies Act, Plant & Machinery:- Continuous Process Plant 25 Years 2. Buildings (other than factory buildings) RCC Frame Structure 60 Years 3. Factory Buildings 30 Years 4. Fences, Wells, Tube Wells 5 Years 5. Borewell (Pipes, Tubes and Other Fittings) 5 Years 6. Bridges, Culverts, Bunders, etc. 30 Years 7. Others (including temporary structure, etc.) 3 Years 8. Carpeted Roads RCC 10 Years 9. Carpeted Roads other than RCC 5 Years 10. Non-carpeted Roads 3 Years 11. General Laboratory Equipment 10 Years 12. Electrical Installations and Equipment (At Factory) 10 Years 13. Motors, Tractors, Harvesting Combines and Heavy Vehicles 8 Years 164

174 Notes B: Assets where useful life differ from Schedule II Assets Useful Life as Prescribed by Estimated Useful Life Schedule II of the Companies Act, Plant & Machinery: 1.1 :- Other than Continuous Process Plant 15 Years 15 Years and 20 Years (Single Shift) 1.2 :- Other than Continuous Process Plant Additional 50% depreciation over 20 Years (Double Shift) single shift (10 Years) 1.3 :- Other than Continuous Process Plant Additional 100% depreciation over 10 Years and 15 Years (Triple Shift) single shift (7.5 Years) 2. Thermal/Gas/Combined Cycle Power 40 Years 25 Years Generation Plant 3. Buildings (other than factory buildings) 30 Years 60 Years other than RCC Frame Structure 4. Office Electronic Equipment 5 Years 4 Years 5. Office Computers (end-user devices 3 Years 4 Years desktop, laptops) 6. Servers 6 Years 4 Years 7. Vehicles 8 Years to 10 Years 4 Years to 5 Years 8. Electrically-operated Vehicles 8 Years 5 Years 9. Furniture & Fixtures and Other Office 10 Years 5 Years to 7 Years Equipment Useful life of assets different from prescribed in Schedule II has been estimated by the management supported by technical assessment. C: Plant and Machinery Separately identified Component of Plant and Machinery 2 to 25 Years D: Leasehold Assets Leasehold Land Period of Lease Fixed Assets, individually costing less than Rupees five thousand, are fully depreciated in the year of purchase. Depreciation on the Fixed Assets added/disposed off/discarded during the year is provided on pro-rata basis with reference to the month of addition/disposal/discarding and in the case of capitalisation of Greenfield/Brownfield project, depreciation is charged from the date the project is ready to commence commercial production to the Statement of Profit and Loss. IV. INTANGIBLE ASSETS AND AMORTISATION Intangible Assets are stated at acquisition cost, net of accumulated amortisation and accumulated impairment losses, if any. Intangible assets are amortised on a straight-line basis over their estimated useful lives. Assets Brands/Trademarks Technical Know-how Computer Software Estimated Useful Life 10 Years 7 Years 3 Years V. IMPAIRMENT OF ASSETS The carrying amounts of assets are reviewed at each Balance Sheet date, if there is any indication of impairment based on internal/external factors. An asset is treated as impaired when the carrying cost of the assets exceeds its recoverable value. An impairment loss, if any, is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. Reversal of impairment losses recognised in the prior years is recorded when there is an indication that the impairment losses recognised for the assets no longer exist or have decreased. VI. BORROWING COSTS Borrowing Costs attributable to acquisition and construction of qualifying assets are capitalised as a part of the cost of such assets up to the date when such assets are ready for its intended use. Other borrowing costs are charged to the Statement of Profit and Loss in the period in which they are incurred. 165

175 Standalone Financial Statements VII. VIII. IX. TRANSLATION OF FOREIGN CURRENCY ITEMS Transactions in foreign currency are recorded at the rate of exchange prevailing on the date of transaction. Foreign currency monetary items are reported using closing rate of exchange at the end of the year. With respect to exchange difference arising on translation/settlement of long-term foreign currency items from 1st April, 2011, the Company has adopted the following policy: (i) Foreign exchange difference on account of a depreciable asset is adjusted in the cost of the depreciable asset, which would be depreciated over the balance life of the asset. (ii) In other cases, the foreign exchange difference is accumulated in a Foreign Currency Monetary Item Translation Difference Account, and amortised over the balance period of such long-term asset/liability. Exchange difference on re-statement of all other monetary items is recognised in the Statement of Profit and Loss. Other non-monetary items like fixed assets are carried in terms of historical cost using the exchange rate at the date of transaction. DERIVATIVE INSTRUMENTS Premium/Discount, in respect of forward foreign exchange contract to hedge an underlying recorded asset or liability, is recognised over the life of the contracts. Exchange differences on such contracts, except the contracts which are long-term foreign currency monetary items, are recognised in the Statement of Profit and Loss in the year in which the exchange rates changes. Profit/Loss on cancellation/renewal of forward exchange contract is recognised as income/expense for the year. The Company enters into forward contracts to hedge the foreign currency risk of firm commitments and highly probable forecast transactions, currency swap and interest rate swaps to hedge its risks associated with foreign currency fluctuations and interest rate and designates such contracts as cash flow hedge by applying the principles set out in the Accounting Standard-30 Financial Instruments: Recognition and Measurement. All such forward contracts are used as risk management tools and not for speculative purposes. For the contracts designated as cash flow hedges, the effective portion of the fair value of forward contracts are recognised in Hedging Reserve (net of taxes) under Reserves and Surplus, and reclassified into, i.e., recognised in the Statement of Profit and Loss in the period or periods during which the underlying hedged item assumed affects profit or loss. The ineffective portion of the change in fair value of such instruments is recognised in the Statement of Profit and Loss in the period in which they arise. If the hedging relationship ceases to be effective or it becomes probable that the expected transaction will no longer occur, the hedge accounting is discontinued, and the fair value changes, arising from the forward contracts, are recognised in the Statement of Profit and Loss. As per the Institute of Chartered Accountants of India (ICAI) announcement regarding accounting for derivative contracts, other than covered under AS-11 and designated contracts described above, these are mark-to-market on the portfolio basis and net loss after considering the offsetting effect on the underlying hedged item is charged to the income statement. Net gains are ignored. INVESTMENTS Investments, which are readily realisable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments. Investments are recorded at cost on the date of purchase, which include acquisition charges such as brokerage, stamp duty, taxes, etc. Current Investments are stated at lower of cost and net realisable value. Long-term investments are stated at cost after deducting provisions made, if any, for other than temporary diminution in the value. X. INVENTORIES Raw materials, components, stores and spares, and packing material are valued at lower of cost and net realisable value. However, these items are considered to be realisable at cost if the finished products, in which they will be used, are expected to be sold at or above cost. Work-in-progress, finished goods and stock-in-trade are valued at lower of cost and net realisable value. Finished goods and work-in-progress include costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost of inventories is computed on a weighted-average basis. Proceeds in respect of sale of raw materials/stores are credited to the respective heads. Obsolete, defective and unserviceable inventory are duly provided for. Certified Emission Reductions (CERs) are valued at lower of cost and net realisable value. Cost includes consultant s fee and the cash payment made under the second levy to the concerned authorities for obtaining the credit of CERs. XI. XII. GOVERNMENT GRANTS Government Grants are recognised when there is a reasonable assurance that the same will be received and all attaching conditions will be complied with. Revenue grants are recognised in the Statement of Profit and Loss. Capital grants relating to specific Tangible/Intangible Assets are reduced from the gross value of the respective Tangible/Intangible Assets. Other capital grants in the nature of promoter s contribution are credited to capital reserve. REVENUE RECOGNITION Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and can be reliably measured. Revenue from sale of products is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer. Sale of goods are recorded net of trade discounts, rebates, Sales Tax, Value Added Tax and gross of Excise Duty. 166

176 Notes Revenue from services are recognised as they are rendered based on agreements/arrangements with the concerned parties and recognised net of Service Tax. Fertiliser price support under the Group Concession and other Scheme of Government of India is recognised based on the management s estimate taking into account known policy parameters and input price escalation/de-escalation. Income from Certified Emission Reductions (CERs) is recognised on sale of CERs. Interest Income is recognised on a time proportion basis taking into account the amount outstanding and applicable interest rate. Dividend income on investments is accounted for when the right to receive the payment is established. XIII. RETIREMENT AND OTHER EMPLOYEE BENEFITS (a) Defined Contribution Plan The Company makes defined contribution to Government Employee Provident Fund, Government Employee Pension Fund, Employee Deposit Linked Insurance, ESI and Superannuation Schemes, which are recognised in the Statement of Profit and Loss on accrual basis. (b) Defined Benefit Plan The Company s liabilities under Payment of Gratuity Act, long-term compensated absences and pension are determined on the basis of actuarial valuation made at the end of each financial year using the projected unit credit method except for short-term compensated absences, which are provided for based on estimates. Actuarial gains and losses are recognised immediately in the Statement of Profit and Loss as income or expense. Obligation is measured at the present value of estimated future cash flows using a discounted rate that is determined by reference to market yields at the Balance Sheet date on Government bonds where the terms of the Government bonds are consistent with the estimated terms of the defined benefit obligation. In respect of certain employees, Provident Fund contributions are made to a Trust, administered by the Company. The interest rate payable to the members of the Trust shall not be lower than the statutory rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act, 1952, and shortfall, if any, shall be made good by the Company. The Company s liability is actuarially determined (using the Projected Unit Credit Method) at the end of the year and any shortfall in the Fund size maintained by the Trust set-up by the Company is additionally provided for. Actuarial losses/gains are recognised in the Statement of Profit and Loss in the year in which they arise. XIV. XV. EMPLOYEE STOCK OPTIONS The stock options and stock appreciation rights (SAR) granted are accounted for as per the accounting treatment prescribed by Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, issued by Securities and Exchange Board of India and the Guidance Note on Accounting for Employee Share-based Payments, issued by the ICAI, whereby the intrinsic value of the option is recognised as employee compensation. The employee compensation is charged to the Statement of Profit and Loss on the straight-line basis over the vesting period of the option. In respect of re-pricing of existing stock options, the incremental intrinsic value of the options is accounted as employee cost over the remaining vesting period. In case of forfeiture stock option, which is not vested, amortised portion is reversed by credit to employee compensation expense. In a situation where the stock option expires unexercised, the related balance standing to the credit of the Employee Stock Options Outstanding Account is transferred to the General Reserve. TAXATION Tax expense comprises of current and deferred tax. Provision for current tax is made on the basis of estimated taxable income for the current accounting year in accordance with the Income-tax Act, Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle the asset and the liability on a net basis. The deferred tax for timing differences between the book and tax profits for the year is accounted for, using the tax rates and laws that have been substantively enacted as of the Balance Sheet date. Deferred tax assets arising from timing differences are recognised to the extent there is reasonable certainty that these would be realised in future. The carrying amount of deferred tax assets are reviewed at each Balance Sheet date. The Company writes down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain, that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes reasonably certain, that sufficient future taxable income will be available. In case of unabsorbed losses and unabsorbed depreciation, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profit. At each Balance Sheet date, the Company reassesses the unrecognised deferred tax assets. Minimum Alternative Tax (MAT) credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognised as an asset in accordance with the recommendations contained in the Guidance Note issued by the ICAI, the said asset is created by way of a credit to the Statement of Profit and Loss and shown as MAT Credit Entitlement. The Company reviews the same at each Balance Sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that the Company will pay normal Income Tax during the specified period. 167

177 Standalone Financial Statements XVI. RESEARCH AND DEVELOPMENT Revenue expenditure on research is expensed under the respective heads of the account in the period in which it is incurred. Development expenditure is capitalised as an asset if the following conditions can be demonstrated: a) The technical feasibility of completing the asset so that it can be made available for use or sell. b) The Company has intention to complete the asset and use or sell it. c) The Company has the ability to sell the asset. d) The future economic benefits are probable. e) The Company has ability to measure the expenditure attributable to the asset during its development reliably. Other development costs, which do not meet the above criteria, are expensed out during the period in which they are incurred. XVII. FINANCE LEASE As a Lessee: Leases, where substantially all the risks and benefits incidental to ownership of the leased item are transferred to the Lessee, are classified as finance lease. The Company has capitalised the leased item at lower of fair value and present value of the minimum lease payments at the inception of the lease and disclosed as leased assets. Such assets are amortised over the period of lease or estimated life of such asset, whichever is less. Lease payments are apportioned between the finance charges and reduction of the lease liability based on implicit rate of return. Lease management fees, lease charges and other initial direct costs are capitalised. XVIII. OPERATING LEASES (a) As a Lessee: Leases, where significant portion of risk and reward of ownership are retained by the Lessor, are classified as Operating Leases, and lease rentals thereon are charged to the Statement of Profit and Loss on a straight-line basis over the lease term. (b) As a Lessor: The Company has leased certain tangible assets, and such leases, where the Company has substantially retained all the risks and rewards of ownership, are classified as operating leases. Lease income is recognised in the Statement of Profit and Loss on a straight-line basis over lease term. Initial direct costs are recognised in the Statement of Profit and Loss. XIX. XX. XXI. CASH AND CASH EQUIVALENTS Cash and Cash Equivalents for the purpose of cash flow statement comprise cash on hand and cash at bank including fixed deposit with original maturity period of three months or less and short-term highly liquid investments with an original maturity of three months or less. CASH FLOW STATEMENT Cash flows are reported using the indirect method, whereby the net profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated. EARNINGS PER SHARE Basic earnings per share are calculated by dividing the net profit for the year attributable to equity shareholders (after deducting preference dividends and attributable taxes) by the weighted-average number of equity shares outstanding during the period. The weighted-average number of equity shares outstanding during the period and for all periods presented is adjusted for events such as bonus issue; bonus element in a rights issue to existing shareholders; share split; and reverse share split (consolidation of shares) that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted-average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares. XXII. CONTINGENT LIABILITIES AND PROVISIONS Contingent Liabilities are possible but not probable obligations as on Balance Sheet date, based on the available evidence. Provisions are recognised when there is a present obligation as a result of past events, and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the Balance Sheet date. 168

178 Notes ` in Crores As at As at Numbers 31st March, st March, 2015 NOTE: 2 SHARE CAPITAL Authorised: Equity Shares of ` 10/- each 175,000, (175,000,000) Redeemable Preference Shares of ` 100/- each 500, (500,000) Issued: EQUITY SHARE CAPITAL Equity Shares of ` 10/- each 130,279, (130,279,180) Subscribed and Paid-up: EQUITY SHARE CAPITAL Equity Shares of ` 10/- each, fully paid-up 130,222, (130,137,193) ) Reconciliation of the number of shares outstanding at the beginning and at the end of the period Sr. Description As at 31st March, 2016 As at 31st March, 2015 No. Equity Preference Equity Preference Shares Shares Shares Shares 1 No. of Shares outstanding at the beginning of the period 130,137, ,084,972 10,000 2 Allotment of Shares on exercise of option by employee under ESOS 85,665 52,221 3 Redemption of Preference Shares 10,000 4 No. of Shares outstanding at the end of the period 130,222, ,137,193 2) Term/Right Attached to Equity Shares The Company has only one class of equity shares having a par value of ` 10/- 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 Annual General Meeting. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution to all preferential holders. The distribution will be in proportion to the number of equity shares held by the shareholders. The Board of Directors has recommended Equity Dividend of ` 5.00 per share for the year ended 31st March, 2016 (Previous Year: ` 7.00 per share). The total cash outflows on account of the Equity Dividend would be ` Crore (Previous Year: ` Crore) and Dividend Distribution Tax thereon (Net of Tax Credit on dividend from subsidiary companies) would be ` Crore (Previous Year: ` Crore). 3) The Company does not have any Holding Company. 169

179 Standalone Financial Statements 4) Equity Shares in the Company held by each shareholder holding more than 5 per cent shares and the number of equity shares held are as under: Sr. Name of Shareholder As at 31st March, 2016 As at 31st March, 2015 No. No. of % of Total No. of % of Total Shares Held Paid-up Equity Shares Held Paid-up Equity Share Capital Share Capital 1 IGH Holdings Private Limited 16,352, % 16,352, % 2 TGS Investment and Trade Private Limited 14,671, % 13,506, % 3 Umang Commercial Company Private Limited (formerly known as Umang Commercial Company Limited) 12,494, % 12,494, % 4 Trapti Trading & Investments Private Limited 9,423, % 9,423, % 5 Hindalco Industries Limited 8,650, % 8,650, % 6 Turquoise Investments and Finance Private Limited 6,885, % 6,441, % 7 Life Insurance Corporation of India 6,065, % 7,276, % 5) Shares reserved for issue under options and contracts, including the terms and amounts: For details of Shares reserved for issue under the Employee Stock Options Plan (ESOP) of the Company refer Note: 40. 6) There are no Equity or Preference Shares issued as fully paid-up pursuant to any contract in consideration of other than cash or bought back during the preceding last five years. 7) Pursuant to the provisions of Section 126 of the Companies Act, 2013, the issue of following equity shares are kept in abeyance. Sr. Particulars No. of Shares No. As at As at 31st March, st March, Rights Issue (1994) 12,575 12,575 2 Bonus Share on Above 6,288 6,288 3 Rights Issue (2007) 22,460 22,460 8) Shares to be allotted upon exercise of ESOS Schemes 14,999 Shares (Previous Year: 100,664 Shares). 9) In the year 1997, the Company had forfeited 4,487 Shares held by 299 holders on account of non-payment of call money with interest on shares issued against each detachable warrant. 10) Equity Shares Nil (Previous Year: 3,168,459) are represented by Global Depository Receipts (GDRs). The GDR programme has since been terminated on 8th December, Each GDR was equivalent to underlying one equity share of the Company and, hence, upon termination of the GDR Programme, the paid-up equity share capital remains the same. 11) During the last five years there were no Bonus Shares were issued. 12) Figures in brackets represent the corresponding number of shares for Previous Year. 170

180 Notes ` in Crores As at As at 31st March, st March, 2015 NOTE: 3 RESERVES AND SURPLUS 1) Capital Reserve Opening Balance as per last audited Financial Statement Deduction: Amalgamation of Subsidiaries - Refer Note: Demerger of Madura Division - Refer Note: 38A ) Capital Redemption Reserve Opening Balance as per last audited Financial Statement Addition: Transfer from Surplus in the Statement of Profit and Loss on Redemption of Preference Shares ) Securities Premium Account Opening Balance as per last audited Financial Statement 3, , Addition: ESOP Exercised Transfer from Stock Options Outstanding Account on Exercise of Options , , ) Debenture Redemption Reserve Opening Balance as per last audited Financial Statement Addition: Transfer from Surplus in the Statement of Profit and Loss ) Share Options Outstanding Account Opening Balance as per last audited Financial Statement Addition: Charge for the Year Deduction: Transfer to Securities Premium Account on Exercise of Options ) Other Reserves i) General Reserve* Opening Balance as per last audited Financial Statement 3, , Addition: Transfer from Surplus in the Statement of Profit and Loss Deduction: Transitional Provision of Schedule II Impact (Net of Deferred Tax Amounting of ` 6.44 Crore) , ,

181 Standalone Financial Statements ii) ` in Crores As at As at 31st March, st March, 2015 Hedging Reserve** Opening Balance as per last audited Financial Statement (1.95) (0.43) Addition: Gain/(Loss) recognised during the year (Net) 4.37 (2.08) Deduction: Gain/(Loss) recycled during the year (Net) 2.66 (0.56) Transfer on demerger of Madura Division 0.29 (0.53) (1.95) Total Other Reserves 3, , ) Surplus in the Statement of Profit and Loss Opening Balance as per last audited Financial Statement Addition: Profit for the Year Amalgamation of Subsidiaries - Refer Note: 43 (44.27) Less: Appropriations Transfer to Debenture Redemption Reserve Transfer to General Reserve Transfer to Capital Redemption Reserve 0.10 Proposed Dividend on Equity Shares Equity Dividend relating to Previous Period Interim Dividend on Preference Shares ß Corporate Tax on Proposed Dividend*** Corporate Tax on Interim Dividend ß Total Reserves and Surplus 8, , * General Reserve is created by appropriation from profits of the current year and/or undistributed profits of previous years, before declaration of dividend duly complying with any regulations in this regard. The General Reserve is a free reserve and can be utilised in accordance with the provisions of the Companies Act, ** For the forward contracts designated as cash flow hedges, the effective portion of the fair value of forward contracts are recognised in Hedging Reserve under Reserves and Surplus. *** Net of Tax Credit on dividend from subsidiary companies. ` in Crores As at As at 31st March, st March, 2015 NOTE: 4A LONG-TERM BORROWINGS SECURED Rupee Term Loans from Banks Financial Institutions Foreign Currency Loans from Banks Finance Lease Liabilities UNSECURED Debentures Foreign Currency Loans from Banks , , ,

182 Notes ` in Crores As at As at 31st March, st March, 2015 NOTE: 4B SHORT-TERM BORROWINGS SECURED Loan Repayable on Demand from Banks UNSECURED Loan Repayable on Demand from Banks , Other Loans and Advances Commercial Papers* , , , , * Maximum balance outstanding during the year 1, , * Commercial Papers are shown net of unamortised discounting charges. NOTE: 4A and 4B As at 31st March, 2016 As at 31st March, 2015 (I) SECURED LONG-TERM BORROWINGS: Current Non-Current Current Non-Current (A) Rupee Term Loan from Banks i) Term loan secured by way of first pari passu charge created 3.20 by mortgage of the immovable properties of the Company situated at Veraval and Rishra (Textile Division), and hypothecation of movables (save and except book debts) situated at these locations, subject to prior charge(s) created on certain assets in favour of a Financial Institution and on Bankers Goods in favour of the Company s Bankers for working capital borrowings. Repayment Terms: 17 half-yearly instalments from 1st July, First four instalments of ` 0.25 Crore each, next 4 instalments of ` 0.50 Crore each, next 4 instalments of ` 1.50 Crore each and next 5 instalments of ` 3.20 Crore each. ii) Term loan secured by way of first pari passu charge created by mortgage of immovable properties of the Company s Madura Garment Export Plants at Kasaba Hobli, Karnataka and hypothecation of movable fixed assets of the Company at these plants.** Repayment Terms: 17 half-yearly instalments from 29th December, First four instalments of ` 0.16 Crore each, next 4 instalments of ` 0.32 Crore each, next 4 instalments of ` 0.96 Crore each and next 5 instalments of ` 2.05 Crore each. iii) Term loan secured by way of first pari passu charge created by hypothecation of movable fixed assets of the Company s Madura Garment Export Plant at Kasaba Hobli, Karnataka.** Repayment Terms: 32 quarterly instalments from 1st January, First instalment of ` 0.16 Crore, next 4 instalments of ` 0.04 Crore each, next 8 instalments of ` 0.08 Crore each, next 8 instalments of ` 0.24 Crore each, next 8 instalments of ` 0.51 Crore each and next 3 instalments of ` 0.34 Crore each. 173

183 Standalone Financial Statements ` in Crores As at 31st March, 2016 As at 31st March, 2015 Current Non-Current Current Non-Current iv) Term Loan secured by way of first pari passu charge created by hypothecation of movable plant and machinery of the Company s Madura Clothing Plant at Marasur Village, Karnataka.** Repayment Terms: 17 half-yearly instalments from 27th September, First four instalments of ` 0.04 Crore each, next 4 instalments of ` 0.08 Crore each, next 4 instalments of ` 0.24 Crore each and next 5 instalments of ` 0.51 Crore each. v) Term Loan secured by way of first pari passu charge created by hypothecation of movable plant and machinery of the Company s Madura Clothing Plant at Marasur Village, Karnataka. ** Repayment Terms: 17 half-yearly instalments from 4th September, First four instalments of ` 0.12 Crore each, next 4 instalments of ` 0.24 Crore each, next 4 instalments of ` 0.72 Crore each and next 5 instalments of ` 1.54 Crore each. vi) Term loan secured by way of first pari passu charge created by hypothecation of the entire movable properties (save and except current assets and assets on which an exclusive charge has been created in favour of Exim Bank) of the Company s Rayon Division Plant at Veraval and Textile Division Plant at Rishra. Repayment Terms: 10 half-yearly instalments from 31st May, First three instalments of ` 0.40 Crore each, next 3 instalments of ` 0.80 Crore each and next 4 instalments of ` 7.85 Crore each. (Note: Entire Outstanding loan was prepaid on 8th January, 2016) vii) Term loan secured by way of first pari passu charge created by hypothecation of the entire movable properties (save and except current assets and assets on which an exclusive charge has been created in favour of Exim Bank) of the Company s Rayon Division Plant at Veraval and Textile Division Plant at Rishra. Repayment Terms: 10 half-yearly instalments from 29th July, First three instalments of ` 0.74 Crore each, next 3 instalments of ` 1.48 Crore each and next 4 instalments of ` 4.83 Crore each. viii) Term loan secured by way of first pari passu charge created by hypothecation of the entire movable properties of the Company s Rayon Divison Plant at Veraval and Textile Division Plant at Rishra. Repayment Terms: 10 half-yearly instalments from 30th June, First four instalments of ` 0.50 Crore each, next 2 instalments of ` 1.00 Crore each, next 2 instalments of ` 9.00 Crore each, next 1 instalment of ` Crore and last instalment of ` 1.00 Crore. ix) Term loan secured by way of first pari passu charge created by hypothecation of the entire movable properties of the Company s Rayon Division Plant at Veraval and Textile Division Plant at Rishra. Repayment Terms: 20 quarterly instalments from 3rd September, First four instalments of ` 0.56 Crore each, next 8 instalments of ` 1.12 Crore each, next 4 instalments of ` 1.35 Crore each, and last 4 instalments of ` 1.46 Crore each. 174

184 Notes ` in Crores As at 31st March, 2016 As at 31st March, 2015 Current Non-Current Current Non-Current x) Term loan secured by way of first pari passu charge created by hypothecation of the entire movable properties of the Company s Rayon Division Plant at Veraval and Textile Division Plant at Rishra. (Drawdown during the year ` 6.77 Crore). Repayment Terms: 21 quarterly instalments from 19th December, First four instalments of ` 0.32 Crore each, next 4 instalments of ` 0.39 Crore each, next 4 instalments of ` 0.47 Crore each, next 4 instalments of ` 0.63 Crore each and last 5 instalments of ` 1.70 Crore each. xi) Term loan to be secured by way of first pari passu charge 5.00 by way of hypothecation of all movable assets of the Company s Madura Clothing Plant at Marasur Village, Karnataka. (Crafted Clothing Plant No. 527, Marsur Village, Anekal Taluk, Bangalore and Fashion Craft Plant No. 324, Marsur Village, Anekal Taluk, Bangalore )** Repayment Terms: 21 quarterly instalments from 23rd March, First three instalments of ` 0.10 Crore each, next 4 instalments of ` 0.13 Crore each, next 4 instalments of ` 0.15 Crore each, next 4 instalments of ` 0.20 Crore each and last 5 instalments of ` 0.54 Crore each. Total Rupee Term Loan Banks (A) Effective cost for the above loans are in the range of 4.65% to 10.30% per annum. (Previous Year: in the range of 5.20% to 12.10% per annum.) (B) Term Loan from Financial Institutions i) Term loan secured by way of first pari passu charge created by mortgage of the immovable properties of the Company situated at Veraval and Rishra (Textile Division) and hypothecation of movables (save and except book debts) situated at these locations, subject to prior charge(s) created on certain assets in favour of a Financial Institution and on Bankers Goods in favour of the Company s Bankers for working capital borrowings. Repayment Terms: 17 half-yearly instalments from 10th August, First four instalments of ` 1.00 Crore each, next 4 instalments of ` 2.00 Crore each, next 4 instalments of ` 6.00 Crore each and next 5 instalments of ` Crore each. ii) Term loan secured by way of first pari passu charge created by mortgage of the immovable properties of the Company situated at Veraval and Rishra (Textile Division) and hypothecation of movables (save and except books debts) situated at these locations, subject to prior charge(s) created on certain assets in favour of a Financial Institution and on Bankers Goods in favour of the Company s Bankers for working capital borrowings. Repayment Terms: 17 half-yearly instalments from 3rd January, First four instalments of ` 0.95 Crore each, next 4 instalments of ` 1.90 Crore each, next 4 instalments of ` 5.70 Crore each and next 5 instalments of ` Crore each. iii) Term loan secured by way of first pari passu charge created by hypothecation of movable fixed assets situated at Veraval and Rishra (Textile Division). Repayment Terms: 17 half yearly instalments from 20th March, First four instalments of ` 0.35 Crore each, next 4 instalments of ` 0.70 Crore each, next 4 instalments of ` 2.10 Crore each and next 5 instalments of ` 4.48 Crore each. 175

185 Standalone Financial Statements ` in Crores As at 31st March, 2016 As at 31st March, 2015 Current Non-Current Current Non-Current iv) Term loan secured by way of first pari passu charge 0.34 created by mortgage of immovable properties of the Company s Madura Garment Export Plants at Parappana Agrahara, Karnataka and hypothecation of movable fixed assets of the Company at these plants.** Repayment Terms: 16 equal half-yearly instalments of ` 0.33 Crore from 20th March, v) Term Loan secured by way of first pari passu charge 0.45 created by mortgage of immovable properties of the Company s Madura Clothing Plant at Marasur Village, Karnataka and hypothecation of movable fixed assets of the Unit at these plants.** Repayment Terms: 16 equal half-yearly instalments of ` 0.23 Crore each from 20th September, Total Rupee Term Loan from Financial Institutions (B) Effective cost for the above loans are in the range of 2.49% to 6.75% per annum. (Previous Year: in the range of 2.49% to 6.75% per annum.) (C) Foreign Currency Term Loans from Banks i) Foreign Currency Loan secured by way of first pari passu charge by way of hypothecation of entire movable assets (save and except current assets) situated at Veraval, Rishra (Textile Division), Insulator Division at Halol and Rishra. # Repayment Terms: 2 equal yearly instalments of USD 0.50 Crore each from 11th November, 2014 and 2 equal instalments of USD 0.50 Crore each from 25th February, (Note: Out of the total loan of ` Crore outstanding as on , ` 2.52 Crore was transferred to Aditya Birla Fashion and Retail Ltd., w.e.f. from ) ii) Foreign Currency Loan secured by way of first pari passu charge created by hypothecation on all movable assets of the Company (save and except current assets) situated at Veraval and Rishra (Textile Division). # Old Repayment Terms: 3 equal yearly instalments of ` Crore each starting from 11th January, New Repayment Terms: 3 equal yearly instalments of ` Crore each starting from 11th January, (Note: Out of the total loan of ` Crore outstanding as on , ` Crore was transferred to Aditya Birla Fashion and Retail Ltd., w.e.f. from ) iii) Foreign Currency Loan secured by way of first pari passu charge created by hypothecation on all movable assets of the Indo Gulf Fertiliser Division (save and except current assets) situated at Jagdishpur, Uttar Pradesh. # Repayment Terms: Bullet payment on 16th May, (Note: Out of the total loan of ` Crore outstanding as on , ` Crore was transferred to Aditya Birla Fashion and Retail Ltd. w.e.f. from ) Total Foreign Currency Term Loans from Banks (C) Effective cost for the above loans are in the range of 6.16% to 8.08% per annum. (Previous Year: in the range of 5.95% to 8.17% per annum.) 176

186 Notes (D) Finance Lease Liability i) Finance Lease Obligation is secured by hypothecation of plant and machinery taken on lease. Repayment Terms: Lease obligation plus interest is payable in 19 quarterly instalments of ` 0.06 Crore each. Total Finance Lease Liability (D) Effective cost for the above loan is 8.13% per annum. (Previous Year: 9.95%) ` in Crores As at 31st March, 2016 As at 31st March, 2015 Current Non-Current Current Non-Current Total Secured Long-term Borrowings ` in Crores As at 31st March, 2016 As at 31st March, 2015 (II) UNSECURED LONG-TERM BORROWINGS: Current Non-Current Current Non-Current A) Debentures i) 8.99% 29th Series Non-Convertible Debentures Repayment Terms: Redeemable at par on 29th January 2018 ii) 9.00% 30th Series Non - Convertible Debentures Repayment Terms: Redeemable at par on 10th May, iii) 8.68% 31st Series Non-Convertible Debentures Repayment Terms: Redeemable at par on 2nd February, Total Debentures (A) B) Unsecured Long-Term Foreign Currency Borrowings: i) Foreign Currency Loan from Bank.# Old Repayment Terms: Instalments of ` Crore each on 1st June, 2015 and 26th July, New Repayment Terms: Instalments of ` Crore each on 1st June, 2015 and ` on 26th July, (Note: Out of the total loan of ` Crore outstanding as on , ` 7.70 Crore was transferred to Aditya Birla Fashion and Retail Ltd., w.e.f. from ) ii) Foreign Currency Loan from Bank. # Repayment Terms: 3 equal half-yearly instalments of ` Crore each from 29th September, New Repayment Terms: Instalment of ` Crore on 29th September, (Note: Out of the total loan of ` Crore outstanding as on , ` 5.80 Crore was transferred to Aditya Birla Fashion and Retail Ltd., w.e.f. from ) iii) Foreign Currency Loan from Bank. # Repayment Terms: Bullet payment on 24th August, New Repayment Terms: Bullet payment on 24th August, ` Crore. (Note: Out of the total loan of ` Crore outstanding as on , ` Crore was transferred to Aditya Birla Fashion and Retail Ltd., w.e.f. from ) iii) Foreign Currency Loan from Bank Repayment Terms: 3 equal yearly instalments of ` Crore each from 20th August, Total Unsecured Long-term Foreign Currency Borrowings (B) Effective cost for the above loans are in the range of 3.73% to 8.21% per annum. (Previous Year: in the range of 3.76% to 6.41% per annum.) Total Unsecured Long-term Borrowings ,

187 Standalone Financial Statements ` in Crores As at As at (III) SECURED SHORT-TERM BORROWINGS: 31st March, 31st Mach, i) Working Capital Borrowings are secured by hypothecation of inventories, book debts and other movables, both present and future, held as current assets Total Secured Short-term Borrowings Effective cost for the above loans are in the range of 7.08% to 14.40% per annum. (Previous Year: in the range of 9.04% to 15.50% per annum.) - Foreign Currency Loans have been fully hedged for foreign exchange and interest rate fluctuation by way of Currency and Interest Rate Swaps, Interest Swaps and Long-Term Forward Contracts. - Effective cost has been calculated with hedged cost in terms of foreign currency loan and net of interest subsidy in case of TUF loans. ** Loans were transferred to Aditya Birla Fashion and Retail Ltd. (ABFRL) as per the scheme of demerger of Madura Garments (Division) from the Company, pursuant to the court orders dated 23rd October, 2015 and 5th December, (Refer Note: 38A) # The foreign currency loans from Banks exclude amount aggregating to ` Crore which were transferred to ABFRL consequent to demerger scheme. The Company is in the process of getting name updated in the Bank s records. (Refer Note: 38A) 178

188 Notes ` in Crores As at As at 31st March, st March, 2015 NOTE: 5 DEFERRED TAX LIABILITIES Deferred Tax Liabilities at the year end comprise timing differences on account of: Depreciation DEFERRED TAX ASSETS Deferred Tax Assets at the year end comprise timing differences on account of: Expenditure/Provisions allowable on Payment Basis Others Net Deferred Tax Liabilities NOTE: 6A OTHER LONG-TERM LIABILITIES Deposits Others (Refer Note: 46(ii)(B)) NOTE: 6B OTHER CURRENT LIABILITIES Current Maturities of Long-term Borrowings (Refer Note: 4A and 4B) Current Maturities of Finance Lease Obligations (Refer Note: 4A and 4B) Interest Accrued but Not Due on Borrowings Investors Education and Protection Fund to be credited (as and when due): Unpaid Dividend Money Due for Refund for Fractional Shares Other Payables Advance from Customers Payables for Capital Expenditure Statutory Dues Deposits Derivative Liability (Net)* Others * This represents Mark-to-Market on Derivative Contracts taken for the purpose of hedging. NOTE: 7A LONG-TERM PROVISIONS Provisions for: Employee Benefits

189 Standalone Financial Statements ` in Crores As at As at 31st March, st March, 2015 NOTE: 7B SHORT-TERM PROVISIONS Provisions for: Employee Benefits Others Taxation (Net of Advance Tax ` Crore (Previous Year: ` Crore)) Proposed Dividend Equity Provision for Corporate Tax on Dividend# Equity Other Short-term Provisions## # Net of Tax Credit on Dividend from Subsidiary Companies. ## Additional disclosure as per Accounting Standard-29 Provisions, Contingent Liabilities and Contingent Assets A. Warranty Opening Balance Arising during the year Unused Amounts Reversed (0.09) Closing Balance Provision is recognised for expected warranty claims on Insulator product sold during the last three years based on the past experience of level of returns and replacements. It is expected that this provision will be utilised within one year. B. Customer Relationship Management Loyalty Programme Opening Balance Arising during the year Utilised (25.75) Transfer on demerger of Madura Division (Refer Note: 38A) (11.56) Closing Balance Customer Relationship Management Loyalty Programmes are the schemes designed with an intention to retain the existing customer and attract new customers by rewarding a customer for his loyalty and patronage. It is expected that this provision will be utilised within one year. NOTE: 8 TRADE PAYABLES TOTAL OUTSTANDING DUES OF Micro enterprises and Small Enterprises Creditors other than Micro Enterprises and Small Enterprises , , There are no Micro and Small Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days as at 31st March, 2016, and no interest payment made during the year to any Micro and Small Enterprises. This information, as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006, has been determined to the extent such parties have been identified on the basis of information available with the Company. 180

190 Notes NOTE: 9A TANGIBLE ASSETS ` in Crores Freehold Leasehold Freehold Leasehold Leasehold Plant & Furniture Office Vehicles Railway TOTAL Lands Lands Buildings Buildings Improve- Equipment & Fixtures Equipment Sidings ments Gross Block As at 1st April, , , Additions Deletions As at 31st March, , , Additions Demerger of Madura Division (Refer Note: 38A) Deletions As at 31st March, , , Accumulated Depreciation As at 1st April, , , For the Year Deletions Charge to General Reserve on account of Schedule II As at 31st March, , , For the Year Demerger of Madura Division (Refer Note: 38A) Deletions As at 31st March, , , Net Block as at 31st March, , , Net Block as at 31st March, , , A. Gross Block of Tangible Assets includes: i) The Company s share in assets held under co-ownership - Leasehold Land ` Crore (Previous Year: ` Crore), Buildings ` Crore (Previous Year: ` Crore), Furniture and Fixtures ` 3.04 Crore (Previous Year: ` 3.03 Crore), Office Equipment ` 6.12 Crore (Previous Year: ` 6.06 Crore) and Vehicles ` 0.04 Crore (Previous Year: ` 0.03 Crore). ii) Buildings include ` 8.19 Crore (Previous Year: ` 8.19 Crore) being cost of Debentures and Shares in a company entitling the right of exclusive occupancy and use of certain premises. B. Details of Tangible Assets capitalised under Finance Lease: i) Plant and Equipment include Gross Block of ` 0.98 Crore (Previous Year: ` 0.98 Crore) and Net Block of ` 0.49 Crore (Previous Year: ` 0.78 Crore). Refer Note: 37(iv) C. Addition to Plant and Equipment is net of Subsidy ` 0.72 Crore (Previous Year: ` 0.02 Crore). D. Gross Block of leasehold lands includes ` 1.33 Crore and Buildings include ` Crore, pending for registration in the name of Company. The Company is in the process of getting the same transferred in its name. E. Freehold lands include Gross Block of ` 7.05 Crore, wherein title deeds of immovable properties are in names of the entities which got merged with the Company and are pending to be transferred in the name of the Company. 181

191 Standalone Financial Statements NOTE: 9B INTANGIBLE ASSETS ` in Crores Goodwill Brands/ Computer Technical TOTAL Trademarks Software Know-how Gross Block As at 1st April, Additions Deletions As at 31st March, Additions Demerger of Madura Division (Refer Note: 38A) As at 31st March, Accumulated Amortisation As at 1st April, For the Year Deletions As at 31st March, For the Year Demerger of Madura Division (Refer Note: 38A) As at 31st March, Net Block as at 31st March, Net Block as at 31st March, All Intangible Assets are other than internally generated. ` in Crores Year Ended Year Ended 31st March, st March, 2015 NOTE: 9A and 9B During the year, the Company has capitalised the following expenses to cost of Fixed Assets/Capital Work-in-Progress Insurance ß Interest Expenses 0.05 Total 0.05 Add: Brought forward from previous year Less: Capitalised during the year 3.05 Less: Charged to the Statement of Profit and Loss* 9.92 Balance Pending Allocation included in Capital Work-in-Progress * Expenses included in the following heads of the Statement of Profit and Loss, towards abandonment of Brownfield expansion project, Employee Benefits Expenses 3.55 Other Expenses 6.37 Total

192 Notes ` in Crores As at As at 31st March, 31st March, Face Value Number 2016 Number 2015 NOTE: 10A NON-CURRENT INVESTMENTS Trade Investments Valued at Cost, except otherwise stated Investment in Equity Instruments Quoted Joint Venture IDEA Cellular Limited* ,526,221 2, ,526,221 2, , , Unquoted Subsidiaries Aditya Birla Financial Services Limited ,710,000 1, ,010,000 1, Aditya Birla Finance Limited # * 10 52,063, ABNL Investment Limited 10 21,000, ,000, ABNL IT & ITES Limited (Refer Note: 43) 10 26,027, Aditya Birla Idea Payments Bank Limited , Aditya Birla Renewables Limited , Birla Sun Life Insurance Company Limited * (Refer Note: 46(v)) ,616,080 1, ,406,893,920 1, Indigold Trade & Services Limited (Refer Note: 43) 10 73,143,588 1, Madura Garments Lifestyle Retail Company Limited (Refer Note: 38B) 10 98,838, Shaktiman Mega Food Park Private Limited , , Less: Provision for Diminution (0.43) (0.43) 3, , Others Aditya Birla Science & Technology Private Limited 10 2,400, ,400, Aditya Birla Port Limited , , Birla Management Centre Services Limited 10 7, , Preference Shares Unquoted Subsidiaries 0.01% Compulsory Convertible Preference Shares of Aditya Birla Financial Services Limited ,500, ,500, % Non-Convertible Non-Cumulative Redeemable Preference Shares of Aditya Birla Financial Services Limited 10 1,271,110,000 1, ,110, % Non-Convertible Non-Cumulative Redeemable Preference Shares of Aditya Birla Financial Services Limited (` 6.50 paid-up) ,000, % Cumulative and Redeemable Preference Shares of Aditya Birla Finance Limited # 10 10,000, % Cumulative and Redeemable Preference Shares of Madura Garments Lifestyle Retail Company Limited (Refer Note: 38B) 10 10,000, % Cumulative and Redeemable Preference Shares of Pantaloons Fashion & Retail Limited (Refer Note: 38A) , , ,

193 Standalone Financial Statements ` in Crores As at As at 31st March, 31st March, Face Value Number 2016 Number 2015 Others 5.25% Cumulative Redeemable Preference Shares of Aditya Birla Health Services Ltd. $ 100 1,500, ,500, % Preference Shares of Birla Management Centre Services Limited ß 200 ß Non-Trade Investments Valued at Cost Quoted Investments in Equity Instruments Aditya Birla Fashion and Retail ^ 10 69,982,370 1, Hindalco Industries Limited 1 33,506, ,506, , Unquoted Investments in Preference Shares 8.00% Cumulative and Redeemable Preference Shares of Aditya Birla Fashion and Retail Limited (earlier known as Pantaloon Fashion & Retail Limited) , TOTAL NON-CURRENT INVESTMENTS 8, Equity Shares of Aditya Birla Fashion and Retail Limited (ABFRL) Particulars No. of Shares Amount Received under the Scheme (Refer Note: 38A and Note: 43) on account of: Equity Holding of the Company in Madura Garments Lifestyle Retail Company Limited on record date 21st January, ,383, Equity Holding of the ABNL IT & ITES Limited in Madura Garments Lifestyle Retail Company Limited (merged into the Company w.e.f. 1st October, 2015) on record date 21st January, ,207, Total (a) 2,591, Equity Shares held by Indigold Trade and Services Limited (merged into the Company w.e.f. 1st October, 2015) 67,390,782 1, Total (b) 67,390,782 1, Total Equity Shares received by the Company (a + b) 69,982,370 1, # Equity Shares of Aditya Birla Finance Limited (ABFL) Particulars No. of Shares Amount Received under the Scheme (Refer Note: 38B and Note: 43) in lieu of: Equity Holding of the Company in Madura Garments Lifestyle Retail Company Limited on record date 2nd February, ,798, Equity Holding of ABNL IT & ITES Limited (merged into the Company w.e.f. 1st October, 2015) in Madura Garments Lifestyle Retail Company Limited on record date 2nd February, ,264, Total Equity Shares received by the Company 52,063, Preference Shares of Aditya Birla Finance Limited (ABFL) received by the Company on account of the Scheme of Amalgamation (Refer Note: 38B) * Refer Note: 26(e) $ Each Preference Share is optionally convertible in 10 Equity Shares of ` 10/- each fully paid-up on the expiry of a period of 15 years from the date of allotment. ^67,390,782 shares are pending to be transferred in the name of Company. 184

194 Notes ` in Crores As at As at Notes: 31st March, st March, All Shares are fully paid-up, unless otherwise stated 2. Aggregate Amount of Quoted Investments 3, , Market Value of Quoted Investments 10, , Aggregate Amount of Unquoted Investments 5, , Aggregate Amount of Diminution in Value of Investments ` in Crores As at As at 31st March, 31st March, Face Value Number 2016 Number 2015 NOTE: 10B CURRENT INVESTMENTS Equity Instuments Unquoted Subsidiaries, at Cost Birla Sun Life Insurance Company Limited* (Refer Note: 46(v)) ,277, Units of Mutual Fund (Valued at Lower of Cost and Fair Value) Quoted, at Cost Birla Sun Life Cash Plus - Growth , Birla Sun Life Dynamic Bond Fund - Regular Plan - Growth 10 2,714, DSP Black Rock Ultra STP Direct Growth 10 5,000, Kotak Gilt Investment Regular Plan Direct Growth 10 2,057, SBI Magnum Gilt Long Term Plan - Growth 10 4,910, TOTAL CURRENT INVESTMENTS Notes: 1. Aggregate Amount of Unquoted Investments Aggregate Amount of Quoted Investments Market Value of Quoted Investments ` in Crores As at As at 31st March, st March, 2015 NOTE: 11A LONG-TERM LOANS AND ADVANCES (Unsecured, Considered Good, except otherwise stated) Capital Advance Unsecured, Considered Good Unsecured, Considered Doubtful Less: Provision for Doubtful (0.81) (0.05) Security Deposits Unsecured, Considered Good Unsecured, Considered Doubtful Less: Provision for Doubtful (0.13) (3.22) Loans and Advances to Related Parties (Refer Note: 41) Other Loans and Advances Inter-Corporate Deposits VAT, Other Taxes Recoverable, Statutory Deposits and Dues from Government Advance Tax (Net of Provision ` Nil) Prepaid Expenses Advance for Expenses, Materials and Employees

195 Standalone Financial Statements ` in Crores As at As at 31st March, st March, 2015 NOTE: 11B SHORT-TERM LOANS AND ADVANCES (Unsecured, Considered Good, except otherwise stated) Security Deposits Unsecured, Considered Good Unsecured, Considered Doubtful Less: Provision for Doubtful (0.46) (0.46) Loans and Advances to Related Parties (Refer Note: 41) * Other Loans and Advances Inter-Corporate Deposits VAT, Other Taxes Recoverable, Statutory Deposits and Dues from Government Unsecured, Considered Good Unsecured, Considered Doubtful Less: Provision for Doubtful (0.39) (0.58) Advance Tax (Net of Provision ` Crore (Previous Year: ` Crore)) MAT Credit Entitlement Prepaid Expenses Advance for Expenses, Materials and Employees** Considered Good Considered Doubtful Less: Provision for Doubtful (1.53) (2.61) * Includes amount due from Directors and Officers 0.19 ** Includes amount due from Subsidiary Companies Disclosure as per Regulations 34(3) and 53(f) of Securities Exchange Board of India Listing Obligation and Disclosure Requirement (LODR) ` in Crores (i) Loans and Advances in the nature of Balance as on Balance as on Maximum Amount Maximum Amount Loans given to Subsidiaries 31st March, st March, 2015 Due at any time Due at any time During the Year Ended During the Year Ended 31st March, st March, 2015 Indigold Trade and Services Ltd. (Merged with ABNL w.e.f. 1st October, 2015) Aditya Birla Minacs Worldwide Ltd. (Upto 8th May, 2014) ABNL Investment Ltd Aditya Birla Money Mart Ltd Aditya Birla Money Insurance Advisory Services Ltd Aditya Birla Customer Services Ltd ABNL IT & ITES Ltd. (Merged with ABNL w.e.f. 1st October, 2015) Madura Garments Lifestyle Retail Company Ltd. (Upto 30th June, 2015)

196 Notes Disclosure as per Section 186(4) of the Companies Act, 2013 (a) Details of Inter-Corporate Deposits granted during the year as below: Name of the Loanee Year Ended Year Ended Remarks 31st March, 31st March, ` in Crores Unsecured Aditya Birla Customer Services Ltd Terms of Deposit - 24 Months, Interest to 11.50% P.A. Payable on Call Aditya Birla Minacs Worldwide Ltd Terms of Deposit - 1 day + Call, Interest 11.75% (Upto 8th May, 2014) P.A. Payable on Call Aditya Birla Money Mart Ltd Terms of Deposit - On Call and 24 Months, Interest P.A. (Previous P.A.) Payable on Maturity/Quarterly Aditya Birla Money Insurance 3.24 Terms of Deposit - On Call, Interest P.A. Advisory Services Ltd. Payable on Maturity ABNL IT & ITES Ltd. (Merged with Terms of Deposit - 1 day + Call, Interest 9.75% to ABNL w.e.f. 1st October, 2015) 10.50% P.A. (Previous Year: 10.00% to 10.50% P.A.) Payable on Call Indigold Trade and Services Ltd Terms of Deposit - 1 day + Call, Interest 10.00% to (Merged with ABNL w.e.f % P.A. Payable on Call 1st October, 2015) Madura Garments Lifestyle Retail Terms of Deposit - 1 day + Call, Interest 10.00% to Company Ltd. (Upto 30th June, 2015) 10.75% P.A. Payable on Call The loans have been utilised for meeting their business requirements. The loanees have not made any investments in the shares of the Company. (b) Refer Note: 10A for investments. ` in Crores As at As at 31st March, st March, 2015 NOTE: 12A OTHER NON-CURRENT ASSETS Other Bank Balances* Bank Deposits with more than twelve months maturity Government Grant Receivable Derivative Assets # 3.71 Receivable towards Divested Business - Refer Note: 46(ii)(A) * Amount held as Margin Money under lien to bank for issuing guarantee/to tax authority # This represents Mark-to-Market on Derivative Contracts taken for the purpose of hedging. NOTE: 12B OTHER CURRENT ASSETS Reimbursement of Expenses Receivables Government Grant Receivable Export Incentive Receivable Less: Provision for Export Incentive Receivable (0.06) (0.06) Fertiliser Bonds 2.19 Others* *Includes dues from subsidiaries

197 Standalone Financial Statements ` in Crores As at As at 31st March, st March, 2015 NOTE: 13 INVENTORIES (Lower of Cost and Net Realisable Value) Raw Materials (Includes Goods-in-Transit ` Crore (Previous Year: ` Crore)) Work-in-Progress Finished Goods Stock-in-Trade Stores and Spares (Includes Goods-in-Transit ` 2.13 Crore (Previous Year: ` 9.24 Crore)) Waste/Scrap Packing Materials , NOTE: 14 TRADE RECEIVABLES Due for period exceeding Six months from the due date of payment Secured, Considered Good Unsecured, Considered Good (Includes subsidy receivables from Government of India ` 4.83 Crore (Previous Year: ` Nil)) Unsecured, Considered Doubtful Less: Provision for Doubtful (28.91) (22.01) Others Secured, Considered Good Unsecured, Considered Good 1, , (Includes subsidy receivables from Government of India ` Crore (Previous Year: ` 1, Crore)) Unsecured, Considered Doubtful 0.14 Less: Provision for Doubtful (0.14) 1, , NOTE: 15 CASH AND BANK BALANCES Cash and Cash Equivalents Balances with Banks Current Accounts Deposit Accounts (with original maturity period of three months or less) Cash on Hand Cheques/Drafts on Hand ß 2.18 (A) Other Bank Balances Deposit Accounts (with original maturity period of more than three months) Others Unclaimed Dividend Money Due for Refund on Fraction Shares (B) (A) + (B) Less: Bank Deposits with more than twelve months maturity (transferred to Other Non-Current Assets) (Refer Note: 12A)

198 Notes ` in Crores Year Ended Year Ended 31st March, st March, 2015 NOTE: 16 REVENUE FROM OPERATIONS A. SALE OF PRODUCTS Manufactured 5, , Traded , , , B. SALE OF SERVICES C. OTHER OPERATING INCOME Export Incentive Scrap Sales Miscellaneous Other Operating Income Total A + B + C 5, , Details of Sale Value of Goods Manufactured under broad heads Ammonia Caustic Soda Customised Fertilisers Garments 1, Insulators Linen Fabric Sulphuric Acid and Allied Chemicals Urea 2, , Viscose Filament Rayon Yarn Wool Top Yarn Linen Yarn Worsted Others , , Sale Value of Traded Goods under broad heads Agro-Chemicals Bulk Fertilisers Garments 1, Seeds Specialty Fertilisers Viscose Filament Rayon Yarn Others ,

199 Standalone Financial Statements ` in Crores Year Ended Year Ended 31st March, st March, 2015 NOTE: 17 OTHER INCOME Interest Income from Subsidiaries Others Dividend Income Subsidiary Company Joint Venture Long-term Investments Current Investments 1.02 Net Gain on Sale of Investments Current Subsidiary Company 0.19 Others Long-term Others 0.22 Gain on Redemption of Preference Share of Subsidiary Foreign Exchange Gain (Net) 3.01 Profit on Sale of Fixed Assets (Net) 5.61 Other Non-Operating Income NOTE: 18 COST OF MATERIALS CONSUMED Raw Materials Consumed 2, , Packing Materials Consumed , , Details of Raw Materials Consumed under broad heads Alumina Clays Cotton Staple and Synthetic Yarn Fabric Flax Fibre Metal Parts Natural Gas 1, , Sulpher Staple and Synthetic Fibre Wood Pulp Wool Fibre Others , , NOTE: 19 PURCHASE OF STOCK-IN-TRADE Purchase of Finished Goods , , Details of Purchases of Finished Goods under broad heads Agro-Chemicals Bulk Fertilisers Garments Seeds Specialty Fertilisers Viscose Filament Rayon Yarn Others ,

200 Notes ` in Crores Year Ended Year Ended 31st March, st March, 2015 NOTE: 20 CHANGES IN INVENTORIES OF FINISHED GOODS, WORK-IN-PROGRESS AND STOCK-IN-TRADE Opening Stocks Finished Goods Stock-in-Trade Work-in-Process Waste/Scrap Certified Emission Reductions (CERs) Less: Closing Stocks Finished Goods Stock-in-Trade Work-in-Process Waste/Scrap Certified Emission Reductions (CERs) Less: (Increase)/Decrease in Excise Duty on Stocks (2.38) 1.86 Stock Transfer on demerger of Madura Business (527.68) (Increase)/Decrease (67.05) (43.66) Movement of (Increase)/Decrease in Inventories Finished Goods (60.53) (12.15) Stock-in-Trade (4.82) (25.72) Work-in-Process 0.68 (7.17) Waste/Scrap ß (0.57) Certified Emission Reductions (CERs) 0.09 (Increase)/Decrease in Excise Duty on Stocks (2.38) 1.86 Details of Inventories: Manufactured Goods Caustic Soda Garments Insulators Linen Fabric Sulphuric Acid and Allied Chemicals Urea Viscose Filament Rayon Yarn Yarn Linen Yarn Worsted Others

201 Standalone Financial Statements ` in Crores Year Ended Year Ended 31st March, st March, 2015 Traded Goods Agro-Chemicals Garments Seeds Specialty Fertilisers Viscose Filament Rayon Yarn Others Work-in-Progress Ammonia Customised Fertilisers 1.50 Garments Insulators Linen Fabric Viscose Filament Rayon Yarn Yarn Linen Yarn Worsted NOTE: 21 EMPLOYEE BENEFITS EXPENSES Salaries and Wages Contribution to Provident and Other Funds (Refer Note: 39) Expense on Employee Stock Options Scheme * (Refer Note: 40) Expense on Stock Appreciation Rights Scheme (Refer Note: 40) Staff Welfare Expenses * ESOP charges are net of recovery of ` 1.40 Crore (Previous Year: ` Nil) from ABFRL on account of demerger of Madura Division. (Refer Note: 38A) 192

202 Notes ` in Crores Year Ended Year Ended 31st March, st March, 2015 NOTE: 22 OTHER EXPENSES Consumption of Stores and Spares Rent Repairs and Maintenance of: Buildings Plant and Machinery Others Insurance Rates and Taxes Processing Charges Commission to Selling Agents Brokerage and Discounts Advertisement and Sales Promotion Transportation and Handling Charges Store Security, Housekeeping and Other Expenses Legal and Professional Expenses (Refer Note: 33, Details of Auditors Remuneration) Provision for Bad and Doubtful Debts, Advances and Bad Debts written off Provision for Diminution in Value of Investments in Subsidiary 0.43 Travelling and Conveyance Loss on Sale/Discard of Fixed Assets (Net) 0.31 Bank Charges Directors Sitting Fees Directors Commission Foreign Exchange Loss (Net) 8.98 Contribution to Research & Development Institution Information Technology Expenses Miscellaneous Includes Contribution to General Electoral Trust for political purpose for distribution to political parties/persons NOTE: 23 DEPRECIATION AND AMORTISATION EXPENSES Depreciation of Tangible Assets Amortisation of Intangible Assets NOTE: 24 FINANCE COST Interest Expenses* Other Borrowing Costs *Net of Interest Rebate Subsidy from Technology Upgradation Fund *Net of Interest Capitalised

203 Standalone Financial Statements NOTE: 25 CONTINGENT LIABILITIES NOT PROVIDED FOR a) Claims against the Company not acknowledged as Debts ` in Crore Nature of Brief Description of Contingent Liabilities As at 31st As at 31st Statute March, 2016 March, 2015 Customs Duty, Departmental appeal against CESTAT order for deleting demand of 2.04 Customs Act, payment of duty for non-fulfilment of provision of EXIM policy 1942 related to Advance Licence obtained by Madura Coats Ltd. Demand of Differential Custom Duty on acquisition of ENKA Tech Know-how Various cases pertaining to demand of counter-vailing duty and additional duties on imports, supplementary Drawback claim, etc. Excise Duty, Central Demand for Non-inclusion of freight charges in transaction value for Excise Act, 1944 the purpose of payment of excise duty on sale of chlorine Departmental appeal against commissioner order for demand of differential excise duty on processing of yarn Cake in to Cone at STPL Bhestan under Noti. 30/2004-CE Show cause-cum-demand notice alleging that mixing of duty paid dyes amounts to manufacture and attracts duty for the period from March 1986 to September 1988 Show cause-cum-demand notice for availment of Cenvat credit on capital goods used exclusively for manufacture of exempted goods for the period from April 2005 to March 2007 Demand for payment of duty for removal of Refinished Imported 2.11 Garments without paying duty Demand of duty for alleged wrong availment of benefit of exemption 8.25 under Notification 38/2003-CE in respect of readymade garments procured from job workers Show cause-cum-demand notice of excise duty on inclusion of Type Test Charges with the value of insulators Various cases demanding duty on reversal of Cenvat credit on sale of capital goods, reversal of credit on inputs used for manufacturing dutiable and exempted goods, etc. Service Tax, Show cause-cum-demand notices for availment of Cenvat credit of Finance Act, Service Tax paid on commission to overseas agents since services 1994 are not falling under input service for the period from April 2005 to March 2010 Demand for Cenvat credit of Service Tax taken on Goods Transport Agency Service on outward transportation from place of removal till buyer s place Demand of Service Tax due to mismatch of Freight Inward declared in ER-4 and ST-3 Returns Disallowance of Cenvat credit on various grounds for April 2005 to March 2014 Demand of Service Tax under Reverse Charge Mechanism under 3.14 Import of Services for 2006 to 2011 Various cases pertaining to disallowance of Cenvat credit of Service Tax on commission paid to overseas agent, in GTA services, service for outward transportation and other services alleging not be classified as input services for availment of Cenvat credit, disallowance of Cenvat credit on various grounds, etc. 194

204 Notes ` in Crore Nature of Brief Description of Contingent Liabilities As at 31st As at 31st Statute March, 2016 March, 2015 Sales Tax, Non-receipt of C and F forms, disallowance of Input Tax Credit Commercial (ITC) on purchases by Power Plant, reversal of ITC, for AY Tax Act Demand for Short of Form H, I and C, Input Tax Credit Short adjusted on Stores Spares Demand for Re-assessment for the year under Karnataka 4.36 VAT Department Demand for UP VAT for AY , and Various other cases in respect of demand for Short of Forms H, I and C, disallowance of input credit, etc Income-tax Various Departmental Appeal in ITAT, High Court on 14A Act, 1961 disallowance, disallowance of additional depreciation, disallowance of depreciation on goodwill and various matters Demand for various additions in tax assessment of AY , , AY and AY Demand for non-deduction of TDS on purchase of shares of Joint Venture Company u/s 201(1) and 201(1A) Demand due to Assessment proceedings u/s 154/143(3) 5.28 for AY Various other cases relating to transfer pricing adjsutments, 3.59 non-deduction of TDS, penalty, etc. Other Statutes Labour Re-instatement and Workmen Compensation cases Water drawal charges for the period of April 1999 to till date Claim by various customers (Pedeee Syria, MGVCL) Railways demanded Land Licence Fees, in 2008, for the land 6.42 used for constructing and connecting siding with Railway at Sindurwa, since 1988 Demand letter issued by UPSIDC for making payment of maintenance charges on land allotted in 1983 Various other cases pertaining to Industrial Disputes, Railways Licence Fee demand, Textile Cess on readymade garments, possession of Gaon Sabha land and other Civil cases Grand Total b) Bills Discounted with Banks c) Corporate Guarantees given to Banks for loans taken by subsidiaries d) Under the Jute Packaging Material (Compulsory use of Packing Commodities) Act, 1987, a specified percentage of fertilisers dispatched was required to be supplied in jute bags up to 31st August, The Company made conscious efforts to use jute packaging material as required under the said Act. However, due to non-availability of material as per the Company s product specifications as well as due to strong customer resistance to use of jute bags, the specific percentage could not be adhered to. The Company has received a show cause notice, against which a writ petition has been filed with the Hon ble High Court, which is awaiting for hearing. The Jute Commissioner, Kolkata, had filed transfer petition, various writ petitions have been filed in different High Courts by other aggrieved parties, including the Company, before the Hon ble Supreme Court of India, praying for consolidation of all cases at one Court. The transfer petition is pending before the Hon ble Supreme Court. The Company has been advised that the said levy is bad in law. 195

205 Standalone Financial Statements ` in Crores As at As at 31st March, st March, 2015 NOTE: 26 CAPITAL AND OTHER COMMITMENTS a) Estimated amount of Contracts remaining to be executed on Capital Account and not provided for (Net of Advances) b) Customs Duty on Capital Goods and Raw Materials Imported under Advance Licensing/EPCG Scheme, against which export obligation is to be fulfilled c) For commitment under lease contract Refer Note: 37. d) For commitment under derivative contract Refer Note: 44. e) Transfer of investments, in IDEA Cellular Ltd. (IDEA) and Birla Sun Life Insurance Co. Ltd., is restricted by the terms contained in their respective shareholder agreements. Non-disposal undertakings for IDEA and Aditya Birla Finance Limited (upto 26th October, 2015), investments have also been provided to certain Banks for respective credit facilities extended by them. Pursuant to the Shareholders Agreement entered into with the Sun Life of Canada, the Company has, in respect of Birla Sun Life Insurance Company Limited, agreed to infuse its share of capital from time to time to meet the solvency requirement prescribed by the regulatory authority. f) Aditya Birla Customer Services Ltd. (ABCSL), a subsidiary of the Company, has issued 0.001% Compulsorily Convertible Preference Shares (CCPS) aggregating to ` 60 Crore to International Finance Corporation (IFC), vides Shareholders Agreement, dated 19th December, 2014, and Subscription Agreement dated 19th December, 2014 (SHA). Under the said SHA, Aditya Birla Financial Services Ltd. (ABFSL), the Company s subsidiary company and holding company of ABCSL, has granted to IFC an option to sell the shares to ABFSL at fair valuation from the period beginning on the expiry of 60 months of the subscription by IFC upto a maximum of 120 months from the date of subscription by IFC, in the event ABCSL or ABFSL fails to provide an opportunity to IFC to exit from ABCSL within 60 months from the date of subscription by IFC in the form of Listing, Secondary Sale or Acquisition, etc. In the event ABFSL fails to fulfil its obligation, the Company will be obligated to fulfil this obligation. ` in Crores Year Ended Year Ended 31st March, st March, 2015 NOTE: 27 VALUE OF IMPORTS CALCULATED ON C.I.F. BASIS Raw Materials 1, , Stores and Spares Capital Goods Purchase of Finished Goods NOTE: 28 EXPENDITURE IN FOREIGN CURRENCY (on accrual basis) Advertisement Technical Assistance Fees/Royalties Interest and Commitment Charges* Professional Charges Travelling Commission Others *Interest expenditure in Foreign Currency includes interest on External Commercial Borrowing (ECB), which is fully hedged. 196

206 Notes NOTE: 29 VALUE OF IMPORTED AND INDIGENOUS RAW MATERIALS AND SPARE PARTS CONSUMED AND PERCENTAGE THEREOF TO THE TOTAL CONSUMPTION Percentage Year Ended Percentage Year Ended 31st March, st March, 2015 Raw Materials: Imported 39.66% 1, % 1, Indigenous 60.34% 1, % 2, , , Spare Parts: Imported 18.19% % 7.38 Indigenous 81.81% % NOTE: 30 AMOUNT REMITTED IN FOREIGN CURRENCY ON ACCOUNT OF DIVIDEND In respect of Accounting Year No. of Shareholders No. of Equity Shares 90,871 94,782 Dividend Remitted in Foreign Currency Year Ended Year Ended 31st March, st March, 2015 NOTE: 31 EARNINGS IN FOREIGN CURRENCY (on accrual basis) On Export of Manufactured Goods (F.O.B. Basis) On Export of Traded Goods (F.O.B. Basis) NOTE: 32 THE FOLLOWING ARE INCLUDED UNDER OTHER HEADS OF EXPENSES IN THE STATEMENT OF PROFIT AND LOSS Particulars Head under which it is clubbed Consumption of Stores Repairs and Maintenance Insurance Staff Welfare Expenses NOTE: 33 DETAILS OF AUDITORS REMUNERATION Payments to Statutory Auditor: As Auditors For Audit Fees (Including Limited Review Fees) For Tax Audit In other capacity For Other Services For Reimbursement of Expenses Payments to Branch Auditor: As Auditors As Audit Fees (Including Limited Review Fees) As Tax Audit 0.03 In other capacity For Other Services 0.02 For Reimbursement of Expenses Payments to Cost Auditor: For Audit Fees For Reimbursement of Expenses

207 Standalone Financial Statements NOTE: 34 DETAILS OF EXPENDITURE INCURRED IN IN-HOUSE RESEARCH & DEVELOPMENT (R&D) FACILITIES APPROVED BY DEPARTMENT OF SCIENTIFIC AND INDUSTRIAL RESEARCH, MINISTRY OF SCIENCE AND TECHNOLOGY, GOVERNMENT OF INDIA, UNDER SECTION 35 OF INCOME-TAX ACT, 1961 ` in Crores Year Ended Year Ended 31st March, st March, 2015 i) Capital Expenditure Capital Equipment ii) Revenue Expenditure Salaries and Wages Material Consumables/Spares Other Expenditure directly related to R&D iii) Total R&D Expenditure on approved R&D Facilities (Total i) & ii)) iv) Less: Amount Received by R&D Facilities v) Net Amount of R&D Expenditure ` in Crores As at As at 31st March, st March, 2015 NOTE: 35 DISCLOSURE PURSUANT TO ACCOUNTING STANDARD-20 EARNINGS PER SHARE Earnings Per Share (EPS) is calculated as under: Net Profit as per the Statement of Profit and Loss Less: Preference Dividend and Tax thereon ß Net Profit for EPS (A) Weighted-average Number of Equity Shares for calculation of Basic EPS (B) 130,168, ,111,149 Basic EPS (`) (A/B) Weighted-average Number of Equity Shares Outstanding 130,168, ,111,149 Add: Shares Held in Abeyance 41,323 41,323 Add: Dilutive impact of Employee Stock Options 92, ,085 Weighted-average number of Equity Shares for calculation of Diluted EPS (C) 130,301, ,320,557 Diluted EPS (`) (A/C) Nominal Value of Shares (`)

208 Notes NOTE: 36 DISCLOSURE IN RESPECT OF THE COMPANY S JOINT VENTURES IN INDIA PURSUANT TO ACCOUNTING STANDARD- 27 FINANCIAL REPORTING OF INTEREST IN JOINT VENTURES Country of Proportion of Ownership Interest Name of the Venture Incorporation As at As at 31st March, st March, 2015 IDEA Cellular Limited India 23.26% 23.28% The Aggregate of Company s Share in the above Venture is: ` in Crores Non-Current Assets 18, , Current Assets 1, , Non-Current Liabilities 10, , Current Liabilities 3, , Total Revenue 8, , Expenses (Including Depreciation and Taxation) 7, , Contingent Liabilities 3, , Capital Commitments , NOTE: 37 DISCLOSURE PURSUANT TO ACCOUNTING STANDARD-19 LEASES IS AS UNDER ` in Crores Year Ended Year Ended 31st March, st March, 2015 A. Assets Taken on Lease: i) Operating Lease Payment recognised in the Statement of Profit and Loss Minimum Lease Rent Contingent Lease Rent ii) iii) The Company has taken certain Office Premises, Showrooms and Residential Houses on non-cancellable/cancellable operating lease. The future minimum rental payable in respect of non-cancellable operating lease are as follows: ` in Crores As at As at 31st March, st March, 2015 Not later than one year Later than one year and not later than five years iv) The details of finance lease payments payable and their Present Value as at the Balance Sheet Date: ` in Crores (A) Particulars Total Lease Present Value Interest Charges Payable Not later than one year (0.25) (0.17) (0.08) Later than one year and not later than five years (0.70) (0.59) (0.11) Total (0.95) (0.76) (0.19) Figures in brackets represent the corresponding amount of Previous Year. (B) A general description of the significant leasing arrangements: The Company has entered into finance lease arrangements for computer servers from a vendor. The finance obligation is secured by a charge against the said assets. 199

209 Standalone Financial Statements NOTE: 38A DISCONTINUING OPERATIONS The Board of Directors of (the Company), at its meeting held on 3rd May, 2015, has considered a Composite Scheme of Arrangement between the Company (with respect to its the branded apparel retailing division, Madura Garments), Madura Garments Lifestyle Retail Company Limited (with respect to its luxury branded apparel retailing division) and Pantaloons Fashion & Retail Limited (PFRL), and their respective shareholders and creditors under Sections 391 to 394 of the Companies Act, 1956 [ Composite Scheme ]. The Hon ble High Court of Gujarat, vide its Order dated 23rd October, 2015, and the Hon ble High Court of Bombay, vide its Order dated 5th December, 2015, have approved the Composite Scheme of Arrangement between the Company with respect to its branded apparel retailing division (Madura Garments), Madura Garments Lifestyle Retail Company Limited (MGLRCL) with respect to its luxury branded apparel retailing division (Madura Lifestyle), Pantaloons Fashion & Retail Limited (PFRL) now known as Aditya Birla Fashion and Retail Limited (ABFRL) and their respective shareholders and creditors under Sections 391 to 394 of the Companies Act, 1956 [ the Composite Scheme ]. Pursuant to the Composite Scheme, Madura Garments and Madura Lifestyle have been demerged from the respective companies and have been merged with ABFRL. Eligible Shareholders of the Company have been allotted 26 new equity shares of ` 10 each of ABFRL for every 5 equity shares of ` 10 each held in the Company pursuant to demerger of Madura Garments. Shareholders of MGLRCL have been allotted 7 new equity shares of ` 10 each of ABFRL for every 500 equity shares of ` 10 each held in MGLRCL and the preference shareholder of MGLRCL has been allotted 1 new equity share of ` 10 each of ABFRL pursuant to demerger of Madura Lifestyle. The Composite Scheme has been made effective on 9th January, 2016, with effect from the Appointed Date of 1st April, The Record Date fixed for ascertaining the entitlement of the eligible shareholders of the Company for the allotment of ABFRL shares was 21st January, After the effectiveness of the Composite Scheme and the allotment of shares by ABFRL, the shareholding of the Company (directly and through other subsidiaries) in ABFRL is 9.1% and, hence, ABFRL has ceased to be subsidiary of the Company. In view of the above, the figures for the previous year are strictly not comparable. The following statement shows the revenue and expenses of Madura Garments Division: ` in Crores Year Ended Year Ended 31st March, st March, 2015 Revenue from Operations 3, Less: Excise Duty Net Revenue from Operations 3, Other Income 5.83 Total Revenue 3, Expenses Cost of Materials Consumed Purchase of Stock-in-Trade Changes in Inventories of Finished Goods, Work-in-Progress and Stock-in-Trade (77.07) Employee Benefits Expenses Power and Fuel 8.33 Other Expenses 1, Total Expenses 3, Profit Before Depreciation/Amortisation, Interest and Tax (PBDIT) Depreciation and Amortisation Expenses Finance Cost Profit Before Exceptional Item and Tax Profit on Sale of Assets attributable to Discontinued Operations Profit Before Tax from Discontinued Operations Tax Expenses of Discontinued Operations Profit for the Year

210 Notes ` in Crores As at As at 31st March, st March, 2015 The carrying amount of the total assets and liabilities transferred are as follows: Fixed Assets Loans and Advances Inventories Trade Receivables Other Assets Deferred Tax Assets Total Assets (A) 1, Borrowings pertaining to Madura Garments Trade Payables Other Liabilities Total Liabilities (B) 1, Excess of Total Assets over Total Liabilities has been Charged to Capital Reserve (A B) ` in Crores Year Ended Year Ended 31st March, st March, 2015 The net cash flows attributable to the Garment Business are as follows: Operating Activities Investing Activities (83.32) Financing Activities (252.63) Net Cash Inflow/(Outflow) (7.55) NOTE: 38B Amalgamation of Madura Garments Lifestyle Retail Company Limited (MGLRCL) The Hon ble High Court of Gujarat at Ahmedabad, vide its Order dated 21st December, 2015, has approved the Scheme of Amalgamation of remaining business of Madura Garments Lifestyle Retail Company Limited (MGLRCL) with Aditya Birla Finance Limited (ABFL) ( the Scheme ). Pursuant to the Scheme, MGLRCL, being wholly owned subsidiary of the Company, has been amalgamated with ABFL, wholly owned subsidiary of the Company, w.e.f. 1st July, 2015, being the Appointed Date. The effective date of the Scheme was 25th January, 2016, and Record Date for allotment was 2nd February, Pursuant to the said scheme, the equity shareholders of MGLRCL received 9 equity shares of ABFL for every 32 equity shares held in the MGLRCL. Each and every 8% preference shareholders of MGLRCL (face value of ` 10) received one 8% preference share of ABFL (face value of ` 10), on the same terms and conditions. NOTE: 39 RETIREMENT BENEFITS Disclosure in respect of Employee Benefits pursuant to Accounting Standard-15 (Revised) a) The details of the Company s Defined Benefit Plans in respect of Gratuity (funded by the Company): General Description of the Plan The Company operates gratuity plan through a trust wherein every employee is entitled to the benefit equivalent to fifteen days salary last drawn for each completed year of service. The same is payable on termination of service or retirement, whichever is earlier. The benefit vests after five years of continuous service. In case of some employees, the Company s scheme is more favourable as compared to the obligation under Payment of Gratuity Act, ` in Crores As at As at 31st March, st March, 2015 Amounts recognised in the Balance Sheet in respect of Gratuity Present Value of the funded Defined Benefit Obligations at the end of the year Fair Value of Plan Assets Net (Asset)/Liability

211 Standalone Financial Statements ` in Crores As at As at 31st March, st March, 2015 Amounts recognised in Employee Benefits Expenses in the Statement of Profit and Loss in respect of Gratuity Current Service Cost Interest on Defined Benefit Obligations Expected Return on Plan Assets (9.07) (9.12) Net Actuarial (Gain)/Loss recognised during the year Net Gratuity Cost Actual Return on Plan Assets: Expected Return on Plan Assets Actuarial Gain/(Loss) on Plan Assets (0.66) 6.82 Actual Return on Plan Assets Reconciliation of Present Value of the Obligation and the Fair Value of the Plan Assets: Change in Present Value of the Obligations: Opening Defined Benefit Obligations Current Service Cost Interest Cost Actuarial (Gain)/Loss Liabilities Settled on Divestment (26.22) Benefits Paid (9.79) (11.05) Closing Defined Benefit Obligations Change in Fair Value of the Plan Assets: Opening Fair Value of the Plan Assets Expected Return on Plan Assets Actuarial Gain/(Loss) (0.66) 6.82 Contributions by the Employer Assets Distributed on Divestment (26.22) Benefits Paid (9.79) (11.05) Closing Fair Value of the Plan Assets Investment Details of the Plan Assets Government of India Securities 21% 27% Corporate Bonds 1% 1% Insurer Managed Fund 55% 51% Special Deposit Scheme 2% 2% Others 21% 19% Total 100% 100% There are no amount included in the Fair Value of the Plan Assets for: i) Company s own financial instrument ii) Property occupied by or other assets used by the Company ` in Crores Experience Adjustment 31s March, 31st March, 31st March, 31st March, 31st March, Defined Benefit Obligations Plan Assets Surplus/(Deficit) (5.25) (1.38) 0.31 (2.53) (3.31) Experience Adjustment on Plan Liabilities Experience Adjustment on Plan Assets (0.66) 6.82 (3.79) 3.18 (1.52) Expected rate of return on assets is based on the average Long-term rate of return expected on investments of the funds during the estimated term of the obligations. 202

212 Notes As at As at 31st March, st March, 2015 Principal Actuarial Assumptions at the Balance Sheet Date Discount Rate 7.80% 8.00% Estimated Rate of Return on Plan Assets 7.80% 8.50% The estimates of future salary increase, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market. Estimated amount of contribution expected to be paid to the fund during the annual period being after the Balance Sheet date is ` Crore (Previous Year: ` Crore). b) The details of the Company s Defined Benefit Plans in respect of the Company owned Provident Fund Trust: ` in Crores Year Ended Year Ended 31st March, st March, 2015 Contribution to Company-Owned Employees Provident Fund Trust The Guidance Note on implementing AS-15, Employee Benefits (Revised 2005), issued by the ICAI states that Provident Funds set-up by employers, which requires interest shortfall to be met by the employer, needs to be treated as Defined Benefit Plan. The Company set-up Provident Fund does not have existing deficit of Interest shortfall. The actuary has accordingly provided for a valuation and based on the below provided assumptions there is no shortfall as at 31st March, 2016, and 31st March, As per the actuarial valuation report, the interest shortfall liability being Other Long-term Employee Benefits, detailed disclosures are not required. ` in Crores As at As at 31st March, st March, 2015 The details of the Plan Assets position as under: Plan Assets at Fair Value Liability Recognised in the Balance Sheet Nil Nil Assumption used in determining the present value obligation of interest rate guarantee under the Deterministic Approach Discount Rate for the term of the Obligations 7.95% 7.90% Discount Rate for the remaining term of maturity of Investment Portfolio 7.93% 7.87% Guaranteed Interest Rate 8.80% 8.75% c) The details of the Company s Defined Benefit Plans in respect of Pension for (unfunded by the Company): General Description of the Plan In addition to contribution to the state managed pension plan, the Company provides pension to some employees, which is discretionary in the nature. The quantum of pension depends on the cadre of the employee at the time of retirement. ` in Crores As at As at 31st March, st March, 2015 Amounts recognised in the Balance Sheet in respect of Pension: Present Value of unfunded Defined Benefit Obligations at the end of the Year Fair Value of Plan Assets Net Liability/(Asset) Amounts recognised in Employee Benefits Expenses in the Statement of Profit and Loss in respect of Pension: Interest on Defined Benefit Obligations Net Actuarial (Gain)/Loss recognised during the Year Net Pension Cost Reconciliation of Present Value of the Obligations: Opening Defined Benefit Obligations Interest Cost Actuarial (Gain)/Loss Benefits Paid (1.19) (1.18) Closing Defined Benefit Obligations Financial Assumptions at the Valuation Date Discount Rate 7.80% 8.00% 203

213 Standalone Financial Statements ` in Crores Experience Adjustment 31st March, 31st March, 31st March, 31st March, 31st March, Defined Benefit Obligations Experience Adjustment on Plan Liabilities d) Defined Contribution Plans ` in Crores Year Ended Year Ended 31st March, st March, 2015 Amount recognised as an expense and included in the Note: 21 as Contribution to Provident and Other Funds NOTE: 40 DISCLOSURE UNDER EMPLOYEE STOCK OPTIONS SCHEME (I) Under the Employee Stock Options Scheme-2006 (ESOS-2006), the Company has granted options to the eligible employees of the Company and its Subsidiaries. The details are as under: (i) Employee Stock Options Scheme: Particulars Tranche - I Tranche - II Tranche - III Tranche - IV Tranche - V No. of Options * 163, ,093 17,174 11,952 3,370 Method of Accounting Intrinsic Value Intrinsic Value Intrinsic Value Intrinsic Value Intrinsic Value Vesting Plan Graded Graded Graded Graded Graded Vesting - 25% Vesting - 25% Vesting - 25% Vesting - 25% Vesting - 25% every year every year every year every year every year Exercise Period 5 Years from 5 Years from 5 Years from 5 Years from 5 Years from the date of the date of the date of the date of the date of Vesting Vesting Vesting Vesting Vesting Grant Date Grant/Exercise Price (` Per Share) 1, , Repricing of the Option on 20th August, 2010 (` Per Share) Market Price on the date of Grant of Option (` Per Share) 1, , Market Price on the date of Repricing of Option (` Per Share) (ii) Details of Activity in the Plan: Particulars Options Range of Weighted- Options Range of Weighted- Exercise average Exercise average Price (`) Exercise Price (`) Exercise Price (`) Price (`) Options Outstanding at 62, to , to the beginning of the year Granted during the year Exercised during the year 62, to , to Lapsed during the year 1, Options Outstanding at the end of the year 62, to Options Unvested at the end of the year 843 Options Exercisable at the end of the year 61, to * Includes 3,360 options granted to the employees of its Subsidiaries. 204

214 Notes The ESOP compensation cost is amortised on a straight-line basis over the total vesting period of the options. Accordingly, ` ß {net of recovery of ` Nil from the subsidiaries} (Previous Year: ` 0.01 Crore net of recovery of ` Nil from the subsidiaries) has been charged to the current year Statement of Profit and Loss. For the option exercised during the period, the weighted-average share price at the exercise date was ` 2, per share (Previous Year: ` 1,494.92). The weighted-average remaining contractual life for the stock options outstanding as at 31st March, 2016, is Nil (Previous Year: 1.65 years). (iii) Fair Valuation: The fair value of the options used to compute proforma net profit and the earnings per share have been done by an independent valuer on the date of grant using Black-Scholes Merton Formula. The key assumptions and the Fair Value are as under: Particulars On the Date of Grant Tranche - I Tranche - II Tranche - III Tranche - IV Tranche - V Risk-Free Interest Rate (%) Option Life (Years) Expected Volatility Expected Dividend Yield (%) Weighted-average Fair Value per Option (`) Particulars On the Date of Repricing Tranche - I Tranche - II Risk-Free Interest Rate (%) Option Life (Years) 5 5 Expected Volatility* Expected Dividend Yield (%) Weighted-average Fair Value per Option (`) *Expected volatility of the Company s stock price is based on NSE price data of last two years. (II) Under the Employee Stock Options Scheme-2013 (ESOS-2013), the Company has granted Options and Restricted Stock Units (RSUs) to the eligible employees of the Company. The details are as under: (A) Stock Option: (i) Employee Stock Options Scheme: Particulars Tranche - I Tranche - II Tranche - III No. of Options 104,272 16,239 35,060 Additional Options issued due to the Scheme of Demerger 16,101 5,129 27,547 Method of Accounting Intrinsic Value Intrinsic Value Intrinsic Value Vesting Plan - Original Options Graded Graded Graded Vesting - 25% Vesting - 25% Vesting - 25% every year every year every year Vesting Plan - Additional Options Proportion and Proportion and Proportion and period period period coterminous coterminous coterminous with the with the with the vesting period vesting period vesting period of original of original of original ESOP ESOP ESOP Exercise Period 5 Years from 5 Years from 5 Years from the date of the date of the date of Vesting Vesting Vesting Grant Date Grant Date of Additional Options issued Grant/Exercise Price (` Per Share) 1, , , Repricing of the Option on 31st March, 2016 (` Per Share) Market Price on the date of Grant of Original Option (` Per Share) 1, , , Market Price on the date of Repricing of Option/Grant of Additional Options (` Per Share)

215 Standalone Financial Statements (ii) Details of Activity in the Plan: Particulars Options Range of Weighted- Options Range of Weighted- Exercise average Exercise average Price (`) Exercise Price (`) Exercise Price (`) Price (`) Options Outstanding at the 98,655 1, to 1, ,511 1, to 1, beginning of the year 1, , Additional Options issued 48, to due to the Scheme of Demerger Granted during the year 35,060 1, , Exercised during the year 23,334 1, to 1, , Lapsed during the year 13,241 1, to 1, ,916 1, , , Options Outstanding at the 110, to ,655 1, to 1, end of the year , Options Unvested at the 80,957 86,096 end of the year Options Exercisable at the 29, to ,559 1, to 1, end of the year , The ESOP compensation cost is amortised on a straight-line basis over the total vesting period of the options. Accordingly, ` 0.59 Crore has been charged to the current year Statement of Profit and Loss (Prevous Year: ` Nil). For the option exercised during the period, the weighted-average share price at the exercise date was ` 2, per share (Previous Year: ` Nil). The weighted-average remaining contractual life for the stock options outstanding as at 31st March, 2016, is 5.92 years (Previous Year: 6.62 years). (iii) Fair Valuation: The fair value of the options used to compute proforma net profit and the earnings per share have been done by an independent valuer on the date of grant using Black-Scholes Merton Formula. The key assumptions and the Fair Value are as under: Particulars On the Date of Grant Tranche - I Tranche - II Tranche - III Risk-Free Interest Rate (%) Option Life (Years) Expected Volatility* Expected Dividend Yield (%) Weighted-average Fair Value per Option (`) * Expected volatility of the Company s stock price is based on NSE price data of last three years. 206

216 Notes Particulars On the Date of Repricing Tranche - I Tranche - II Tranche - III Risk-Free Interest Rate (%) Option Life (Years) Expected Volatility# Expected Dividend Yield (%) Weighted-average Fair Value per Option (`) Incremental Fair Value (`) Fair Valuation of Additional Options issued due to Demerger: Particulars On the Date of Additional Grant Tranche - I Tranche - II Tranche - III Risk-Free Interest Rate (%) Option Life (Years) Expected Volatility# Expected Dividend Yield (%) Weighted-average Fair Value per Option (`) # Expected Volatility is based on Company s stock price on NSE is based on the price data of previous years upto the date of grant/reporting to commensurate with the expected term of the Option. However, in view of the Demerger, for the changes in share prices of ABNL, the volatility was calculated separately upto the date of Demerger (pre-demerger) and from the date of the Demerger (post-demerger), and thereafter the weightedaverage of the same is taken. (B) Restricted Stock Units (i) Employee Stock Options Scheme: Particulars Tranche - I Tranche - II Tranche - III No. of Options 101,731 9,567 12,630 Additional Options issued due to the Scheme of Demerger 11,139 5,320 10,092 Method of Accounting Intrinsic Value Intrinsic Value Intrinsic Value Vesting Plan Bullet Vesting-end of Bullet Vesting-end of Bullet Vesting-end of 3 years from the 3 years from the 3 years from the grant date grant date grant date Vesting Plan - Additional RSUs Proportion and Proportion and Proportion and period coterminous period coterminous period coterminous with the vesting with the vesting with the vesting period of original RSU period of original RSU period of original RSU Exercise Period 5 Years from the 5 Years from the 5 Years from the date of Vesting date of Vesting date of Vesting Grant Date Grant Date of Additional Option issued Grant/Exercise Price (` Per Share) Market Price on the date of Grant of Original Option (` Per Share) 1, , , Market Price on the date of Additional Options granted (` Per Share)

217 Standalone Financial Statements (ii) Details of Activity in the Plan: Particulars Options Range of Weighted- Options Range of Weighted- Exercise average Exercise average Price (`) Exercise Price (`) Exercise Price (`) Price (`) Options Outstanding at the beginning of the year 105, , Additional Granted due to the Scheme of Demerger 26, Granted during the year 12, Exercised during the year Lapsed during the year 15, , Options Outstanding at the end of the year 115, , Options Unvested at the end of the year 115, ,041 The ESOP compensation cost is amortised on a straight-line basis over the total vesting period of the options. Accordingly, ` 2.85 Crore (net of recovery of ` 1.40 Crore from ABFRL on account of ESOP option granted to employee of demerged Madura division) has been charged to the current year Statement of Profit and Loss (Previous Year: ` 3.76 Crore). The weighted-average remaining contractual life for the stock options outstanding as at 31st March, 2016, is 5.89 years (Previous Year: 6.82 years). (iii) Fair Valuation: The fair value of the options used to compute proforma net profit and the earnings per share have been done by an independent valuer on the date of grant using Black-Scholes Merton Formula. The key assumptions and the Fair Value are as under: Particulars On the Date of Grant Tranche - I Tranche - II Tranche - III Risk-Free Interest Rate (%) Option Life (Years) Expected Volatility* Expected Dividend Yield (%) Weighted-average Fair Value per Option (`) 1, , , *Expected volatility of the Company s stock price is based on NSE price data of last three years. Fair Valuation for the Additional Shares Granted: Particulars On the Date of Additional Grant Tranche - I Tranche - II Tranche - III Risk-Free Interest Rate (%) Option Life (Years) Expected Volatility # Expected Dividend Yield (%) Weighted-average Fair Value per Option (`) #Expected Volatility is based on Company s stock price on NSE is based on the price data of previous years upto the date of grant/reporting to commensurate with the expected term of the Option. However, in view of the Demerger, for the changes in share prices of the Company, the volatility was calculated separately upto the date of Demerger (pre-demerger) and from the date of the Demerger (post-demerger), and thereafter the weightedaverage of the same is taken. 208

218 Notes (C) Stock Appreciation Rights (SAR): (i) Scheme: Particulars Tranche - I Tranche - II Tranche - III No. of Options 91,239 14,199 30,678 Additional Options issued due to the Scheme of Demerger 14,089 4,164 18,078 Method of Accounting Intrinsic Value Intrinsic Value Intrinsic Value Vesting Plan Graded Vesting - Graded Vesting - Graded Vesting - 25% every year 25% every year 25% every year Vesting Plan - Additional Options Proportion and Proportion and Proportion and period coterminous period coterminous period coterminous with the vesting with the vesting with the vesting period of original period of original period of original SAR s SAR s SAR s Exercise Period 3 Years from the 3 Years from the 3 Years from the date of Vesting or date of Vesting or date of Vesting or 6 years from the 6 years from the 6 years from the date of grant, date of grant, date of grant, whichever is earlier whichever is earlier whichever is earlier Grant Date Grant Date of Additional Options issued Grant Price (` Per Share) 1, , , Repricing of the Option on 31st March, 2016 (` Per Share) Market Price on the date of Grant of Options (` Per Share) 1, , , Market Price on the date of Repricing of Option/Grant of Additional Options (` Per Share) (ii) Details of Activity in the Plan: Particulars Options Range of Weighted- Options Range of Weighted- Exercise average Exercise average Price (`) Exercise Price (`) Exercise Price (`) Price (`) Options Outstanding at the 86,314 1, to 1, ,438 1, to 1, beginning of the year 1, , Additional Options Granted due to 36, to Scheme of Demerger Granted during the year 30,678 1, , Exercised during the year 28,490 1, to 1, , Lapsed during the year 11,585 1, to 1, ,802 1, , , Options Outstanding at the 82, to ,314 1, to 1, end of the year , Options Unvested at the end of the year 66,150 75,324 Options Exercisable at the 16, to ,990 1, to 1, end of the year , The Stock Appreciation Right s compensation cost is amortised on a straight-line basis over the total vesting period of the options. Accordingly, ` 1.48 Crore (Previous Year: ` 1.50 Crore) has been charged to the current year Statement of Profit and Loss. The weighted-average remaining contractual life for the Stock Appreciation Right s outstanding as at 31st March, 2016 is 3.73 years (Previous Year: 4.35 years). 209

219 Standalone Financial Statements (iii) Fair Valuation: The Fair Value of the options used to compute proforma net profit and the earnings per share have been done by an independent valuer using Black-Scholes Merton Formula. The key assumptions and the Fair Value are as under: Particulars As at Tranche - I Tranche - II Tranche - III Risk-Free Interest Rate (%) Option Life (Years) Expected Volatility # Expected Dividend Yield (%) Weighted-average Fair Value per Option (`) Fair Valuation of Additional Options: Particulars As at Tranche - I Tranche - II Tranche - III Risk-Free Interest Rate (%) Option Life (Years) Expected Volatility # Expected Dividend Yield (%) Weighted-average Fair Value per Option (`) # Expected Volatility is based on Company s stock price on NSE is based on the price data of previous years upto the date of grant/reporting to commensurate with the expected term of the Option. However, in view of the Demerger, for the changes in share prices of ABNL, the volatility was calculated separately upto the date of Demerger (pre-demerger) and from the date of the Demerger (post-demerger), and thereafter the weighted-average of the same is taken. The Company is following Intrinsic Value for Employee Stock Options Scheme valuation. Had the compensation cost for the stock options granted under ESOS-2006 and 2013 been recognised based on fair and value in accordance with Black-Scholes Merton Formula, the proforma amount of net profit and earnings per share of the Company would have been as under: ` in Crores Particulars Net Profit Add: Compensation Cost as per Intrinsic Value Less: Compensation Cost as per Fair Value Adjusted Net Income Weighted-average number of Basic Equity Shares Outstanding (In Nos.) 130,168, ,111,149 Weighted-average number of Diluted Equity Shares Outstanding (In Nos.) 130,301, ,320,557 Face Value of the Equity Share (In `) Reported Earnings Per Share (EPS) Basic EPS (`) Diluted EPS (`) Proforma Earnings Per Share (EPS) Basic EPS (`) Diluted EPS (`)

220 Notes NOTE: 41 LIST OF RELATED PARTIES PARTIES WHERE CONTROL EXIST SUBSIDIARIES Aditya Birla Financial Services Limited (ABFSL) Aditya Birla Capital Advisors Private Limited (ABCAPL) ABCAP Trustee Company Private Limited (ATCPL) (w.e.f. 25th March, 2016) Aditya Birla Customer Services Limited (ABCSL) Aditya Birla Health Insurance Co. Limited (ABHICL) (w.e.f. 22nd April, 2015) Aditya Birla Trustee Company Private Limited (ABTCPL) Aditya Birla Money Limited (ABML) Aditya Birla Commodities Broking Limited (ABCBL) Aditya Birla Financial Shared Services Limited (ABFSSL) Aditya Birla Finance Limited (ABFL) Aditya Birla Securities Private Limited (ABSL) (up to 10th September, 2014) Aditya Birla Insurance Brokers Limited (ABIBL) Birla Sun Life Asset Management Company Limited (BSAMC) Birla Sun Life AMC (Mauritius) Ltd. Aditya Birla Sun Life AMC Ltd., Dubai Aditya Birla Sun Life AMC Pte. Ltd., Singapore India Advantage Fund Ltd. (IAFL) International Opportunities Fund SPC (IOF) Birla Sun Life Trustee Company Private Limited (BSTPL) Aditya Birla Housing Finance Ltd. (ABHFL) Aditya Birla Money Mart Limited (ABMML) Aditya Birla Money Insurance Advisory Services Limited (ABMIASL) ABNL IT & ITES Limited (IT&ITES) (upto 30th September, 2015) Aditya Birla Minacs BPO Private Limited (ABMBPL) (upto 30th September, 2015) Aditya Birla Minacs Worldwide Limited (ABMWL) (upto 8th May, 2014) Aditya Birla Minacs Philippines Inc. (ABMPI) (up to 8th May, 2014) AV TransWorks Limited (AVTL) (up to 8th May, 2014) Aditya Birla Minacs Worldwide Inc. (ABMWI) (up to 8th May, 2014) Aditya Birla Minacs BPO Limited (ABMBL) (up to 8th May, 2014) Minacs Worldwide SA de CV (MWSC) (up to 8th May, 2014) The Minacs Group (USA) Inc. (MGI) (up to 8th May, 2014) Bureau of Collection Recovery, LLC (BCR) (up to 8th May, 2014) Bureau of Collections Recovery (BCR) Inc. (up to 8th May, 2014) Minacs Limited (ML) (up to 8th May, 2014) Minacs Worldwide GmbH (MWGH) (up to 8th May, 2014) Minacs Kft. (up to 8th May, 2014) Aditya Vikram Global Trading House Limited (AVGTHL) (up to 29th September, 2014) Birla Sun Life Insurance Company Limited (BSLICL) Birla Sun Life Pension Management Limited (BSLPML) (w.e.f. 9th January, 2015) ABNL Investment Limited (ABNL Inv) Shaktiman Mega Food Park Private Limited (SMFP) Madura Garments Lifestyle Retail Company Limited. (MGLRCL) (upto 30th June, 2015) Indigold Trade and Services Limited (ITSL) (upto 30th September, 2015) Pantaloons Fashion & Retail Limited (PFRL) (upto 31st March, 2015) [now known as Aditya Birla Fashion and Retail Limited (ABFRL)] Aditya Birla Renewables Limited (ABRL) (w.e.f. 7th August, 2015) Aditya Birla IDEA Payments Bank Limited (ABIPBL) (w.e.f. 19th February, 2016) OTHER RELATED PARTIES JOINT VENTURES IDEA Cellular Limited (IDEA) ASSOCIATES Birla Securities Limited (BSL) (upto 14th November, 2014) KEY MANAGEMENT PERSONNEL (KMP) Mr. Lalit Naik Managing Director (Deputy Managing Director upto 30th June, 2014) Mr. Sushil Agarwal Whole-time Director (upto 30th June, 2015) Dr. Rakesh Jain Managing Director (Upto 30th June, 2014) ENTERPRISES HAVING COMMON KEY MANAGEMENT PERSONNEL (KMP) Aditya Birla Science & Technology Company Private Limited (ABSTCPL) (Common KMP Mr. Lalit Naik) (w.e.f. 30th March, 2015), upto 30th March, 2016) 211

221 Standalone Financial Statements Disclosure in respect of Related Parties pursuant to Accounting Standard-18 During the year, following transactions were carried out with the related parties in the ordinary course of business: ` in Crores Transaction/Nature of Relationship Subsidiaries Joint Associates Key Enterprises Grand Total Ventures Management having Personnel common Key Management Personnel Purchase of Goods PFRL (4.06) (4.06) TOTAL (4.06) (4.06) Information Technology Cost ABMWL (0.01) (0.01) TOTAL (0.01) (0.01) Brokerage and Discounts PFRL (1.16) (1.16) TOTAL (1.16) (1.16) Contribution to Research and Development Institution ABSTCPL TOTAL Other Expenses BSLICL (0.93) (0.93) IDEA (3.01) (3.01) TOTAL (0.93) (3.01) (3.94) Sales of Goods PFRL (130.26) (130.26) MGLRCL (136.52) (136.52) TOTAL (266.78) (266.78) Interest Received ABNL Inv (0.02) (0.02) ABCSL (3.13) (3.13) ABMWL (5.72) (5.72) ABMIASL ABMML (0.20) (0.20) BSLICL ß ß (0.02) (0.02) 212

222 Notes ` in Crores Transaction/Nature of Relationship Subsidiaries Joint Associates Key Enterprises Grand Total Ventures Management having Personnel common Key Management Personnel ITSL (2.45) (2.45) IT&ITES ß ß (0.07) (0.07) MGLRCL (3.65) (3.65) ABSTCPL (0.01) (0.01) TOTAL (15.26) (0.01) (15.27) Dividend Received BSLICL (51.80) (51.80) IDEA (33.50) (33.50) TOTAL (51.80) (33.50) (85.30) Other Income MGLRCL (0.12) (0.12) TOTAL (0.12) (0.12) Receipt against Reimbursement of Revenue/Capital Expenditure ABFL (0.06) (0.06) PFRL (2.36) (2.36) ABFSL (0.21) (0.21) ABHICL ABML ß ß ABRL BSLICL MGLRCL (0.12) (0.12) Other Related Parties ß ß TOTAL (2.75) (2.75) Payment for Reimbursement of Expenses ABFL (0.02) (0.02) PFRL (0.47) (0.47) TOTAL (0.49) (0.49) 213

223 Standalone Financial Statements ` in Crores Transaction/Nature of Relationship Subsidiaries Joint Associates Key Enterprises Grand Total Ventures Management having Personnel common Key Management Personnel Purchase of Fixed Assets ABFL TOTAL Sale of Fixed Assets PFRL ß ß TOTAL ß ß Interest Expenses BSLICL ß ß TOTAL ß ß Managerial Remuneration Paid * Mr. Lalit Naik (5.49) (5.49) Mr. Sushil Agarwal (3.94) (3.94) Dr. Rakesh Jain (6.72) (6.72) TOTAL (16.15) (16.15) Fresh Investments Made ABFSL (681.11) (681.11) ABHICL ABIPB ABRL ITSL (61.55) (61.55) SMFP (0.42) (0.42) TOTAL (743.08) (743.08) Sale of Investments ABHICL BSL (0.01) (0.01) TOTAL (0.01) (0.01) Winding of Subsidiary AVGTHL (0.84) (0.84) TOTAL (0.84) (0.84) 214

224 Notes ` in Crores Transaction/Nature of Relationship Subsidiaries Joint Associates Key Enterprises Grand Total Ventures Management having Personnel common Key Management Personnel Conversion of 0.01% Compulsory Convertible Preference Shares into Equity Shares ABFSL (400.00) (400.00) TOTAL (400.00) (400.00) Provision for Diminution in Value of Long-term Investments SMFP (0.43) (0.43) TOTAL (0.43) (0.43) Proceeds from Redemption of Preference Shares ABMWL (33.75) (33.75) TOTAL (33.75) (33.75) Loans/Deposits Granted (including Inter-Corporate Deposits) ABCSL (28.79) (28.79) ABMIAS ABMML (3.50) (3.50) ABMWL (77.15) (77.15) ITSL (59.03) (59.03) IT&ITES (2.61) (2.61) MGLRCL (50.16) (50.16) TOTAL (221.24) (221.24) Advance Given Mr. Lalit Naik (0.19) (0.19) TOTAL (0.19) (0.19) Loans Granted Received Back (including Inter-Corporate Deposits) ABCSL (33.49) (33.49) ABMIASL ABMML (3.50) (3.50) ABMWL (556.90) (556.90) ABNL Inv (1.00) (1.00) ITSL (59.24) (59.24) 215

225 Standalone Financial Statements ` in Crores Transaction/Nature of Relationship Subsidiaries Joint Associates Key Enterprises Grand Total Ventures Management having Personnel common Key Management Personnel IT&ITES (3.99) (3.99) MGLRCL (32.95) (32.95) TOTAL (691.07) (691.07) Advance Given Received Back Mr. Lalit Naik TOTAL Deposits Given during the year ABFSL ABRL ABNL Inv ABNL IT & ITES BSLICL ITSL TOTAL Deposits Given Received Back during the year ABFSL ABRL ABNL INV ABNL IT & ITES BSLICL ITSL TOTAL Outstanding Balances as on 31st March, 2016 Loans Granted Outstanding Balances (83.08) (14.19) (97.27) Interest Accured on Loans Granted Interest Payable on NCD Issued Amounts Receivable (113.18) (0.19) (113.37) 216

226 Notes ` in Crores Transaction/Nature of Relationship Subsidiaries Joint Associates Key Enterprises Grand Total Ventures Management having Personnel common Key Management Personnel Amounts Payable (0.04) (0.24) (0.28) Debentures Held by Corporate Guarantees Outstanding (17.50) (17.50) Investments Outstanding 5, , , (6,120.19) (2,355.81) (2.40) (8,478.40) Figures in brackets represent the corresponding amount of previous year. No amount, in respect of the related parties have been written off/back, is provided for during the year. Related parties relationships have been identified by the management and relied upon by the auditors. * Remuneration to Key Managerial Personnel Current Year Previous Year Salary and Perquisites ESOP and SAR Contribution to Provident and Other Funds Expenses towards gratuity and leave encashment provisions are determined actuarially on an overall Company basis at the end of each year and, accordingly, have not been considered in the above information, except to the extent of amount paid to Dr. Rakesh Jain. NOTE: 42 The Company has incurred ` 7.40 Crore (Previous Year: ` 9.61 Crore) towards Corporate Social Responsibility activities as per Section 135 of the Companies Act, 2013, and Rules thereon. It is included in different heads of expenses in the Statement of Profit and Loss. 217

227 Standalone Financial Statements NOTE: 43 NOTE ON AMALGAMATION OF ABNL IT & ITES, ITSL AND ABMBPO Pursuant to the Scheme of Amalgamation (the Scheme) under Sections 391 to 394 of the Companies Act, 1956, ABNL IT & ITES Limited (ABNL IT & ITES) and Aditya Birla Minacs BPO Private Limited (ABMBPO) and Indigold Trade and Services Limited (ITSL), wholly owned subsidiaries of the Company, have been merged with the Company with effect from 1st October, 2015 (the Appointed Date) pursuant to the Order passed by the Hon ble High Court of Gujarat on 29th February, The effective date of the Scheme is 31st March, There were no business activities being carried out in these companies. In terms of the Scheme, all assets and liabilities of ABNL IT & ITES, ABMBPO and ITSL have been transferred and stand vested with the Company with effect from the Appointed Date at its respective book values on that date. ABNL IT & ITES, ABMBPO and ITSL carried on all its businesses and activities for the benefit of and in trust for, the Company from the Appointed Date. Thus, the profit or income accruing or arising to ABNL IT & ITES, ABMBPO & ITSL, or expenditure or losses arising or incurred by it from the Appointed Date have been treated as the profit or income or expenditure or loss, as the case may be, of the Company. The Scheme has accordingly been given effect to in these accounts. The Company has accounted for the arrangement as amalgamation in the nature of merger as prescribed by Accounting Standard-14 Accounting for Amalgamation (AS-14) issued by the Institute of Chartered Accountants of India (ICAI), which have been notified under Section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules, Accordingly, all the assets and liabilities of ABNL IT & ITES, ABMBPO and ITSL are recorded in the books of the Company at their book values as on the Appointed Date. In terms of the Scheme, the Company has acquired assets having Net Book Value of ` 1, Crore (as on 1st October, 2015) as detailed hereunder: ` in Crores Assets and Liabilities ABNL IT & ITSL ABMBPO Total ITES Loans and Advances Investments , , Cash and Bank Balances Other Assets Total Assets , , Less: Trade Payable, Provisions and Other Liabilities Borrowings Total Liabilities Net Book Value , , The difference between the net book value, after adjusting reserves of ABNL IT & ITES, ABMBPO and ITSL and the investment already made in ABNL IT & ITES, ABMBPO and ITSL (which is now cancelled as per the Scheme), is charged to Capital Reserve, in accordance with the Scheme, as detailed hereunder: ` in Crores Assets and Liabilities ABNL IT & ITSL ABMBPO Total ITES Net Book Value (as above) (A) , , Less: Deficit in the Statement of Profit and Loss considered as deficit in the Statement of Profit and Loss of the Company (B) (40.69) (2.40) (1.18) (44.27) Balance (A) (B) (C) , , Cancellation of the Company Investment into ABNL IT & ITES, ABMBPO and ITSL (D) , , The Balance Charged to Capital Reserve of the Company (C) (D) (E) (92.15) 0.78 (91.37) 218

228 Notes NOTE: 44 STATEMENT OF DERIVATIVES OUTSTANDING AT THE BALANCE SHEET DATE a) Derivatives: Outstanding at the Balance Sheet Date Amount in Foreign Currency Nature of Contract Foreign Option As at As at Purpose Currency 31st March, st March, 2015 Currency and Interest Rate Swap USD Buy 94,994, ,666,667 Hedging of Loan Currency and Interest Rate Swap JPY Buy 1,269,834,749 2,307,300,000 Hedging of Loan Forward Contracts USD Buy 81,755,175 90,221,528 Hedging Purpose Sell 8,924,245 23,194,250 Forward Contracts EUR Buy 7,342,555 15,427,036 Hedging Purpose Sell 2,235,341 3,524,110 Forward Contracts GBP Sell 1,207,490 1,577,166 Hedging Purpose Forward Contracts JPY Sell 111,044,500 Hedging Purpose Forward Contracts CNY Buy 4,063,500 Hedging Purpose Forward Contracts CHF Buy 27,208 Hedging Purpose Forward Contracts and Interest Rate Swap USD Buy 5,000,000 Hedging of Loan b) Foreign Currency Exposure which are not hedged As at 31st March, 2016 Particulars Currency Foreign Currency ` in Crores Trade Receivables USD 1,426, EUR 120, GBP 345, Loans and Advances USD 975, Trade Payables USD 4,502, EUR 1,601, GBP 133, Other Current Liabilities USD 376, EUR 125 ß As at 31st March, 2015 Particulars Currency Foreign Currency ` in Crores Trade Receivables USD 2,004, EUR 323, GBP 34, Loans and Advances USD 11, EUR 19, JPY 1,181, Trade Payables USD 6,750, AUD 536, EUR 243, GBP 3, Other Current Liabilities USD 401, EUR 10, NOTE: 45 EXCEPTIONAL ITEMS (i) ` 6.44 Crore received by ABNL IT & ITES Limited, a wholly owned subsidiary of the Company (merged with the Company), towards deferred consideration in respect of transaction for divestment of Aditya Birla Minacs Worldwide Limited that consummated during the previous year. (Refer Note: 43) (ii) ` Crore received towards facilitation for development of distribution network for financial service business. 219

229 Standalone Financial Statements NOTE: 46 OTHER SIGNIFICANT NOTES (i) The Company has presented segment information in its Consolidated Financial Statements, which are part of the same annual report. Accordingly, in terms of provisions of Accounting Standard on Segment Reporting (AS-17) no disclosure related to the segment are presented in the Standalone Financial Statements. (ii) As per the terms of the Stock Purchase Agreement (SPA) executed by ABNL IT & ITES (merged with the Company with effect from 1st October, Refer Note: 43) with a group of investors led by Capital Square Partners and CX Partners dated 30th January, 2014, Amendment Agreement dated 30th April, 2014, and Amended and Restated Amendment Agreement dated 8th May, 2014, ABNL IT & ITES (now merged with the Company with effect from 1st October, 2015) for divestment of Aditya Birla Minacs Worldwide Ltd. (ABMWL). (A) The Company has to receive from the purchaser (a) balance amount of CAD 0.91 Million (` 4.70 Crore) towards deferred consideration and (b) ` Crore towards tax refunds, which have been shown under other non-current assets. (B) The purchaser has made a claim of USD 0.70 Million (` 4.70 Crore) against the Company towards litigation and related expenses, which have been fully provided for and appearing as other non-current liability as on the Balance Sheet date. There is a limit on the indemnity amount and the indemnity period, i.e., USD 6 Million and 3 years from the date of closing, respectively. This limit, however, does not include (i) ownership of shares and assets and (ii) tax matters. (C) The details of Contingent Liability (included in Note: 25 (a)) in respect of tax matters are given below: Income tax matters: ` 1.68 Crore Service tax matters: ` Crore (iii) The Company is one of the Promoter members of Aditya Birla Management Corporation Private Limited, a Company limited by guarantee which has been formed to provide a common pool of facilities and resources to its members, with a view to optimise the benefits of specialisation and minimize cost to each member. The Company s share of expenses under the common pool has been accounted for under the appropriate head. (iv) (a) The Company has a process whereby periodically all long-term contracts are assessed for material foreseeable losses. At the year end, the Company has reviewed and ensured that adequate provision, as required under any law/accounting standards for material foreseeable losses on such long term contracts, has been made in the books of account. (b) The Company s pending litigations comprise of claims against the Company primarily by the workers/employees/ customers/suppliers and proceedings pending with Income Tax/Excise/Service Tax/VAT/Customs and other government authorities. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where Provisions are required and disclosed the contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial results. In respect of litigations, where the management assessment of a financial outflow is probable, the Company has made an adequate provision in the financial statements and appropriate disclosure for contingent liabilities is given in Note 25. (v) During the year, the Company has entered into an agreement with Sun Life of Canada, to sell 437,277,840 equity shares constituting 23% of the issued and paid-up equity shares of Birla Sun Life Insurance Company Limited (BSLI). With the regulatory approvals in place, from Insurance Regulatory and Development Authority of India ( IRDAI ), Foreign Investment Promotion Board ( FIPB ) and Competition Commission of India ( CCI ) the transaction was consummated during second week of April The Company has received ` 1,664 Crore from stake sale, valuing BSLI at ` 7,235 Crore. The Company continues to hold the controlling stake in BSLI at 51%. (vi) Figures of ` 50,000 or less have been denoted by ß. (vii) Previous Year s figures have been regrouped/rearranged, wherever necessary. As per our attached Report of even date For and on behalf of the Board of Directors For KHIMJI KUNVERJI & CO. For S R B C & CO LLP KUMAR MANGALAM BIRLA ICAI Firm Registration No W ICAI Firm Registration No E/E Chairman Chartered Accountants Chartered Accountants LALIT NAIK Managing Director 220 PINKY MEHTA Chief Financial Officer Per SHIVJI K. VIKAMSEY Per VIJAY MANIAR Partner Partner ASHOK MALU Membership No Membership No President & Company Secretary Mumbai, May 20, 2016 Mumbai, May 20, 2016 RAJASHREE BIRLA TARJANI VAKIL P. MURARI B. R. GUPTA S. C. BHARGAVA V. CHANDRASEKARAN Directors

230 Independent Auditors Report CONSOLIDATED FINANCIAL STATEMENTS 221

231 Consolidated Financial Statements THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK 222

232 Independent Auditors Report Independent Auditors Report on the Consolidated Financial Statements To the Members of Report on the Consolidated Financial Statements We have audited the accompanying consolidated financial statements of (hereinafter referred to as the Holding Company ), its subsidiaries (the Holding Company and its subsidiaries together referred to as the Group ), and a jointly controlled entity, comprising of the consolidated Balance Sheet as at March 31, 2016, the consolidated Statement of Profit and Loss and consolidated Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information (hereinafter referred to as the consolidated financial statements ). Management s Responsibility for the Consolidated Financial Statements The Holding Company s Board of Directors is responsible for the preparation of these consolidated financial statements in terms with the requirement of the Companies Act, 2013 ( the Act ) that give a true and fair view of the consolidated financial position, consolidated financial performance and consolidated cash flows of the Group including its jointly controlled entity in accordance with accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, The respective Board of Directors of the companies included in the Group and jointly controlled entity are responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the respective entities and for preventing and detecting frauds and other irregularities; the 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. These respective financial statements have been used for the purpose of preparation of the consolidated financial statements by the Directors of the Holding Company, as aforesaid. Auditor s Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. While conducting the 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 consolidated financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Holding Company s preparation of the consolidated financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Holding Company s Board of Directors, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence obtained by us and the audit evidence obtained by the other auditors in terms of their reports referred to in paragraph (a) of the Other Matters below, is sufficient and appropriate to provide a basis for our audit opinion on the consolidated financial statements. Opinion In our opinion and to the best of our information and according to the explanations given to us, the consolidated 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 consolidated state of affairs of the Group, its jointly controlled entity as at March 31, 2016, their consolidated profit and their consolidated cash flows for the year ended on that date. 223

233 Consolidated Financial Statements Emphasis of Matter The auditors of Idea Cellular Limited ( Idea ), a jointly controlled entity, without qualifying their opinion on the consolidated financial statements of Idea have drawn attention to note no. 26 (f) to the consolidated financial statements which describes the uncertainties related to the legal outcome in respect of the Department of Telecommunication (DOT) demand notices for one time spectrum charges. Our opinion on the consolidated financial statements, and our report on Other Legal and Regulatory Requirements below, is not modified in respect of the above matters. Other Matters (a) The accompanying consolidated financial statements include total assets of ` 81,090 crores as at March 31, 2016, and total revenues of ` 17,662 crores and net cash out flows of ` 249 crores for the year ended on that date, in respect of twenty eight subsidiaries and a jointly controlled entity, which have been audited either by one of us or by one of us jointly with others or by other auditors, whose financial statements, other financial information and auditor s reports have been furnished to us by the management. Our opinion on the consolidated financial statements, in so far as it relates to the amounts and disclosures included in respect of these subsidiaries and jointly controlled entity is based solely on such reports. (b) (c) The auditors of Birla Sun Life Insurance Company Limited ( BSLI ), a subsidiary company, have reported that the actuarial valuation of liabilities of BSLI for life policies in force and for policies in respect premium has been discontinued but liability exists as at March 31, 2016 is the responsibility of BSLI s Appointed Actuary ( the appointed actuary ). The actuarial valuation of these liabilities for life policies in force and for policies in respect of which premium has been discontinued but liability exists as at March 31, 2016 has been duly certified by the appointed actuary and in appointed actuary s opinion, the assumptions for such valuation are in accordance with the guidelines and norms issued by the Insurance Regulatory and Development Authority ( IRDA ) and the Institute of Actuaries of India in concurrence with IRDA. BSLI s auditors have relied on the appointed actuary s certificate in this regard for forming their opinion on financial statements of BSLI. The Company has not consolidated financial statements Aditya Birla Idea Payment Bank Limited ( ABIPBL ), a subsidiary which was incorporated on February 19, ABIPBL will prepare its first full financial statements for the period ending on March 31, According to the information and explanations given to us by the management, the impact of non-consolidation on the Statement would be immaterial. Our opinion on the consolidated financial statements, and our report on Other Legal and Regulatory Requirements below, is not modified in respect of the above matters. Report on Other Legal and Regulatory Requirements As required by section 143 (3) of the Act, we report, to the extent applicable, 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 of the aforesaid consolidated financial statements; (b) In our opinion proper books of account as required by law relating to preparation of the aforesaid consolidation of the financial statements have been kept so far as it appears from our examination of those books and reports of the other auditors; (c) The consolidated Balance Sheet, consolidated Statement of Profit and Loss, and consolidated Cash Flow Statement dealt with by this Report are in agreement with the books of account maintained for the purpose of preparation of the consolidated financial statements; (d) In our opinion, the aforesaid consolidated financial statements comply with the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014; (e) On the basis of the written representations received from the directors of the Holding Company as on March 31, 2016 taken on record by the Board of Directors of the Holding Company and the reports of the auditors, of its subsidiary companies and a jointly controlled entity incorporated in India, none of the directors of the Holding Company, its subsidiaries and jointly controlled entity incorporated in India is disqualified as on March 31, 2016 from being appointed as a director in terms of Section 164 (2) of the Act; (f) With respect to the adequacy and the operating effectiveness of the internal financial controls over financial reporting, refer to our separate report in Annexure A to this report which is based on the auditor s report of the Holding Company, its subsidiaries and a jointly controlled entity, incorporated in India; 224

234 Independent Auditors Report (g) With respect to the other matters to be included in the Auditor s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us and based on the auditor s report of the Holding Company, its subsidiaries and a jointly controlled entity: i. The consolidated financial statements disclose the impact of pending litigations on the consolidated financial position of the Group and a jointly controlled entity Refer Note 41(ii) to the consolidated financial statements; ii. iii. Provision has been made in the consolidated financial statements, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts Refer Note 41(i) to the consolidated financial statements; and There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Holding Company, its subsidiaries and a jointly controlled entity incorporated in India. For and on behalf of Khimji Kunverji & Co. Chartered Accountants ICAI Firm Registration Number: W For and on behalf of S R B C & CO LLP Chartered Accountants ICAI Firm Registration Number: E/E per Shivji K. Vikamsey per Vijay Maniar Partner Partner Membership Number: 2242 Membership Number: Mumbai Mumbai Date: May 20, 2016 Date: May 20,

235 Consolidated Financial Statements ANNEXURE A TO THE INDEPENDENT AUDITORS REPORT Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (the Act ) In conjunction with our audit of the consolidated financial statements of the Company as of and for the year ended March 31, 2016, we report on internal financial controls over financial reporting of (hereinafter referred to as the Holding Company ), its subsidiaries (the Holding Company and its subsidiaries together referred to as the Group ), and a jointly controlled entity, incorporated in India, based on the auditor s report of respective entities. Management s Responsibility for Internal Financial Controls The respective Board of Directors of the Holding Company, its subsidiaries and a jointly controlled entity, incorporated in India, are responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the respective entities considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the Guidance Note ) issued by the Institute of Chartered Accountants of India ( ICAI ). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to respective company s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013 ( the Act ) including with respect to BSLI, the provisions of the Insurance Act, 1938 as amended by the Insurance Laws (Amendment) Act, 2015 read with Insurance Regulatory and Development Authority of India circular IRDA/F&A/CIR/CPM/056/03/2016 dated April 4, 2016 (the Insurance Act ), the Insurance Regulatory and Development Authority Act, 1999 (the IRDA Act ), the IRDA Financial Statements Regulations, orders/directions issued by the Insurance Regulatory and Development Authority of India (the IRDA ) in this regard. Auditors Responsibility Our responsibility is to express an opinion on the internal financial controls over financial reporting of Group and a jointly controlled entity based on our audit. We conducted our audit in accordance with the Guidance Note issued by the ICAI and the Standards on Auditing prescribed under Section 143(10) of the Act, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. We believe that the audit evidence we have obtained and in terms of other auditor s report referred to in paragraph (a) of the Other Matters below, the audit evidence obtained by them, is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls system over financial reporting of Group and a jointly controlled entity. Meaning of Internal Financial Controls Over Financial Reporting A company s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company s assets that could have a material effect on the financial statements. 226

236 Independent Auditors Report Inherent Limitations of Internal Financial Controls Over Financial Reporting Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Opinion In our opinion, to the best of our information and according to the explanations given to us and based on auditor s report of twenty one subsidiaries and a jointly controlled entity, the Holding Company, its subsidiaries and a jointly controlled entity, incorporated in India, have, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2016, based on the internal control over financial reporting criteria established by the respective entities considering the essential components of internal control stated in the Guidance Note issued by the ICAI. Other Matters (a) Our aforesaid report under Section 143(3)(i) of the Act on the adequacy and operating effectiveness of the internal financial controls over financial reporting insofar as it relates to twenty one subsidiary companies and a jointly controlled company, which are companies incorporated in India, is based on the corresponding reports of the auditors of such companies. (b) The auditors of Birla Sun Life Insurance Company Limited ( BSLI ), a subsidiary company, have reported that the actuarial valuation of liabilities of BSLI for life policies in force and policies where premium is discontinued is required to be certified by the Appointed Actuary as per the Insurance Regulatory and Development Authority (Preparation of Financial Statements and Auditor s Report of Insurance Companies) Regulations, 2002 (the IRDA Financial Statements Regulations ) read with Insurance Regulatory and Development Authority of India circular IRDA/F&A/CIR/CPM/056/03/2016 dated April 4, 2016, and has been relied upon by the auditors of BSLI, as mentioned in Other Matter para (b) of our audit report on the consolidated financial statements of the Holding Company as at and for the year ended March 31, Accordingly, auditors of BSLI have not audited the internal financial controls over financial reporting in respect of the valuation and accuracy of the aforesaid actuarial valuation. For and on behalf of Khimji Kunverji & Co. Chartered Accountants ICAI Firm Registration Number: W For and on behalf of S R B C & CO LLP Chartered Accountants ICAI Firm Registration Number: E/E per Shivji K. Vikamsey per Vijay Maniar Partner Partner Membership Number: 2242 Membership Number: Mumbai Mumbai Date: May 20, 2016 Date: May 20,

237 228 Consolidated Financial Statements Consolidated Balance Sheet As at 31st March, 2016 ` in Crores As at As at Note No. 31st March, st March, 2015 EQUITY AND LIABILITIES (A) Shareholders Funds Share Capital 2A Reserves and Surplus 3 14, , Equity Attributable to Owners of the Parent Minority Interest 14, , Total Equity Sub-Total - (A) 15, , (B) Preference Shares issued by Subsidiary and Joint Venture Companies 2B (C) Non-Current Liabilities Long-term Borrowings 4A 24, , Deferred Tax Liabilities (Net) Other Long-term Liabilities 6A Long-term Provisions 7A Policyholders Fund 27, , Fund for Discontinued Policies Fund for Future Appropriations Sub-Total - (C) 54, , (D) Current Liabilities Short-term Borrowings 4B 9, , Trade Payables - Total Outstanding Dues of Micro Enterprises and Small Enterprises Creditors other than Micro Enterprises and Small Enterprises 1, , Other Current Liabilities 6B 5, , Short-term Provisions 7B Policyholders Fund Fund for Discontinued Policies Fund for Future Appropriations Sub-Total - (D) 18, , TOTAL (A) + (B) + (C) + (D) 88, , ASSETS (E) Non-Current Assets Fixed Assets Tangible Assets 8A 7, , Intangible Assets 8B 12, , Capital Work-in-Progress 1, , Intangible Assets under Development , , Non-Current Investments Investments of Life Insurance Business 9A 6, , Other Investments 10A 1, Assets Held to Cover Linked Liabilities of Life Insurance Business 11A 20, , Deferred Tax Assets (Net) Long-term Loans and Advances 12A 19, , Other Non-Current Assets 13A Sub-Total - (E) 69, , (F) Current Assets Current Investments Investments of Life Insurance Business 9B Other Investments 10B 1, , Assets Held to Cover Linked Liabilities of Life Insurance Business 11B 3, , Stock of Securities of NBFC Business 14A Inventories 14B , Trade Receivables 15 1, , Cash and Bank Balances , Short-term Loans and Advances 12B 9, , Other Current Assets 13B Sub-Total - (F) 18, , TOTAL (E) + (F) 88, , Significant Accounting Policies 1 The accompanying Notes are an integral part of the Financial Statements. As per our attached Report of even date For and on behalf of the Board of Directors For KHIMJI KUNVERJI & CO. For S R B C & CO LLP KUMAR MANGALAM BIRLA ICAI Firm Registration No W ICAI Firm Registration No E/E Chairman Chartered Accountants Chartered Accountants LALIT NAIK Managing Director PINKY MEHTA Chief Financial Officer Per SHIVJI K. VIKAMSEY Per VIJAY MANIAR Partner Partner ASHOK MALU Membership No Membership No President & Company Secretary Mumbai, May 20, 2016 Mumbai, May 20, 2016 RAJASHREE BIRLA TARJANI VAKIL P. MURARI B. R. GUPTA S. C. BHARGAVA V. CHANDRASEKARAN Directors

238 Balance Sheet / Statement of Profit and Notes Loss } Consolidated Statement of Profit and Loss For the year ended 31st March, 2016 ` in Crores Year Ended Year Ended Note No. 31st March, st March, 2015 Revenue from Operations 17 23, , Less: Excise Duty (194.90) (180.08) Net Revenue from Operations 23, , Other Income Total Revenue 23, , Expenses Cost of Materials Consumed 19 2, , Purchase of Stock-in-Trade , Changes in Inventories of Finished Goods, Work-in-Progress and Stock-in-Trade 20 (69.06) (95.47) Employee Benefits Expenses 21 1, , Benefits Paid (Life Insurance Business) 4, , Change in Valuation of Liability in respect of Life Insurance Policies in Force Other Expenses 23 7, , Total Expenses 17, , Profit Before Depreciation/Amortisation, Interest and Tax (PBDIT) 6, , Depreciation and Amortisation Expenses 24 1, , Finance Cost 25 2, , Profit Before Exceptional Item and Tax 2, , Exceptional Items (13.33) Profit Before Tax 2, , Tax Expenses Current Tax MAT Credit (150.92) (0.99) Short/(Excess) Provision for Tax of Earlier Years (Net) (25.72) (3.88) Deferred Tax Profit for the Year 2, , Profit for the Year Attriburable to Owners of Parent 1, , Minority Interest Profit for the Year 2, , Profit Before Tax from Continuing Operations 2, , Tax Expense of Continuing Operations Profit from Continuing Operations (A) 1, , Profit/(Loss) Before Tax from Ordinary Activities of Discontinued Operations 3.72 Profit/(Loss) Before Tax from Sale of Assets Attributable to Discontinued Operations (13.33) Tax Expense/(Credit) from Ordinary Activities of Discontinued Operations Profit/(Loss) from Discontinued Operations (B) (112.73) Profit for the Year (A) + (B) 2, , Basic Earnings Per Share (`) Diluted Earnings Per Share (`) (Face Value of ` 10/- each) Significant Accounting Policies 1 The accompanying Notes are an integral part of the Financial Statements. As per our attached Report of even date For and on behalf of the Board of Directors For KHIMJI KUNVERJI & CO. For S R B C & CO LLP KUMAR MANGALAM BIRLA ICAI Firm Registration No W ICAI Firm Registration No E/E Chairman Chartered Accountants Chartered Accountants LALIT NAIK Managing Director PINKY MEHTA Chief Financial Officer Per SHIVJI K. VIKAMSEY Per VIJAY MANIAR Partner Partner ASHOK MALU Membership No Membership No President & Company Secretary Mumbai, May 20, 2016 Mumbai, May 20, 2016 RAJASHREE BIRLA TARJANI VAKIL P. MURARI B. R. GUPTA S. C. BHARGAVA V. CHANDRASEKARAN Directors 229

239 Consolidated Financial Statements Consolidated Cash Flow Statement For the year ended 31st March, 2016 ` in Crores PARTICULARS A CASH FLOW FROM OPERATING ACTIVITIES Profit Before Tax 2, , Adjustments for: Exceptional Items (Refer Note: 28(a) & 28(d)) (357.42) Depreciation and Amortisation 1, , Change in Valuation of Liabilities in respect of life Policies Provision/(Reversal) of Diminution in Value of Fertiliser Bonds (1.54) Contingency Provision reversed (19.81) Provision for Bad and Doubtful Debts & Advances and Bad Debts written off Expense on Employee Stock Options Scheme Expense on Employee Stock Appreciation Rights Unrealised (Gain)/Loss on Foreign Exchange Finance Costs Interest Income (61.24) (54.77) (Profit)/Loss on Fixed Assets Sold (5.65) (10.67) (Profit)/Loss on Sale of Investments (89.36) (146.02) Dividend Income (6.00) 2, (6.54) 2, OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 5, , Adjustments for: Decrease/(Increase) in Trade Receivables (38.08) (214.63) Decrease/(Increase) in Loans and Advances (10,016.71) (5,467.17) Decrease/(Increase) in Other Assets (599.64) (49.02) Decrease/(Increase) in Inventories (65.05) (201.62) Decrease/(Increase) in Stock of Securities (350.84) Decrease/(Increase) in Investment of Life Insurance Policyholders (239.40) (122.30) Increase/(Decrease) in Trade Payables Increase/(Decrease) in Other Liabilities Increase/(Decrease) in Provisions (9,767.48) (5,814.84) CASH GENERATED FROM OPERATIONS (4,440.25) (965.44) Income Taxes Refund/(Paid) (797.20) (654.67) B NET CASH FROM OPERATING ACTIVITIES (5,237.45) (1,620.11) CASH FLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets* (3,318.02) (1,900.28) Sale of Fixed Assets Acquisition of Additional Shares/Investments in Subsidiaries (Net of Cash and Cash Equivalents) (58.74) Sale of Units Subsidiaries (Net of Cash and Cash Equivalents) Sale/(Purchase) of Current Investments (Net) 1, (2,309.69) Purchase of Long-term Investments (106.64) (422.43) Sale of Long-term Investments Inter-Corporate Deposits Received Back Inter-Corporate Deposits Given (13.00) (36.00) Interest Received (Increase)/Decrease in Other Bank Deposits (Original Maturity more than three months) (29.49) (26.95) Dividend Received on Other Long-term Investments Dividend Received on Current Investments NET CASH (USED IN)/FROM INVESTING ACTIVITIES (1,010.83) (4,337.21) 230

240 Cash Flow Statement Notes PARTICULARS ` in Crores C CASH FLOW FROM FINANCING ACTIVITIES Proceeds from Issue of Shares (including Securities Premium) Share of Proceeds from Issue of Shares by JV Share of Proceeds from Issue of Shares by Subsidiaries Redemption of Preference Shares (0.10) Repayment of Borrowings (3,350.91) (2,221.23) Proceeds from Borrowings* 9, , Dividends Paid by the Company (91.12) (91.08) Dividend Paid by the Joint Venture Company relating to earlier years (0.02) (2.59) Dividend Paid by Subsidiaries to Minority Shareholders (7.91) (23.20) Corporate Dividend Tax Paid (30.13) (52.27) Interest Paid (487.28) (619.37) NET CASH (USED IN)/FROM FINANCING ACTIVITIES 5, , NET INCREASE IN CASH AND CASH EQUIVALENTS (267.34) CASH AND CASH EQUIVALENTS (OPENING BALANCE) 1, CASH AND CASH EQUIVALENTS (CLOSING BALANCE) , (Refer Note: 16) * Excluding deferred payment liability towards spectrum won in auction by IDEA, being non-cash transaction. Significant Accounting Policies Refer Note: 1 The accompanying Notes are an integral part of the Financial Statements. As per our attached Report of even date For and on behalf of the Board of Directors For KHIMJI KUNVERJI & CO. For S R B C & CO LLP KUMAR MANGALAM BIRLA ICAI Firm Registration No W ICAI Firm Registration No E/E Chairman Chartered Accountants Chartered Accountants LALIT NAIK Managing Director PINKY MEHTA Chief Financial Officer Per SHIVJI K. VIKAMSEY Per VIJAY MANIAR Partner Partner ASHOK MALU Membership No Membership No President & Company Secretary Mumbai, May 20, 2016 Mumbai, May 20, 2016 RAJASHREE BIRLA TARJANI VAKIL P. MURARI B. R. GUPTA S. C. BHARGAVA V. CHANDRASEKARAN Directors 231

241 Consolidated Financial Statements Notes Forming Part of Consolidated Financial Statements NOTE: 1 SIGNIFICANT ACCOUNTING POLICIES: I. BASIS OF PREPARATION The Consolidated Financial Statements (CFS) comprise the financial statement of Aditya Birla Nuvo Ltd. ( the Company ) and its Subsidiaries, Joint Ventures and Associates (hereinafter referred to as the Group Companies and together as the Group ) (Refer Annexure A to Note-1 ). The CFS of the Group have been prepared in accordance with the generally accepted accounting principles in India (Indian GAAP) under the historical cost convention on an accrual basis in compliance with all material aspect of the Accounting Standards (AS) notified under Section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014, in case of Life Insurance Company guidelines issued by the Insurance Regulatory and Development Authority (IRDA), in case of Non-Banking Financial Companies (NBFCs) guidelines issued by the Reserve Bank of India (RBI), as applicable to NBFC and in case of Housing Finance Companies (HFC) directions and guidelines issued by the National Housing Regulators as applicable to HFC, amended from time to time. The accounting policies adopted in the preparation of financial statements are consistent with those of previous year, except for the change in accounting policy explained in paragraph II below. All assets and liabilities have been classified as current or non-current as per the Group s normal operating cycle, and other criteria set out in the Schedule III of the Companies Act, Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The Group has ascertained its operating cycle as upto twelve months for the purpose of current/non-current classification of assets and liabilities. II. III. IV. CHANGE IN ACCOUNTING POLICY a. Aditya Birla Finance Limited (ABFL), a wholly owned subsidiary of the Company, has discontinued contingency provision in the current year created based on the management judgement. Accordingly, the Company has reversed general contingency provision of ` Crore lying in the books of account as on 31st March, As a result, the Profit before tax is higher by ` Crore in the current year. b. ABFL has revised recognition norms of Non-Performing Assets (NPA) from six months to five months and the increased provisions on standard assets from 0.25% to 0.30% pursuant to Reserve Bank of India (RBI) Notification No. DNBR. 009/CGM (CDS) , dated 27th March, 2015, which has resulted in additional provision on loan portfolio of ` Crore in the current year. Accordingly, the Profit before tax is lower by ` Crore in the current year. USE OF ESTIMATES The preparation of Consolidated Financial Statements in conformity with Indian GAAP requires the management to make judgements, estimates and assumption that affect reported amounts of revenues, expenses, assets and liabilities and disclosure of contingent liabilities, at the date of the financial statements and the results of operations during the reporting period end. Although, these estimates are based on the management s best knowledge of current events and actions, uncertainty about these judgements, assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods. PRINCIPLES OF CONSOLIDATION The financial statements are prepared in accordance with the principles and procedures required for the preparation and presentation of Consolidated Financial Statements as laid down under the Accounting Standard (AS)-21, Consolidated Financial Statements. The Consolidated Financial Statements are prepared by applying uniform accounting policies in use at the Group. Investments in Associate Companies have been accounted under the equity method as per AS-23 Accounting for Investments in Associates in Consolidated Financial Statements. Interests in Joint Ventures have been accounted by using the proportionate consolidation method as per AS-27 Financial Reporting of Interests in Joint Ventures. The excess/deficit of cost to the Company of its investment over its portion of net worth in the consolidated entities at the respective dates, on which the investment in such entities was made, is recognised in the CFS as Goodwill/Capital Reserve. Minority Interest in the net assets of Subsidiaries consists of: i. The amount of equity attributable to the minorities at the date on which investment in Subsidiary is made. ii. The minorities share of movements in equity since the date the parent subsidiary relationship came into existence. Entities acquired during the year have been consolidated from the respective dates of their acquisition. List of companies included in Consolidation are mentioned in Annexure A. V. TANGIBLE FIXED ASSETS AND DEPRECIATION Tangible Fixed Assets are stated at cost, less accumulated depreciation and impairment loss, if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Each part of an item of property, plant and equipment, with a cost that is significant in relation to the total cost of the item, is depreciated separately. This applies mainly to components for machinery. When significant parts of fixed assets are required to be replaced at intervals, the Group recognises such parts as individual assets with specific useful lives and depreciates them accordingly. Any trade discounts and rebates are deducted in arriving at the purchase price. Depreciation on Tangible Fixed Assets is provided on Straight-Line Method using the rates arrived at based on the useful lives as specified in the Schedule II of the Companies Act, 2013, or estimated by the management. The Group has used the following useful life to provide depreciation on its fixed assets. 232

242 Notes A: Assets where useful life is same as Schedule II Assets Useful Life as Prescribed by Schedule II of the Companies Act, Plant & Machinery:- Continuous Process Plant 25 Years 2. Buildings (other than factory buildings) RCC Frame Structure 60 Years 3. Factory Buildings 30 Years 4. Fences, Wells, Tube Wells 5 Years 5. Borewell (Pipes, Tubes and Other Fittings) 5 Years 6. Bridges, Culverts, Bunders, etc. 30 Years 7. Others (including temporary structure, etc.) 3 Years 8. Carpeted Roads RCC 10 Years 9. Carpeted Roads other than RCC 5 Years 10. Non-carpeted Roads 3 Years 11. General Laboratory Equipment 10 Years 12. Electrical Installations and Equipment (At Factory) 10 Years 13. Motors, Tractors, Harvesting Combines and Heavy Vehicles 8 Years B: Assets where useful life differ from Schedule II Assets Useful Life as Prescribed Estimated Useful Life by Schedule II of the Companies Act, Plant & Machinery: 1.1. Other than Continuous Process Plant (Single Shift) 15 Years 15 Years and 20 Years 1.2. Other than Continuous Process Plant (Double Shift) Additional 50% depreciation over single shift (10 Years) 20 Years 1.3. Other than Continuous Process Plant (Triple Shift) Additional 100% depreciation over single shift (7.5 Years) 10 Years and 15 Years 2. Thermal/Gas/Combined Cycle Power Generation Plant 40 Years 25 Years 3. Buildings (other than factory buildings) other than RCC Frame Structure 30 Years 60 Years 4. Office Electronic Equipment 5 Years 4 Years 5. Office Computers (end-user devices, desktop, laptops) 3 Years 3 to 5 Years 6. Servers 6 Years 3 to 5 Years 7. Vehicles 8-10 Years 4 to 5 Years 8. Electrically-operated Vehicles 8 Years 5 Years 9. Furniture & Fixtures and Other Office Equipment 10 Years 2 to 10 Years 10. Network Equipment (including towers and shelters) 18 Years 7 to 20 Years 11. Optical Fibre 18 Years 15 Years Useful life of assets different from prescribed in Schedule II has been estimated by the management supported by technical assessment. C: Plant and Machinery Separately identified Component of Plant and Machinery 2 to 25 Years D: Leasehold Assets 1. Leasehold Land Period of Lease 2. Leasehold Improvements Period of Lease Fixed Assets, individually costing less than Rupees five thousand, are fully depreciated in the year of purchase. Depreciation on the Fixed Assets added/disposed off/discarded during the year is provided on pro-rata basis with reference to the month of addition/disposal/discarding and in the case of capitalisation of Greenfield/ Brownfield project, depreciation is charged from the date the project is ready to commence commercial production to the Statement of Profit and Loss. Asset Retirement Obligations in Telecom Business are capitalised based on a constructive obligation as a result of past events, when it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made. Such costs are depreciated over the remaining useful life of the assets. 233

243 Consolidated Financial Statements VI. INTANGIBLE ASSETS AND AMORTISATION Intangible Assets are stated at acquisition cost, net of accumulated amortisation and accumulated impairment losses, if any. Intangible assets are amortised on a straight-line basis over their estimated useful lives. Assets Estimate Useful Life 1. Brands/Trademarks 5 to 10 Years 2. Technical Know-how 7 Years 3. Computer Software 2 to 6 Years 4. Telecom Entry & Licence Fees and Bandwidth Over period of licence 5. Client Acquisition Cost 2 to 5 Years 6. Investment Management Rights Over period of 10 Years 7. Non-Compete Fees 3 Years 8. Goodwill Not being amortised (Tested for Impairment)* 9. Goodwill on Consolidation Not being amortised (Tested for Impairment) * Amortised by the subsidiaries before its acquisition by the Group. VII. VIII. IX. PRE-OPERATIVE EXPENDITURE Expenditure during the construction period incurred on projects, which are directly attributable to projects under implementation, are treated as Pre-operative expenses, pending allocation to the assets, and are included under Capital Work-in-Progress. These expenses are apportioned to fixed assets on commencement of commercial production. IMPAIRMENT OF ASSETS The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal/external factors. An asset is treated as impaired when the carrying cost of the assets exceeds its recoverable value. An impairment loss, if any, is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. Reversal of impairment losses recognised in the prior years is recorded when there is an indication that the impairment losses recognised for the assets no longer exist or have decreased. BORROWING COSTS Borrowing Costs attributable to acquisition and construction of qualifying assets are capitalised as a part of the cost of such assets up to the date when such assets are ready for its intended use. Other borrowing costs are charged to the Statement of Profit and Loss in the period in which they are incurred. X. TRANSLATION OF FOREIGN CURRENCY ITEMS Transactions in foreign currency are recorded at the rate of exchange prevailing on the date of transaction. Foreign currency monetary items are reported using closing rate of exchange at the end of the year. With respect to exchange difference arising on translation/settlement of long-term foreign currency items from 1st April, 2011, the Group has adopted the following policy: (i) Foreign exchange difference on account of a depreciable asset is adjusted in the cost of the depreciable asset, which would be depreciated over the balance life of the asset. (ii) In other cases, the foreign exchange difference is accumulated in a Foreign Currency Monetary Item Translation Difference Account, and amortised over the balance period of such long-term asset/liability. Exchange difference on re-statement of all other monetary items is recognised in the Statement of Profit and Loss. Other non-monetary items like fixed assets, investments in equity shares are carried in terms of historical cost using the exchange rate at the date of transaction. Translation of foreign subsidiary is done in accordance with AS-11 (Revised) The Effects of Changes in Foreign Exchange Rates. In the case of subsidiaries, the operation of which are considered as integral, the Balance Sheet items have been translated at closing rate except share capital and fixed assets, which have been translated at the transaction date. The income and expenditure items have been translated at the average rate for the year. Exchange Gain/(Loss) is recognised in the Statement of Profit and Loss. In case of subsidiaries, the operation of which are considered as non-integral, all assets and liabilities are converted at the closing rate at the end of the year, and items of income and expenditure have been translated at the weighted-average rates, where such rates approximate the exchange rate at the date of transaction. Exchange gain/(loss) arising on conversion is recognised under Foreign Currency Translation Reserve. XI. DERIVATIVE INSTRUMENTS Premium/Discount in respect of forward foreign exchange contract to hedge an underlying recorded asset or liability is recognised over the life of the contracts. Exchange differences on such contracts, except the contracts which are 234

244 Notes long-term foreign currency monetary items, are recognised in the Statement of Profit and Loss in the year in which the exchange rate changes. Profit/Loss on cancellation/renewal of forward exchange contract is recognised as income/expense for the year. The Group enters into forward contracts to hedge the foreign currency risk of firm commitments and highly probable forecast transactions, currency swap and interest rate swaps to hedge its risks associated with foreign currency fluctuations and interest rate and designates such forward contracts as cash flow hedge by applying the principles set out in the Accounting Standard-30 Financial Instruments: Recognition and Measurement. All such forward contracts are used as risk management tools and not for speculative purposes. For the forward contracts designated as cash flow hedges, the effective portion of the fair value of forward contracts are recognised in Hedging Reserve (net of taxes) under Reserves and Surplus, and reclassified into, i.e., recognised in the Statement of Profit and Loss in the period or periods during which the underlying hedged item assumed affects profit or loss. The ineffective portion of the change in fair value of such instruments is recognised in the Statement of Profit and Loss in the period in which they arise. If the hedging relationship ceases to be effective or it becomes probable that the expected transaction will no longer occur the hedge accounting is discontinued, and the fair value changes arising from the forward contracts are recognised in the Statement of Profit and Loss. As per The Institute of Chartered Accountants of India (ICAI) announcement regarding accounting for derivative contracts, other than covered under AS-11 and designated contracts described above, these are mark-to-market on the portfolio basis and net loss after considering the offsetting effect on the underlying hedged item is charged to the income statement. Net gains are ignored. XII. XIII. XIV. INVESTMENTS Investments, which are readily realisable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments. Investments are recorded at cost on the date of purchase, which includes acquisition charges such as brokerage, stamp duty, taxes, etc., but excludes pre-acquisition interest, i.e., from the previous coupon date to the transaction settlement date, if any, on purchase. If an investment is acquired in exchange of another asset, the acquisition is determined by reference to the fair value of the asset given up or by reference to the fair value of the investment acquired, whichever is more clearly evident. Current Investments are stated at lower of cost and net realisable value. Long-term investments are stated at cost after deducting provisions made, if any, for other than temporary diminution in the value. Investments of Life Insurance Business: Investments are made in accordance with the Insurance Act, 1938, the Insurance Regulatory and Development Authority (Investment) Regulations, 2000, the Insurance Regulatory and Development Authority (Investment) (Amendment) Regulations, 2001, and various other circulars/notifications issued by the IRDA in this context from time to time. i. Debt Securities a) Investments of Shareholders fund and non-linked fund of Policyholders: All debt securities, including government securities, are considered as held to maturity and stated at amortised cost. b) Policyholders linked funds: All debt securities, including government securities, are valued using CRISIL Bond Valuer/CRISIL Gilt Prices, as applicable. ii. iii. Equity Shares Listed equity shares are valued and stated at fair value, using the last quoted closing prices on the National Stock Exchange (NSE), at the Balance Sheet date. If the equity shares are not traded on the NSE, then closing prices of the Bombay Stock Exchange (BSE) is considered. Equity shares acquired through primary markets, and awaiting listing are valued at their issue price. Unlisted equity shares are valued as per the valuation policy duly approved by its Investment Committee. Mutual Funds Mutual fund units are valued at previous day s Net Asset Value. STOCK OF SECURITIES OF NBFC BUSINESS Stocks of securities of NBFC Business are valued at lower of cost and net realisable value. Cost includes cost of purchase and other directly attributable cost towards purchase costs. Net realisable value is the estimated fair value of securities as on the Balance Sheet date. INVENTORIES Raw materials, components, stores and spares, and packing material are valued at lower of cost and net realisable value. However, these items are considered to be realisable at cost if the finished products, in which they will be used, are expected to be sold at or above cost. 235

245 Consolidated Financial Statements Work-in-progress, finished goods and stock-in-trade are valued at lower of cost and net realisable value. Finished goods and work-in-progress include costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost of inventories is computed on a weighted-average basis. Proceeds in respect of sale of raw materials/stores are credited to the respective heads. Obsolete, defective and unserviceable inventory is duly provided for. Certified Emission Reductions (CERs) are valued at lower of cost and net realisable value. Cost includes consultant s fee and the cash payment made under the second levy to the concerned authorities for obtaining the credit of CERs. XV. XVI. GOVERNMENT GRANTS Government Grants are recognised when there is a reasonable assurance that the same will be received and all attaching conditions will be complied with. Revenue grants are recognised in the Statement of Profit and Loss. Capital grants relating to specific Tangible/Intangible Assets are reduced from the gross value of the respective Tangible/Intangible Assets. Other capital grants in the nature of promoter s contribution are credited to capital reserve. REVENUE RECOGNITION Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and can be reliably measured. Revenue from sale of products are recognised when the significant risks and rewards of ownership of the goods have passed to the buyer. Sales of goods are recorded net of trade discounts, rebates, Sales Tax, Value Added Tax and gross of Excise Duty. Revenue from services are recognised as they are rendered based on agreements/arrangements with the concerned parties and recognised net of Service Tax. In case of fixed price contracts revenue is recognised on percentage of completion method, and revenue from time and materials contract is recognised as the services are provided. Maintenance income is accrued evenly over the period of contract. Fertiliser price support under Group Concession and other Scheme of Government of India is recognised based on management s estimate taking into account known policy parameters and input price escalation/de-escalation. Income from Certified Emission Reductions (CERs) is recognised on sale of CERs. The property in merchandise of third party concession stores located within the main departmental store of the Group passes to the Group once a customer decides to purchase an item from the concession store. The Group, in turn, sells the item to the customer and is accordingly included under retail sales. Gift voucher sales are recognised when the vouchers are redeemed and goods are sold to the customer. Interest Income is recognised on a time proportion basis taking into account the amount outstanding and applicable interest rate except in case of NBFC business non-performing assets are recognised on receipt basis. Dividend income on investments is accounted for when the right to receive the payment is established. For Life Insurance Business, revenue is recognised as follows: Premium is recognised as income when due from policyholders. For unit-linked businesses, premium income is recognised when the associated units are created. Premium on lapsed policies is recognised as income when such policies are re-instated. Premiums are net of Service Tax on risk premium collected, if any. In case of Linked Business, Top-up premiums paid by policyholders are considered as single premium and are unitised as prescribed by the regulations. This premium is recognised when the associated units are created. Income from linked policies, which includes asset management fees, policy administration charges, mortality charges and other charges, if any, are recovered from the linked funds in accordance with the terms and conditions of the policies and recognised when due. Accretion of discount and amortisation of premium relating to debt securities is recognised over the remaining maturity period on a straight-line basis. The realised gain/loss on debt securities held for linked business and on sale of equity shares/mutual fund units is the difference between the net sale consideration and weighted-average cost. Reinsurance premium ceded is accounted for at the time of recognition of the premium income in accordance with the terms and conditions of the relevant treaties with the reinsurers. Impact on account of subsequent revisions to or cancellations of premium is recognised in the year in which they occur. In case of Telecom Business, Recharge fees on recharge vouchers is recognised as revenue as and when the recharge voucher is activated by the subscriber. Unbilled receivables, represent revenues recognised from the bill cycle date to the end of each month. These are billed in the subsequent periods as per the terms of the billing plans. Revenue from passive infrastructure is recognised on accrual basis (net of reimbursements) as per the contractual terms on straight-line method over the contract period. Income from Financial Services includes brokerage and fees on mutual fund units, bonds, fixed deposits, IPOs private equity and other alternative products, and services which is recognised when due, on completion of transaction. Management 236

246 Notes fees are recognised on accrual basis at specific rates, applied on the average daily net assets of each scheme. The fees charged are in accordance with the terms of Scheme Information Documents of respective schemes and are in line with the provisions of SEBI (Mutual Funds) Regulations, 1996, as amended from time to time. Advisory and portfolio management fees are accounted on an accrual basis as per contractual terms with clients. Income on discounted instruments is recognised over the tenure of the instrument on a straight-line basis. Stock and Commodity Brokerage Income is recognised on the trade date of the transaction upon confirmation of the transactions by the exchanges. Trusteeship fee is recognised on an accrual basis, in accordance with the terms of the Trust Deed. XVII. XVIII. XIX. XX. XXI. XXII. BENEFITS PAID (INCLUDING CLAIMS) In case of Life Insurance Business, deaths and other claims are accounted for, when notified. Survival and maturity benefits are accounted when due. Surrenders/Withdrawals under linked policies are accounted in the respective schemes when the associated units are cancelled. Reinsurance recoverable thereon is accounted for in the same period as the related claim. Repudiated claims, disputed before judicial authorities, are provided for based on the management prudence considering the facts and evidences available in respect of such claims. LICENCE FEES REVENUE SHARE (TELECOM BUSINESS) With effect from August 1, 1999, the variable Licence Fee computed at prescribed rates of revenue share is being charged to the Statement of Profit and Loss in the period in which the related revenue arises. Revenue for this purpose comprises adjusted gross revenue as per the licence agreement of the licence area to which the licence pertains. SCHEME EXPENSES (ASSET MANAGEMENT BUSINESS) Expenses relating to New Fund Offer are charged to the Statement of Profit and Loss. Expenses of schemes of Birla Sun Life Mutual Fund in excess of the stipulated limits as per SEBI (Mutual Fund) Regulations, 1996, and expenses incurred directly (inclusive of advertisement/brokerage of expenses) on behalf of the schemes of Birla Sun Life Mutual Fund are charged to the Statement of Profit and Loss in the year in which they are incurred. Trail Commission paid for future period for Equity Link Saving Schemes (ELSS), Fixed Tenure Schemes, Close-ended Schemes and Systematic Investment Plans (SIPs) in the different schemes during the year are treated as prepaid expenses, and such brokerage and commission are expensed out over three years in case of ELSS or duration of closed schemes or over the duration of the SIP. Any other brokerage/commission is expensed in the year in which they are incurred. Brokerage paid in advance in respect of Portfolio Management Business is amortised over the contractual period. DISTRIBUTION COST (PRIVATE EQUITY FUND) Distribution costs incurred by the Group in respect of Private Equity Fund I and the Aditya Birla Private Sunrise Fund, have been accrued over the Commitment Period and the extended Commitment Period of the Fund I and the Sunrise Fund, respectively, as defined in the Fund s Private Placement Memorandum. FUND FOR FUTURE APPROPRIATION AND FUND FOR DISCONTINUED POLICIES (LIFE INSURANCE BUSINESS) Amounts estimated by the Appointed Actuary as Funds for Future Appropriation in respect of lapsed Unit Linked Policies are set aside in the Balance Sheet, and are not available for distribution to shareholders until expiry of the revival period. Premium Discontinuance Fund represents the fund value of all policies which are issued and discontinued after July 2010 and are set-aside in the Balance Sheet as per requirement of relevant regulations. RETIREMENT AND OTHER EMPLOYEE BENEFITS a) Defined Contribution Plan: The Group makes defined contribution to Government Employee Provident Fund, Government Employee Pension Fund, Employee Deposit Linked Insurance, ESI and Superannuation Scheme which are recognised in the Statement of Profit and Loss on accrual basis. b) Defined Benefit Plan: The Group s liabilities under Payment of Gratuity Act, long-term compensated absences and pension are determined on the basis of actuarial valuation made at the end of each financial year using the projected unit credit method except for short-term compensated absences which are provided for based on estimates. Actuarial gains and losses are recognised immediately in the Statement of Profit and Loss as income or expense. Obligation is measured at the present value of estimated future cash flows using a discounted rate that is determined by reference to market yields at the Balance Sheet date on Government bonds where the terms of the Government bonds are consistent with the estimated terms of the defined benefit obligation. In respect of certain employees, Provident Fund contributions are made to a Trust administered by the Group. The interest rate payable to the members of the Trust shall not be lower than the statutory rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act, 1952, and shortfall, if any, shall be made good by the Group. The Group s liability is actuarially determined (using the Projected Unit Credit Method) at the end of the year, and any shortfall in the Fund size maintained by the Trust set-up by the Group is additionally provided for. Actuarial losses/gains are recognised in the Statement of Profit and Loss in the year in which they arise. c) Long-term Incentive Plan: Provision for long-term incentive plan for different cadre of employees is based on the estimated future liability of long term plan and the same is assessed on yearly basis. 237

247 Consolidated Financial Statements XXIII. XXIV. XXV. XXVI. EMPLOYEE STOCK OPTIONS The stock options and stock appreciation rights (SARs) granted are accounted for as per the accounting treatment prescribed by Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, issued by Securities and Exchange Board of India and the Guidance Note on Accounting for Employee Share-based Payments, issued by the ICAI, whereby the intrinsic value of the option is recognised as employee compensation. The employee compensation is charged to the Statement of Profit and Loss on the straight-line basis over the vesting period of the option. In respect of re-pricing of existing stock options, the incremental intrinsic value of the options is accounted as employee cost over the remaining vesting period. In case of forfeiture stock option, which is not vested, amortised portion is reversed by credit to employee compensation expense. In a situation where the stock option expires unexercised, the related balance standing to the credit of the Employee Stock Options Outstanding Account is transferred to the General Reserve. TAXATION Tax expense comprises of current and deferred tax. Provision for current tax is made on the basis of estimated taxable income for the current accounting year in accordance with the Income-tax Act, 1961, and tax laws prevailing in the respective tax jurisdictions the Group operates. Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognised amounts, and there is an intention to settle the asset and the liability on a net basis. The deferred tax for timing differences between the book and tax profits for the year is accounted for, using the tax rates and laws that have been substantively enacted as of the Balance Sheet date. Deferred tax assets arising from timing differences are recognised to the extent there is reasonable certainty that these would be realised in future. The carrying amount of deferred tax assets are reviewed at each Balance Sheet date. The Group writes down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes reasonably certain that sufficient future taxable income will be available. In case of unabsorbed losses and unabsorbed depreciation, deferred tax assets thereon are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profit. At each Balance Sheet date, the Group reassesses unrecognised deferred tax assets. Minimum Alternatives Tax (MAT) credit is recognised as an asset only when and to the extent there is convincing evidence that the companies in the Group will pay normal income tax during the specified period. In the year, in which the MAT credit becomes eligible to be recognised as an asset in accordance with the recommendations contained in the Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the Statement of Profit and Loss and shown as MAT Credit Entitlement. The companies in the Group review the same at each Balance Sheet date and write down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that the Group will pay normal Income Tax during the specified period. RESEARCH AND DEVELOPMENT Revenue expenditure on research is expensed under the respective heads of the account in the period in which it is incurred. Development expenditure is capitalised as an asset if the following conditions can be demonstrated: a) The technical feasibility of completing the asset so that it can be made available for use or sell. b) The Group has the intention to complete the asset and use or sell it. c) The Group has the ability to sell the asset. d) The future economic benefits are probable. e) The Group has the ability to measure the expenditure attributable to the asset during its development reliably. Other development costs, which do not meet the above criteria, are expensed out during the period in which they are incurred. OPERATING LEASES i. As a Lessee: Leases, where significant portion of risk and reward of ownership are retained by the Lessor are classified as Operating Leases, and lease rentals thereon are charged to the Statement of Profit and Loss on a straight-line basis over the lease term. ii. As a Lessor: The Group has leased certain tangible assets and such leases, where the Group has substantially retained all the risks and rewards of ownership, are classified as operating leases. Lease income is recognised in the Statement of Profit and Loss on a straight-line basis over lease term. Initial direct costs are recognised in the Statement of Profit and Loss. 238

248 Notes XXVII. FINANCE LEASE As a Lessee: Leases, where substantially all the risks and benefits incidental to ownership of the leased item are transferred to the Lessee, are classified as finance lease. The Group has capitalised the leased item at lower of fair value and present value of the minimum lease payments at the inception of the lease and disclosed as leased assets. Such assets are amortised over the period of lease or estimated life of such asset, whichever is less. Lease payments are apportioned between the finance charges and reduction of the lease liability based on implicit rate of return. Finance charges are charged directly against income. Lease management fees, lease charges and other initial direct costs are capitalised. XXVIII. CASH AND CASH EQUIVALENTS Cash and Cash Equivalents for the purpose of cash flow statement comprise cash on hand and cash at bank including fixed deposit with original maturity period of three months or less and short-term highly liquid investments with an original maturity of three months or less. XXIX. XXX. XXXI. SEGMENT REPORTING The accounting policies adopted for segment reporting are in conformity with the accounting policies adopted for the Group. The Group s operating businesses are organised and managed separately according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. The analysis of geographical segments is based on the areas in which major operating divisions of the Group operate. Further, inter-segment revenue have been accounted for based on the transaction price agreed to between segments which is primarily market based. Unallocated items include general corporate income and expense items, which are not allocated to any business segment. CASH FLOW STATEMENT Cash flows are reported using the indirect method, whereby the profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Group are segregated. EARNINGS PER SHARE Basic earnings per share are calculated by dividing the net profit for the year attributable to equity shareholders (after deducting preference dividends and attributable taxes) by the weighted-average number of equity shares outstanding during the period. The weighted-average number of equity shares outstanding during the period and for all periods presented is adjusted for events such as bonus issue; bonus element in a rights issue to existing shareholders; share split; and reverse share split (consolidation of shares) that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted-average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares. XXXII. CONTINGENT LIABILITIES AND PROVISIONS Contingent Liabilities are possible but not probable obligation as on the Balance Sheet date, based on the available evidence. Provisions are recognised when there is a present 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 a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the Balance Sheet date. In case of NBFC Business, Non-performing loans are written off/provided for, as per management estimates, subject to the minimum provision required as per the Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, Provision on Standard assets is 0.30% as per the notification DNBR 009/ CGM (CDS)-2015, dated March 27, 2015, issued by Reserve Bank of India. In case of Housing Finance Companies, Over due loans are written off/provided for, as per management estimates, subject to the minimum provision required as per Housing Finance Companies (NHB) Directions, 2010, as amended. Provision on Standard assets is made as per Housing Finance Companies (NHB) Directions,

249 Consolidated Financial Statements Annexure A to Note 1 Significant Accounting Policies Country of Proportion of Proportion of Incorporation Ownership Ownership Interest as on Interest as on 31st March, st March, 2015 SUBSIDIARIES Aditya Birla Financial Services Limited (ABFSL)* India % % Aditya Birla Capital Advisors Private Limited (ABCAPL) (Subsidiary of ABFSL) India % % Aditya Birla Customer Services Limited (ABCSL) (Formerly known as Aditya Birla Customer Services Private Limited) (Subsidiary of ABFSL) India 93.70% % Aditya Birla Trustee Company Private Limited (ABTCPL) (Subsidiary of ABFSL) India % % ABCAP Trustee Company Private Limited (Subsidiary of ABFSL) (w.e.f. 25th March, 2016) India % - Aditya Birla Money Limited (ABML) (Subsidiary of ABFSL) India 75.00% 75.00% Aditya Birla Commodities Broking Limited (ABCBL) (100% Subsidiary of ABML) India 75.00% 75.00% Aditya Birla Financial Shared Services Limited (ABFSSL) (Subsidiary of ABFSL) India % % Aditya Birla Finance Limited (ABFL) (Subsidiary of ABFSL) India % % Aditya Birla Securities Private Limited (ABSPL) (Subsidiary of ABFL) (ceased to be subsidiary w.e.f. 10th September, 2014) India Aditya Birla Housing Finance Limited (Subsidiary of ABFSL) India % % Aditya Birla Health Insurance Co. Limited (Subsidiary of ABFSL) (w.e.f. 22nd April, 2015) India % Aditya Birla Insurance Brokers Limited (ABIBL) (Subsidiary of ABFSL) India 50.01% 50.01% Aditya Birla Money Mart Limited (ABMML) (Subsidiary of ABFSL) India % % Aditya Birla Money Insurance Advisory Services Limited (Subsidiary of ABMML) India % % Birla Sun Life Asset Management Company Limited (BSAMC) (Subsidiary of ABFSL) India 51.00% 51.00% Birla Sun Life AMC (Mauritius) Ltd. (100% Subsidiary of BSAMC) Mauritius 51.00% 51.00% Aditya Birla Sun Life AMC Ltd., Dubai (100% Subsidiary of BSAMC) Dubai 51.00% 51.00% Aditya Birla Sun Life AMC Pte. Ltd., Singapore (100% Subsidiary of BSAMC) Singapore 51.00% 51.00% India Advantage Fund Limited** (Subsidiary of BSAMC) Mauritius 51.00% 51.00% International Opportunities Fund SPC(IOF)*** (Subsidiary of BSAMC) Cayman Islands 51.00% 51.00% Birla Sun Life Trustee Company Private Limited (BSTPL) (Subsidiary of ABFSL) India 50.85% 50.85% Birla Sun Life Insurance Company Limited (BSLICL) India 74.00% 74.00% Birla Sun Life Pension Management Limited (Subsidiary of BSLICL) (BSLPML) (w.e.f. 9th January, 2015) India 74.00% 74.00% ABNL Investment Limited (ABNLIL) India % % Shaktiman Mega Food Park Private Limited (SMFP) (Ownership interest upto 15th January, 2015, 94.00%) India % % Aditya Birla Renewables Limited (ABRL) (w.e.f. 7th August, 2015) (Ownership interest upto 6th October, 2015, 100%) India 51.00% Aditya Birla Idea Payments Bank Limited****(w.e.f. 19th February, 2016) India 51.00% ABNL IT & ITES Ltd. (ABNLIT) (merged with ABNL w.e.f. 1st October, 2015) India % Aditya Birla Minacs BPO Private Limited (ABMBPL) (merged with ABNL w.e.f. 1st October, 2015) India % Madura Garments Lifestyle Retail Company Limited (MGLRCL) (merged with ABFL w.e.f. 1st July, 2015) India % Indigold Trade and Services Limited (ITSL) (merged with ABNL w.e.f. 1st October, 2015) India % 240

250 Notes Country of Proportion of Proportion of Incorporation Ownership Ownership Interest as on Interest as on 31st March, st March, 2015 Pantaloons Fashions & Retail Limited (PFRL) (now known as Aditya Birla Fashion and Retail Limited (ABFRL) (Subsidiary of ITSL) (Ownership interest upto 29th September, 2014, 67.95%) (ceased to be subsidiary with effect from 1st April, 2015) India 72.62% Aditya Birla Minacs Worldwide Limited (ABMWL) (Subsidiary of ABNLIT) (ceased to be subsidiary w.e.f. 9th May, 2014) India Aditya Birla Minacs Philippines Inc. (ABMPI) (100% Subsidiary of ABMWL) (ceased to be subsidiary w.e.f. 9th May, 2014) Philippines AV TransWorks Limited (AVTL) (100% Subsidiary of ABMWL) (ceased to be subsidiary w.e.f. 9th May, 2014) Canada Aditya Birla Minacs Worldwide Inc. (ABMWI) (100% Subsidiary of AVTL) (ceased to be subsidiary w.e.f. 9th May, 2014) Canada Aditya Birla Minacs BPO Ltd. (ABMBL) (100% Subsidiary of ABMWI) (ceased to be subsidiary w.e.f. 9th May, 2014) U K Minacs Worldwide SA de CV (MWSC) (100% Subsidiary of ABMWI) (ceased to be subsidiary w.e.f. 9th May, 2014) Mexico The Minacs Group (USA) Inc. (MGI) (100% Subsidiary of ABMWI) (ceased to be subsidiary w.e.f. 9th May, 2014) USA Bureau of Collection Recovery, LLC (BCR) (100% Subsidiary of MGI) (ceased to be subsidiary w.e.f. 9th May, 2014) USA Minacs Limited (ML) (100% Subsidiary of ABMWI) (ceased to be subsidiary w.e.f. 9th May, 2014) UK Minacs Worldwide GmbH (MWGH) (100% Subsidiary of ML) (ceased to be subsidiary w.e.f. 9th May, 2014) Germany Minacs Kft. (100% Subsidiary of MWGH) (ceased to be subsidiary w.e.f. 9th May, 2014) Hungary Aditya Vikram Global Trading House Limited (AVGTHL) (ceased to be subsidiary w.e.f. 29th September, 2014) Mauritius JOINT VENTURES IDEA Cellular Limited (IDEA) India 23.26% 23.28% * Aditya Birla Financial Services Limited had applied to RBI and has obtained registration as Core Investment Company ( CIC ) under Section 45I of Reserve Bank of India Act, 1934, on October 16, ** India Advantage Fund Limited (IAFL), wholly owned Subsidiary of Birla Sun Life Asset Management Company Limited, is a collective investment scheme set-up as a fund in Mauritius with the status of a limited company under the Mauritius Companies Act. In terms of constitution and private placement memorandum, IAFL has classes of redeemable participating shares. Each class of participating shares has its own Balance Sheet and Statement of Profit and Loss. The Profit/Loss of each such class belongs to the participating shareholders of that class. Birla Sun Life Asset Management Company Limited (BSAMC) owns 100% of the management share, and the management shareholder is neither entitled to any beneficial interest in the profit/loss of various classes nor is required to make good any shortfall. In substance, there are no direct or indirect economic benefits received by the management shareholders. The substance over form must prevail. Accordingly, the Group has not consolidated IAFL in the Consolidated Financial Statements. *** Aditya Birla Sun Life AMC Pte. Limted, Singapore, has made investment in international Opportunities Fund. International Opportunities Fund SPC(IOF) is segregated portfolio company set-up as a fund in Cayman Islands under the Cayman Islands Monetary Act. In terms of constitution and private placement memorandum, IOF has various segregated portfolio which issue redeemable participating shares. Each Segregated Portfolio of participating shares has its own Balance Sheet and Profit and Loss Account. The Profit/Loss of each such Portfolio belongs to the participating shareholders of that segregated portfolio. Aditya Birla Sun Life Asset Management Pte. Limited (ABSLAMC) owns 100% of the management share and management shareholder is neither entitled to any beneficial interest in the profit/loss of various segregated portfolios nor is required to make good any shortfall. In substance there are no direct or indirect economic benefits received by the management shareholders. The substance over form must prevail. Accordingly, the Group has not consolidated IOF in the Consolidated Financial Statement. **** The Company, jointly with Idea Cellular Limited (IDEA), has incorporated a new subsidiary, namely, Aditya Birla Idea Payments Bank Limited (ABIPBL) wherein the Company holds 51% shares, and the balance 49% shares are held by IDEA. ABIPBL has been formed to set up a Payments Bank under the Guidelines for Licensing of Payments Banks issued on November 27, 2014, by the Reserve Bank of India. First full financials of ABIPBL shall be prepared for the period ended 31st March, 2017, hence, the same has not been consolidated. 241

251 Consolidated Financial Statements ` in Crores As at As at NOTE: 2A Numbers 31st March, st March, 2015 SHARE CAPITAL Authorised: Equity Shares of ` 10/- each 175,000, (175,000,000) Redeemable Preference Shares of ` 100/- each 500, (500,000) Issued: EQUITY SHARE CAPITAL Equity Shares of ` 10/- each 130,279, (130,279,180) Subscribed and Paid-up: EQUITY SHARE CAPITAL Equity Shares of ` 10/- each, fully paid-up 130,222, (130,137,193) 1) Reconciliation of the number of shares outstanding at the beginning and at the end of the period Sr. Description As at 31st March, 2016 As at 31st March, 2015 No. Equity Preference Equity Preference Shares Shares Shares Shares 1 No. of Shares outstanding at the beginning of the period 130,137, ,084,972 10,000 2 Allotment of Shares on exercise of option by employee under ESOS-2006 and ESOS ,665 52,221 3 Redemption of Preference Shares 10,000 4 No. of Shares outstanding at the end of the period 130,222, ,137,193 2) Term/Right Attached to Equity Shares The Company has only one class of equity shares having a par value of ` 10/- 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 Annual General Meeting. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution to all preferential holders. The distribution will be in proportion to the number of equity shares held by the shareholders. The Board of Directors has recommended Equity Dividend of ` 5 per share for the year ended 31st March, 2016 (Previous Year: ` 7.00 per share). The total cash outflows on account of the Equity Dividend would be ` Crore (Previous Year: ` Crore) and Dividend Distribution Tax thereon (Net of Tax Credit on dividend from subsidiary companies) would be ` Crore (Previous Year: ` Crore). 3) The Company does not have any Holding Company. 242

252 Notes 4) Equity Shares in the Company held by each shareholder holding more than 5 per cent shares and the number of equity shares held are as under: Sr. Name of Shareholder As at 31st March, 2016 As at 31st March, 2015 No. No. of % of Total No. of % of Total Shares Held Paid-up Equity Shares Held Paid-up Equity Share Capital Share Capital 1 IGH Holdings Private Limited 16,352, % 16,352, % 2 TGS Investment and Trade Private Limited 14,671, % 13,506, % 3 Umang Commercial Company Private Limited (Earlier known as Umang Commercial Company Limited) 12,494, % 12,494, % 4 Trapti Trading & Investments Private Limited 9,423, % 9,423, % 5 Hindalco Industries Limited 8,650, % 8,650, % 6 Turquoise Investments and Finance Private Limited 6,885, % 6,441, % 7 Life Insurance Corporation of India 6,065, % 7,276, % 5) Shares reserved for issue under options and contracts, including the terms and amounts: For details of Shares reserved for issue under the Employee Stock Options Plan (ESOP) of the Company refer Note: 35. 6) There are no Equity or Preference Shares issued as fully paid-up pursuant to any contract in consideration of other than cash or bought back during the preceding last five years. 7) Pursuant to the provisions of Section 126 of the Companies Act, 2013, the issue of following equity shares are kept in abeyance. Sr. Particulars No. of Shares No. As at As at 31st March, st March, Rights Issue (1994) 12,575 12,575 2 Bonus Share on Above 6,288 6,288 3 Rights Issue (2007) 22,460 22,460 8) Shares to be allotted upon exercise of ESOS Schemes 14,999 Shares (Previous Year: 100,664 Shares). 9) In the year 1997, the Company had forfeited 4,487 Shares held by 299 holders on account of non-payment of call money with interest on shares issued against each detachable warrant. 10) Equity Shares Nil (Previous Year: 3,168,459) are represented by Global Depository Receipts (GDRs). The GDR programme has since been terminated on 8th December, Each GDR was equivalent to underlying one equity share of the Company and, hence, upon termination of the GDR Programme, the paid-up equity share capital remains the same. 11) During the last five years there were no Bonus Shares issued. 12) Figures in brackets represent the corresponding number of shares for Previous Year. As at As at 31st March, st March, 2015 NOTE: 2B PREFERENCE SHARES ISSUED BY SUBSIDIARY AND JOINT VENTURE COMPANIES 6% Redeemable Cumulative Preference Shares of ` 100/- each, fully paid-up of the Subsidiary Company % Compulsorily Convertible Preference Shares of ` 10/- each, fully paid-up of the Subsidiary Company Compulsory Convertible Preference Shares of ` 10/- each, fully paid-up of the Subsidiary Company of Joint Venture Company

253 Consolidated Financial Statements ` in Crores As at As at 31st March, st March, 2015 NOTE: 3 RESERVES AND SURPLUS 1) Capital Reserve Opening Balance as per last audited Financial Statement Deduction: Amalgamation of Subsidiaries (Refer Note: 33) Demerger of Garment Business (Refer Note: 32) ) Capital Redemption Reserve Opening Balance as per last audited Financial Statement Addition: Transfer from Surplus/(Deficit) in the Statement of Profit and Loss on Redemption of Preference Shares ) Securities Premium Account Opening Balance as per last audited Financial Statement 6, , Addition: ESOP Exercised Transfer from Stock Options Outstanding Account on Exercise of Options Premium on issue of shares via QIP and Preferential Allotment (Net of Share issue expenses of ` Nil (Previous Year: ` 5.88 Crore) Premium on issue of Compulsorily Convertible Preference Shares of the Subsidiary Company Deduction: Stake Change in Joint Venture , , ) Debenture Redemption Reserve Opening Balance as per last audited Financial Statement Addition: Transfer from Surplus in the Statement of Profit and Loss Deduction: Transferred to General Reserve on Redemption of Debentures Stake Change in Joint Venture ) Share Options Outstanding Account Opening Balance as per last audited Financial Statement Addition: Charge for the year Deduction: Transfer to Securities Premium Account on Exercise of Options Demerger of Garment Business 1.00 Stake Change in Joint Venture ß

254 Notes 6) Other Reserves i) General Reserve ` in Crores As at As at 31st March, st March, 2015 Opening Balance as per last audited Financial Statement 3, , Addition: Transfer from Surplus in the Statement of Profit and Loss Transfer from Debenture Redemption Reserve on Redemption of Debentures Transfer from Special Reserve 3.98 Deduction: Transitional Provision of Schedule II Impact (Net of Deferred Tax Amounting of ` Nil (Previous Year: ` 6.44 Crore) Depreciation Charge on Fair Value Portion of Fixed Assets by JV of Idea Group s Share of Idea JV discrepancy in physical verification of Fixed Assets as per scheme Amount transferred to Surplus in P&L Amount transferred on Stake Change of Joint Venture/ Divestment of Subsidiaries , , ii) Special Reserve (a) Opening Balance as per last audited Financial Statement Addition: Transfer from Surplus in the Statement of Profit and Loss Deduction: Transfer to General Reserve iii) Capital Fund (b) iv) Credit/(Debit) Fair Value Change Account (c) Opening Balance as per last audited Financial Statement 0.10 Addition: Addition/(Deduction) during the year (0.23) (0.10) (0.23) v) Foreign Currency Translation Reserve Opening Balance as per last audited Financial Statement Addition: Addition during the year Deduction: Amount transferred on Divestment of Subsidiaries and Businesses vi) Hedging Reserve (d) Opening Balance as per last audited Financial Statement (2.22) (31.13) Addition: Gain/(Loss) recognised during the year (Net) Deduction: Gain/(Loss) recycled during the year (Net) 2.66 (2.50) Amount transferred on Divestment of Subsidiaries and Businesses 0.03 (23.55) (0.54) (2.22) Total Other Reserves 4, ,

255 Consolidated Financial Statements 7) Surplus/(Deficit) in the Statement of Profit and Loss ` in Crores As at As at 31st March, st March, 2015 Opening Balance as per last audited Financial Statement 1, Addition/(Dedcution): Profit of the Year 1, , Amalgamation of Subsidiaries Amount transferred on Stake Change of Joint Venture/ Divestment of Subsidiaries (1.36) (81.57) Amount adjusted on demerger of Garment Business (Refer Note: 32) (24.35) Transfer from General Reserve Transitional Provision of Schedule II Impact (Net of Deferred Tax Amounting of ` Nil Crore) (15.19) Share of Minority Interest on Transitional Provision of Schedule II Impact 3.09 Less: Appropriations Transfer to Debenture Redemption Reserve Transfer to General Reserve Transfer to Capital Redemption Reserve 0.10 Transfer to Special Reserve Proposed Dividend on Equity Shares Interim Dividend on Preference Shares ß Equity Dividend relating to Previous Period Corporate Tax on Proposed Equity Dividend of the Company* Corporate Tax on Proposed Equity Dividend of Subsidiaries and Joint Venture Corporate Tax on Proposed Preference Dividend of Subsidiaries 0.17 Corporate Tax on Interim/Final Dividend of Joint Venture Company by its Joint Venture Corporate Tax on Dividend relating to earlier years ß 0.44 Corporate Tax on Interim Dividend on Preference Shares ß 3, , , , * Net of Tax Credit on dividend from subsidiary companies. (a) (b) (c) (d) Special Reserve Special Reserve represents the reserve created pursuant to the Reserve Bank of India Act, 1934 (the RBI Act ). In terms of Section 45-IC of the RBI Act, a Non-Banking Finance Company is required to transfer an amount not less than 20 per cent of its net profit to a Reserve Fund before declaring any dividend. Appropriation from this Reserve Fund is permitted only for the purposes specified by RBI. Capital Fund Capital Fund comprises an amount received, on a non-repatriable basis from the Sponsor, as a contribution to the Birla Sun Life Mutual Fund ( the Fund ) in accordance with the terms of the Trust Deed, together with accretion thereon. The amount is held by the Company in its fiduciary capacity as the trustee to the Fund and is intended to be utilised only for the purposes of settlement of claims, if any, from the unit holders of the mutual fund schemes launched by the Fund. Credit/(Debit) Fair Value Change Account Unrealised gain/loss due to changes in fair value of listed equity shares and mutual funds are taken to the Fair Value Change Account for Shareholders Investments of Life Insurance Business. Hedging Reserve For the forward contracts designated as cash flow hedges, the effective portion of the fair value of forward contracts are recognised in Hedging Reserve. 246

256 Notes ` in Crores As at As at 31st March, st March, 2015 NOTE: 4A LONG-TERM BORROWINGS SECURED Debentures 5, , Rupee Term Loans from Banks 8, , Others Foreign Currency Loans from Banks Others , Finance Lease Liabilities , , UNSECURED Debentures 1, , Rupee Term Loans from Banks Others Foreign Currency Loans from Banks Deferred Payment Liability towards Spectrum 7, , , , , , NOTE: 4B SHORT-TERM BORROWINGS SECURED Loan Repayable on Demand from Banks 3, , , , UNSECURED Loan Repayable on Demand from Banks 1, , Others Other Loans and Advances Commercial Papers* 5, , , , , , *Commercial Papers are shown net of unamortised discounting charges. NOTE: 5 DEFERRED TAX LIABILITIES Deferred Tax Liabilities at the year end comprise timing differences on account of: Depreciation Revenue Equalisation Reserve and Others , DEFERRED TAX ASSETS Deferred Tax Assets at the year end comprise timing differences on account of: Depreciation Expenditure/Provisions Allowable on Payment Basis Provision for Doubtful Debts and Advances Unabsorbed Depreciation and Carry Forward Losses Others Net Deferred Tax Liabilities/(Assets) Deferred Tax presented in Balance Sheet Deferred Tax Liabilities (Net) Deferred Tax Assets (Net) Net Deferred Tax Liabilities/(Assets) Deferred Tax Assets in certain subsidiaries are recognised on losses and unabsorbed depreciation only to the extent of Deferred Tax Liabilities in those subsidiaries. 247

257 Consolidated Financial Statements ` in Crores As at As at 31st March, st March, 2015 NOTE: 6A OTHER LONG-TERM LIABILITIES Trade Payables Interest Accrued but Not Due on Borrowings Other Payables Deposits Advance from Customers Income Received in Advance Payables for Capital Expenditure Others NOTE: 6B OTHER CURRENT LIABILITIES Current Maturities of Long-term Borrowings 2, , Current Maturities of Finance Lease Obligations Interest Accrued but Not Due on Borrowings Income Received in Advance Investors Education and Protection Fund to be credited as and when due Unpaid Dividend Money Due for Refund on Fraction Shares Other Payables Advance from Customers Book Overdraft Payables for Capital Expenditure Statutory Dues Deposits Due to Life Insurance Policyholders Derivative Liability (Net) * Others *This represents Mark-to-Market on Derivative Contracts taken for the purpose of hedging. 5, , NOTE: 7A LONG-TERM PROVISIONS Provisions for: Employee Benefits Others Contingent Provision on Standard Asset of Financing Activities (Refer Note: 1(II)(b)) Provisions for Doubtful Loans and Advances of Financing Activities (Refer Note: 1(II)(a)) Other Long-term Provisions ##

258 Notes ` in Crores As at As at 31st March, st March, 2015 NOTE: 7B SHORT-TERM PROVISIONS Provisions for: Employee Benefits Others Taxation (Net of Advance Tax) Proposed Dividend Equity Provision for Corporate Tax on Dividend Equity Dividend of the Company# Equity Dividend of the Subsidiaries and Joint Venture Equity Dividend of Joint Venture Company by its Joint Venture Preference Dividend of Subsidiaries 0.17 Contingent Provision on Standard Assets of Financing Activities (Refer Note: 1(II)(b)) Provision for Doubtful Loans and Advances of Financing Activities (Refer Note: 1(II)(a)) Other Short-term Provisions ## # Net of Tax Credit on Dividend from subsidiary company. ## Additional disclosure as per Accounting Standard-29 Provisions, Contingent Liabilities and Contingent Assets A. Warranty Opening Balance Arising during the year Utilised ß (0.02) Unused Amounts Reversed (0.09) Closing Balance Long-term Short-term Provision is recognised for expected warranty claims on products sold during the last two to three years based on the past experience of level of returns and replacements. B. Customer Relationship Management Loyalty Programme Opening Balance Arising during the year Utilised (26.09) Unused Amounts Reversed (1.26) Transfer on Demerger of Garments Business (12.34) Closing Balance Short-term Customer Relationship Management Loyalty Programmes are the schemes designed with an intention to retain the existing customer and attract new customers by rewarding a customer for his loyalty and patronage. C. Asset Retirement Obligation Opening Balance Arising during the year Change in Liability on Stake Change of Joint Venture (0.06) (6.21) Utilised (0.43) (0.79) Closing Balance Long-term The Group installs equipment on leased premises and layed down optical fibre cable (OFC) to provide seamless connectivity to its customers. In certain cases, the Group may have to incur some cost to remove such equipments and OFC. Estimated cost to be incurred for restoration is capitalised along with the assets. 249

259 Consolidated Financial Statements NOTE: 8A TANGIBLE ASSETS ` in Crores Freehold Leasehold Freehold Leasehold Leasehold Plant & Furniture Office Vehicles Railway TOTAL Lands Lands Buildings Buildings Improve- Equipment & Fixtures Equipment Sidings ments Gross Block As at 1st April, , , Additions , , Deletions Foreign Exchange Translation Difference (Deletion) on Stake Change/ Divestment/Demergers (0.23) (0.02) (3.44) (107.08) (1,026.73) (66.56) (23.88) (2.99) (1,230.93) As at 31st March, , , Additions , , Deletions Foreign Exchange Translation Difference (0.90) (0.81) (Deletion) on Stake Change/ Divestment/Demergers (5.94) (0.02) (21.68) (6.01) (182.31) (260.31) (718.62) (337.45) (11.86) (1,544.20) As at 31st March, , , Accumulated Depreciation As at 1st April, , , For the Year , , Deletions Foreign Exchange Translation Difference Charge to Retained Earnings on account of Schedule II (Deletion) on Stake Change/ Divestment/Demergers (0.01) (1.55) (77.70) (580.66) (46.11) (15.78) (1.85) (723.66) As at 31st March, , , For the Year ß , , Deletions Foreign Exchange Translation Difference (0.92) (0.85) (Deletion) on Stake Change/ Divestment/Demergers ß (7.63) (2.84) (107.93) (129.67) (453.55) (203.43) (7.02) (912.07) As at 31st March, , , Net Block as at 31st March, , , Net Block as at 31st March, , , A. Gross Block of Tangible Assets includes: (i) The Group s share in assets held under co-ownership - Leasehold Land ` Crore (Previous Year: ` Crore), Buildings ` Crore (Previous Year: ` Crore), Furniture & Fixtures ` 3.04 Crore (Previous Year: ` 3.03 Crore), Office Equipment ` 6.12 Crore (Previous Year: ` 6.06 Crore), Vehicles ` 0.04 Crore (Previous Year: ` 0.03 Crore). (ii) Buildings include ` Crore (Previous Year: ` Crore) being cost of Debentures and Shares in a company entitling the right of exclusive occupancy and use of certain premises. (iii) Registration of Freehold Land of ` 0.15 Crore (Previous Year: ` 0.15 Crore) in favour of the Group is subject to resolution of disputes. B. Details of Tangible Assets capitalised under Finance Lease: (i) Plant and Equipment include Gross Block of ` Crore (Previous Year: ` Crore) and Net Block of ` Crore (Previous Year: ` Crore). (ii) Office Equipment includes Gross Block of ` 4.82 Crore (Previous Year: ` 0.74 Crore) and Net Block of ` 4.14 Crore (Previous Year: ` 0.66 Crore). C. Depreciation charge for the year includes ` Crore (Previous Year: ` Crore) on due to the change in estimate useful life of certain tangible assets. D. Exchange loss of ` Crore (Previous Year: ` Crore) has been capitalised as per Para 46A of AS-11. E. Capital Work-in-Progress is net of Impairment provision amounting to ` Crore (Previous Year: ` Crore). F. Addition to Plant and Equipment is net of Subsidy ` 0.72 Crore (Previous Year: ` 0.02 Crore). G. Gross Block of leasehold lands include ` 1.33 Crore and Buildings include ` Crore, pending for registration in the name of the Company. The Company is in the process of getting the same transferred in its name. H. Freehold lands include Gross Block of ` 7.05 Crore, wherein title deeds of immovable properties are in the names of the entities, which got merged with the Company, and are pending to be transferred in the name of the Company. I. For Assets given on Operating Lease - Refer Note:

260 Notes NOTE: 8B INTANGIBLE ASSETS ` in Crores Goodwill Goodwill Brands/ Computer Technical Investment Client Telecom Non- TOTAL on Con- Trade- Software Know-how Manage- Acquisi- Entry/ Compete solidation marks ment tion Costs Licence Fees Rights Fees* Gross Block As at 1st April, , , , , Additions , , Deletions Foreign Exchange Translation Difference (Deletion) on Stake Change/ Divestment/Demergers (39.59) (1,025.21) (158.89) (16.77) (217.21) (1,457.67) As at 31st March, , , , , Additions , , Deletions (Deletion) on Stake Change/ Divestment/Demergers (1,187.98) (575.71) (190.28) (65.43) (6.60) (3.16) (2,029.16) As at 31st March, , , , Accumulated Amortisation/Impairment As at 1st April, , Amortisation for the Year Deletions Foreign Exchange Translation Difference (Deletion) on Stake Change/ Divestment/Demergers (5.91) (52.96) (15.14) (70.30) (144.31) As at 31st March, , Amortisation for the Year Deletions (Deletion) on Stake Change/ Divestment/Demergers (170.41) (41.43) (6.45) (0.76) (219.05) As at 31st March, , Net Block as at 31st March, , , , , Net Block as at 31st March, , , , A. All Intangible Assets are other than internally generated. B. Details of Intangible Assets capitalised under Finance Lease: Software includes Gross Block of ` Crore (Previous Year: ` Crore) and Net Block of ` Crore (Previous Year: ` 8.31 Crore). C. Deletion of Entry/Licence Fees pertains to the expired CMTS Licences on completion of its licence tenure of 20 years. * Based on Written-down Value, the balance amortisation period of material Intangible Assets: Intangible Assets As at As at 31st March, st March, 2015 Telecom Entry/Licence Fees Ranges between 12 and 240 months based on Ranges between 12 and 240 months based on the respective Telecom Service Licence period. the respective Telecom Service Licence period. 251

261 Consolidated Financial Statements ` in Crores Year Ended Year Ended 31st March, st March, 2015 NOTE: 8A and 8B During the year, the Group has capitalised the following expenses to the cost of Fixed Assets/Capital Work-in-Progress Salaries and Wages 2.94 Power and Fuel 0.20 Insurance ß Travelling and Conveyance 0.11 Interest Expenses Miscellaneous Expenses Add: Brought forward from previous year Less: Capitalised during the year Less: Charged to the Statement of Profit and Loss* 9.92 Less: Divestment of Garment Business 0.06 Less: Impact on Stake Change * Expenses included in the following heads of the Statement of Profit and Loss, towards abandonment of Brownfield expansion project. Employee Benefits Expenses 3.56 Other Expenses 6.36 Total 9.92 NOTE: 9A INVESTMENTS OF LIFE INSURANCE BUSINESS: NON-CURRENT (i) Shareholders Investments Quoted Investments in Government or Trust Securities Debentures/Bonds , , Unquoted Investments in Equity Instruments Others (Fixed Deposits) Sub-Total - (i) 1, , (ii) Policyholders Investments Quoted Investments in Equity Instruments Preference Shares Government or Trust Securities 3, , Debentures and Bonds 1, , Mutual Funds , , Unquoted Investments in Equity Instruments 6.96 Others (Fixed Deposits) Venture Capital Funds 3.33 Social Venture Fund Sub-Total - (ii) 5, , Total - (i) + (ii) 6, , Aggregate Market Value of Quoted Investments 6, , Aggregate Book Value of Quoted Investments 6, , Aggregate Book Value of Unquoted Investments

262 Notes ` in Crores As at As at 31st March, st March, 2015 NOTE: 9B INVESTMENTS OF LIFE INSURANCE BUSINESS: CURRENT (i) Shareholders Investments Quoted Investments in Government or Trust Securities 0.37 Debentures/Bonds Mutual Funds Unquoted Investments in Others (Fixed Deposits) Mutual Funds Sub-Total - (i) (ii) Policyholders Investments Quoted Investments in Government or Trust Securities Debentures/Bonds Mutual Funds Unquoted Investments in Others Fixed Deposits Collateralised Borrowings and Lending Obligations Certificate of Deposits Sub-Total - (ii) Total - (i) + (ii) Aggregate Market Value of Quoted Investments Aggregate Book Value of Quoted Investments Aggregate Book Value of Unquoted Investments

263 Consolidated Financial Statements ` in Crores As at As at Face Value Number 31st March, Number 31st March, NOTE: 10A OTHER INVESTMENTS: NON-CURRENT Investments in Equity Instruments Subsidiaries (Refer Annexure A to Note: 1 ) Aditya Birla Idea Payment Bank Limited (Including proportionate share of Joint Venture) , Class A in India Advantage Fund Limited, Mauritius $ ß 90 ß Class B in India Advantage Fund Limited, Mauritius $ ß 40 ß International Opportunities Fund $ ß 1 ß 0.32 ß Others Aditya Birla Fashion and Retail Limited (earlier known as Pantaloon Fashion & Retail ,051,697 1, Hindalco Industries Limited ,506, ,506, Aditya Birla Science & Technology Private Limited ,400, ,400, Aditya Birla Port Limited , , Birla Management Centre Services Limited , , MF Utilities India Private Limited , , HDFC Bank Limited ,300 ß 1,300 ß MOIL Limited , , Less: Provision for Diminution (0.21) (0.21) Apollo Sindhoori Hotels Limited , , Less: Provision for Diminution (0.01) (0.01) SWAWS Credit Corporation Private Limited 393, Less: Provision for Diminution (0.39) 1, Preference Shares 5.25% Cumulative Redeemable Preference Shares of Aditya Birla Health Services Ltd. $ ,500, ,500, % Cumulative and Redeemable Preference Shares of Aditya Birla Fashion and Retail Limited (earlier known as Pantaloon Fashion & Retail Limited)@ , % Optionally Convertible Cumulative Redeemable Preference Shares in Share Microfin Limited ,854, ,682, Less: Provision for Diminution (7.50) Debentures and Bonds NHAI Bonds , , Optionally Convertible Debentures carrying fixed coupon rate of 12 % p.a. of SWAWS Credit Corporation Private Limited , Less: Provision for Dimunition (0.13)

264 Notes Mutual Funds* Others Aditya Birla Private Equity - Fund I Aditya Birla Private Equity - Sunrise Fund Class B Units of Aditya Birla Real Estate Fund PMS Investment Investment in Alternate Fund TOTAL NON-CURRENT INVESTMENTS 1, Aggregate Market Value of Quoted Investments 1, Aggregate Book Value of Quoted Investments 1, Aggregate Book Value of Unquoted Investments Aggregate Amount of Provision for Diminution * Includes Earmarked towards Capital Fund 0.04 Ceases to be Subsidairy of the Company w.e.f. 1st April, 2015 (Refer Note: 32) $ Each Preference Share is optionally convertible in 10 Equity Shares of ` 10/- each fully paid-up on the expiry of a period of 15 years from the date of allotment. ` in Crores As at As at Face Value Number 31st March, Number 31st March, NOTE: 10B OTHER INVESTMENTS: CURRENT Debentures and Commercial Papers Mahindra Worldcity Jaipur Limited 1,000,000 1, AU Financiers (India) Limited 1,000,000 1, Dalmia Cement Bharat Limited 1,000,000 1, KKR Financial Services Private Limited 10,000, Indiabulls Housing Finance Company 1,000, Karvy Financial Services Private Limited (Commercial Papers) 500, Mutual Funds , TOTAL CURRENT INVESTMENT 1, , Aggregate Market Value of Quoted Investments Aggregate Book Value of Quoted Investments Aggregate Book Value of Unquoted Investments 1, ,

265 Consolidated Financial Statements ` in Crores As at As at 31st March, st March, 2015 NOTE: 11A ASSETS HELD TO COVER LINKED LIABILITIES OF LIFE INSURANCE BUSINESS: NON-CURRENT Quoted Investments in Equity Instruments 8, , Preference Shares Government or Trust Securities 5, , Debentures or Bonds 6, , Mutual Funds , , Unquoted Investments in Debentures or Bonds Others (Fixed Deposits) Other Current Assets Interest Accrued on Investments Total 20, , Aggregate Market Value of Quoted Investments 20, , Aggregate Book Value of Quoted Investments 20, , Aggregate Book Value of Unquoted Investments NOTE: 11B ASSETS HELD TO COVER LINKED LIABILITIES OF LIFE INSURANCE BUSINESS: CURRENT Quoted Investments in Equity Instruments Government or Trust Securities Debentures or Bonds Mutual Funds , , Unquoted Investments in Others Fixed Deposits Collateralised Borrowings and Lending Obligations Certificate of Deposits Commercial Papers Other Current Assets Bank Balances Interest Accrued on Investments Dividend Receivables Outstanding Contracts (9.38) , , Total 3, , Aggregate Market Value of Quoted Investments 1, , Aggregate Book Value of Quoted Investments 1, , Aggregate Book Value of Unquoted Investments 1, ,

266 Notes ` in Crores As at As at 31st March, st March, 2015 NOTE: 12A LONG-TERM LOANS AND ADVANCES (Unsecured, Considered Good, except otherwise stated) Capital Advance Unsecured, Considered Good Unsecured, Considered Doubtful Less: Provision for Doubtful (0.81) (0.10) Security Deposits Unsecured, Considered Good Unsecured, Considered Doubtful Less: Provision for Doubtful (0.22) (3.44) Other Loans and Advances Loans and Advances of Financing Activities Secured, Considered Good 16, , Unsecured, Considered Good 1, Unsecured, Considered Doubtful Inter-Corporate Deposits Unsecured, Considered Good Loans against Insurance Policy (Secured, Considered Good) VAT, Other Taxes Recoverable, Statutory Deposits and Dues from Government Unsecured, Considered Good Unsecured, Considered Doubtful 0.15 Less: Provision for Doubtful (0.15) Advance Tax (Net of Provision) MAT Credit Entitlement Prepaid Expenses Advance for Expenses, Materials, Employees and Others , , NOTE: 12B SHORT-TERM LOANS AND ADVANCES (Unsecured, Considered Good, except otherwise stated) Security Deposits Unsecured, Considered Good Unsecured, Considered Doubtful Less: Provision for Doubtful (0.51) (0.51) Other Loans and Advances Loans and Advances of Financing Activities Secured, Considered Good 5, , Unsecured, Considered Good 2, , Inter-Corporate Deposits Unsecured, Considered Good Loans against Insurance Policy (Secured, Considered Good) VAT, Other Taxes Recoverable, Statutory Deposits and Dues from Government Unsecured, Considered Good Unsecured, Considered Doubtful Less: Provision for Doubtful (0.39) (0.58) Advance Tax (Net of Provision) MAT Credit Entitlement Prepaid Expenses Advance for Expenses, Material, Employees and Others* Unsecured, Considered Good Unsecured, Considered Doubtful Less: Provision for Doubtful (8.31) (22.51) 9, , *Refer Note: 41(viii) 257

267 Consolidated Financial Statements ` in Crores As at As at 31st March, st March, 2015 NOTE: 13A OTHER NON-CURRENT ASSETS Other Bank Balances* Bank Deposits with more than twelve months maturity Interest Accrued on Loans and Advances, and Investments Government Grant Receivable Revenue Equalisation Reserve Derivative Assets # 3.71 Others *Amount held as Margin Money under lien to bank for issuing guarantee/to tax authority *Lien Marked in favour of IRDA #This represents Mark-to-Market on Derivative Contracts taken for the purpose of hedging NOTE: 13B OTHER CURRENT ASSETS Reimbursement of Expenses Receivables Fertiliser Bonds 2.19 Unbilled Revenue Interest Accrued on Loans and Advances, Investments and Fixed Deposits Government Grant Receivable Export Incentive Receivable Less: Provision for Export Incentive Receivable (0.06) (0.06) Others NOTE: 14A STOCK OF SECURITIES OF NBFC BUSINESS (Valued at Lower of Cost and Net Realisable Value) Details of Opening Stock, Purchases, Sales and Closing Stock in respect of Trading in Securities of NBFC Business are as follows: Stock of Securities Opening Purchase 6, , Sales 7, , Closing NOTE: 14B INVENTORIES (Lower of Cost and Net Realisable Value) Raw Materials (Includes Goods-in-Transit `15.47 Crore (Previous Year: ` Crore)) Work-in-Progress Finished Goods Stock-in-Trade (Includes Goods-in-Transit ` Nil (Previous Year: ` 9.19 Crore)) Stores and Spares (Includes Goods-in-Transit ` 2.13 Crore (Previous Year: ` 9.24 Crore)) Waste/Scrap Packing Materials ,

268 Notes ` in Crores As at As at 31st March, st March, 2015 NOTE: 15 TRADE RECEIVABLES Due for period exceeding Six months from the due date of payment Secured, Considered Good Unsecured, Considered Good (Includes subsidy receivables from Government of India ` 4.83 Crore (Previous Year: ` Nil)) Unsecured, Considered Doubtful Less: Provision for Doubtful (114.70) (101.67) Others Secured, Considered Good Unsecured, Considered Good (Includes subsidy receivables from Government of India ` Crore (Previous Year: ` 1, Crore)) 1, , Unsecured, Considered Doubtful Less: Provision for Doubtful (14.02) (11.32) 1, , NOTE: 16 CASH AND BANK BALANCES Cash and Cash Equivalents Balances with Banks Current Accounts Deposit Accounts (with original maturity period of three months or less) Cash on Hand Cheques/Drafts on Hand (A) , Other Bank Balances Deposit Accounts (with original maturity period of more than three months)# Others Unclaimed Dividend Money Due for Refund on Fraction Shares (B) (A) + (B) , Less: Bank Deposits with more than twelve months maturity (transferred to Other Non-Current Assets) (Refer Note: 13A) , # Includes deposits placed under lien towards bank guarantees for margins with exchange/banks

269 Consolidated Financial Statements ` in Crores Year Ended Year Ended 31st March, st March, 2015 NOTE: 17 REVENUE FROM OPERATIONS A. SALE OF PRODUCTS Manufactured 5, , Traded , , , B. SALE OF SERVICES Telecom Services 8, , Life Insurance Premium 5, , Other Financial Services 3, , IT-ITES Services Other Services , , C. OTHER OPERATING INCOME Export Incentive Scrap Sales Discount Income Investment Income on Life Insurance Policyholders Fund Miscellaneous Other Operating Income Total A + B + C 23, , NOTE: 18 OTHER INCOME Interest Income on Investments Current Long-term Interest Income - Others Dividends Income on Investments Current Long-term Net Gain on Sale of Investments Current Long-term 0.33 Other Non-Operating Income Profit on Sale of Fixed Assets (Net) General Contingency Provision written back (Refer Note: 1(II)(a)) Others NOTE: 19 COST OF MATERIALS CONSUMED Raw Materials Consumed 2, , Packing Materials Consumed , ,

270 Notes ` in Crores Year Ended Year Ended 31st March, st March, 2015 NOTE: 20 CHANGES IN INVENTORIES OF FINISHED GOODS, WORK-IN-PROGRESS AND STOCK-IN-TRADE Opening Stocks Finished Goods Stock-in-Trade Work-in-Process Waste/Scrap CER , , Less: Closing Stocks Finished Goods Stock-in-Trade Work-in-Process Waste/Scrap CER , Add/(Less): Stock Transfer of Garment Business (1,000.71) (Increase)/Decrease in Excise Duty on Stocks (2.37) 1.86 Impact on Stake Change ß (0.68) (69.06) (95.47) Movement of (Increase)/Decrease in Inventories Finished Goods (60.52) (12.15) Stock-in-Trade (6.85) (76.84) Work-in-Process 0.68 (7.17) Waste/Scrap ß (0.57) CER 0.09 (Increase)/Decrease in Excise Duty on Stocks (2.37) 1.86 Impact on Stake Change ß (0.68) NOTE: 21 EMPLOYEE BENEFITS EXPENSES Salaries and Wages 1, , Contribution to Provident and Other Funds (Refer Note: 34) Expenses on Employee Stock Options Scheme (Refer Note: 35) Expenses on Employee Stock Appreciation Rights (Refer Note: 35) Staff Welfare Expenses * ESOP charges are net of recovery of ` 1.40 Crore (Previous Year: ` Nil) from ABFRL on account of demerger of Madura division (Refer Note: 32) 1, , NOTE: 22 CHANGE IN VALUATION OF LIABILITY IN RESPECT OF LIFE INSURANCE POLICIES IN FORCE (Released from)/transfer to Fund for Future Appropriation (5.29) (54.86) Change in Premium Discontinuance Fund (45.19) Change in Valuation of Liability in respect of Life Insurance Policies , Investment (Income)/Loss on Life Insurance Policyholders Fund related to Linked Business (246.93) (5,008.30)

271 Consolidated Financial Statements ` in Crores Year Ended Year Ended 31st March, st March, 2015 NOTE: 23 OTHER EXPENSES Consumption of Stores and Spares Power and Fuel 1, , Rent Repairs and Maintenance of: Buildings Plant and Machinery Others Insurance Rates and Taxes Processing Charges Passive Infrastructure Charges Licence and WPC Charges Roaming and Access Charges 1, , Connectivity Charges Subscriber Acquisition and Servicing Expenses Commission to Selling Agents Brokerage and Discounts Advertisement and Sales Promotion Expenses Transportation and Handling Charges Store Security, Housekeeping and Other Expenses Distribution Expenses Bad Debts and Provision for Bad and Doubtful Debts, and Advances including Contingency Provision for Standard Assets of NBFC (Refer Note: 1(II)(b)) Travelling and Conveyance Bank Charges Foreign Exchange Loss (Net) Information Technology Expenses Miscellaneous Expenses , , NOTE: 24 DEPRECIATION AND AMORTISATION EXPENSES Depreciation of Tangible Assets 1, , Amortisation of Intangible Assets Less: Depreciation charged to General Reserve pursuant to merger scheme by Joint Venture (13.24) (17.73) 1, , NOTE: 25 FINANCE COST Interest Expenses* 2, , Other Borrowing Costs , , *Net of Interest Rebate Subsidy from Technology Upgradation Fund *Net of Interest Capitalised

272 Notes NOTE: 26 CONTINGENT LIABILITIES NOT PROVIDED FOR (a) Claims against the Group not acknowledged as Debts ` in Crores Nature of Brief Description of Contingent Liability As at 31st As at 31st Statute March, 2016 March, 2015 Excise Duty, Various cases demanding duty for alleged wrong availment of Central Excise benefit of exemption under Notification 38/2003-CE in respect of Act, 1944 readymade garments, demand of differential excise duty on processing of Yarn Cake into Cone, demand of non-inclusion of Type Test Charges with the value of insulators, demand on reversal of Cenvat Credit on sale of capital goods, reversal of credit on inputs used for manufacturing dutiable and exempted goods, etc. Customs Duty, Various cases pertaining to demand of non-fulfilment of Customs Act, EXIM policy, differential duty on ENKA Tech Know-how, countervailing 1942 duty and additional duties on imports, supplementary Drawback claim, etc. Sales Tax Demands raised by the VAT/Sales Tax authorities of few states on Broadband Connectivity, SIM cards, etc., on which the Company has already paid Service Tax, demand for telecom services included in the definition of goods/services, demand of entertainment tax on revenue from value added services. Various cases in respect of demand for Short of Form H, I and C, disallowance of input credit, tax demand on freight charges and on export to Nepal. Service Tax, Show Cause-cum-Demand Notice from Service Tax Authorities issued Finance Act, for the AY to AY disputing Cenvat Credit eligibility 1994 on input services. Demand, mainly on account of interpretation of Rule 6(3), denial of Cenvat related to towers, shelters and OFC ducts, disallowance of Cenvat allegedly not related to output service. Disallowance of Cenvat Credit on input services and Service Tax paid under reverse charge mechanism, rebate claim rejected. Service Tax demands related to excess utilization of Cenvat against liability on risk premium and payment of reimbursements to agents. Various cases pertaining to disallowance of Cenvat Credit of Service Tax on commission paid to overseas agent, in GTA services, service for outward transportation, and other services alleging not be classified as input services for availment of Cenvat Credit, etc. Income-tax Act, Various Dept. appeals in ITAT, High Court on 14A disallowance, disallowance of additional depreciation, disallowance of depreciation on goodwill and various matters. Demand for non-deduction of TDS on purchase of shares of Joint Venture Company u/s 201(1) & 201(1A). The appeals, which are pending before various Appellate Authorities, 2, , mainly on account of: 1. Disallowance of revenue share licencee, non-applicability of TDS on pre-paid margin, interest on interest-free advances to wholly owned subsidiaries. 2. Treating proceeds of CCPS as cash Credit. 3. Capital Gain on demerger of a telecom undrtaking. 4. Short-term capital gain on the fair valuation of investment in JV done as per High Court approved scheme. 5. Demand on difference between revalued figure of Investment in Indus held through a wholly owned subsidiary and book value of PI assets transferred to step down subsidiary through High Court approved scheme. Various cases pertaining to demand in tax assessment for various years

273 Consolidated Financial Statements ` in Crores Nature of Brief Description of Contingent Liability As at 31st As at 31st Statute March, 2016 March, 2015 Other Statutes Demand letter issued by UPSIDC for making payment of maintenance charges on land allotted in The matter is currently pending before the High Court, Lucknow. Demand of water drawal charges by irrigation department. Matter pending before the High Court, Gujarat. Licensing Disputes Disputed matters with local Municipal Corporations, Electricity Boards, etc Letter of Comfort given to bank for third parties Repudiation of death claims and customer complaints Various cases pertaining to Industrial Disputes, Railways licence fee demand, Textile Cess on readymade garments, claims made by clients on sale of securities and other Civil cases. Grand Total 4, , b) Bills Discounted with Banks c) Under the Jute Packaging Material (Compulsory use of Packing Commodities) Act, 1987, a specified percentage of fertilisers dispatched was required to be supplied in jute bags up to 31st August, The Company made conscious efforts to use jute packaging material as required under the said Act. However, due to non-availability of material as per the Company s product specifications as well as due to strong customer resistance to use of jute bags, the specific percentage could not be adhered to. The Company has received a show-cause notice, against which a writ petition has been filed with the Hon ble High Court, which is awaiting for hearing. The Jute Commissioner, Kolkata, had filed transfer petition, various writ petitions have been filed in different High Courts by other aggrieved parties, including the Company, before the Hon ble Supreme Court of India, praying for consolidation of all cases at one Court. The transfer petition is pending before the Hon ble Supreme Court. The Company has been advised that the said levy is bad in law. d) The Birla Sun Life Mutual Fund has invested in the Pass Through Certificates (PTC) issued by various Securitisation Trusts. The Income Tax Department treated the interest Income from the PTC as taxable in the hands of such securitisation Trusts. The Department has also issued demand notices to various Mutual Funds, who are the beneficiaries in such trusts. The Birla Sun Life Mutual Fund has also received the demand notice for AY , and at present the case is being heard at ITAT. Based on expert s advice, the management does not expect the liability to crystalise, hence no provision is made in the books of account. e) The Group s share in certain disputed tax demand notices and show-cause notices relating to Direct and Indirect Tax matters of Joint Venture of IDEA (IDEA s JV) amounting to ` Crore (Previous Year: ` Crore) have neither been acknowledged as claims nor considered as contingent liabilities by the IDEA s JV. Based on internal assessment and independent advice taken from tax experts by the IDEA s JV, it is of the view that the possibility of any of these tax demands materialising is remote. f) DoT had issued demand notices towards one-time spectrum charges for spectrum beyond 6.2 Mhz in respective service areas for retrospective period from 1st July, 2008 to 31st December, 2012, the Group s share amounting to ` Crore, and for spectrum beyond 4.4 Mhz in respective service areas effective 1st January, 2013, till expiry of the period as per respective licences, the Group s share amounting to ` Crore. In the opinion of IDEA, inter-alia, the above demands amount to alteration of financial terms of the licences issued in the past. IDEA therefore petitioned the Hon ble High Court of Bombay, where the matter was admitted and is currently subjudice. The Hon ble High Court of Bombay has directed the DoT not to take any coercive action until the matter is further heard. No effects have been given in the consolidated financial statements for the above. g) As per the terms of the Stock Purchase Agreement (SPA) executed by ABNL IT & ITES (merged with the Company with effect from 1st October, 2015 Refer Note: 43) with a group of investors led by Capital Square Partners and CX Partners dated 30th January, 2014, Amendment Agreement dated 30th April, 2014 and Amended and Restated Amendment Agreement dated 8th May, 2014, ABNL IT & ITES (now merged with the Company with effect from 1st October, 2015) for divestment of Aditya Birla Minacs Worldwide Ltd. (ABMWL). ABNL IT & ITES (merged with the Company with effect from 1st October, 2015) has indemnified the Purchaser in respect of litigation and other matters pertaining to the period prior to closing, including the cost incurred towards settlement/defence for these litigation matters. As per the terms of the SPA, there is a limit on the indemnity amount and the indemnity period, i.e., USD 6 Million and 3 years from the date of closing, respectively. This limit, however, does not include (i) ownership of shares and assets; and (ii) tax matters. The details of Contingent Liability (included in Note 26 (a)) in respect of tax matters are given below: Income tax matters: ` 1.68 Crore Service tax matters: ` Crore 264

274 Notes ` in Crores As at As at 31st March, st March, 2015 NOTE: 27 CAPITAL AND OTHER COMMITMENTS a) Spectrum won in Auctions 6,565.2 b) Estimated amount of Contracts remaining to be executed on Capital Account and not provided for (Net of Advances) , c) Custom Duty on Capital Goods and Raw Materials Imported under Advance Licensing/EPCG Scheme, against which export obligation is to be fulfilled d) For commitment under lease contract Refer Note: 31. e) For commitment under derivative contract Refer Note: 38. f) Transfer of investments in IDEA Cellular Ltd. (IDEA) and Birla Sun Life Insurance Co. Ltd. is restricted by the terms contained in their respective shareholder agreements. Non-disposal undertakings for IDEA and Aditya Birla Finance Limited (upto 26th October, 2015), investments have also been provided to certain Banks for respective credit facilities extended by them. Pursuant to the Shareholders Agreement entered into with Sun Life of Canada, the Company has, in respect of Birla Sun Life Insurance Company Limited, agreed to infuse its share of capital from time to time to meet the solvency requirement prescribed by the regulatory authority. g) Aditya Birla Customer Services Ltd. (ABCSL), a subsidiary of the Company, has issued 0.001% Compulsorily Convertible Preference Shares (CCPS) aggregating to ` 60 Crore to International Finance Corporation (IFC) vide Shareholders Agreement, dated 19th December, 2014, and Subscription Agreement dated 19th December, 2014 (SHA). Under the said SHA, Aditya Birla Financial Services Ltd. (ABFSL), the Company s subsidiary company and holding company of ABCSL, has granted to IFC an option to sell the shares to ABFSL at fair valuation from the period beginning on the expiry of 60 months of the subscription by IFC upto a maximum of 120 months from the date of subscription by IFC, in the event ABCSL or ABFSL fails to provide an opportunity to IFC to exit from ABCSL within 60 months from the date of subscription by IFC in the form of Listing, Secondary Sale or Acquisition, etc. In the event ABFSL fails to fulfil its obligation, the Company will be obligated to fulfil this obligation. h) Idea Cellular Limited (IDEA), a Joint Venture Company, to buy compulsorily convertible preference shares (CCPS) issued by Aditya Birla Telecom Limited (ABTL), a subsidiary of the Company, from the holder at a mutually agreed consideration based on the fair value, in the event the holder exercises exit rights. In case, the holder of CCPS exercises the right of conversion, ABTL will issue equity shares equivalent to % of its total Equity Share Capital. NOTE: 28 EXCEPTIONAL ITEMS It includes: a) After the effectiveness of the Composite Scheme (Refer Note: 32), PFRL (now known as ABFRL) has ceased to be subsidiary of the Company, accordingly, difference of ` Crore between carrying amount of net assets and investment in PFRL, has been recognised as an exceptional item on 1st April, 2015, in the Consolidated Financial Statements of the Company. b) ` Crore received towards facilitation for Development of distribution network for financial service business. c) ` 6.44 Crore received by ABNL IT & ITES Limited (a subsidary company merged with the Company with effect from 1st October, 2015 Refer Note: 33) towards deferred consideration in respect of transaction for divestment of Aditya Birla Minacs Worldwide Limited (ABMWL). (Refer Note: 32 for disclosure as per Discontinuing operations) d) Loss of ` Crore (net of one-time fees) on divestment of Aditya Birla Minacs Worldwide Limited recognised during the previous year. (Refer Note: 32 for disclosure as per Discontinuing operations). 265

275 Consolidated Financial Statements ` in Crores As at As at 31st March, st March, 2015 NOTE: 29 DISCLOSURE PURSUANT TO ACCOUNTING STANDARD-20 EARNINGS PER SHARE ATTRIBUTABLE TO OWNERS Earnings Per Share (EPS) is calculated as under: Net Profit as per the Statement of Profit and Loss attributable to Owners 1, , Less: Preference Dividend and Tax thereon ß Net Profit for EPS (A) 1, , Weighted-Average Number of Equity Shares for calculation of Basic EPS (B) 130,168, ,111,149 Basic EPS (`) (A/B) Weighted-Average Number of Equity Shares Outstanding 130,168, ,111,149 Add: Shares Held in Abeyance 41,323 41,323 Add: Dilutive Impact of Employee Stock Options 92, ,085 Weighted-Average Number of Equity Shares for calculation of Diluted EPS (C) 130,301, ,320,557 Diluted EPS (`) (A/C) Nominal Value of Shares (`) NOTE: 30 DETAILS OF PROPORTIONATE SHARE OF JOINT VENTURE COMPANIES The Group s proportionate share in the Assets, Liabilities, Income and Expenses of its Joint Venture companies included in these Consolidated Financial Statements are given below: ` in Crores As at As at 31st March, st March, 2015 EQUITY AND LIABILITIES (A) Shareholders Funds Share Capital - Preference Reserves and Surplus 5, , , , (B) Non-Current Liabilities Long-term Borrowings 8, , Deferred Tax Liabilities (Net) Other Long-term Liabilities Long-term Provisions , , (C) Current Liabilities Short-term Borrowings Trade Payables Other Current Liabilities 1, , Short-term Provisions , ,

276 Notes ` in Crores As at As at 31st March, st March, 2015 ASSETS (D) Non-Current Assets Fixed Assets Tangible Assets 5, , Intangible Assets 10, , Capital Work-in-Progress 1, , , , Non-Current Investments 0.06 Long-term Loans and Advances Other Non-Current Assets , , (E) Current Assets Current Investments , Inventories Trade Receivables Cash and Bank Balances Short-term Loans and Advances Other Current Assets , , Contingent Liabilities 3, , Capital Commitments , ` in Crores Year Ended Year Ended STATEMENT OF PROFIT AND LOSS 31st March, st March, 2015 Revenue from Operations 8, , Other Income Total Revenue 8, , Expenses Purchase of Stock-in-Trade Changes in Inventories of Finished Goods, Work-in-Progress and Stock-in-Trade (2.01) 1.33 Employee Benefits Expenses Other Expenses 4, , Total Expenses 5, , Profit Before Depreciation/Amortisation, Interest and Tax (PBDIT) 3, , Depreciation and Amortisation Expenses 1, , Finance Cost Profit Before Exceptional Item and Tax 1, , Exceptional Items Profit Before Tax 1, , Tax Expenses Current Tax MAT Credit (150.56) (0.99) Deferred Tax Profit for the Year

277 Consolidated Financial Statements NOTE: 31 DISCLOSURE PURSUANT TO ACCOUNTING STANDARD-19 LEASES IS AS UNDER: ` in Crores Year Ended Year Ended 31st March, st March, 2015 A. Assets Taken on Lease: i) Operating Lease Payment recognised in the Statement of Profit and Loss Minimum Lease Rent , Contingent Lease Rent , ii) iii) iv) The Group has taken certain Office Premises, switches and cell sites, Showrooms and Residential Houses on cancellable/ cancellable operating lease. The future minimum rental payable in respect of non-cancellable operating lease are as follows: As at As at 31st March, st March, 2015 Not later than one year Later than one year and not later than five years 1, , Later than five years , , , The Company has entered into finance lease arrangements for computer servers and softwares from a vendor. The details of finance lease payments payable and their Present Value of the Group as at the Balance Sheet Date: Particulars Total Lease Present Value Interest Charges Payable a) Not later than one year (2.63) (2.10) (0.53) b) Later than one year and not later than five years (3.39) (2.94) (0.45) Total (6.02) (5.04) (0.98) Figures in brackets represent the corresponding amount of Previous Year. B. Assets Given on Lease: The Group has leased under operating lease arrangements certain Cell Sites and Optical Fibre Cables on Indefeasible Rights of Use (IRU) basis, the gross block, accumulated depreciation and depreciation expense of the assets given on IRU basis is not separately identifiable and, hence, not disclosed. The future minimum lease rental in respect of above Optical Fibre Cables lease is as follows: ` in Crores As at As at 31st March, st March, 2015 Not later than one year Later than one year and not later than five years Later than five years

278 Notes NOTE: 32 DISCOUNTINUING OPERATIONS Garment Business The Hon ble High Court of Gujarat, vide its Order dated 23rd October, 2015, and the Hon ble High Court of Bombay, vide its Order dated 5th December, 2015, have approved the Composite Scheme of Arrangement between the Company with respect to its branded apparel retailing division (Madura Garments), Madura Garments Lifestyle Retail Company Limited (MGLRCL) with respect to its luxury branded apparel retailing division (Madura Lifestyle), Pantaloons Fashion & Retail Limited (PFRL) now known as Aditya Birla Fashion and Retail Limited (ABFRL) and their respective shareholders and creditors under Sections 391 to 394 of the Companies Act, 1956 [ the Composite Scheme ]. Pursuant to the Composite Scheme, Madura Garments and Madura Lifestyle have been demerged from the respective companies and have been merged with ABFRL. Eligible Shareholders of the Company have been allotted 26 new equity shares of ` 10 each of ABFRL for every 5 equity shares of ` 10 each held in the Company pursuant to demerger of Madura Garments. Shareholders of MGLRCL have been allotted 7 new equity shares of ` 10 each of ABFRL for every 500 equity shares of ` 10 each held in MGLRCL and the preference shareholder of MGLRCL has been allotted 1 new equity share of ` 10 each of ABFRL pursuant to demerger of Madura Lifestyle. The Composite Scheme has been made effective on 9th January, 2016, with effect from the Appointed Date of 1st April, The Record Date fixed for ascertaining the entitlement of the eligible shareholders of the Company for the allotment of ABFRL shares was 21st January, After the effectiveness of the Composite Scheme and the allotment of shares by ABFRL, the shareholding of the Company (directly and through other subsidiaries) in ABFRL is 9.1% and, hence, ABFRL has ceased to be subsidiary of the Company. As per the terms of Composite Scheme, excess of total Assets over total liabilities of Madura Garments demerged from the Company aggregating ` Crore has been debited to Capital Reserve and excess of total assets over total liabilities of Madura Lifestyle of ` Crore has been debited to Surplus in Profit and Loss. After the effectiveness of the Composite Scheme, PFRL (now known as ABFRL) has ceased to be subsidiary of the Company, accordingly, the difference of ` Crore between carrying amount of net assets and investment in PFRL has been recognised as an exceptional item on 1st April, 2015, in the Consolidated Financial Statements of the Company. In view of the above, the figures for the previous periods are strictly not comparable. The following Statement shows the revenue and expenses of Garment Business ` in Crores Year Ended Year Ended 31st March, st March, 2015 Revenue from Operations 5, Less: Excise Duty Net Revenue from Operations 5, Other Income 9.76 Total Revenue 5, Expenses Cost of Materials Consumed Purchase of Stock-in-Trade 2, Changes in Inventories of Finished Goods, Work-in-Progress and Stock-in-Trade (130.21) Employee Benefits Expenses Other Expenses 1, Total Expenses 4, Profit Before Depreciation/Amortisation, Interest and Tax (PBDIT) Depreciation and Amortisation Expenses Finance Cost Profit/(Loss) Before Exceptional Item and Tax Exceptional Items Gain/(Loss) Profit Before Tax from Discontinued Operations Tax Expenses/(Credit) of Discontinued Operations Profit for the Year (76.69) Profit/(Loss) Before Tax from Ordinary Activities of Discountinued Operations Profit/(Loss) on Sale of Asset Attributable to Discontinued Operation Tax Expenses/(Credit) from Ordinary Activities of Discountinued Operations Profit/(Loss) for the Year (76.69) Minority Interest (68.13) Profit/(Loss) for the Year attributable to owners (8.56) 269

279 Consolidated Financial Statements The carrying amount of the total assets and liabilities transferred are as follows: ` in Crores As at As at 31st March, st March, 2015 Fixed Assets 1, Loans and Advances Inventories 1, Trade Receivables Other Assets Deferred Tax Assets Total Assets (A) 3, Borrowings pertaining to Garment Business 1, Trade Payables 1, Other Liabilities Total Liabilities (B) 3, The net cash flows attributable to the Garment Business are as follows: ` in Crores Year Ended Year Ended 31st March, st March, 2015 Operating Activities Investing Activities (197.12) Financing Activities (113.96) Net Cash Inflow/(Outflow) (11.97) IT & ITeS Business ABNL IT & ITES Limited, a wholly owned subsidiary of the Company, at its meeting of the Board of Directors held on 30th January, 2014, had approved the divestment of shares held by it in its IT-ITeS subsidiary, Aditya Birla Minacs Worldwide Limited, and had executed a Share Purchase Agreement with a group of investors led by Capital Square Partners and CX Partners at an Enterprise Value of USD 260 Million (including deferred grant) subject to working capital adjustment and fulfilment of requisite consents and approvals. All requisite consents and approvals, which were part of closing conditions, had been completed in the previous year. With this divestment, Aditya Birla Minacs Worldwide Limited and its subsidiaries ceased to be subsidiaries of the Company, with effect from 9th May, 2014, and a loss of ` Crore (Net off one-time fees) had been recognised as an exceptional item in the previous year. In view of the above, the figures for the previous periods are strictly not comparable. The following statement shows the revenue and expenses of IT & ITeS Business: ` in Crores Year Ended Year Ended 31st March, st March, 2015 Revenue from Operations Other Income 0.04 Total Revenue Expenses Employee Benefits Expenses Other Expenses Total Expenses Profit Before Depreciation/Amortisation, Interest and Tax (PBDIT) (5.67) Depreciation and Amortisation Expenses Finance Cost 8.43 Profit Before Exceptional Item and Tax (24.88) Exceptional Items Gain/(Loss) (13.33) Profit Before Tax from Discontinued Operations (38.21) Tax Expenses of Discontinued Operations (2.17) Profit for the Year (36.04) Profit/(Loss) Before Tax from Ordianry Activities of Discontinued Operations (24.88) Profit/(Loss) Before Tax from Sale of Assets Attributable to Discontinued Operations (13.33) Tax Expense/(Credit) from Ordinary Activities of Discontinued Operations (2.17) Profit/(Loss) for the Year (36.04) Minority Interest (0.04) Profit/(Loss) for the Year attributable to owners (36.00) 270

280 Notes The carrying amount of the total assets and liabilities transferred are as follows: ` in Crores As at As at 31st March, th May, 2014 Fixed Assets Loans and Advances Trade Receivables Other Assets Total Assets (A) 1, Borrowings pertaining to IT&ITeS Business 1, Trade Payables Other Liabilities Deferred Tax Liability 2.98 Total Liabilities (B) 1, The net cash flows attributable to the IT & ITeS Business are as follows: ` in Crores Year Ended Year Ended 31st March, st March, 2015 Operating Activities Investing Activities (34.10) Financing Activities Foreign Exchange difference on translation of foreign currency cash and cash equivalents 0.33 Net Cash Inflow/(Outflow) Total amount relating to discountinued operations (Garment and IT & ITeS Business) included in the Statement of Profit and Loss Total Revenue 5, Total Expenses 5, Profit Before Depreciation/Amortisation, Interest and Tax (PBDIT) Depreciation and Amortisation Expenses Finance Cost Profit Before Exceptional Item and Tax 3.72 Exceptional Items Gain/(Loss) (13.33) Profit Before Tax from Discontinued Operations (9.61) Tax Expenses of Discontinued Operations Profit for the Year (112.73) Profit/(Loss) Before Tax from Ordianry Activities of Discontinued Operations 3.72 Profit/(Loss) Before Tax from Sale of Assets Attributable to Discontinued Operations (13.33) Tax Expense/(Credit) from Ordinary Activities of Discontinued Operations Profit/(Loss) for the Year (112.73) Minority Interest (68.17) Profit/(Loss) for the Year attributable to owners (44.56) NOTE: 33 AMALGAMATION OF COMPANIES (a) The Hon ble High Court of Gujarat at Ahmedabad, vide its Order dated 21st December, 2015, has approved the Scheme of Amalgamation of remaining business of Madura Garments Lifestyle Retail Company Limited (MGLRCL) with Aditya Birla Finance Limited (ABFL) ( the Scheme ). Pursuant to the Scheme, MGLRCL, being wholly owned subsidiary of the Company, has been amalgamated with ABFL, wholly owned subsidiary of the Company w.e.f. 1st July, 2015, being the Appointed Date. The effective date of the Scheme was 25th January, 2016, and the Record Date for allotment was 2nd February, (b) Pursuant to the Scheme of Amalgamation (the Scheme) under Sections 391 to 394 of the Companies Act, 1956, ABNL IT & ITES Limited (ABNL IT & ITES), Aditya Birla Minacs BPO Private Limited (ABMBPO) and Indigold Trade and Services Limited (ITSL), wholly owned subsidiaries of the Company, have been merged with the Company with effect from 1st October, 2015 (the Appointed Date), pursuant to the Order passed by the Hon ble High Court of Gujarat on 29th February, The difference between the net book value, after adjusting reserves of ABNL IT & ITES, ABMBPO and ITSL, and the investment already made in ABNL IT & ITES, ABMBPO and ITSL (which is now cancelled as per the Scheme), is charged to Capital Reserve of ` Crore. 271

281 Consolidated Financial Statements NOTE: 34 RETIREMENT BENEFITS Disclosure in respect of Employee Benefits pursuant to Accounting Standard-15 (Revised) a) The details of the Group s Defined Benefit Plans in respect of Gratuity (funded by the Group): General Description of the Plan The Group operates gratuity plan through a trust wherein every employee is entitled to the benefit equivalent to fifteen days salary last drawn for each completed year of service. The same is payable on termination of service or retirement, whichever is earlier. The benefit vests after five years of continuous service. In case of some employees, the Group s scheme is more favourable as compared to the obligation under Payment of Gratuity Act, A small part of the gratuity plan, which is not material, is unfunded and managed within the Group. ` in Crores As at As at 31st March, st March, Amounts recognised in the Balance Sheet in respect of Gratuity Present Value of the funded Defined Benefit Obligations at the end of the year Fair Value of Plan Assets Net Liability/(Asset) Amounts recognised in Employee Benefits Expenses in the Statement of Profit and Loss in respect of Gratuity Current Service Cost Interest on Defined Benefit Obligations Expected Return on Plan Assets (13.79) (13.14) Net Actuarial (Gain)/Loss recognised during the year Net Gratuity Cost Actual Return on Plan Assets: Expected Return on Plan Assets Actuarial Gain/(Loss) on Plan Assets (2.18) Actual Return on Plan Assets Reconciliation of Present Value of the Obligations and the Fair Value of the Plan Assets: Change in Present Value of the Obligations: Opening Defined Benefit Obligations Opening Transferrerd from Unfunded 0.34 Current Service Cost Interest Cost Actuarial (Gain)/Loss Liability on Stake Change/Divestment of Subsidiaries/Joint Ventures/Demergers (26.79) (10.57) Benefits Paid (16.61) (16.98) Closing Defined Benefit Obligations Change in Fair Value of the Plan Assets: Opening Fair Value of the Plan Assets Expected Return on Plan Assets Actuarial Gain/(Loss) (2.18) Asset on Stake Change/Divestment of Subsidiaries/Joint Ventures/Demergers (26.76) (7.79) Contributions by the Employer Benefits Paid (16.61) (16.98) Closing Fair Value of the Plan Assets Investment Details of the Plan Assets Government of India Securities 15% 20% Corporate Bonds 0% 1% Special Deposit Scheme 2% 2% Insurer Managed Fund* 68% 63% Others 15% 14% Total 100% 100% * included in the Fair Value of the Plan Assets, investment in Group s own financial instruments (funds of Birla Sun Life Insurance Company Limited) There are no amounts included in the Fair Value of the Plan Assets for Property occupied by or other assets used by the Group.

282 Notes ` in Crores Experience Adjustment 31st March, 31st March, 31st March, 31st March, 31st March, Defined Benefit Obligations Plan Assets Surplus/(Deficit) (49.88) (28.55) (19.44) (23.90) (10.62) Experience Adjustment on Plan Liabilities Experience Adjustment on Plan Assets (2.18) (3.93) 4.33 (1.79) Expected Rate of Return on Assets is based on the average long-term rate of return expected on investments of the fund during the estimated term of the obligations. As at As at 31st March, st March, 2015 Principal Actuarial Assumptions at the Balance Sheet Date Discount Rate 7.35% % 7.80% % Estimated Rate of Return on Plan Assets 7.60% % 8.00% % The Estimates of future salary increase, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market. b) The details of the Group s Defined Benefit Plans in respect of Gratuity (unfunded by the Group): ` in Crores As at As at 31st March, st March, 2015 Amounts recognised in the Balance Sheet in respect of Gratuity Present Value of the unfunded Defined Benefit Obligations at the end of the year Amounts recognised in Employee Benefits Expenses in the Statement of Profit and Loss in respect of Gratuity Current Service Cost Interest on Defined Benefit Obligations Net Actuarial (Gain)/Loss recognised during the year Net Gratuity Cost Reconciliation of Present Value of the Obligations: Opening Defined Benefit Obligations Current Service Cost Interest Cost Actuarial (Gain)/Loss Liability in respect of Employees transferred from funded plan (0.34) Liability on Stake Change/Divestment of Subsidiaries/Joint Ventures/Demergers (6.89) (0.08) Benefits Paid 0.93 (0.71) Closing Defined Benefit Obligations ` in Crores Experience Adjustment 31st March, 31st March, 31st March, 31st March, 31st March, Defined Benefit Obligations Experience Adjustment on Plan Liabilities ß Principal Actuarial Assumptions at the Balance Sheet Date As at As at 31st March, st March, 2015 Discount Rate 7.60% % 7.75% % c) The details of the Group s Defined Benefit Plans in respect of Group owned Provident Fund Trust: ` in Crores Year Ended Year Ended 31st March, st March, 2015 Contribution to the Group-Owned Employees Provident Fund Trust The Guidance Note on implementing AS-15 Employee Benefits (Revised 2005), issued by the ICAI, states that the Provident Funds set-up by employers, which require interest shortfall to be met by the employer, needs to be treated as Defined Benefit Plan. The Group set-up Provident Fund does not have existing deficit of Interest shortfall. The actuary has provided the valuation and based on the below provided assumptions there is no shortfall as at 31st March, 2016, and 31st March, As per the actuarial valuation report, the interest shortfall liability being Other Longterm Employee Benefits, detailed disclosures are not required. 273

283 Consolidated Financial Statements ` in Crores As at As at 31st March, st March, 2015 The details of the Plan Assets position as under: Plan Assets at Fair Value Liability recognised in the Balance Sheet Nil Nil Assumption used in determining the present value obligation of interest rate guarantee under the Deterministic Approach Discount Rate for the term of the Obligations 7.33% % 7.82% % Discount Rate for the remaining term of maturity of Investment Portfolio 7.93% 7.87% Guaranteed Interest Rate 8.80% 8.75% d) Details of the Group s Defined Benefit Plans in respect of Pension (unfunded by the Group): General Description of the Plan In addition to contribution to the state managed pension plan, the Group provides pension to some employees, which is discretionary in the nature. The quantum of pension depends on the cadre of the employee at the time of retirement. ` in Crores As at As at 31st March, st March, 2015 Amounts recognised in the Balance Sheet in respect of Pension: Present Value of unfunded Defined Benefit Obligations at the end of the year Amounts recognised in Employee Benefits Expenses in the Statement of Profit and Loss in respect of Pension: Interest on Defined Benefit Obligations Net Actuarial (Gain)/Loss recognised during the year Net Pension Cost Reconciliation of Present Value of the Obligations: Opening Defined Benefit Obligations Interest Cost Actuarial (Gain)/Loss Benefits Paid (1.19) (1.18) Closing Defined Benefit Obligations Financial Assumptions at the Valuation Date Discount Rate 7.80% 8.00% ` in Crores Experience Adjustment 31st March, 31st March, 31st March, 31st March, 31st March, Defined Benefit Obligations Experience Adjustment on Plan Liabilities ` in Crores Year Ended Year Ended 31st March, st March, 2015 e) Defined Contribution Plans Amount recognised as an expense and included in the Note: 21 as Contribution to Provident and Other Funds

284 Notes Note: 35 DISCLOSURE UNDER EMPLOYEE STOCK OPTIONS SCHEME (1) OF THE COMPANY (A) Under the Employee Stock Options Scheme-2006 (ESOS -2006), the Company has granted options to the eligible employees of the Company and its Subsidiaries. The details are as under: (i) Employee Stock Options Scheme: Particulars Tranche - I Tranche - II Tranche - III Tranche - IV Tranche - V No. of Options * 163, ,093 17,174 11,952 3,370 Method of Accounting Intrinsic Value Intrinsic Value Intrinsic Value Intrinsic Value Intrinsic Value Vesting Plan Graded Graded Graded Graded Graded Vesting - 25% Vesting - 25% Vesting - 25% Vesting - 25% Vesting - 25% every year every year every year every year every year Exercise Period 5 Years from 5 Years from 5 Years from 5 Years from 5 Years from the date of the date of the date of the date of the date of Vesting Vesting Vesting Vesting Vesting Grant Date Grant/Exercise Price (` Per Share) 1, , Repricing of the Option on 20th August, Market Price on the date of Grant of Option (` Per Share) 1, , Market Price on the date of Repricing of Option (` Per Share) (ii) Details of Activity in the Plan: Particulars Options Range of Weighted- Options Range of Weighted- Exercise average Exercise average Price (`) Exercise Price (`) Exercise Price (`) Price (`) Options Outstanding 62, to , to at the beginning of the year Granted during the year Exercised during the year 62, to , to Lapsed during the year 1, to Options Outstanding at 62, to the end of the year Options Unvested at the end of the year 843 Options Exercisable at the 61, to end of the year * Includes 3,360 options granted to the employees of its Subsidiaries. The ESOP compensation cost is amortised on a straight-line basis over the total vesting period of the options. Accordingly, ß {net of recovery of ` Nil from the subsidiaries} (Previous Year: ` 0.01 Crore net of recovery of ` Nil from the subsidiaries) has been charged to the current year Statement of Profit and Loss. For the option exercised during the period, the weighted-average share price at the exercise date was ` 2, per share (Previous Year: ` 1,494.92). The weighted-average remaining contractual life for the stock options outstanding as at 31st March, 2016, is Nil (Previous Year: 1.65 years). 275

285 Consolidated Financial Statements (iii) Fair Valuation: The fair value of the options used to compute proforma net profit and the earnings per share have been done by an independent valuer on the date of grant using Black-Scholes Merton Formula. The key assumptions and the Fair Value are as under: Particulars On the Date of Grant Tranche - I Tranche - II Tranche - III Tranche - IV Tranche - V Risk-Free Interest Rate (%) Option Life (Years) Expected Volatility Expected Dividend Yield (%) Weighted-average Fair Value per Option (`) Particulars On the Date of Repricing Tranche - I Tranche - II Risk-Free Interest Rate (%) Option Life (Years) 5 5 Expected Volatility* Expected Dividend Yield (%) Weighted-average Fair Value per Option (`) *Expected volatility of the Company s stock price is based on NSE price data of last two years. (B) Under the Employee Stock Options Scheme-2013 (ESOS-2013), the Company has granted Options and Restricted Stock Units (RSUs) to the eligible employees of the Company. The details are as under: (a) Stock Option: (i) Employee Stock Options Scheme: Particulars Tranche - I Tranche - II Tranche - III No. of Options 104,272 16,239 35,060 Additional Options issued due to the Scheme of Demerger 16,101 5,129 27,547 Method of Accounting Intrinsic Value Intrinsic Value Intrinsic Value Vesting Plan - Original Options Graded Vesting - 25% Graded Vesting - 25% Graded Vesting - 25% every year every year every year Vesting Plan - Additional Options Proportion and period Proportion and period Proportion and period coterminous with the coterminous with the coterminous with the vesting period of vesting period of vesting period of original ESOP original ESOP original ESOP Exercise Period 5 Years from the 5 Years from the 5 Years from the date of Vesting date of Vesting date of Vesting Grant Date Grant Date of Additional Options issued Grant/Exercise Price (` Per Share) 1, , , Repricing of the Option on 31st March, 2016 (` Per Share) Market Price on the date of Grant of Original Option (` Per Share) 1, , , Market Price on the date of Repricing of Option/Grant of Additional Options (` Per Share)

286 Notes (ii) Details of Activity in the Plan: Particulars Options Range of Weighted- Options Range of Weighted- Exercise average Exercise average Price (`) Exercise Price (`) Exercise Price (`) Price (`) Options Outstanding at the 98,655 1, to 1, ,511 1, to 1, beginning of the year 1, , Additional Options issued due 48, to to the Scheme of Demerger Granted during the year 35,060 1, , Exercised during the year 23,334 1, to 1, , Lapsed during the year 13,241 1, to 1, ,916 1, , , Options Outstanding at the 110, to ,655 1, to 1, end of the year , Options Unvested at the 80,957 86,096 end of the year Options Exercisable at the 29, to ,559 1, to 1, end of the year , The ESOP compensation cost is amortised on a straight-line basis over the total vesting period of the options. Accordingly, ` 0.59 Crore has been charged to the current year Statement of Profit and Loss (Previous Year: ` Nil). For the option exercised during the period, the weighted-average share price at the exercise date was ` 2, per share (Previous Year: ` Nil). The weighted-average remaining contractual life for the stock options outstanding as at 31st March, 2016, is 5.92 years (Previous Year: 6.62 years). (iii) Fair Valuation: The fair value of the options used to compute proforma net profit and the earnings per share have been done by an independent valuer on the date of grant using Black-Scholes Merton Formula. The key assumptions and the Fair Value are as under: Particulars On the Date of Grant Tranche - I Tranche - II Tranche - III Risk-Free Interest Rate (%) Option Life (Years) Expected Volatility* Expected Dividend Yield (%) Weighted-average Fair Value per Option (`) *Expected volatility of the Company s stock price is based on NSE price data of last three years. Particulars On the Date of Repricing Tranche - I Tranche - II Tranche - III Risk-Free Interest Rate (%) Option Life (Years) Expected Volatility# Expected Dividend Yield (%) Weighted-average Fair Value per Option (`) Incremental Fair Value (`) Fair Valuation of Additional Options issued due to Demerger: Particulars On the Date of Additional Grant Tranche - I Tranche - II Tranche - III Risk-Free Interest Rate (%) Option Life (Years) Expected Volatility# Expected Dividend Yield (%) Weighted-average Fair Value per Option (`) # Expected Volatility is based on the Company s stock price on NSE is based on the price data of previous years upto the date of grant/reporting to commensurate with the expected term of the Option. However, in view of the Demerger, for the changes in share prices of ABNL, the volatility was calculated separately upto the date of Demerger (pre-demerger) and from the date of the Demerger (post-demerger), and thereafter the weighted-average of the same is taken. 277

287 Consolidated Financial Statements (b) Restricted Stock Units (i) Employee Stock Options Scheme: Particulars Tranche - I Tranche - II Tranche - III No. of Options 101,731 9,567 12,630 Additional Options issued due to 11,139 5,320 10,092 the Scheme of Demerger Method of Accounting Intrinsic Value Intrinsic Value Intrinsic Value Vesting Plan Bullet Vesting-end of 3 Bullet Vesting-end of 3 Bullet Vesting-end of 3 years from the grant date years from the grant date years from the grant date Vesting Plan - Additional RSUs Proportion and period Proportion and period Proportion and period coterminous with the coterminous with the coterminous with the vesting period of vesting period of vesting period of original RSU original RSU original RSU Exercise Period 5 Years from the date 5 Years from the date 5 Years from the date of Vesting of Vesting of Vesting Grant Date Grant Date of Additional Options issued Grant/Exercise Price (` Per Share) Market Price on the date of Grant of Original Option (` Per Share) 1, , , Market Price on the date of Additional Options granted (` Per Share) (ii) Details of Activity in the Plan: Particulars Options Range of Weighted- Options Range of Weighted- Exercise average Exercise average Price (`) Exercise Price (`) Exercise Price (`) Price (`) Options Outstanding at the beginning of the year 105, , Additional Granted due to the Scheme of Demerger 26, Granted during the year 12, Exercised during the year Lapsed during the year 15, , Options Outstanding at the end of the year 115, , Options Unvested at the end of the year 115, ,041 Options Exercisable at the end of the year The ESOP compensation cost is amortised on a straight-line basis over the total vesting period of the options. Accordingly, ` 2.85 Crore (net recovery of ` 1.40 Crore from ABFRL on account of ESOP option granted to demerged Madura division), has been charged to the current year Statement of Profit and Loss (Previous Year: ` 3.76 Crore). The weighted-average remaining contractual life for the stock options outstanding as at 31st March, 2016, is 5.89 years (Previous Year: 6.82 years). 278

288 Notes (iii) Fair Valuation: The fair value of the options used to compute proforma net profit and the earnings per share have been done by an independent valuer on the date of grant using Black-Scholes Merton Formula. The key assumptions and the Fair Value are as under: Particulars On the Date of Grant Tranche - I Tranche - II Tranche - III Risk-Free Interest Rate (%) Option Life (Years) Expected Volatility* Expected Dividend Yield (%) Weighted-average Fair Value per Option (`) 1, , , *Expected volatility of the Company s stock price is based on NSE price data of last three years. Fair Valuation for the Additional Shares Granted: Particulars On the Date of Additional Grant Tranche - I Tranche - II Tranche - III Risk-Free Interest Rate (%) Option Life (Years) Expected Volatility # Expected Dividend Yield (%) Weighted-average Fair Value per Option (`) # Expected Volatility is based on the Company s stock price on NSE is based on the price data of previous years upto the date of grant/reporting to commensurate with the expected term of the Option. However, in view of the Demerger, for the changes in share prices of ABNL, the volatility was calculated separately upto the date of Demerger (pre- Demerger) and from the date of the Demerger (post-demerger), and thereafter the weighted-average of the same is taken. (c) Stock Appreciation Rights (SARs): (i) Scheme: Particulars Tranche - I Tranche - II Tranche - III No. of Options 91,239 14,199 30,678 Additional Options issued due to 14,089 4,164 18,078 the Scheme of Demerger Method of Accounting Intrinsic Value Intrinsic Value Intrinsic Value Vesting Plan Graded Vesting - 25% Graded Vesting - 25% Graded Vesting - 25% every year every year every year Vesting Plan - Additional Options Proportion and period Proportion and period Proportion and period coterminous with the coterminous with the coterminous with the vesting period of vesting period of vesting period of original SAR s original SAR s original SAR s Exercise Period 3 Years from the date 3 Years from the date 3 Years from the date of Vesting or 6 years of Vesting or 6 years of Vesting or 6 years from the date of grant, from the date of grant, from the date of grant, whichever is earlier whichever is earlier whichever is earlier Grant Date Grant Date of Additional Options issued Grant Price (` Per Share) 1, , , Repricing of the Option on st March, 2016 (` Per Share) Market Price on the date of Grant 1, , , of Options (` Per Share) Market Price on the date of Repricing of Option/Grant of Additional Options (` Per Share) 279

289 Consolidated Financial Statements (ii) Details of Activity in the Plan: Particulars Options Range of Weighted- Options Range of Weighted- Exercise average Exercise average Price (`) Exercise Price (`) Exercise Price (`) Price (`) Options Outstanding at the 86,314 1, to 1, ,438 1, to 1, beginning of the year 1, , Additional Options Granted 36, to due to the Scheme of Demerger Granted during the year 30,678 1, , Exercised during the year 28,490 1, to 1, , Lapsed during the year 11,585 1, to 1, ,802 1, , , Options Outstanding at the 82, to ,314 1, to 1, end of the year , Options Unvested at the 66,150 75,324 end of the year Options Exercisable at the 16, to ,990 1, to 1, end of the year , The Stock Appreciation Right s compensation cost is amortised on a straight-line basis over the total vesting period of the options. Accordingly, ` 1.48 Crore (Previous Year: ` 1.50 Crore) has been charged to the current year Statement of Profit and Loss. The weighted-average remaining contractual life for the Stock Appreciation Right s outstanding as at 31st March, 2016, is 3.73 years (Previous Year: 4.35 years). (iii) Fair Valuation: The fair value of the options used to compute proforma net profit and the earnings per share have been done by an independent valuer using Black-Scholes Merton Formula. The key assumptions and the Fair Value are as under: Particulars As at Tranche - I Tranche - II Tranche - III Risk-Free Interest Rate (%) Option Life (Years) Expected Volatility # Expected Dividend Yield (%) Weighted-average Fair Value per Option (`) Fair Valuation of Additional Options: Particulars As at Tranche - I Tranche - II Tranche - III Risk-Free Interest Rate (%) Option Life (Years) Expected Volatility # Expected Dividend Yield (%) Weighted-average Fair Value per Option (`) # Expected Volatility is based on the Company s stock price on NSE is based on the price data of previous years upto the date of grant/reporting to commensurate with the expected term of the Option. However, in view of the Demerger, for the changes in share prices of ABNL, the volatility was calculated separately upto the date of Demerger (pre-demerger) and from the date of the Demerger (post-demerger), and thereafter the weighted-average of the same is taken. 280

290 Notes (2) OF SUBSIDIARY COMPANIES (A) Aditya Birla Money Limited Stock Options Granted under ABML Employee Stock Options Scheme-2014 The objective of the Employee Stock Options Scheme is to attract and retain talent and align the interest of employees with the Company as well as to motivate them to contribute to its growth and profitability. In accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, as amended by Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (hereinafter referred to as SEBI ESOP Regulations ), and the Guidance Note on Accounting for Employee Share-based Payments, the cost of equity-settled transactions is measured using the intrinsic value method. The cumulative expense to be recognised for equity-settled transactions at each reporting date until the vesting date will reflect the extent to which the vesting period has expired, and the Company s best estimate of the number of equity instruments that will ultimately vest. The expense or credit to be recognised in the Statement of Profit and Loss for a period to represent the movement in cumulative expense recognised as at the beginning and end of that period and is to be recognised in employee benefits expenses. However, there is no expense that is incurred during the year by the Company for this purpose since the exercise price at which the options have been granted by the Company to the eligible employees are at the market price of the Company. As per the ABML ESOP-2014, 25% of the stock options granted got vested at the end of twelfth month from the date of grant of option but none of the employees exercised the vested option till 31st March, Stock Options Granted under ABML Employee Stock Options Scheme-2014 In the previous year, the Company had formulated the ABML Employee Stock Options Scheme-2014 (ABML ESOP Scheme-2014) with the approval of the shareholders at the Annual General Meeting, dated 9th September, The Scheme provides that the total number of options granted thereunder will be 2,770,000 and to follow the Market Value Method (Intrinsic Value) for valuation of the Options. Each option, on exercise, is convertible into one equity share of the Company having face value of ` 1 each. Subsequently, the Nomination and Remuneration Committee of the Board of Directors on 2nd December, 2014, has granted 2,509,341 stock options to its eligible employees under the ABML ESOP Scheme-2014 at an exercise price of ` 34.25/-. The Exercise Price was based on the latest available closing price, prior to 2nd December, 2014 (the date of grant by the Nomination and Remuneration Committee), on the recognised stock exchanges on which the shares of the Company are listed with the highest trading volume. Summary of Stock Options Granted under ABML ESOP Scheme-2014 is as under: Options granted on 2nd December, ,509,341 Options Outstanding at the beginning of the year 2,448,901 No. of Options Granted during the year Nil Method of Accounting Intrinsic Value Vesting Plan 25% every year Exercise Period Within 5 years from the date of vesting of respective options Grant/Exercise Price (` per share) Market price as on the date of grant (previous day closing price on the recognised stock exchange) Options forfeited/lapsed during the year 469,781 (due to resignation of employees) Options exercised during the year Nil Options exercisable at the end of the year 1,979,120 The vesting period in respect of the options granted under ABML ESOP Scheme-2014 is as follows: Sr. No. Vesting Dates % of Options that shall vest 1 12 months from the date of grant 25% of the grant 2 24 months from the date of grant 25% of the grant 3 36 months from the date of grant 25% of the grant 4 48 months from the date of grant 25% of the grant No. of shares vested on 2nd December, 2015, is 612,225, and none of the employees has exercised the vested options. The Company has granted options to the eligible employees at an exercise price of ` per share being the latest market price as per SEBI ESOP Regulations. In view of this, there being no intrinsic value (being the excess of the market price of share under ESOP over the exercise price of the option), on the date of grant, the Company is not required to account the accounting value of option as per SEBI ESOP Regulations. 281

291 Consolidated Financial Statements Fair Valuation: The fair value of the options on the date of grant has been done by an independent valuer using Black-Scholes Merton Formula. The key assumptions are as under: Risk-Free Interest Rate (%) 8.13 Expected Life (No. of years) 5 Expected Volatility (%) Dividend Yield (%) Nil The price of the underlying share in market at the time of option grant (`) Weighted-average Fair Value (`) (B) Aditya Birla Customer Services Limited During the year, the Company had formulated the ABCSL Employee Stock Option Scheme-2015 (ABCSL ESOP Scheme-2015) with the approval of the shareholders at the Annual General Meeting, dated 7th July, The objective of the Employee Stock Options Scheme is to attract and retain talent and align the interest of employees with the Company as well as to motivate them to contribute to its growth and profitability. In accordance with the Guidance Note on Accounting for Employee Share-based Payments, the cost of equity-settle transactions is measured using Intrinsic Value method. The cumulative expense to be recognised from equity-settled transactions at each reporting date until the vesting date will reflect the extent to which the vesting period has expired, and the Company s best estimate of the number of equity instruments that will ultimately vest. The expense or credit to be recognised in the Statement of Profit and Loss for a period to represent the movement in cumulative expense recognised at the beginning and end of that period and is to be recognised in employee benefits expenses. However, there is no expense that is incurred during the year by the Company for this purpose since the exercise price at which the options have been granted by the Company to the eligible employees are at fair value of the Company and, further, the vesting of the options is due only in upcoming years. ABCSL Employee Stock Option Scheme-2015 provides that the total number of options granted thereunder will be 1,134,853 equity shares and to follow the Intrinsic Value method for valuation of the Options. Each option, on exercise, is convertible into one equity share of the Company having face value of ` 10 each. Subsequently, the Nomination and Remuneration Committee of the Board of Directors on 4th September, 2015, has granted 900,618 stock options to its eligible employees under the ABCSL ESOP Scheme-2015 at an exercise price of ` each. The Exercise Price was based on the fair value method arrived at as per valuation report issued by Independent Valuer. Summary of Options Granted under ABCSL ESOP Scheme-2015 is as under: Options Outstanding at the beginning of the year Nil Number of Options Granted during the year 900,618 Method of Accounting Intrinsic value Vesting Plan Bullet vesting on 31st March, 2018 Exercise Period Within 2 years from the date of vesting of respective options Grant Date 4th September, 2015 Grant/Exercise Price (` per share) Market Price as on the date of grant NA Options forfeited/lapsed/not opted for during the year 1,01,734 Options exercised during the year Nil Options exercisable at the end of the year 798,884 The vesting period in respect of the options granted under ABCSL ESOP Scheme-2015 is as follows: Vesting Dates % of options that shall vest Options shall vest at one go-bullet vesting at 100% of the grant more specifically specified in the end of March, 2018 or such time period the ESOP Scheme may be determined by the Compensation Committee 282

292 Notes Fair Valuation: The fair value of the options on the date of grant has been done by an independent valuer using Black-Scholes Merton Formula. The key assumptions are as under: Expected Volatility (%) Nil Risk-Free Rate 7.83 Exercise Price (`) Expected Life (No. of years) 6 Dividend Yield (%) Nil Option Fair Value (`) ) OF THE JOINT VENTURE OF THE COMPANY The Company has granted stock options under the Employee Stock Option Scheme (ESOS)-2006 and stock options as well as Restricted Stock Units (RSUs) under ESOS-2013 to the eligible employees of the Company and its subsidiaries from time to time. These Options would vest in 4 equal annual instalments after one year of the grant and the RSUs will vest after 3 years from the date of grant. The maximum period for exercise of Options and RSUs is 5 years from the date of vesting. Each Option and RSU when exercised would be converted into one fully paid-up equity share of `10/- of the Company. The Options granted under ESOS-2006 and Options as well as RSUs granted under the ESOS-2013 scheme carry no rights to dividends and no voting rights till the date of exercise. As at the end of the financial year, details of outstanding options are as follows: Particulars As at March 31, 2016 As at March 31, 2015 No. of Weighted- No. of Weighted- Options average Options average Exercise Exercise Price (`) Price (`) i) Options Granted under ESOS-2006 Options outstanding at the beginning of the year 4,851, ,344, Options granted during the year Options forfeited/lapsed during the year 10, , Options exercised during the year 2,136, ,453, Options expired during the year 23, , Options outstanding at the end of the year 2,681, ,851, Options exercisable at the end of the year 2,681, ,851, Range of exercise price of outstanding options (`) Remaining contractual life of outstanding options (years) ii) Options Granted under ESOS-2013 Options outstanding at the beginning of the year 18,657, ,565, Options granted during the year 1,048, , Options forfeited/lapsed during the year 158, , Options exercised during the year 528, , Options expired during the year Options outstanding at the end of the year 19,018, ,657, Options exercisable at the end of the year 8,622, ,494, Range of exercise price of outstanding options (`) Remaining contractual life of outstanding options (years) iii) RSUs Granted under ESOS-2013 Options outstanding at the beginning of the year 8,160, ,105, Options granted during the year 476, , Options forfeited/lapsed during the year 86, , Options exercised during the year Options expired during the year Options outstanding at the end of the year 8,550, ,160, Options exercisable at the end of the year 41, Range of exercise price of outstanding options (`) Remaining contractual life of outstanding options (years)

293 Consolidated Financial Statements (B) Fair Valuation: The fair value of each option is estimated using Black-Scholes Merton Formula on the date of grant/repricing based on the following: ESOS-2006 Particulars On the Date of Grant On the Date of Repricing Tranche - I Tranche - II Tranche - III Tranche - IV Tranche - I Tranche - II Expected Dividend Yield (%) Nil Nil Nil Nil Nil Nil Expected Life 6 years & 6 years & 6 years & 6 years & 4 years & 5 years & 6 months 6 months 6 months 6 months 6 months 9 months Risk-Free Interest Rate (%) Expected Volatility (%) Particulars ESOS-2013 Tranche - I Tranche - II Tranche - III Stock RSUs Stock RSUs Stock RSUs Options Options Options Excepted Dividend Yield (%) Expected Life 6 years & 5 years & 6 years & 5 years & 6 years & 5 years & 6 months 6 months 6 months 6 months 6 months 6 months Risk-Free Interest Rate (%) Expected Volatility (%) The Group is following Intrinsic Value for Employee Stock Options Scheme valuation. Had the compensation cost for the stock options granted under ESOS 2006 and 2013 been recognised based on the fair value in accordance with Black-Scholes Merton Formula, the proforma amount of net profit and the earnings per share of the Company would have been as under: ` in Crores Particulars Net Profit 1, , Add: Compensation Cost as per Intrinsic Value Less: Compensation Cost as per Fair Value Adjusted Net Income 1, , Weighted-average number of Basic Equity Shares Outstanding (In Nos.) 130,168, ,111,149 Weighted-average number of Diluted Equity Shares Outstanding (In Nos.) 130,301, ,320,557 Face Value of the Equity Share (In `) Reported Earnings Per Share (EPS) Basic EPS (`) Diluted EPS (`) Proforma Earnings Per Share (EPS) Basic EPS (`) Diluted EPS (`)

294 Notes NOTE: 36 DISCLOSURE IN RESPECT OF RELATED PARTIES PURSUANT TO ACCOUNTING STANDARD-18 1 List of Related Parties Joint Ventures IDEA Cellular Limited (IDEA) Associates Birla Securities Limited (BSL) (Upto November 13, 2014) Key Management Personnel of the Company Mr. Lalit Naik Managing Director (Deputy Managing Director upto 30th June, 2014) Mr. Sushil Agarwal Whole-time Director (upto 30th June, 2015) Dr. Rakesh Jain Managing Director (Upto 30th June, 2014) Enterprises having Common Key Management Personnel (KMP) Aditya Birla Science & Technology Company Private Limited (ABSTCPL) (Common KMP Mr. Lalit Naik) (w.e.f. 30th March, 2015, upto 30th March, 2016) 2 During the year, following transactions were carried out with the related parties: ` in Crores Transaction/Nature of Relationship Joint Associates Key Enterprises Grand Total Ventures Management having Personnel Common Key Management Personnel (KMP) Interest Received ABSTCPL (0.01) (0.01) TOTAL (0.01) (0.01) Contribution to Research and Development Institution ABSTCPL TOTAL Other Expenses IDEA (5.92) (5.92) TOTAL (5.92) (5.92) Managerial Remuneration Paid* Mr. Lalit Naik (5.49) (5.49) Mr. Sushil Agarwal (3.94) (3.94) Dr. Rakesh Jain (6.72) (6.72) TOTAL (16.15) (16.15) Sale of Investments BSL (0.01) (0.01) TOTAL (0.01) (0.01) 285

295 Consolidated Financial Statements Transaction/Nature of Relationship Joint Associates Key Enterprises Grand Total Ventures Management having Personnel Common Key Management Personnel (KMP) Advance Given Mr. Lalit Naik (0.19) (0.19) TOTAL (0.19) (0.19) Advance Given Reveived Back Mr. Lalit Naik TOTAL Outstanding Balance as on 31st March Amount Receivable (0.19) (14.19) (14.38) Amount Payable (0.67) (0.67) Investment Outstandings (2.40) (2.40) Figures in brackets represent corresponding amount of Previous Year. No amount, in respect of the related parties have been written off/back, is provided for during the year. Related parties relationships have been identified by the management and relied upon by the auditors. * Expenses towards gratuity and leave encashment provisions are determined actuarially on an overall Company basis at the end of each year and, accordingly, have not been considered in the above information, except to the extent of amount paid to Dr. Rakesh Jain. NOTE: 37 DISCLOSURE IN RESPECT CORPORATE SOCIAL RESPONSIBILITY UNDER SECTION 135 OF THE COMPANIES ACT, 2013, AND RULES THEREON The Group has incurred ` Crore (Previous Year: ` Crore) towards Corporate Social Responsibility activities under Section 135 of the Companies Act and Rules thereon. It is included in different heads of expenses in the Statement of Profit and Loss. 286

296 Notes NOTE: 38 STATEMENT OF DERIVATIVES AND UNHEDGED FOREIGN CURRENCY EXPOSURE a) Derivatives: Outstanding at the Balance Sheet Date Amount in Foreign Currency Nature of Contract Foreign Option As at As at Purpose Currency 31st March, st March, 2015 Currency and Interest Rate Swap USD Buy 94,994, ,666,667 Hedging of Loan Currency and Interest Rate Swap JPY Buy 1,269,834,749 2,307,300,000 Hedging of Loan Forward Contracts USD Buy 156,038, ,150,622 Sell 8,924,245 23,194,250 Hedging Purpose Forward Contracts EUR Buy 7,342,555 15,724,398 Sell 2,235,341 3,524,110 Hedging Purpose Forward Contracts GBP Buy 172,947 Sell 1,207,490 1,577,166 Hedging Purpose Forward Contracts JPY Sell 111,044,500 Hedding Purpose Forward Contracts CNY Buy 14,063,500 Hedging Purpose Forward Contracts CHF Buy 27,208 Hedging Purpose Forward Contracts and Interest Rate Swap USD Buy 5,000,000 Hedging of Loan b) Foreign Currency Exposure which are not hedged Particulars Currency Foreign Currency ` in Crores As at 31st March, 2016 Trade Receivables USD 4,579, EUR 191, GBP 345, PHP 146 ß AED 118, KWD LKR 1,244, THB 569, TRY 61, Loans and Advances USD 975, Other Current Liabilities USD 1,153, EUR 125 ß Borrowings USD 110,200, Trade Payables USD 18,585, EUR 1,727, GBP 133, AED 990 ß CAD 1,066, Particulars Currency Foreign Currency ` in Crores As at 31st March, 2015 Trade Receivables USD 5,582, EUR 341, GBP 34, AED 118, LKR 64,771 ß TBH 69, TRY 5, Loans and Advances USD 11, EUR 19, JPY 1,181, Other Current Liabilities USD 401, EUR 10, Borrowings USD 110,282, Trade Payables USD 16,395, EUR 565, GBP 220, AUD 536, AED 10, CAD 1,000 ß HKD 4,000 ß KRW 140,000 ß MNT 175,000 ß SAR 1,000 ß SGD 3, THB 10,000 ß 287

297 Consolidated Financial Statements NOTE: 39 SEGMENT DISCLOSURES Segments have been identified in line with the Accounting Standard on Segment Reporting (AS-17), taking into account the organisational structure as well as differential risk and returns of these segments. The Group has considered business segment as the primary segment for disclosure. The products and services included in each of the reported business segments are as follows: SEGMENTS ACTIVITIES Life Insurance Life Insurance Services Asset Management, Non-Bank Financial Services, Private Equity, Equity and Other Financial Services Commodity Broking, Wealth Management and General Insurance Advisory, Health Insurance Telecom Telecommunication Services Branded Apparels and Branded Apparels and Accessories Accessories (Refer Note: 32) Textiles Linen Yarn and Fabric, Worsted Yarn and Wool Tops Agri-Business Fertilisers, Agro-Chemicals and Seeds Rayon Yarn Viscose Filament Yarn, Caustic Soda and Allied Chemicals Insulators Insulators IT-ITeS (Refer Note: 32) Business Process Outsourcing Services and Software Services Others Solar Power Business The Group considers secondary segment based on revenues within India as Domestic Revenues and outside India as Export Revenues. Assets are segregated based on their geographical location. Information about Primary Business Segments ` in Crores Segment Revenue For the Year Ended 31st March, 2016 For the Year Ended 31st March, 2015 External Inter- Total External Inter- Total Segment Segment Life Insurance 5, , , , Other Financial Services 3, , , , Telecom 8, , , , Textiles 1, , , , Agri-Business 2, , , , Rayon Insulators Branded Apparels and Accessories (Refer Note: 32) 5, , IT-ITeS (Refer Note: 32) Others Total Segment 23, , , , Eliminations Total Revenue 23, ,

298 Notes ` in Crores Segment Result (PBIT) For the Year Ended For the Year Ended 31st March, st March, 2015 Life Insurance Other Financial Services Telecom 1, , Textiles Agri-Business Rayon Insulators Branded Apparels and Accessories (Refer Note: 32) IT-ITeS (Refer Note: 32) (16.45) Others 0.74 Total Segment 3, , Less: Finance Cost* Add: Interest Income* Add: Unallocable Income (net of unallocable expenses) Profit Before Exceptional Items and Tax 2, , Exceptional Items (Refer Note: 28) (13.33) Profit Before Tax 2, , Tax Expenses Profit Before Minority Interest 2, , Minority Interest Profit for the Year 1, , * Finance Cost excludes finance Cost of ` 1, Crore (Previous Year: ` 1, Crore) and Interest Income excludes interest income of ` Crore (Previous Year: ` Crore) on Financial Services Business, since it is considered as an expense and income, respectively, for deriving Segment Result. Information about Primary Business Segments ` in Crores Other Information Carrying Amount of Carrying Amount of Segment Assets Segment Liabilities as on (including Goodwill) as on 31st March, 31st March, 31st March, 31st March, Life Insurance 31, , , , Other Financial Services 29, , , , Telecom 20, , , , Textiles Agri-Business 1, , Rayon Insulators Branded Apparels and Accessories (Refer Note: 32) 4, , IT-ITeS (Refer Note: 32) Others Total Segment 85, , , , Inter-Segment Eliminations (36.91) (43.22) (36.91) (43.22) Unallocated Corporate Assets/Liabilities 3, , , , Total Assets/Liabilities 88, , , ,

299 Consolidated Financial Statements Other Information Cost incurred to Acquire Segment Fixed Assets (including CWIP and Capital Advance) for the Year Ended ` in Crores Depreciation/Amortisation for the Year Ended 31st March, 31st March, 31st March, 31st March, Life Insurance Other Financial Services Telecom 8, , , , Textiles Agri-Business Rayon Insulators Branded Apparels and Accessories (Refer Note: 32) IT-ITeS (Refer Note: 32) Others Total Segment 9, , , , Unallocated Total 9, , , , Information about Secondary Business Segments ` in Crores For the Year Ended 31st March, st March, 2015 Revenue by Geographical Market In India 22, , Outside India , Total 23, , Carrying Amount of Segment Assets In India 88, , Outside India Total 88, , Cost incurred to acquire Segment Fixed Assets In India 9, , Outside India Total 9, ,

300 Notes NOTE: 40 ADDITIONAL INFORMATION PURSUANT TO SCHEDULE III OF THE COMPANIES ACT, 2013, FOR CONSOLIDATED FINANCIAL STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2016 ` in Crores Name of the Entity Net Assets* Net Assets* Share in Profit Share in Profit as on as on or Loss for the or Loss for the 31st March, st March, 2015 Year Ended Year Ended 31st March, st March, 2015 % of Amount % of Amount % of Amount % of Amount Conso- Conso- Conso- Consolidated lidated lidated lidated Net Net Profit and Profit and Assets Assets Loss Loss HOLDING COMPANY 58.91% 8, % 8, % % SUBSIDIARY COMPANIES Aditya Birla Financial Services Limited 21.54% 3, % 2, % (0.48) 3.43% (48.56) Aditya Birla Capital Advisors Private Limited 0.21% % % % 4.44 Aditya Birla Customer Services Limutes 0.01% (0.97) 0.02% % (70.00) 4.33% (61.35) Aditya Birla Trustee Company Private Limited 0.00% % % % 0.04 ABCAP Trustee Company Private Limited (w.e.f. 25th March, 2016) 0.00% ß Aditya Birla Money Limited 0.26% % % % 7.08 Aditya Birla Commodities Broking Limited 0.02% % % % (1.18) Aditya Birla Financial Shared Services Limited 0.00% % % (0.07) 0.01% 0.07 Aditya Birla Finance Limited 25.44% 3, % 2, % % Aditya Birla Housing Finance Limited 1.41% % % (30.22) 0.36% (5.13) Aditya Birla Health Insurance Co. Limited (w.e.f. 22nd April, 2015) 0.02% % (15.20) Aditya Birla Insurance Brokers Limited 0.24% % % % Aditya Birla Money Mart Limited 0.13% (18.27) 0.09% (11.46) 0.36% (6.81) 0.76% Aditya Birla Money Insurance Advisory Services Limited 0.03% (3.97) 0.19% (24.01) 0.12% (2.28) 0.42% (5.98) Birla Sun Life Asset Management Company Limited 5.71% % % % Birla Sun Life Trustee Company Private Limited 0.00% % % % 0.08 Birla Sun Life Insurance Company Limited 11.57% 1, % 1, % % Birla Sun Life Pension Management Limited (w.e.f. 9th January, 2015) 0.18% % (0.32) 0.01% % (0.37) ABNL Investment Limited 0.18% % % % 2.47 Shaktiman Mega Food Park Private Limited 0.00% ß 0.00% ß 0.00% (0.01) 0.02% (0.35) Aditya Birla Renewables Limited (w.e.f. 7th August, 2015) 0.01% (0.74) 0.05% (0.94) Indigold Trade and Services Limited (Merged with the Company w.e.f. 1st October, 2015) 8.94% 1, % (0.04) 0.18% (2.56) ABNL IT & ITES Limited (Merged with the Company w.e.f. 1st October, 2015) 3.23% % (1.35) 2.09% (29.65) Madura Garments Lifestyle Retail Company Limited (Merged with Aditya Birla Finance Limited w.e.f. 1st July, 2015) 0.61% % (25.98) Pantaloons Fashions & Retail Limited (Now known as Aditya Birla Fashion and Retail Limited) (ceased to subsidiary w.e.f. 1st April, 2015) 2.69% % (228.14) Aditya Birla Minacs Worldwide Limited (upto 8th May, 2014) 0.32% (4.50) Aditya Birla Minacs BPO Private Limited (Merged with the Company w.e.f. 1st October, 2015) % (0.25) Aditya Birla Securities Private Limited (Upto 10th September, 2014) 0.00% ß 291

301 Consolidated Financial Statements ` in Crores Name of the Entity Net Assets* Net Assets* Share in Profit Share in Profit as on as on or Loss for the or Loss for the 31st March, st March, 2015 Year Ended Year Ended 31st March, st March, 2015 % of Amount % of Amount % of Amount % of Amount Conso- Conso- Conso- Consolidated lidated lidated lidated Net Net Profit and Profit and Assets Assets Loss Loss FOREIGN SUBSIDIARY COMPANIES Aditya Birla Sun Life AMC Pte. Limited, Singapore 0.03% % % (6.67) 0.39% (5.46) Aditya Birla Sun Life AMC Limited, Dubai 0.04% % % (1.00) 0.03% (0.36) Birla Sun Life AMC (Mauritius) Limited 0.04% % % % 5.00 Aditya Vikram Global Trading House Limited (upto 29th September, 2014) 0.00% 0.02 Aditya Birla Minacs Philippines Inc. (upto 8th May, 2014) 0.01% (0.19) AV Transworks Limited, Canada (upto 8th May, 2014) 0.00% 0.03 Aditya Birla Minacs Worldwide Inc., Canada (upto 8th May, 2014) 0.67% (9.43) Minacs Worldwide S.A. de C.V., Mexico (upto 8th May, 2014) 0.00% 0.01 The Minacs Group (USA) Inc. (upto 8th May, 2014) 0.52% (7.34) Bureau Collections Recovery, LLC (USA) (upto 8th May, 2014) 0.02% (0.32) Minacs Limited, UK (upto 8th May, 2014) 0.01% 0.11 Minacs Worldwide GmbH, Germany (upto 8th May, 2014) 0.01% 0.19 Minacs Kft., Hungary (upto 8th May, 2014) 0.00% 0.03 Aditya Birla Minacs BPO Limited, UK (upto 8th May, 2014) 0.00% (0.06) Minority Interest 5.90% (857.45) 6.23% (801.83) 7.81% (147.29) 5.34% (75.58) JOINT VENTURE IDEA Cellular Limited 41.25% 5, % 5, % % ASSOCIATES Birla Securities Limited (Upto 14th November, 2015) Consolidation Eliminations and Adjustments (8,861.12) (9,270.22) (85.47) TOTAL ATTRIBUTABLE TO OWNERS 14, , , , Notes: * Net Assets = Total Assets Total liabilities 1. India Advantage Fund Limited (IAFL), wholly owned Subsidiary of Birla Sun Life Asset Management Company Limited, is a collective investment scheme set-up as a fund in Mauritius with the status of a limited company under the Mauritius Companies Act. In terms of the constitution and private placement memorandum, IAFL has classes of redeemable participating shares. Each class of participating shares has its own Balance Sheet and Statement of Profit and Loss. The Profit/Loss of each such class belongs to the participating shareholders of that class. Birla Sun Life Asset Management Company Limited (BSAMC) owns 100% of the management share, and management shareholder is not entitled to any beneficial interest in the profit/loss of various classes nor is required to make good any shortfall. In substance, there are no direct or indirect economic benefits received by the management shareholders. The substance over form must prevail. Accordingly, the Group has not consolidated IAFL in the Consolidated Financial Statements. 2. Aditya Birla Sun Life AMC Pte. Limited, Singapore, has made investment in International Opportunities Fund. International Opportunities Fund SPC (IOF) is segregated portfolio company set-up as a fund in Cayman islands under the Cayman Islands Monetary Act. In terms of constitution and private placement memorandum, IOF has various segregated portfolio which issue redeemable participating shares. Each Segregated Portfolio of participating shares has its own Balance Sheet and Profit and Loss. The profit/loss of each such Portfolio belongs to the participating shareholders of that segregated portfolio. Aditya Birla Sun Life Asset Management Pte. Limited (ABSLAMC) owns 100% of the management share, and the management shareholder is not entitled to any beneficial interest in the profit/loss of various segregated portfolios nor is required to make good any shortfall. In substance there are no direct or indirect economic benefits received by the management shareholders. The substance over form must prevail. Accordingly, the Group has not consolidated IOF in the Consolidated Financial Statement. 3. Aditya Birla Idea Payment Bank Limited Refer Note 41 (iv). 292

302 Notes NOTE: 41 OTHER SIGNIFICANT NOTES (i) The Group has a process whereby periodically all long-term contracts are assessed for material foreseeable losses. At the year end, the Company has reviewed and ensured that adequate provision as required under any law/accounting standards for material foreseeable losses on such long-term contracts has been made in the books of account. (ii) The Group s pending litigations comprise of claims by or against the Group primarily by the workers/employees/customers/ suppliers, etc., and proceedings, pending with tax and other government authorities. The Group has reviewed its pending litigations and proceedings and has adequately provided for where Provisions are required and disclosed the contingent liabilities where applicable, in its financial statements. The Group does not expect the outcome of these proceedings to have a materially adverse effect on its financial results. In respect of litigations, where the management assessment of a financial outflow is probable, the Group has made adequate provision in the financial statements and appropriate disclosure for contingent liabilities is given in Note 26. (iii) In respect of Idea Cellular Limited (IDEA) During the year, the Cable Modem Termination System (CMTS) Licences along with bundled spectrum, which were issued twenty years back, expired on completion of the licensed tenure in the service areas of Maharashtra, Gujarat, Madhya Pradesh, Andhra Pradesh, Kerala, Haryana and Uttar Pradesh (West). The Department of Telecommunications (DoT) had, in the meanwhile, allotted the spectrum won by the successful bidders of the March 2015 auctions (including the Company) for a period of twenty (20) years and linked the use of the allotted spectrum to the expiring dates of the bundled spectrum in the service areas, where the initial licences were expiring as mentioned above. During the year, the Company had also obtained the required authorisation for access services under Unified Licence (UL) which enabled it to use the allotted spectrum won, thus shifting out from the earlier administered spectrum in all the above service areas seamlessly. The Company has also launched its 3G services in the Kolkata service area and 4G LTE services in the ten service areas of Maharashtra, Madhya Pradesh, Andhra Pradesh, Kerala, Karnataka, Punjab, Tamil Nadu, Haryana, Odisha and NESA using the spectrum that it had additionally acquired during the February 14 and March 15 auctions. The above has resulted in an addition to the Intangible Fixed Assets (including CWIP relating to the spectrum of Punjab and Karnataka service areas whose CMTS licences along with bundled spectrum are expiring in April 2016). During the year, the Group s share of which amounts to ` 7, Crore along with the Deferred Payment Liability the Group s Share of which amounts to ` 5, Crore which is reflected under Long-term Borrowings. Also, deletions pertaining to the above mentioned expired CMTS licences Group share of ` Crore (Written-down Value ` NIL) have been recorded in Intangible Fixed Assets. (iv) The Company, jointly with Idea Cellular Limited (IDEA), has incorporated a new subsidiary, namely, Aditya Birla Idea Payments Bank Limited (ABIPBL), wherein the Company holds 51% shares and the balance 49% shares are held by IDEA. ABIPBL has been formed to set up a Payments Bank under the Guidelines for Licensing of Payments Banks issued on 27th November, 2014, by the Reserve Bank of India. First full financials of ABIPBL shall be prepared for the period ended 31st March, 2017, hence the same has not been consolidated. (v) In line with RBI regulations for Payments Bank, which do not permit co-existence of any Prepaid Payment Instrument (PPI) issuer and a payment bank entity in the same group, the Board of Idea Mobile Commerce Services Limited (IMCSL) (wholly owned subsidiary of IDEA) (current holder of a PPI authorisation from RBI) has given its approval to amalgamate IMCSL with ABIPBL on a going-concern basis, subject to requisite approvals. (vi) During the year, the Company has entered into an agreement with Sun Life of Canada, to sell 437,277,840 equity shares constituting 23% of the issued and paid-up equity shares of Birla Sun Life Insurance Company Limited (BSLI). With the regulatory approvals in place, from Insurance Regulatory and Development Authority of India ( IRDAI ), Foreign Investment Promotion Board ( FIPB ) and Competition Commission of India ( CCI ), the transaction was consummated during the second week of April The Company has received ` 1,664 Crore from stake sale, valuing BSLI at ` 7, Crore. The Company continues to hold the controlling stake in BSLI at 51%. (vii) During the year, the Company floated a new subsidiary, namely, Aditya Birla Renewables Limited, and entered into a definitive Share Subscription and Shareholders Agreement (SSA) with AEIF Mauritius SPV1 Limited (AEIF), an affiliate of the Abraaj Group, a leading investor operating in global growth markets, to build a large scale renewable energy platform focused on developing utility-scale solar power plants in India. In accordance with the SSA, holding of the Company and AEIF is 51% and 49%, respectively. The same has been reported under Others of Segment Reporting. (viii) Pursuant to a Share Purchase Agreement ( SPA ) between the Company and Mr. Prataph C. Reddy and others ( Erstwhile Promoters ), Aditya Birla Money Limited (ABML), a subsidiary of the Company, dated 28th August, 2008, the Company had agreed to acquire 31 million equity shares in ABML. The transaction was completed on 6th March, As per the SPA, the Erstwhile Promoters had agreed to indemnify and hold harmless the Company to the extent of any Losses, resulting from or consequent upon or relating to such breach of representations or warranties, covenants or agreement including, but not limited to the recoveries of receivables and other assets in the books of ABML, contingencies on tax and related matters, etc. Subsequent to the completion of the above transaction, the Company noted several breaches of representations and warranties including, but not limited to non-recovery of debtors, irrecoverable advances, missing fixed assets, etc. Accordingly, the Company, based on its internal assessment of the recoverability of receivables, fixed assets, other assets and matters relating to tax and other contingencies, arrived at an amount of `16.66 Crore as losses incurred on account of breach of representation warranties in the SPA. Further, the Company, vide its letter dated 5th March, 2011, made a separate claim of ` 0.52 Crore for amounts becoming due and payable on accounts of various cases initiated by the customers of the ABML. 293

303 Consolidated Financial Statements (ix) (x) (xi) The Company invoked the arbitration mechanism and filed their Statement of Claim on 26th February, 2011, with the Arbitration Tribunal. Pending the final outcome of the arbitration proceedings, ABML has identified all such receivables, assets, etc., which have not been recovered and other items, which are the subject matter of the claim, to the extent they are in the books of account of the ABML as at 31st March, 2016, aggregating `18.66 Crore (Previous Year: ` Crore) and disclosed the same in Short-term Loans and Advances in Note 12B of the Balance Sheet, as these amounts would be paid directly to the ABML by the Erstwhile Promoters at the direction of the Company as and when the settlement happens. Both parties completed filing of documents. On 4th July, 2012, a hearing was held and M/s. Delloitte Haskins & Sells were asked to act as auditors by the Arbitrators with a mandate to submit a report on whether from an accounting perspective, including the accounting treatment that has been given to the items set out in the Statement of Claim, the amounts as claimed are correct as per accounting practice. The arbitral tribunal then directed the Claimants and Respondents to file their objections, if any, to the audit report submitted by M/s. Deloitte Haskins & Sells, and had also directed the Respondent to file their list of witnesses (if any) by the end of April The Respondents filed their objections to the audit report and the Company had also filed its reply to the said objections. Arguments in rebuttal by the Claimant was completed on 25th October, 2013, and written submissions were filed by 29th October, The tribunal has reserved the award. During the previous year, Arbitral Tribunal has passed an award, allowing claim of ` Crore, which excluded premature claims pertaining to income tax, service tax, etc. Further, such award directed the Erstwhile Promoters to pay a sum of ` 5.73 Crore (being 56% of ` Crore, as the Company has purchased only 56% of shares), along with 14% from the date of award. This award was received by the Company on 27th May, Subsequently, during the year both parties have filed petitions under Section 34 of the Arbitration and Conciliation Act, 1996, seeking to set aside the award and the same are admitted and pending on the file of the High Court of Madras. In respect of such receivables, which exclude premature claims pertaining to income tax, service tax, etc., the Company has created adequate provision, which also includes claims not awarded by the Arbitral Tribunal to the extent of 44%. In respect of tax claims, the Company has obtained favourable order for certain assessment years and is confident of recovering such amount in due course. Such amounts are fully recoverable from the Income Tax Department. Further, during the year, the Supreme Court dismissed the appeal filed by the Company against SAT order directing the Company to pay a sum of ` 1.66 Crore together with interest thereon. Consequently, SEBI served a notice of demand on the Company, seeking payment of a sum of ` 1.66 Crore towards turnover fee and a sum of ` 3.76 Crore towards interest thereon from the respective due dates of payment of the said Turnover Fee. As the erstwhile promoters have agreed to indemnify the Company to the extent of any losses resulting from or consequent upon the civil appeal pending before the Supreme Court, vide Civil Appeal No. 3441/2007 in the SPA, the demand was communicated to the erstwhile promoters, and the erstwhile promoters have paid the total turnover fee of ` 1.66 Crore to the Company against the payment made by the Company to SEBI. The request of the Company to SEBI seeking waiver of the interest was not considered favourably and the review petition filed by the Company in the Supreme Court was also dismissed. In the meanwhile, SEBI issued a Recovery Certificate dated 12th January, 2016, seeking to recover the interest amount and the Company remitted the above mentioned interest amount with SEBI under intimation to erstwhile promoters. Based on legal opinion received and internal assessment, the Company is confident of recovering the allowed claim through the legal process. The actuarial liabilities of Life Insurance Business are calculated in accordance with the accepted actuarial practice, requirements of the Insurance Act, 1938, Regulations notified by the IRDA and Practice Standard prescribed by the Institute of Actuaries of India. Figures of ` 50,000 or less have been denoted by ß. Previous Year s figures have been regrouped/rearranged, wherever necessary. As per our attached Report of even date For and on behalf of the Board of Directors For KHIMJI KUNVERJI & CO. For S R B C & CO LLP KUMAR MANGALAM BIRLA ICAI Firm Registration No W ICAI Firm Registration No E/E Chairman Chartered Accountants Chartered Accountants LALIT NAIK Managing Director PINKY MEHTA Chief Financial Officer Per SHIVJI K. VIKAMSEY Per VIJAY MANIAR Partner Partner ASHOK MALU Membership No Membership No President & Company Secretary Mumbai, May 20, 2016 Mumbai, May 20, 2016 RAJASHREE BIRLA TARJANI VAKIL P. MURARI B. R. GUPTA S. C. BHARGAVA V. CHANDRASEKARAN Directors 294

304 Notes SHAREHOLDERS ARE REQUESTED TO SUBMIT THIS FORM TO: (In case shares are held in physical mode) (In case shares are held in demat mode) Karvy Computershare Private Limited, (Name and address of Depository Participant) (Unit: )... Karvy Selenium Tower B, Plot 31 32,... Gachibowli, Financial District,... Nanakramguda, Hyderabad Updation of Shareholder Information I / We requested you to record the following information against my / our Folio No. / DP ID / Client ID : General Information: Folio No. /DP ID /Client ID: Name of the first named Shareholder: PAN:* Tel No. with STD Code: Mobile No.: Id: *Self attested copy of the document(s) enclosed IFSC: (11 digit) MICR: (9 digit) Bank A/c Type: Bank A/c No.:* Name of the Bank: Bank Branch Address: Bank Details: *A blank cancelled cheque is enclosed to enable verification of bank details I /We hereby declare that the particulars given above are correct and complete. If the translation is delayed because of incomplete or incorrect information, I /we would not hold the Company /RTA responsible. I /We understand that the above details shall be maintained till I /we hold the securities under the above mentioned Folio No. /beneficiary account. Place : Date : Signature of Sole /First holder 295

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306 Notes NOTES 297

307 NOTES 298

308 NUVO ADITYA BIRLA NUVO LIMITED & ITS SUBSIDIARIES / JOINT VENTURES* ADITYA BIRLA NUVO LIMITED : Agri, Viscose Filament Yarn, Caustic Soda and Allied Chemicals, Insulators, Textiles I) FINANCIAL SERVICES Birla Sun Life Insurance Company Limited : Life Insurance Birla Sun Life Pension Management Limited : Management of Pension Fund under NPS Scheme Aditya Birla Financial Services Limited ( ABFSL ) : Core Investment Company Aditya Birla Capital Advisors Private Limited : Private Equity Investment, Advisory & Management Services Aditya Birla Customer Services Limited : Financial & IT enabled services Aditya Birla Finance Limited : NBFC/ Fund Based Lending Aditya Birla Financial Shared Services Limited : Financial & IT enabled services Aditya Birla Housing Finance Limited : Housing Finance Aditya Birla Insurance Brokers Limited : Composite Non-life Insurance Advisory & Broking Aditya Birla Money Limited : Equity Broking Aditya Birla Commodities Broking Limited : Commodities Broking Aditya Birla Trustee Company Private Limited : Trustee of Private Equity Fund Aditya Birla Money Mart Limited : Wealth Management & Distribution Aditya Birla Money Insurance Advisory Services Limited : Life Insurance Advisory- Corporate Agent Birla Sun Life Asset Management Company Limited } Birla Sun Life AMC (Mauritius) Limited Aditya Birla Sun Life AMC Limited, Dubai Aditya Birla Sun Life AMC Pte. Limited, Singapore : Asset Management International Opportunities Fund SPC Global Clean Energy Fund SPC India Advantage Fund Limited Birla Sun Life Trustee Company Private Limited : Trustee of Birla Sun Life Mutual Fund Aditya Birla Health Insurance Co. Limited : Health Insurance (Proposed) Aditya Birla Wellness Private Limited : Incentivised Wellness business (Proposed) ABCAP Trustee Company Private Limited Aditya Birla Idea Payments Bank Limited : Payments Bank (Proposed) II) OTHERS ABNL Investment Limited Aditya Birla Renewables Limited : Solar Power Aditya Birla Solar Limited : Solar Power Shaktiman Mega Food Park Pvt. Ltd. III) TELECOM (JOINT VENTURE) Idea Cellular Ltd. : Telecommunication Services *As on 11 th July, 2016

309 NUVO Corporate Office A-4, Aditya Birla Centre, S.K. Ahire Marg, Worli, Mumbai Telephone : , nuvo.cfd@adityabirla.com, nuvo-investors@adityabirla.com Registered Office Indian Rayon Compound, Veraval , Gujarat Telephone : abnlsecretarial@adityabirla.com Website : / Thomson Press