INDEPENDENT AUDITOR S REPORT

Transcription

1 INDEPENDENT AUDITOR S REPORT To the Trustees of Franklin Templeton Mutual Fund Report on the Financial Statements We have audited the accompanying financial statements of Franklin India Treasury Management Account ( the Scheme ), which comprise the Balance Sheet as at March 31, 2017, and also the Revenue Account and Cash Flow Statement for the year ended March 31, 2017 and a summary of significant accounting policies and other explanatory information. Management s Responsibility for the Financial Statements Management of Franklin Templeton Asset Management (India) Private Limited ( the Company ), the scheme s asset manager, is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Scheme in accordance with accounting principles generally accepted in India, including the accounting policies and standards specified in the Ninth Schedule to the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto ( the SEBI Regulations ). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Scheme s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the SEBI Regulations in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (a) in the case of the Balance Sheet, of the state of affairs of the Scheme as at the March 31, 2017; (b) in the case of the Revenue Account, of the surplus for the year ended March 31, 2017; and (c) in the case of the Cash Flow Statement, of the cash flows for the year ended March 31, 2017.

2 Report on Other Legal and Regulatory Requirements 1. As required by Regulation 55(4) and clause 5(ii)(2) of the Eleventh Schedule of the Regulations, we report that: a. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit. b. The balance sheet, revenue account and cash flow statement dealt with by this report are in agreement with the books of account. c. In our opinion, the balance sheet and revenue account dealt with by this report have been prepared in conformity with the accounting policies and standards specified in the Ninth Schedule to the SEBI Regulations. 2. In our opinion, and on the basis of information and explanations given to us, the methods used to value non traded securities as at March 31, 2017 are in accordance with the SEBI Regulations and other guidelines issued by the Securities and Exchange Board of India, as applicable, and approved by the Board of Directors of Franklin Templeton Trustees Private Limited ( Trustees ), and are fair and reasonable. For S.R. BATLIBOI & CO. LLP Chartered Accountants ICAI Firm Registration Number: E / E Sd/ per Viren H. Mehta Partner Membership Number: Place: Mumbai Date: 07 July, 2017

3 BALANCE SHEET AS AT MARCH 31, 2017 (All amounts in thousands of Rupees) SOURCES OF FUNDS Schedules FRANKLIN INDIA TREASURY MANAGEMENT ACCOUNT As at As at March 31, 2017 March 31, Unit Capital 2(b) & 3 16,128,312 11,622,527 2 Reserves and Surplus Unrealised Appreciation Reserve 6,040 20, Retained Surplus 14,880,215 11,301,175 3 Borrowings from other Commercial Banks 7,530,000 4,418,903 4 Current Liabilities and Provisions Current Liabilities 37,517 86,527 TOTAL 38,582,084 27,449,143 APPLICATION OF FUNDS 1 Investments 2(c), 6 & Listed Securities Other Debentures and Bonds 10,744,462 1,636, Unlisted Securities Privately Placed Debentures and Bonds 236, Commercial Papers 18,911,076 6,981, Certificate of Deposits 5,718,497 16,658,158 2 Other Current Assets Cash and Bank Balances 28,549 75, CBLO/ Reverse Repo Lending 156, Others 877,711 70,404 3 Accumulated Unit Discount, Net 8 1,909,237 2,026,725 TOTAL 38,582,084 27,449,143 Notes to Accounts 1 to 17 The accompanying schedules are an integral part of this Balance Sheet. As per our attached report of even date For S.R. Batliboi & Co.LLP For Franklin Templeton Trustee For Franklin Templeton Asset Management ICAI Firm Registration No.: E/E Services Private Limited (India) Private Limited Chartered Accountants Sd/ Sd/ Sd/ Sd/ per Viren H. Mehta Anand J. Vashi Deepak Satwalekar S. Jayaram Partner Director Director Director Membership No Sd/ Sd/ Sd/ Alok Sethi Sanjay Sapre Ajay Narayan Director President Vice President Sd/ Santosh Kamath Managing Director & Chief Investment Officer Fixed Income Mumbai Sd/ Sachin Padwal Desai Vice President & Portfolio Manager Fixed Income Sd/ Pallab Roy Assistant Vice President & Portfolio Manager Fixed Income

4 REVENUE ACCOUNT FOR THE YEAR ENDED MARCH 31, 2017 (All amounts in thousands of Rupees) Schedules FRANKLIN INDIA TREASURY MANAGEMENT ACCOUNT Year ended Year ended March 31, 2017 March 31, INCOME 1.1 Interest 2(d),9 & 14 2,154,371 4,274, Realised Gain on Interscheme Sale of Investments, net 2(d) 5,914 3, Realised Gain on External Sale / Redemption of Investments, net 2(d) 7, Change in Unrealised Appreciation in the value of Investments 2(c) & 6(ii) (13,971) (12,202) 2,154,148 4,265,348 2 EXPENSES 2.1 Realised Loss on External Sale / Redemption of Investments, net 2(d) 159, Management Fees 10 21,255 35, Service Tax on Management Fees 10 3,173 4, Transfer Agents Fees and Expenses 7,414 10, Custodian Fees Trusteeship Fees , Commission to Agents 9,738 12, Investor Education Expense 2(g) 6,008 9, Marketing and Distribution Expenses 1,262 2, Audit Fees Change in Unrealised Depreciation in value of Investments 2(c) & 6(ii) (12) 2.12 Other Operating Expenses 3,275 3,686 53, , Expenses Written Back pertaining to previous year (577) 53, ,418 3 NET INCOME AS PER REVENUE ACCOUNT 2,100,261 4,024,930 4 Transfer from Retained Surplus 4 11,301,175 12,168,088 5 Add: Balance Transfer from Unrealised Appreciation Reserve 4 20,011 32,213 6 Less: Balance Transfer to Unrealised Appreciation Reserve 4 6,040 20,011 7 Add / (Less): Equalisation Credit/(Debit) 2(e) 1,855,061 (4,133,516) 8 Total 15,270,468 12,071,704 9 Dividend Appropriation 9.1 Income Distributed during the Year 15 (270,587) (524,808) 9.2 Tax on Income Distributed during the Year 15 (119,666) (245,721) 10 NET SURPLUS / (DEFICIT) FOR THE YEAR TRANSFERRED TO BALANCE SHEET (8+9) 4 14,880,215 11,301,175 * Amount is less than rupees one thousand. Notes to Accounts 1 to 17 The accompanying schedules are an integral part of this Revenue Account. As per our attached report of even date For S.R. Batliboi & Co.LLP For Franklin Templeton Trustee For Franklin Templeton Asset Management ICAI Firm Registration No.: E/E Services Private Limited (India) Private Limited Chartered Accountants Sd/ Sd/ Sd/ Sd/ per Viren H. Mehta Anand J. Vashi Deepak Satwalekar S. Jayaram Partner Director Director Director Membership No Sd/ Sd/ Sd/ Alok Sethi Sanjay Sapre Ajay Narayan Director President Vice President Sd/ Santosh Kamath Managing Director & Chief Investment Officer Fixed Income Sd/ Sachin Padwal Desai Vice President & Portfolio Manager Fixed Income Sd/ Pallab Roy Assistant Vice President & Portfolio Manager Fixed Income Mumbai

5 CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2017 (All amounts in thousands of Rupees) FRANKLIN INDIA TREASURY MANAGEMENT ACCOUNT March 31, 2017 March 31, 2016 A. Cashflow from Operating Activities Surplus for the period before equalisation and income distribution. 2,100,261 4,024,930 Add: Interest on borrowing adjusted against Interest Income 27,340 65,034 Add / (Less) :Change in Unrealised Apreciation in value of Investments 13,971 12,202 Add / (Less) :Change in Unrealised Depreciation in value of Investments (12) Add / (Less) :Expenses Written Back pertaining to previous year (577) Add / (Less) :Amortization of premium / discount on investment cost (1,765,859) (4,039,530) Adjustments for: (Increase)/Decrease in Investments at Cost (8,582,319) 22,720,686 (Increase)/Decrease in Other Current Assets (843,316) 31,076 Increase/(Decrease) in Current Liabilities (4,857) (10,202) Net Cash Generated from/(used in) Operations ( A ) (9,054,779) 22,803,607 B Cashflow from Financing Activities Increase/(Decrease) in Unit Capital 4,240,110 (12,340,405) Increase/(Decrease) in Unit Premium 1,976,380 (4,356,614) Adjustments for: Increase/(Decrease) in Sundry Creditors for Units Redeemed by Investors 1,077 1,320 (Increase)/Decrease in Sundry Debtors for Units Issued to Investors 36,010 (42,301) Dividend paid during the period (including dividend tax) (129,161) (256,637) Increase/(Decrease) in Loans and Borrowings 3,111,097 (5,731,098) Interest on borrowings (27,340) (65,034) Increase/(Decrease) in Unclaimed redemption (436) (707) Increase/(Decrease) in Units pending allotment (44,042) (17,988) Net Cash (used in)/generated from Financing Activities ( B ) 9,163,695 (22,809,464) Net Increase/(Decrease) in Cash and Cash Equivalents (A+B) 108,916 (5,857) Cash and Cash Equivalents as at the beginning of the Year 75,962 81,819 Cash and Cash Equivalents as at the end of the Year 184,878 75,962 Components of Cash and Cash Equivalents Balances with Banks in Current Accounts* 184,878 75, ,878 75,962 *Includes CBLO & Reverse Repo balances and balances in unclaimed redemption / dividend bank account held towards unclaimed redemption / dividend liabilities of the Scheme As per our attached report of even date For S.R. Batliboi & Co.LLP For Franklin Templeton Trustee For Franklin Templeton Asset Management ICAI Firm Registration No.: E/E Services Private Limited (India) Private Limited Chartered Accountants Sd/ Sd/ Sd/ Sd/ per Viren H. Mehta Anand J. Vashi Deepak Satwalekar S. Jayaram Partner Director Director Director Membership No Sd/ Sd/ Sd/ Alok Sethi Sanjay Sapre Ajay Narayan Director President Vice President Sd/ Santosh Kamath Managing Director & Chief Investment Officer Fixed Income Sd/ Sachin Padwal Desai Vice President & Portfolio Manager Fixed Income Sd/ Pallab Roy Assistant Vice President & Portfolio Manager Fixed Income Mumbai

6 (All amounts in thousands of Rupees unless specified otherwise) 1. BACKGROUND Franklin Templeton Mutual Fund ( the Fund ) was established as a trust under the Indian Trusts Act, 1882, by way of a trust deed dated January 4, 1996, a supplementary trust deed dated March 30, 1996 and August 26, 2005 executed by Templeton International Inc. USA, the sponsor of the Fund. Templeton International Inc. is a part of the Franklin Templeton Investments group. In accordance with the Securities and Exchange Board of India ( SEBI ) (Mutual Funds) Regulations, 1996 ( the SEBI Regulations ), the Board of Directors of Franklin Templeton Trustee Services Private Limited ( the Trustee ) has appointed Franklin Templeton Asset Management (India) Private Limited ('the AMC') to manage the Fund s affairs and operate its Schemes. The objective and other feature of the schemes covered in the financial statement are as under: Scheme Name Nature of the Scheme Objective Scheme Date of Allotment Plans Offered Franklin India Treasury Management Fund^ Open Ended Mutual Fund Scheme April 29, 1998 The Scheme seeks to provide current The Scheme offers its investors three plans: Regular, Institutional and income along with high liquidity and Super Institutional with growth, daily dividend and weekly dividend safety. options ('the options') in each of the plans. On September 2, 2005 a new plan namely, Super Institutional plan with growth, daily and weekly dividend options ('the options') was launched by the Scheme.Effective October 1, 2012, in accordance with the SEBI Circular No. CIR/IMD/DF/21/2012 dated September 13, 2012, the sale of units under the Regular and Institutional Plans were suspended. Effective January 1, 2013, in accordance with SEBI Circular no. CIR/IMD/DF/21/2012 dated September 13, 2012, the Scheme introduced a new Plan under each of the Retained plan / option, termed as Direct. Effective September 6, 2016, pursuant to SEBI Circular no. SEBI/HO/IMD/DF2/CIR/P/2016/37 dated February 25, 2016, the Scheme introduced two new plans namely, Unclaimed Redemption Plan and Unclaimed Dividend Plan. ^ Effective June 30, 2014, Templeton India Treasury Management Fund was renamed as Franklin India Treasury Management Fund. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements are prepared on the accrual basis of accounting, under the historical cost convention, as modified for investments, which are markedtomarket. These financial statements are prepared in accordance and conformity with the accounting policies and standards specified in the Ninth Schedule to the Securities and Exchange Board of India (Mutual Funds) Regulations, The significant accounting policies, which are in accordance with the SEBI Regulations and have been approved by the Board of Directors of the AMC and the Trustee, are stated below. (a) Determination of net asset value The net asset value of the units of the Scheme is determined separately for units issued under the Plans after including the respective unit capital and reserves and surplus, and reducing net deficit and accumulated discount, if any. For reporting the net asset values, the daily income earned, including realised profit or loss and unrealised gain or loss in the value of investments, and expenses incurred by the Scheme, are allocated to the Plans in proportion to their respective daily net assets as at the end of the immediately preceding day. Commission expenses are not allocated to the Direct Plans. (b) Unit capital Unit capital represents the net outstanding units at the balance sheet date, thereby reflecting all transactions relating to the year ended on that date. Upon issue and redemption of units, the net premium or discount to the face value of units is adjusted against the unit premium reserve of the Scheme, after an appropriate portion of the issue proceeds and redemption payouts is credited or debited respectively to the equalisation account, a mandatory requirement for open ended mutual fund Schemes. (c) Investments Accounting for investment transactions Valuation of investments Purchase and sale of investments are recorded on the date of the transaction, at cost and sale price respectively, after considering brokerage, commission, securities transaction tax and fees payable or receivable, if any. The front end fee receivable, if any, is reduced from the cost of investment. In terms of SEBI circular no. CIR/IMD/DF/21/2012 dated September 13, 2012, brokerage and transaction costs (including all taxes) incurred for the purpose of execution of trade in excess of 0.12% in case of cash market transaction is charged to the Total Expense Ratio of the fund.. All Debt securities (except for Zero Coupon Bonds, Government Securities and Treasury Bills), with residual maturity greater than 60 days, on the valuation date, are valued at the weighted average price obtained from CRISIL and ICRA (agency(ies) appointed/ designated for the said purpose by the Association of Mutual Funds of India {AMFI}). Effective January 1, 2016, if price for New security purchased is not available from CRISIL and ICRA, the security will be valued at weighted average traded price available on public platform (namely FIMMDA, NSE and BSE), provided there is at least one trade of Rs.5 crores or more for Bonds and at least one trade of Rs. 25 crores or more for Money Market Instruments as against the earlier practice of valuing at weighted average price available on public platform (namely FIMMDA, NSE WDM, BSE ICDM), provided there are at least two trades aggregating to Rs. 25 crores or more for debt securities with residual maturity of greater than 365 days on the valuation date and at least three trades aggregating to Rs. 100 crores or more for debt securities with residual maturity greater than 60 days and less than or equal to 365 days on the valuation date. Effective June 3, 2016 all Debt securities (except for Zero Coupon Bonds, Government Securities and Treasury Bills), with residual maturity upto 60 days on the date of valuation, which are traded on the valuation date, are valued at the weighted average traded price available on the public platform (namely FIMMDA,NSE and BSE), provided there are at least three trades aggregating to Rs 100 crores or more. Outlier trades, if any, are excluded based on suitable justification. Prior to June 3, 2016 and effective from January 1, 2016the same were being valued at the weighted average traded price available on the public platform (namely FIMMDA, NSE and BSE), provided there was at least one trade of Rs. 5 crores or more for Bonds and at least one trade of Rs 25 crores or more for Money Market Instrument as against the earlier practice of valuing at weighted average price available on public platform (namely FIMMDA, NSE WDM, BSE ICDM) provided there were at least three trades aggregating to Rs.100 crores or more. When such securities are not traded on a particular valuation day, they are valued on amortisation basis. Effective June 3, 2016, in case the variance between the amortised price and the reference price exceeds plus/ minus 0.10%, the valuation is adjusted to bring it within the band of +/0.10% as against the earlier practice of considering reference price for valuation and this change has no impact during the period. Reference price is the price derived from risk free benchmark yields plus/ minus spread. Investment in Zero Coupon Bonds with residual maturity greater than 60 days, on the valuation date, are valued at the weighted average price obtained from CRISIL and ICRA (agency(ies) appointed/ designated for the said purpose by AMFI). Effective from January 1, 2016, if price for New security purchased is not available from CRISIL and ICRA, the security will be valued at weighted average traded price available on public platform (namely NSE and BSE), provided there is at least one trade of Rs. 5 crores or more. Prior to January 1, 2016, if the price of Zero Coupon Bond was not available from CRISIL and ICRA, the security was valued at weighted average traded yield available on public platform (namely FIMMDA, NSE WDM and BSE ICDM ) as per qualification criteria as mentioned below: (a ) Maturity greater than 60 days and less than or equal to 365 days there were at least three trades aggregating to Rs. 100 crores or more (b) Maturity greater than 365 days at least two trades aggregating to Rs. 25 crores or more.

7 (All amounts in thousands of Rupees unless specified otherwise) All other investments are stated at their fair value as determined in good faith by the AMC in accordance with the SEBI Regulations and reviewed by the Trustee. Effective June 3, 2016 Investment in Zero Coupon Bonds with residual maturity upto 60 days on the date of valuation, which are traded on the valuation date, are valued at the weighted average traded price available on the public platform (namely NSE and BSE), provided there are at least three trades aggregating to of Rs. 100 crores or more. Outlier trades, if any, are excluded based on suitable justification. Prior to June 3, 2016 and effective from January 1, 2016, investment in Zero Coupon Bonds with residual maturity upto 60 days on the date of valuation, if traded were valued at the weighted average traded price available on the public platform (namely NSE and BSE), provided there was at least one trade of Rs. 5 crores or more as against the earlier practice of valuing at the weighted average traded yield available on the public platform (namely FIMMDA, NSE WDM and BSE ICDM), for the trade criteria of at least three trades aggregating to Rs. 100 crores or more. When such securities are not traded on a particular valuation day, they are valued on amortisation basis. Effective from June 3, 2016 In case the variance between the amortised price and the reference price exceeds plus/ minus 0.10%, the valuation is adjusted to bring it within the band of +/0.10% as against the earlier practice of considering the reference price for valuation and this change has no impact during the period. Reference price is the price derived from risk free benchmark yields plus/ minus spread. The securities with call option are valued at the lower of the value as obtained by valuing the security to final maturity and valuing the security to call option. In case there are multiple call options, the lowest value obtained by valuing to the various call dates and valuing to the maturity date is taken as the value of the instrument.. The securities with put option are valued at the higher of the value as obtained by valuing the security to final maturity and valuing the security to put option. In case there are multiple put options, the highest value obtained by valuing to the various put dates and valuing to the maturity date is taken as the value of the instruments. Effective June 3, 2016, Investment in Government Securities and Treasury Bills with residual maturity up to 60 days on the date of valuation, which are traded on the valuation date, are valued at the weighted average traded price available on the public platform namely CCIL provided there are at least three trades aggregating to of Rs.100 crores or more. Outlier trades, if any, are excluded based on suitable justification. Prior to June 3, 2016 and effective from January 1, 2016, Investment in Government Securities and Treasury Bills with residual maturity up to 60 days on the date of valuation, which are traded on the valuation date, are valued at the weighted average traded price available on the public platform namely CCIL provided there was at least one trade aggregating to Rs. 5 crores or more for Bonds and at least one trade of Rs 25 crores or more for Money Market Instrument as against the earlier practice of weighted average traded price available on the public platform namely CCIL provided there were at least three trades aggregating to Rs. 100 crores or more. When such securities are not traded on a particular valuation day, they are valued on amortisation basis. The amortised price is used as long as it is within plus/ minus 0.10% of the reference price. Effective from June 3, 2016, in case the variance between the amortised price and the reference price exceeds plus/ minus 0.10%, the valuation is adjusted to bring it within the band of +/0.10% as against the earlier practice of considering reference price for valuation and this change has no impact during the period. Reference price is the price derived from risk free benchmark yield plus/ minus spread. Investment in Government Securities and Treasury Bills with residual maturity greater than 60 days on the date of valuation are valued based on the average of the prices provided by the CRISIL and ICRA(agency(ies) entrusted for the said purpose by AMFI). The net unrealised gain or loss in the value of investments is determined separately for each category of investments. The change in the net unrealised loss, if any, between two balance sheet dates is recognised in the revenue account and the change in net unrealised gain, if any, is adjusted in an unrealised appreciation reserve. The loss on investments sold/transferred during the period is charged to the revenue account. (d) Revenue recognition Interest on fixed income securities is recognised as income on an accrual basis. Profit or loss on sale of investments is determined on the basis of the weighted average cost method. The discount or premium, if any, to the redemption value of debt securities is amortised and recognised as interest income or expense, as the case may be, over the period to redemption. (e) Equalisation account The purpose of equalization account is to maintain per unit amount of a Plan s/option s share of the Scheme s undistributed income, so that continuing unit holders share of undistributed income remains unchanged on issue or redemption of units under that Plan/Option. "Pursuant to SEBI circular dated March 15, 2010, the Trustee/AMC has changed the method of calculating equalization per unit w.e.f. that date viz: a) When the sale price is higher than the face value of the unit, the total accumulated undistributed income till the date of the transaction is determined. Based on the number of units outstanding on the transaction date, the undistributed income associated with each unit is computed. The per unit amount so determined is credited and debited to the equalisation account on issue and redemption of each unit respectively. (f) b) When the sale price is lower than the face value of the unit, the difference between the Net asset value and the par value is debited and credited to the equalisation account on issue and redemption of unit respectively." Load charges Load charged upto 1% at the time of redemption of units prior to October 1, 2012 and Load charged at the time of purchase of units, wherever applicable, are being utilised towards meeting distribution and marketing expenses. In accordance with the SEBI Circular no. CIR/IMD/DF/21/2012 dated September 13, 2012, entire amount of Exit load/ CDSC collected is credited to the respective scheme net of taxes as "Other Income", as against the earlier practice of crediting any amount more than 1% of the exit load to the respective schemes as "Other Income" and balance towards marketing and selling expenses. (g) Unutilised amount of load is carried forward to subsequent period. If the amount is considered in excess by the AMC / Trustees, then such excess amount is credited to the respective Schemes as Other Income. Investor education and awareness initiatives In accordance with SEBI Circular no. CIR/IMD/DF/21/2012 dated September 13, 2012, the fund is accruing 0.02% p.a. on daily net assets towards investor education and awareness initiatives. Unutilised amount is carried forward to the subsequent period. Interest earned, if any, by investment of unutilized amount in Fixed deposits, is credited to the Investor Education Liability. (THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK)

8 (All amounts in thousands of Rupees) FRANKLIN INDIA TREASURY MANAGEMENT ACCOUNT Schedules March 31, 2017 March 31, 2016 March 31, 2017 March 31, UNIT CAPITAL Units of Rs 1000 each fully paid up Quantity Amount Regular Growth Plan Outstanding, beginning of year 96, , , ,951 Issued during the year Redeemed during the year (9, ) (24, ) (9,806) (24,633) Outstanding, end of year 86, , ,512 96,318 Direct Super Institutional Growth Plan Outstanding, beginning of year 2,443, ,392, ,443,183 5,392,875 Issued during the year 164,316, ,192, ,316, ,192,026 Redeemed during the year (161,934, ) (469,141, ) (161,934,104) (469,141,718) Outstanding, end of year 4,825, ,443, ,825,391 2,443,183 Direct Super Institutional Daily Dividend Plan Outstanding, beginning of year 745, ,545, ,107 3,545,422 Issued during the year 13,445, ,987, ,445,936 67,987,486 Redeemed during the year (12,535, ) (70,787, ) (12,535,393) (70,787,801) Outstanding, end of year 1,655, , ,655, ,107 Direct Super Institutional Weekly Dividend Plan Outstanding, beginning of year 216, ,326, ,686 5,326,012 Issued during the year 393, ,359, ,434 1,359,410 Redeemed during the year (435, ) (6,468, ) (435,715) (6,468,736) Outstanding, end of year 174, , , ,686 Dividend Plan Weekly Outstanding, beginning of year 56, , ,361 67,917 Issued during the year Redeemed during the year (4, ) (11, ) (4,480) (11,556) Outstanding, end of year 51, , ,881 56,361 Dividend Plan Daily Outstanding, beginning of year 31, , ,718 40,540 Issued during the year Redeemed during the year (5, ) (8, ) (5,386) (8,822) Outstanding, end of year 26, , ,332 31,718 Institutional Growth Plan Outstanding, beginning of year 11, , ,263 15,853 Issued during the year Redeemed during the year (4, ) (4,590) Outstanding, end of year 11, , ,263 11,263 Institutional Weekly Dividend Plan Outstanding, beginning of year Issued during the year Redeemed during the year Outstanding, end of year Institutional Daily Dividend Plan Outstanding, beginning of year , ,086 Issued during the year Redeemed during the year (3, ) (3,216) Outstanding, end of year Super Institutional Growth Plan Outstanding, beginning of year 4,655, ,712, ,655,663 3,712,847 Issued during the year 79,818, ,220, ,818, ,220,542 Redeemed during the year (80,456, ) (146,277, ) (80,456,204) (146,277,726) Outstanding, end of year 4,017, ,655, ,017,636 4,655,663 Super Institutional Weekly Dividend Plan Outstanding, beginning of year 814, , , ,294 Issued during the year 1,174, ,434, ,174,940 2,434,135 Redeemed during the year (1,463, ) (2,197, ) (1,463,238) (2,197,237) Outstanding, end of year 525, , , ,192 Super Institutional Daily Dividend Plan Outstanding, beginning of year 2,551, ,639, ,551,153 4,639,536 Issued during the year 49,944, ,098, ,944,397 34,098,620 Redeemed during the year (48,440, ) (36,187, ) (48,440,784) (36,187,003) Outstanding, end of year 4,054, ,551, ,054,766 2,551,153 Unclaimed Dividend Plan Growth option Units of Rs 10 each fully paid up Outstanding, beginning of year Issued Initial offering 30,605, ,056 Issued during the year 12,068, ,687 Redeemed during the year (4,285, ) (42,856) Outstanding, end of year 38,388, ,887 Unclaimed Redemption Plan Growth option Units of Rs 10 each fully paid up Outstanding, beginning of year Issued Initial offering 28,223, ,238 Issued during the year 6,370, ,706 Redeemed during the year (3,213, ) (32,132) Outstanding, end of year 31,381, ,813 Total Outstanding, beginning of year 11,622, ,443, ,622,527 23,443,346 Issued Initial offering 58,829, ,295 Issued during the year 327,532, ,292, ,277, ,292,219 Redeemed during the year (312,783, ) (731,113, ) (305,360,098) (731,113,038) Outstanding, end of year 85,200, ,622, ,128,313 11,622,527

9 FRANKLIN INDIA TREASURY MANAGEMENT ACCOUNT Schedules March 31, 2017 March 31, RESERVES AND SURPLUS Unrealised appreciation reserve Balance, beginning of year 20,011 32,213 Change in net unrealised appreciation in value of investments (13,971) (12,202) Balance, end of year6,040 20,011 Retained surplus Balance, beginning of year 11,301,175 12,168,088 Transfer to Revenue Account (11,301,175) (12,168,088) Net surplus transferred from revenue account 14,880,215 11,301,175 Balance, end of year 14,880,215 11,301,175 Total reserves and surplus 14,886,255 11,321, CURRENT LIABILITIES AND PROVISIONS Current Liabilities Management fees 2,779 3,633 Trusteeship fees Registrar service charges Investor Education Liability 1,947 7,095 Sundry creditors for units redeemed by investors 5,752 4,675 Dividend payable 500 1,252 Unclaimed distributed income 2 Unclaimed redemption payable 436 Units pending allotment 20,315 64,357 Other current liabilities 5,352 4,433 37,517 86, INVESTMENTS (i) (ii) The investments of the Scheme are registered in the name of the Fund for the benefit of the Scheme's unitholders. Aggregate appreciation and depreciation in the value of investments are as follows: Listed debentures and bonds / Awaiting listing on Stock Exchanges Listed Securities / Securities Awaited Listing: (Equity linked debentures / Other debentures and bonds / Securitised debt securities) appreciation 5, depreciation Money Market Instruments (Commercial papers / Certificate of deposits / Bills Rediscounting) appreciation 1,387 21,016 depreciation 375 1,191

10 FRANKLIN INDIA TREASURY MANAGEMENT ACCOUNT Schedules March 31, 2017 March 31, 2016 (iii) The aggregate value of investments purchased and sold by the Scheme during the year and these amounts as a percentage of average daily net assets are as follows: Purchases amount 261,052, ,300,600 as a percentage of average daily net assets Sales amount 70,986, ,490,893 as a percentage of average daily net assets (iv) Amount of Debentures and bonds Listed/ Awaiting listing on Stock Exchanges not traded as on the date of financial statement. 109,807 1,385,954 (v) During the year, the Scheme has invested in the equity shares / debentures and bonds of certain companies, which have invested in some of the schemes of the Fund in excess of five percent of those schemes' Net Assets. The Scheme's investments in these companies (except for investments in subsidiaries of these companies) as at March 31, 2017 are provided in Annexure 1. These investments have been made on account of their value at the related prices and are in accordance with the investment objectives of the Scheme. (vi) The Scheme made investments in the Pass Through Certificates ('PTCs'). PTCs are issued by Special Purpose Vehicles ('SPVs') to whom the Obligator (the seller) has assigned single loans/ pool of loans in the Securitization process. The SPVs are set up in the form of a Trust. In respect of certain such Trusts, Income Tax Authorities ( Tax Authorities ) initiated scrutiny proceedings in respect of the AY and AY The Tax Authorities passed assessment orders and consequential demand notices to such Trusts and contended that the interest received by such Trust (SPVs) from the loans is taxable under the head 'Profits & gains from Business and Profession', at the maximum marginal rate. The Trustees of such trusts filed an appeal against such orders/ notices with the first Appellate authority. Since the relevant Trusts did not pay the demand raised by the Tax Authorities, the Tax Authorities initiated recovery proceedings against the Fund and sent demand notices to the Fund. In response to the recovery proceedings, the Fund filed Writ Petitions in the Honorable High Court of Bombay seeking direction by the Court to the tax authorities to follow the due process of Law and not take any coercive measures against the Fund for the recovery of the tax demand. The Honorable High Court disposed of the Writ Petitions of the Fund by ordering the Tax Authorities not to take any coercive action against the Fund pending the hearing and the final disposal of the Appeals filed by the relevant Trust before the first Appellate authority and for a period of six weeks thereafter to enable the fund to seek recourse to its remedies against the order of the first Appellate Authority, if necessary. Subsequently, the first Appellate authority disposed of the Appeal filed by the relevant Trusts for Assessment year and for most of the Trusts for Assessment year The first Appellate authority had partly upheld the contention of the Tax Authorities with an enhancement in case of some Trusts. In all the cases disposed by the first Appellate authority, the relevant Trusts were in Appeal against such orders with the Income Tax Appellate Tribunal (ITAT). Recently, the ITAT dismissed the contentions/ appeal of the Tax Authorities/ Revenue for Assessment year and for most of the Trusts for Assessment year , thereby ruling in favor of the Trusts. Till date, the Tax Authorities/ Revenue have not filed an appeal against the order passed by the ITAT. The Fund in consultation with its tax advisors has carried out the analysis of the situation and has assessed the possibility of the event resulting into tax liability to be remote. Accordingly, no adjustments have been carried out in the financial statements of the Schemes in this regard.

11 FRANKLIN INDIA TREASURY MANAGEMENT ACCOUNT Schedules March 31, 2017 March 31, OTHER CURRENT ASSETS Cash and Bank Balance Balances with banks in current accounts 28,549 75,524 Unclaimed dividend bank account 2 Unclaimed redemption bank account ,549 75,643 CBLO/ Reverse Repo Lending Collateralised lending/reverse repo 156,329 Unclaimed Redemption CBLO , Others Sundry debtors for units issued to investors 6,292 42,301 Outstanding and accrued income 866,416 6,392 Advances and deposits Margin money 4,965 21, ,711 70,404 TOTAL 1,062, , ACCUMULATED UNIT DISCOUNT, NET Balance, beginning of year 2,026,725 1,799,617 Net premium on ( issue) / redemption of units (117,488) 227,108 Balance, end of year 1,909,237 2,026,725 9 INTEREST Gross Interest On Debentures and bonds 2,101,529 4,216,158 On Fixed deposits 906 1,018 On Collateralised lending / Reverse repo 79, ,133 Total Gross Interest 2,181,711 4,339,309 Borrowing cost borne by Scheme 27,340 65,034 Total Net Interest 2,154,371 4,274, INCOME AND EXPENDITURE The total income and expenditure and these amounts as a percentage of the Scheme s average daily net assets on an annualised basis are provided below: Income amount 2,168,119 4,117,991 as a percentage of average daily net assets Expenditure amount 53,887 80,871 as a percentage of average daily net assets Regular Plan Institutional Plan Super Institutional Plan Direct Plan Management fees (including service tax) amount 24,428 40,272 as a percentage of average daily net assets Regular Plan Institutional Plan Super Institutional Plan Direct Plan Trusteeship fees (including service tax) amount 901 1,498 as a percentage of average daily net assets

12 11. RELATED PARTY DISCLOSURES The Scheme has entered into transactions with certain related parties. The information required in this regard in accordance with Accounting Standard 18 on Related PartyDisclosures issued bythe ICAI and Regulation 25(8) of the SEBI Regulations, is provided below. (i) Related party relationships Name Description of relationship a) Where control exists Franklin Resources Inc Templeton Worldwide Inc (TWI) USA Templeton International Inc, USA Franklin Templeton Capital Holdings Pte Limited (Singapore) Franklin Templeton Asia Holdings Pte Limited (Singapore) Franklin Templeton Holding Limited, Mauritius Franklin Templeton Asset Management (India) Private Limited Franklin Templeton Trustee Services Private Limited Ultimate holding Companyof the sponsor Holding Companyof the Sponsor Sponsor of the Fund Subsidiaryof the Sponsor SubSubsidiaryof the Sponsor Holding Companyof the Scheme's Asset Manager./ SubSubsidiaryof the Sponsor Scheme's asset manager./ Subsubsidiaryof the Sponsor Trustee of the Fund. b) Other Related Parties with whom transactions have taken place during the period Mywish Market Places Pvt Ltd ITI Capital Markets Limited (Under Liquidation) Associate of the Scheme's Asset Manager Subsidiaryof the Scheme's Asset Manager Schemes of the Fund, under common control of the Sponsor Franklin Asian EquityFund Franklin Build India Fund Franklin India Balanced Fund Franklin India Banking & PSU Debt Fund Franklin India BlueChip Fund Franklin India Cash Management Account Franklin India Corporate Bond Opportunities Fund Franklin India Dynamic Accrual Fund Franklin India Dynamic PE Ratio Fund Of Funds Franklin India Feeder Franklin European Growth Fund Franklin India Feeder Franklin U.S. Opportunities Fund Franklin India Flexi Cap Fund Franklin India Government Securities Fund Composite Plan & PF Plan Franklin India Government Securities Fund Long Term Plan Franklin India High Growth Companies Fund Franklin India Income Builder Account Franklin India Income Opportunities Fund Franklin India Index Fund Nifty Plan Franklin India Life Stage Fund of Funds Franklin India Low Duration Fund Franklin India Monthly Income Plan Franklin India MultiAsset Solution Fund Franklin India Opportunities Fund Franklin India Pension Plan Franklin India Prima Fund Franklin India Prima Plus Franklin India Savings Plus Fund Franklin India Short Term Income Plan Franklin India Smaller Companies Fund Franklin India Taxshield Franklin India Ultra Short Bond Fund Franklin India Fixed MaturityPlans Series 1 Plan A (1108 Days) Franklin Infotech Fund Templeton India Equity Income Fund Templeton India Growth Fund (ii) Transactions, if any, with the above mentioned related parties as defined under Accounting Standard 18 and Regulation 25(8) of the SEBI Regulations are provided below: Franklin India Treasury Management Account Name of related party Nature of transactions Year Ended 2017 Balance as at March 31, 2017 Year Ended 2016 Balance as at March 31, 2016 Schemes under common control Purchase of investments 51,999,194 68,862,010 Franklin India Banking & PSU Debt Fund 7,474 Franklin India Cash Management Account 238, ,909 Franklin India Corporate Bond Opportunities Fund 4,175,184 1,294,590 Franklin India Dynamic Accrual Fund 458,484 Franklin India Income Builder Account 248,983 Franklin India Income Opportunities Fund 5,121, ,756 Franklin India Low Duration Fund 6,674,164 6,949,058 Franklin India Monthly Income Plan 397,499 Franklin India Pension Plan 49,687 Franklin India Savings Plus Fund 768,732 1,030,694 Franklin India Short Term Income Plan 3,454,801 4,669,563 Franklin India Ultra Short Bond Fund 30,660,868 52,965,819 Franklin India Dynamic Accrual Fund 493,164 Sale of investments 15,560,363 73,563,352 Franklin India Balanced Fund 811,187 Franklin India Banking & PSU Debt Fund 97, ,394 Franklin India Cash Management Account 1,398,915 5,044,465 Franklin India Corporate Bond Opportunities Fund 149,777 6,288,750 Franklin India Dynamic Accrual Fund 277, ,584 Franklin India Income Builder Account 247,007 5,874,974 Franklin India Income Opportunities Fund 358,990 1,813,591 Franklin India Low Duration Fund 1,145,766 9,879,204 Franklin India Monthly Income Plan 397,890 Franklin India Pension Plan 149,895 Franklin India Savings Plus Fund 188, ,931 Franklin India Short Term Income Plan 725,969 16,186,939 Franklin India Ultra Short Bond Fund 9,611,702 26,829,152 Franklin India Fixed Tenure Fund Series XVII 388,368 Franklin India MultiAsset Solution Fund Investment in the plan Direct Super Institutional Plan Growth Subscriptions 59,018 45,836 Redemptions 32,692 46,157 Net asset value of investment at balance sheet date 26,959 Franklin Templeton Trustee Services Private Limited Fees for trusteeship services , Franklin Templeton Asset Management (India) Private Limited Registrar service charges 7, , Fees for management services 24,428 2,779 40,272 3,633 Franklin Templeton Asset Management (India) Private Limited Direct Super Institutional Plan Growth Subscriptions 350,000 1,255,000 Redemptions 360,223 1,886,913 Net Asset Value of investment at Balance Sheet date 5,788 5,393 Direct Super Institutional Plan Weekly Dividend Subscriptions Redemptions Net Asset Value of investment at Balance Sheet date 1,069 1,020 Direct Super Institutional Plan Daily Dividend Subscriptions ** ** Redemptions Net Asset Value of investment at Balance Sheet date 13 12

13 Name of related party Nature of transactions Year Ended 2017 Franklin Templeton Trustee Services Pvt Ltd Balance as at March 31, 2017 Year Ended 2016 Balance as at March 31, 2016 Regular Plan Growth Subscriptions Redemptions Net Asset Value of investment at Balance Sheet date 2,083 1,955 Direct Super Institutional Plan Growth Subscriptions 4,000 Redemptions Net Asset Value of investment at Balance Sheet date 6,912 6,441 Institutional Plan Growth Subscriptions Redemptions Net Asset Value of investment at Balance Sheet date 28,021 26,236 Franklin Templeton International Services (India) Private Limited Franklin Templeton Services India Private Limited Darby Asia Investors (India) Private Limited Direct Super Institutional Plan Growth Subscriptions 230,000 Redemptions 820, ,300 Net Asset Value of investment at Balance Sheet date 44, ,632 Direct Super Institutional Plan Growth Subscriptions 182,500 Redemptions 89,500 Net Asset Value of investment at Balance Sheet date 178, ,778 Regular Plan Growth Subscriptions Redemptions Net Asset Value of investment at Balance Sheet date 12,696 11,917 Super Institutional Plan Growth Subscriptions Redemptions Net Asset Value of investment at Balance Sheet date 7,201 6,714 Direct Super Institutional Plan Growth Subscriptions Redemptions Net Asset Value of investment at Balance Sheet date 23,728 22,111 ITI Capital Markets Limited^ Commission for distribution of the Scheme's units (#) 2 ^Commission is paid for the business mobilized prior to October Effective September 1, 2015 no commission paid to the ITI Capital Markets Ltd. # The commission is at rates similar to those offered to other distributors bythe scheme. **Units are less than one thousand.

14 FRANKLIN INDIA TREASURY MANAGEMENT ACCOUNT Schedules March 31, 2017 March 31, NET ASSET VALUE Net asset value of each unit of Rs of the Scheme Direct Super Institutional Daily Dividend Plan (Rs) 1, , Direct Super Institutional Growth Plan (Rs) 2, , Direct Super Institutional Weekly Dividend Plan (Rs) 1, , Institutional Daily Dividend Plan (Rs.)! 1, , Institutional Growth Plan (Rs.)! 2, , Institutional Weekly Dividend Plan (Rs.)! 1, , Regular Daily Dividend Plan (Rs)! 1, , Regular Growth Plan (Rs)! 3, , Regular Weekly Dividend Plan (Rs)! 1, , Super Institutional Daily Dividend Plan (Rs) 1, , Super Institutional Growth Plan (Rs) 2, , Super Institutional Weekly Dividend Plan (Rs) 1, , Unclaimed Dividend Plan Growth option (Rs) NA Unclaimed Redemption Plan Growth option (Rs) NA The net asset value of the Scheme's unit is determined after including unit capital and any reserves and surplus, and reducing net deficit and accumulated unit discount, if any.!the sale of units has been suspended effective October 1, SEGMENT REPORTING The scheme operates only in one segment viz. to primarily generate returns, based on schemes' investment objective. 14. BORROWINGS : Franklin India Treasury Management Account has entered into a Credit Line arrangement for the purpose of meeting the requirements of the redemption from the unitholders. As per the terms of the agreement entered with the banks, the borrowing has been secured by a floating charge on rated Public sector bonds, Corporate bonds and Certificate of deposits held by the respective Scheme making the borrowing.as of March 31, 2017, the outstanding borrowing is secured by a floating charge to the extent of Rs.965 Crores. The borrowings made by the Scheme were within the limits permissible under the SEBI Regulations, as on the date of the borrowings, the details of which are as given below: Name of the Scheme Date of borrowing Amount borrowed (Rs. Cr) Amount borrowed as a % of Net Assets on Date of Repayment the date of borrowing Interest on borrowing borne by the Fund adjusted from interest income (Rs. Cr) Franklin India Treasury Management Account November 2, % November 3, Franklin India Treasury Management Account November 3, % November 4, Franklin India Treasury Management Account November 4, % November 7, Franklin India Treasury Management Account December 30, % 9.20% January 2, Franklin India Treasury Management Account March 31, % April 3, In addition to the above, the Scheme has borrowed in the Collateralized Borrowing and Lending (CBLO) market, the details of which are as given below: Rate of Borrowing 9.75% 9.75% 9.75% 8.25% Franklin India Treasury Management Account April 4, % April 5, ** Franklin India Treasury Management Account April 11, % April 12, Franklin India Treasury Management Account April 26, % April 27, Franklin India Treasury Management Account May 2, % May 3, Franklin India Treasury Management Account May 6, % May 9, Franklin India Treasury Management Account May 9, % May 10, Franklin India Treasury Management Account May 13, % May 16, Franklin India Treasury Management Account June 3, % June 6, Franklin India Treasury Management Account June 17, % June 20, Franklin India Treasury Management Account July 22, % July 25, Franklin India Treasury Management Account July 26, % July 27, Franklin India Treasury Management Account July 27, % July 28, Franklin India Treasury Management Account July 28, % July 29, Franklin India Treasury Management Account July 29, % August 1, Franklin India Treasury Management Account August 10, % August 11, Franklin India Treasury Management Account August 12, % August 16, Franklin India Treasury Management Account August 24, % August 25, Franklin India Treasury Management Account August 25, % August 26, Franklin India Treasury Management Account September 1, % September 2, Franklin India Treasury Management Account September 6, % September 7, Franklin India Treasury Management Account September 7, % September 8, Franklin India Treasury Management Account September 8, % September 9, Franklin India Treasury Management Account September 30, % October 3, Franklin India Treasury Management Account October 3, % October 4, Franklin India Treasury Management Account October 7, % October 10, Franklin India Treasury Management Account October 10, % October 13, Franklin India Treasury Management Account October 13, % October 14, Franklin India Treasury Management Account October 14, % October 17, Franklin India Treasury Management Account October 17, % October 18, Franklin India Treasury Management Account October 19, % October 20, Franklin India Treasury Management Account December 29, % December 30, Franklin India Treasury Management Account January 11, % January 12, Franklin India Treasury Management Account January 12, % January 13, ** Franklin India Treasury Management Account January 27, % January 30, Franklin India Treasury Management Account March 20, % March 21, % 6.69% 6.50% 6.68% 6.49% 6.58% 5.55% 6.55% 6.15% 5.22% 6.56% 6.48% 6.57% 5.99% 6.58% 6.38% 6.54% 6.47% 6.38% 6.42% 6.45% 6.46% 5.89% 6.09% 6.23% 6.23% 6.38% 6.35% 6.22% 6.21% 6.13% 6.22% 6.05% 6.14% 5.69% The cost of the borrowing has been shared between the Scheme and the AMC in such a manner that the residual investors of the scheme do not suffer at the cost of the redeeming investors. Effective November 2, 2016, the borrowing cost to the extent of gross portfolio yield, average CBLO yield on the date of borrowing or the actual rate of borrowing, whichever is lower, has been borne by the scheme and has been adjusted against interest income. Prior to November 2, 2016 the borrowing cost to the extent of gross portfolio yield or the actual rate of borrowing has been borne by the scheme and has been adjusted against interest income. ** Less than Rs 0.01 Crores 15. INCOME DISTRIBUTION: In case where the Surplus / (Deficit) for the year (after adjustment of income equalisation) is lower than the amount of distributed income (including tax on income distributed), the income has been distributed by the Scheme to its unitholders out of the distributable surplus available with the Scheme, which consists of the Surplus / (Deficit) for the year (after adjustment of income equalisation) and the retained earnings / accumulated reserves of earlier year(s). 16. PRIOR YEAR COMPARATIVES Prior year amounts have been reclassified, wherever applicable, to conform to the current year's presentation. (THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK)