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Aditya Birla Capital Ltd.

BSE: 540691 | NSE: ABCAPITAL |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE674K01013 | SECTOR: Finance - Investments

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Annual Report

For Year :
2021 2019 2018

Director’s Report

The Board of Directors of Aditya Birla Capital Limited (“your Company” or “the Company” or “ABCL”) is pleased to present the 14th (fourteenth) Annual Report and the Audited Financial Statements (Consolidated and Standalone) of your Company for the financial year ended 31st March 2021 (“financial year under review”).

FINANCIAL SUMMARY AND HIGHLIGHTS

The highlights of the Consolidated and Standalone Financial Statements are detailed hereunder.

Your Company’s financial performance for the financial year ended 31st March 2021 as compared to the previous financial year ended 31st March 2020 is summarised below:

('' In Cr)

Particulars

Consolidated

Standalone

2020-21

2019-20

2020-21

2019-20

Revenue from operations

19,247.79

16,691.18

107.89

199.82

Profit before share of Joint Venture Companies, exceptional items and Tax

1,277.28

1,038.81

72.29

56.82

Share of Profit / (Loss) of Joint Venture Companies

268.41

250.92

-

-

Exceptional Items

-

(9.99)

-

(29.17)

Profit / (Loss) before Tax

1,545.69

1,279.74

72.29

27.65

Tax Expense

440.04

413.63

(0.74)

(2.20)

Profit / (Loss) after Tax Attributable to:

1,105.65

866.11

73.03

29.85

Owners of the Company

1,126.54

919.78

73.03

29.85

Non-Controlling Interest

(20.89)

(53.67)

-

-

Other Comprehensive Income Attributable to:

60.19

74.63

0.25

(0.46)

Owners of the Company

26.57

24.18

0.25

(0.46)

Non-Controlling Interest

33.62

50.45

-

-

Total Comprehensive Income Attributable to:

1,165.84

940.74

73.28

29.39

Owners of the Company

1,153.11

943.96

73.28

29.39

Non-Controlling Interest

12.73

(3.22)

-

-

Profit / (Loss) attributable to owners of the Company

1,126.54

919.78

73.03

29.85

The above figures are extracted from the Consolidated and Standalone Financial Statements prepared in accordance with Indian Accounting Standards (“IND AS”) as notified under Sections 129 and 133 of the Companies Act, 2013 (“the Act”) read with the Companies (Accounts) Rules, 2014 and other relevant provisions of the Act and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI Listing Regulations”)

RESULTS OF OPERATIONS AND THE STATE OF COMPANY’S AFFAIRS

For the financial year ended 31st March 2021, on a Standalone basis revenue of the Company was '' 107.89 Crore and Net Profit was '' 73.03 Crore.

Key Highlights of the Company''s Consolidated performance for the financial year ended 31st March 2021 are as under:

• Strong growth across businesses leading to delivery of highest ever consolidated profit despite a Covid-hit year

• Consolidated Revenue: ? 19,248 Crore (grew 15% year on year)

• Consolidated Net Profit: ? 1,127 Crore (grew 22% year on year)

• Active customer base at 24 million (grew 22% year on year) aided by focus on granular retail growth across all businesses of the subsidiaries

• Overall AUM across asset management, life insurance and health insurance at over ? 3,35,000 Crore (grew 10% year on year)

• Overall lending book (NBFC and Housing Finance) at ~ ? 60,000 Crore (grew 2% year on year)

• Gross premium (across Life and Health Insurance) at ? 11,076 Crore (Grew 25% year on year)

The financial results of the Company and major Subsidiaries are elaborated in the Management Discussion and Analysis Report, which forms part of this Annual Report.

ACCOUNTING METHOD

The Consolidated and Standalone Financial Statements of the Company have been prepared in accordance with Indian Accounting Standards as notified under Sections 129 and 133 of the Act read with the Companies (Accounts) Rules, 2014, as amended and other relevant provisions of the Act.

In accordance with the provisions of the Act, applicable Accounting Standards, the SEBI Listing Regulations, the Audited Standalone and Consolidated Financial Statements of the Company for the financial year ended 31st March 2021, together with the Auditors’ Report forms part of this Annual Report.

The Audited Financial Statements (including the Consolidated Financial Statements) of the Company as stated above and the Financial Statements of each of the Subsidiaries of the Company, whose financials are consolidated with that of the Company, are available on the Company’s website at https://www.adityabirlacapital.com/Investor-Relations.

MATERIAL EVENTS DURING THE YEAR

Impact on the Business Continuity of the Company and Subsidiaries amidst the spread of COVID-19

The outbreak of COVID-19 pandemic has severely impacted social and economic activities across the World. WHO has declared COVID-19 as a global Pandemic. The Government of India, as a preventive measure to contain the spread of COVID-19 and to flatten the curve, declared a nationwide lockdown from 24th March 2020 and took various measures to control the spread of infection.

The continual disruptions caused by the COVID-19 pandemic and frequent lockdowns led to a difficult situation. The Company and its Subsidiaries responded proactively to these challenges posed by lockdown by activating their respective Business Continuity Plans (BCP). As a result, all the critical activities could be managed with employees working from home with the required controls being in place.

The Company and its Subsidiaries have since been able to reduce the impact of lockdown by taking a slew of measures including digitally enabling the front end sales force, all support functions working from Home, reducing costs, etc. Overall, the

Company and its Subsidiaries could ensure seamless servicing of customers without any major issues during the crisis through constant focus on a robust digital strategy. The details of BCP with reference to COVID-19 are covered comprehensively under the Business Continuity section.

HOLDING/SUBSIDIARIES/JOINT VENTURES/ ASSOCIATES COMPANIES

Holding Company

During the financial year under review, Grasim Industries Limited continued to remain the Holding Company of your Company. Grasim Industries Limited is listed at BSE Limited and National Stock Exchange of India Limited. As per Regulation 16(c) of SEBI Listing Regulations, your Company is considered as a Material Subsidiary of Grasim Industries Limited.

Subsidiaries

As a Core Investment Company, the Company is primarily a Holding Company and holds investments in its Subsidiaries. The Company conducts its business through its Subsidiaries in the various business segments in which they operate. As on 31st March 2021, the Company had 19 (Nineteen) Indian Subsidiaries and 6 (Six) Foreign Subsidiaries (including step down Subsidiaries).

Provisions of Regulations 24 and 24A of SEBI Listing Regulations, with reference to Subsidiaries were duly complied to the extent applicable.

During the financial year under review, the major changes with respect to the Subsidiaries of your Company were as under:

• Aditya Birla Sun Life AMC Limited (“ABSLAMC”), a material subsidiary of the Company, filed a draft red herring prospectus (‘DRHP’) dated 19th April 2021 with the Securities and Exchange Board of India for an initial public offering by way of an offer for sale (“IPO”) of up to 3,88,80,000 equity shares of face value of ?5 each constituting up to 13.50% of the paid-up share capital of ABSLAMC, subject to relevant approvals as required and other considerations. The above IPO comprises of an offer for sale of up to 28,50,880 equity shares of face value of ?5 each held by your Company in ABSLAMC.

• Pursuant to Regulation 24(5) of the SEBI Listing Regulations, approval of the Members of the Company by way of special resolution is being sought through postal ballot notice dated 7th May 2021 for potential dilution, sale of stake or reduction of shareholding of the Company to less than or equal to fifty percent of the paid up capital in Aditya Birla Sun Life AMC Limited, as may be applicable on such terms and

conditions as deemed fit by the Board of Directors. The result of the above postal ballot shall be announced on or before 11th June 2021. Further details are provided in the Corporate Governance Report which forms part of this Annual Report.

• Aditya Birla Capital Investments Private Limited, a nonmaterial subsidiary of the Company, was voluntarily struck off from the Registrar of Companies being non-operational and inoperative, with effect from 25th February 2021 and hence ceased to be a subsidiary of the Company.

MATERIAL SUBSIDIARIES

As required under Regulations 16(1)(c) and 46 of the SEBI Listing Regulations, the Board has approved and adopted the Policy for determining Material Subsidiaries. The Policy is available on the Company’s website at https://www.adityabirlacapital. com/Investor-Relations/Policies-and-Codes.

During the financial year under review, Aditya Birla Sun Life Insurance Company Limited, Aditya Birla Finance Limited, Aditya Birla Sun Life AMC Limited and Aditya Birla Housing Finance Limited were the material subsidiaries of the Company as per Regulation 16(1)(c) of the SEBI Listing Regulations.

JOINT VENTURES/ ASSOCIATES

As per the provisions of the Act, the Company did not have any Joint Ventures/ Associates during the financial year under review.

REGISTRATION AS A CORE INVESTMENT COMPANY

(CIC”) refer footnote

The Company is registered as a Non-Deposit taking Systemically Important - Core Investment Company (“CIC-ND-SI”) pursuant to the receipt of Certificate of Registration from the Reserve Bank of India dated 16th October 2015, under Section 45-IA of the Reserve Bank of India Act, 1934 (“RBI Act”) and Master Direction - Core Investment Companies (Reserve Bank) Directions 2016 as amended (“RBI Master Directions”).

TRANSFER TO RESERVES

For the financial year ended 31st March 2021 an amount of ?14.66 Crore was transferred to Special Reserve in terms of Section 45-IC of the Reserve Bank of India Act, 1934.

DIVIDEND

Your Directors do not recommend any dividend for the financial year under review. In terms of the provisions of Regulation 43A of the SEBI Listing Regulations, your Company has formulated and adopted a Dividend Distribution Policy. The policy is available

on your Company’s website at https://www.adityabirlacapital. com/investor-relations/policies-and-codes.

SHARE CAPITAL

As on 31st March 2021, the Company’s paid-up Equity Share Capital was ?24,15,27,79,780 divided into 2,41,52,77,978 Equity Shares of ?10 each.

During the financial year under review, the Company allotted 4,31,754 Equity Shares pursuant to exercise of Stock Options and Restricted Stock Units granted under ABCL Incentive Scheme for Stock Options and Restricted Stock Units - 2017 and 10,85,516 Equity Shares pursuant to exercise of Stock Options, Restricted Stock Units and Performance Restricted Stock Units granted under Aditya Birla Capital Limited Employee Stock Option Scheme 2017 respectively (“ESOP Schemes”).

Pursuant to the allotment of Equity Shares under the aforesaid ESOP Schemes, the paid-up Equity Share Capital of the Company increased from ?24,13,76,07,080 as on 31st March 2020 to ?24,15,27,79,780 as on 31st March 2021.

Mr. Amber Gupta, Company Secretary and Compliance Officer of the Company has been appointed as the Nodal Officer and Mr. Pramod Bohra, Joint Vice President, has been appointed as the Deputy Nodal Officer for and on behalf of the Company for the purpose of verification of claims and co-ordination with Investor Education and Protection Fund Authority.

Their details are available on the website of the Company at https://www.adityabirlacapital.com/investor-relations/ shareholder-centre.

DEPOSITORY

As on 31st March 2021, out of the Company’s paid-up Equity Share Capital comprising of 2,41,52,77,978 Equity Shares, 2,38,45,52,256 Equity Shares (98.73%) were held in dematerialised mode.

The Company’s Equity Shares are compulsorily tradable in electronic form.

RESOURCE MOBILISATION

During the financial year under review, no funds have been mobilised by way of Non-Convertible Debentures (NCD), Term Loans / Working Capital Demand Loan (WCDL) from banks or through Commercial Paper.

INVESTMENT IN SUBSIDIARIES

During the year under review, the Company subscribed to equity share capital in the following Subsidiaries:

Name of Subsidiary

Amount of capital Infused (Equity shares) ('' in Cr)

Aditya Birla Health Insurance Co. Limited

163.20

ABCAP Trustee Company Private Limited

0.02

Further, details of investment in subsidiaries are stated in the notes to the financial statements forming part of this Annual Report.

CREDIT RATING

The Company has neither issued any debt instruments nor undertaken any fixed deposit programme or any scheme or proposal involving mobilisation of funds in India or abroad during the financial year under review.

However the Company has continued to avail the below ratings from Credit Rating agencies to meet any unforeseen fund requirements and ensure continuation of ratings through any of the following instruments:

Sr.

No.

Nature of Instrument

Name of the Instrument

Name of Credit Rating Agency

Amount

Rated

Current

Rating

1

Short Term Instrument

Commercial

paper

CRISIL

300

A1

2

Short Term Instrument

Commercial

paper

ICRA Ltd

300

A1

3

Long Term Instrument

Non

Convertible

Debenture

ICRA Ltd

200

AAA

PUBLIC DEPOSITS

The Company, being a Non-Deposit taking Systemically Important Core Investment Company, has not accepted any deposits from the public during the financial year under review in accordance with Section 73 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014.

PARTICULARS OF LOANS GIVEN, INVESTMENT MADE, GUARANTEES GIVEN OR SECURITY PROVIDED

The Company is registered as a Core Investment Company with Reserve Bank of India. Thus, particulars of loans, guarantees and investments under the provisions of Section 186 of the Act read with the Companies (Meetings of Board and its Powers) Rules, 2014, are not applicable to the Company.

CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION

As the Company is a Core Investment Company carrying out its activities through its Subsidiaries, the particulars regarding conservation of energy and technology absorption as required to be disclosed pursuant to provision of Section 134(3)(m) of the Act read with Rule 8(3) of the Companies (Accounts) Rules, 2014 are not relevant to its activities.

However, some of the steps taken by the Company along with its Subsidiaries for conservation of energy include:

• The Company and its Subsidiaries are committed to reducing negative environmental impact.

• The Company along with Subsidiaries tied up with ViaGreen, an organization that helps us in waste management and recycling.

• Most of the offices of the Company and its subsidiaries have installed LED lights making them very energy-efficient. Further, our first rooftop solar panel was installed at Bengaluru offices. Similar renewable energy installations in other office buildings will be taken up in future.

• As a step towards further reducing the environmental impact, the documents for Board and Committee meetings of the Subsidiaries are transmitted electronically using a secure web-based application, thereby saving paper.

• The energy saving measures also include selecting and designing offices to facilitate maximum natural light utilisation, video-conferencing facilities across all offices to reduce the need of employee travel, digital learning initiatives for employees, optimised usage of lights and continuous monitoring and control of the operations of the air conditioning equipment as well as elimination of non-recyclable plastic in offices.

FOREIGN EXCHANGE EARNINGS AND OUTGO

There were no foreign exchange earnings during the financial year under review as well as during the previous financial year. However, the foreign exchange outgo during the financial year under review was ?0.51 Crore as compared to ?0.17 Crore, during the previous financial year.

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, are attached as Annexure I to this report.

Details as required under Section 197(12) of the Act, read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, with respect to information of employees of the Company will be provided upon request by a Member. In terms of the provisions of Section 136(1) of the Act, the Annual Report is being sent to all the Members of your Company whose email address(es) are registered with the Company / Depository Participants via electronic mode, excluding the aforesaid details which shall be made available for inspection by the Members via electronic mode. If any Member is interested in obtaining a copy thereof, the Member may write to the Company Secretary at the Registered Office of the Company in this regard or send an email to abc.secretarial@adityabirlacapital.com.

BUSINESS RESPONSIBILITY REPORT

Your Company forms part of the top 1000 listed entities on BSE Limited and National Stock Exchange of India Limited as on 31st March 2021. Accordingly pursuant to Regulation 34(2) of SEBI Listing Regulations, Business Responsibility Report forms part of this Annual Report, describing the initiatives taken by the Company and its Subsidiaries from environmental, social and governance perspective. The report is also available on your Company’s website at https://www.adityabirlacapital. com/%20investor-relations/financial-reports.

MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION OF THE COMPANY

There were no material changes and commitments affecting the financial position of the Company from the end of the financial year up to the date of this Report.

CHANGE IN NATURE OF BUSINESS

During the financial year under review, there has been no change in the nature of business of the Company.

EMPLOYEE STOCK OPTION PLAN

Employee Stock Options have been recognised as an effective instrument to attract talent and align the interest of employees with that of the Company, providing an opportunity to the employees to share in the growth of the Company and to create long term wealth in the hands of employees, thereby and acting as a retention tool.

In view of the above, your Company had formulated “Aditya Birla Capital Limited Employee Stock Option Scheme 2017” (“Scheme 2017”) for the employees of the Company and its Subsidiaries.

Your Company also adopted “ABCL Incentive Scheme for Stock Options and Restricted Stock Units - 2017” (“ABCL Incentive Scheme”), pursuant to the Composite Scheme of Arrangement between erstwhile Aditya Birla Nuvo Limited and Grasim Industries Limited and the Company and their respective Shareholders and Creditors.

The aforesaid ESOP Schemes are in compliance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014.

Your Company also adopted “Aditya Birla Capital Limited Stock Appreciation Rights Scheme 2019” (“SARs Scheme 2019”), which is a cash based plan linked to the actual stock price movement over the plan tenure. Further details on the same are provided in the Corporate Governance Report which forms part of this Annual Report.

There were no material changes made to the aforesaid schemes during the financial year under review.

The details/disclosure(s) on the aforesaid Employee Stock Option Scheme(s) as required to be disclosed under the SEBI (Share Based Employee Benefits) Regulations, 2014 are available on the Company’s website at https://www.adityabirlacapital. com/investor-relations/financial-reports.

Certificates from the Statutory Auditors on the implementation of your Company’s Employee Stock Option Scheme(s) will be made available via electronic mode at the ensuing 14th (Fourteenth) Annual General Meeting (“AGM”) of the Company for inspection by the Members.

MANAGEMENT DISCUSSION AND ANALYSIS

Pursuant to 34(2) of SEBI Listing Regulations, the Management Discussion and Analysis Report for the financial year under review forms part of this Annual Report.

CORPORATE GOVERNANCE REPORT

The Corporate Governance Report as stipulated under Regulation 34(3) read with Schedule V of the SEBI Listing Regulations forms part of this Annual Report. The requisite certificate from M/s. Makarand M. Joshi & Co., Practising Company Secretaries on compliance with the requirements of Corporate Governance is attached as Annexure II to the Board’s Report.

STATEMENT CONTAINING SALIENT FEATURES OF THE FINANCIAL STATEMENTS OF SUBSIDIARIES

A report on the performance and financial position of each of the Company’s Subsidiaries as per Section 129(3) of the Act read with the Companies (Accounts) Rules, 2014, in the prescribed form AOC-1 is attached as Annexure III to the Board’s Report.

RISK MANAGEMENT

Risk Management is at the core of our business and ensuring we have the right risk-return trade-off in line with our risk appetite is the essence of our Risk Management while looking to optimize the returns that go with that risk.

The Board has constituted a Risk Management Committee as required under Regulation 21 of the SEBI Listing Regulations to frame, implement and monitor the risk management plan of the Company

The objectives and scope of the Risk Management Committee broadly include:

• Risk identification;

• Risk Assessment;

• Risk Response and Risk Management strategy; and

• Risk monitoring, communication and reporting.

The Management Discussion and Analysis Report sets out the risks identified and the mitigation plans thereof.

The financial year 2020-21 witnessed disruption and challenges due to the pandemic and consequent lockdowns. The Company and its Subsidiaries showed good resilience due to the strong Business Continuity Plan and Pandemic Plans in place.

The Company is a Core Investment Company (“CIC”) and its operations are limited to those of a CIC. The risks therefore largely relate to investments made in its Subsidiaries. The operations of each of the Subsidiaries, the risks faced by them and the risk mitigation tools used to manage them are reviewed periodically by their Risk Management Committees and Board of Directors. The same are also reviewed by the Risk Management Committee and Board of Directors of the Company.

Over the years, the Company and its Subsidiaries have built a strong Risk Management Framework supported by well-established policies and procedures and a talented pool of Risk Professionals. The Company was able to face the unprecedented challenges during the year and emerged stronger during these turbulent times due to some of these policies and frameworks.

All the Subsidiaries of the Company have well-established Risk Management frameworks designed to identify, assess, monitor and mitigate risks inherent in the business. The framework enables effective risk management through a structure of Committees, policies, internal controls and reporting.

The organizational structure to manage the risk consists of “Three lines of defense”:

First is: Line Management (Functional Heads) to ensure that accountability and ownership is as close as possible to the activity that creates the risks;

Second is: Risk Oversight including the Risk and Compliance Function and Risk Management Committee

Third is: Independent Assurance through Internal Audit, conducted by Independent Internal Auditors, whose work is reviewed by the Audit Committee.

Risk Management Committee, Asset Liability Management Committee, Investment Committee and Audit Committee have been set-up to ensure monitoring of risks and Governance as applicable. These Committees are prima facie governed by their Charters.

The Company has in place a Risk Management Policy which has been uploaded on the website of the Company at https://www. adityabirlacapital.com/investor-relations/policies-and-codes.

Business Continuity

The Company and its Subsidiaries have a well-documented Business Continuity Management Programme which has been designed to ensure continuity of critical processes during any disruption.

The continual disruptions caused by the COVID-19 pandemic and frequent lockdowns tested the Business Continuity Policy of the Company. Nevertheless, it continued to operate in line with the procedures outlined in its Business Continuity Plan, which was modified to take care of the evolving situation and a Pandemic Plan was developed keeping in view the interest of various stakeholders like employees, customers, partners, distributors, etc. within the overall regulatory requirements and guidelines. As a result, your Company and its Subsidiaries were able to continue to operate and serve customers while taking care of the health of their employees.

To manage the impact of the pandemic on the Company, a Crisis Management Team (CMT) comprising of Leadership Team members and led by the Chief Executive Officer of the Company was formed. The program was managed by Chief Compliance & Risk Officer with the support of other Leadership Team members.

The Risk team of each of the Subsidiaries coordinated with various business functions to implement the Work from Home plan for employees to ensure Business Continuity without dilution of controls.

Employees’ health and safety was accorded top priority. Various steps were taken well before the lockdown to reduce congestion in office, maintain social distancing and enable Work from home for employees. Critical processes were identified, reviewed for work from home scenario and wherever required alternate controls were instituted. The work from home plan was tested well in advance and glitches ironed out. After announcement of the nation-wide lockdown, Work-from-Home (WFH) was fully enabled for all employees.

The Business Continuity Plan was also supplemented with a Business Normalisation plan.

This enabled the Company and its Subsidiaries to resume Business Operations wherever the conditions had normalised.

As the COVID-19 pandemic continues to evolve, the efforts will be to support an effective return to work while ensuring safety of employees, distribution partners and customers. The Company and its Subsidiaries expect the challenging times to continue for the next few months. However, it is well prepared to ensure stabilization and Business continuity.

In view of the increased move to digital, there was a continued focus on Cyber Security and the Company and its Subsidiaries continued to invest in a strong Cyber Defence Programme.

CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES

During the financial year under review, all transactions entered into by the Company with related parties were in ordinary course of business and on an arm’s length basis and were not considered material as per the provisions of Section 188 of the Act read with the Companies (Meetings of Board and its Powers) Rules, 2014 and Regulation 23 of the SEBI Listing Regulations. Hence, disclosure in form AOC-2 under Section 134(3)(h) of the Act, read with the Rule 8 of the Companies (Accounts of Companies) Rules, 2014, is not applicable.

Prior omnibus approval of the Audit Committee is obtained for Related Party Transactions (“RPTs”) which are of a repetitive nature and entered into in the ordinary course of business and at arm’s length. A statement on RPTs specifying the details of the transactions pursuant to each omnibus approval granted, is placed on a quarterly basis for review by the Audit Committee.

Pursuant to Regulation 23(9) of SEBI Listing Regulations, 2015, disclosures of RPTs on a consolidated basis are submitted to the stock exchanges on a half-yearly basis and published on the Company’s website https://www.adityabirlacapital.com/ investor-relations/announcements-and-updates.

There were no material transactions entered into with related parties during the period under review, which may have had any potential conflict with the interests of the Company at large.

The details of contracts and arrangements with related parties of your Company for the financial year under review, are given in notes to the Standalone Financial Statements, which form part of this Annual Report. The Policy on Related Party Transactions, as approved by the Board, is available on your Company’s website at https://www.adityabirlacapital.com/ investor-relations/policies-and-codes.

INTERNAL FINANCIAL CONTROLS

Your Company and its Subsidiaries have well-established internal control systems in place which are commensurate with the nature of its business and size and scale and complexity of its operations. Standard operating procedures (SOP) and Risk Control Matrices designed to provide a reasonable assurance are in place and are being continuously monitored and updated.

In addition to the above, internal audits are undertaken on periodic basis to independently validate the existing controls as per scope assigned to them. The Internal audit program is reviewed by the Audit Committee at the beginning of the year to ensure that the coverage of the areas is adequate. Reports of the internal auditors are regularly reviewed by the management and corrective action is initiated to strengthen controls and enhance the effectiveness of existing systems.

Significant audit observations, if any, are presented to the Audit Committee along with the status of management actions and the progress of implementation of recommendations.

Your Company along with its Subsidiaries also periodically engage outside experts to carry out independent review of the effectiveness of various business processes. The observations and best practices suggested are reviewed by the Management and Audit Committee and appropriately implemented with a view to continuously strengthen internal controls.

INTERNAL AUDIT

The Company has in place an adequate internal audit framework to monitor the efficacy of internal controls with the objective of providing to the Audit Committee and the Board of Directors, an independent and reasonable assurance on the adequacy and effectiveness of the organization’s risk management, internal control and governance processes. The framework is commensurate with the nature of the business, size, scale and complexity of its operations.

The audit plan is approved by the Audit Committee, which regularly reviews compliance to the plan.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Act and to the best of their knowledge and belief and according to the information and explanations obtained from the operating management, Directors of your Company state that:-

i) in the preparation of the Annual Accounts for the financial year ended 31st March 2021, the applicable accounting standards have been followed and there were no material departures from the same;

ii) the Directors had 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 31st March 2021 and of the profit/loss of the Company for financial year ended on that date;

iii) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) the Directors had prepared the Annual Accounts on a ‘going concern basis’;

v) the Directors had laid down Internal Financial Controls and that such Internal Financial Controls were adequate and were operating effectively; and

vi) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

DIRECTORS AND KEY MANAGERIAL PERSONNELAPPOINTMENT/RE-APPOINTMENT / RESIGNATION OF DIRECTORS

As on 31st March 2021, the Board of Directors of your Company (“the Board”) comprised 8 Directors including 1 woman Director.

Mr. Romesh Sobti (DIN: 00031034) was appointed as an Additional Director (Non-Executive) (Nominee of Jomei Investments Limited, Equity Investor) on the Board of your Company w.e.f 14th January 2021 and holds office till ensuing 14th (Fourteenth) Annual General Meeting and is eligible for appointment. Based on the recommendation of the Nomination, Remuneration and Compensation Committee of the Company, the Board recommends his appointment for the approval of the Members at the 14th (Fourteenth) Annual General Meeting.

Mr. Arun Adhikari (DIN: 00591057), Mr. P. H. Ravikumar (DIN: 00280010) and Mrs. Vijayalakshmi Iyer (DIN:05242960), Independent Directors, will complete their term of 5 years on 25th June 2022 and have given their consent for re-appointment for a second term of 5 years pursuant to the provisions of Section 149 of the Act and SEBI Listing Regulations

Mr. S. C. Bhargava (DIN: 00020021), Independent Director, will complete his tenure of 5 years on 31st August 2021 and has given his consent for re-appointment for a second term of 3 years pursuant to the provisions of Section 149 of the Act and SEBI Listing Regulations

Mr. P. H. Ravikumar will exceed seventy-five years of age during his proposed re-appointment for second term of five years. Mr. S. C. Bhargava during his present tenure exceeded seventy-five years of age for which approval was earlier obtained from Members vide resolution passed on 19th August 2019.

Based on the recommendation of the Nomination, Remuneration and Compensation Committee of the Company and being satisfied on the performance evaluation, considering the background and experience, the Board at its Meeting held on 14th May 2021 has recommended the re-appointment of Mr. Arun Adhikari, Mr. P. H. Ravikumar and Mrs. Vijayalakshmi Iyer as Independent Directors for a second term of five years and Mr. S. C. Bhargava for a second term of three years for the approval of the Members at the 14th (Fourteenth) Annual General Meeting by way of special resolution.

The terms and conditions of appointment of Independent Directors are available on the website of the Company at https:// www.adityabirlacapital.com/about-us/board-of-directors.

No Director has resigned from the Board during the financial year under review.

RETIREMENT BY ROTATION

Pursuant to Section 152 of the Act read with the Articles of Association of the Company, Mr. Sushil Agarwal (DIN: 00060017), Non-Executive Director retires from the Board by rotation

and being eligible, offers himself for re-appointment at the 14th (Fourteenth) Annual General Meeting of the Company.

The Nomination, Remuneration and Compensation Committee of the Company and the Board of Directors have recommended the re-appointment of Mr. Sushil Agarwal.

All the Directors proposed to be appointed/re-appointed meet the fit and proper criteria stipulated under the Master Directions - Core Investment Companies (Reserve Bank) Directions, 2016, as amended.

A detailed profile of the Directors seeking appointment / reappointment is provided in the Notice of the 14th (Fourteenth) Annual General Meeting of the Company.

DECLARATION BY INDEPENDENT DIRECTORS

All Independent Directors have submitted their declaration of independence, pursuant to the provisions of Section 149(7) of the Act and Regulation 25(8) of the SEBI Listing Regulations, stating that they meet the criteria of independence as provided in Section 149(6) of the Act and Regulation 16(1)(b) of the SEBI Listing Regulations and they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence.

The Board is of the opinion that the Independent Directors of the Company possess requisite qualifications, experience, expertise and hold highest standards of integrity.

KEY MANAGERIAL PERSONNEL

In terms of the provisions of Sections 2(51) and 203 of the Act, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, Mr. Ajay Srinivasan, Chief Executive Officer (CEO), Mrs. Pinky Mehta, Chief Financial Officer (CFO) and Mr. Amber Gupta, Company Secretary and Compliance Officer (w.e.f. 1st March 2021) are the Key Managerial Personnel of your Company. Mr. Sailesh Kumar Daga ceased to be the Company Secretary of the Company effective from the close of business hours on 28th February 2021.

FIT AND PROPER CRITERIA

All the Directors meet the fit and proper criteria stipulated under the Master Directions - Core Investment Companies (Reserve Bank) Directions, 2016, as amended.

ANNUAL PERFORMANCE EVALUATION

The evaluation framework for assessing the performance of the Directors of your Company comprises contributions at the Meeting(s) and strategic perspective or inputs regarding the growth and performance of your Company provided by them, amongst others.

Pursuant to the provisions of the Act and SEBI Listing Regulations and in terms of the Framework of the Board Performance Evaluation, the Nomination, Remuneration and Compensation Committee and the Board of Directors have carried out an annual performance evaluation of the Board, performance of various Committees of the Board, Individual Directors, and the Chairman. The manner in which the evaluation has been carried out has been set out in the Corporate Governance Report, which forms part of this Annual Report. The details of the programme for familiarisation of the Independent Directors of your Company are available on your Company’s website at www.adityabirlacapital.com/about-us/board-of-Directors.

Outcome of the Evaluation

The Board of your Company was satisfied with the functioning of the Board and its Committees. The Committees are functioning well and besides covering the Committees’ terms of reference, as mandated by applicable laws, important issues are brought up and discussed in the Committee meetings. The Board was also satisfied with the contribution of Directors in their individual capacities.

MEETINGS OF THE BOARD AND ITS COMMITTEES

Board

The Board meets at regular intervals to discuss and decide on the Company’s performance and strategies. During the financial year under review, the Board met 6 (Six) times on 5th June 2020, 7th August 2020, 5th November 2020, 30th December 2020, 5th February 2021 and 17th March 2021.

Further details on the Board, its Meetings, composition and attendance are provided in the Corporate Governance Report, which forms part of this Annual Report.

Audit Committee

Your Company has constituted an Audit Committee with its composition, quorum, powers, role and scope in line with the applicable provisions of the Act and SEBI Listing Regulations.

During the financial year under review, the Audit Committee 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.

Further details on the Audit Committee, its Meetings, composition and attendance are provided in the Corporate Governance Report, which forms part of this Annual Report.

During the financial year under review, all recommendations made by the Audit Committee were accepted by the Board.


NOMINATION, REMUNERATION AND COMPENSATION COMMITTEE

Your Company has constituted a Nomination, Remuneration and Compensation Committee (“NRC”), with its composition, quorum, powers, role and scope in line with the applicable provisions of the Act and SEBI Listing Regulations.

Further details on the NRC,its Meetings, composition and attendance are provided in the Corporate Governance Report, which forms part of this Annual Report.

The NRC has formulated a policy on remuneration under the provisions of Section 178(3) of the Act, which is attached as Annexure IV to the Board’s Report and the same is uploaded on the website of the Company at https://www.adityabirlacapital. com/investor-relations/policies-and-codes.

Other Committees

The Board of Directors has also constituted the following Committees:

• Corporate Social Responsibility Committee

• Stakeholders’ Relationship Committee

• Risk Management Committee

• PIT Regulations Committee

• IT Strategy Committee

• Asset Liability Management Committee

• Asset Monetization Committee

More information on all of the above Committees including details of its Meetings, composition and attendance are provided in the Corporate Governance Report, which forms part of this Annual Report.

ANNUAL RETURN

Pursuant to the provisions of Section 134(3)(a) of the Act, the Annual Return in form MGT-7 for the Company for the financial year 2020-21 is available on the Company’s website at https://www.adityabirlacapital.com/investor-relations/ financial-reports.

AUDITORSSTATUTORY AUDITORS, THEIR REPORT AND NOTES TO FINANCIAL STATEMENTS

Pursuant to the provisions of Section 139 of the Act and the Companies (Audit and Auditors) Rules, 2014, as amended, M/s. Deloitte Haskins & Sells, LLP, Chartered Accountants (Firm Registration No. 117366W/W-100018) had been appointed as Statutory Auditors of the Company for a term of 5 (Five) years

i.e. from the Tenth Annual General Meeting till the conclusion of Fifteenth Annual General Meeting of the Company.

The observation(s) made in the Auditor’s Report are selfexplanatory and therefore, do not call for any further comments under Section 134(3)(f) of the Act.

The Auditor’s Report does not contain any qualifications, reservations, adverse remarks or disclaimer. The Statutory Auditors have not reported any incident of fraud to the Audit Committee or the Board of Directors under Section 143(12) of the Act during the financial year under review.

Reserve Bank of India (“RBI”) has issued a circular (Circular) dated 27th April 2021 on Guidelines for appointment of Statutory Central Auditors (SCAs)/Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs). The Circular has given flexibility to adopt these guidelines from H2 (second half) of FY 2021-22. The circular amongst other restrictions inter-alia stipulates that an Audit firm can be appointed as the Statutory Auditor for a period of 3 years only and thereafter, the next reappointment in the same entity will be possible only after a cooling period of six years. Industry representations are being made for seeking relaxations/ clarifications of this Circular.

Depending on the clarification/ relaxation, if any, received from RBI, information about continuation of existing Statutory Auditors (who have already completed tenure of four years) till the conclusion of Fifteenth Annual General Meeting of the Company or recommendation for the appointment of a new Statutory Auditor if any, shall be suitably provided in the Notice of 14th (Fourteenth) Annual General Meeting of the Company as applicable.

SECRETARIAL AUDIT AND SECRETARIAL COMPLIANCE REPORT

Pursuant to the requirements of Section 204(1) of the Act read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed M/s. Makarand M. Joshi & Co., Practising Company Secretaries, to conduct the Secretarial Audit for the financial year under review. The Secretarial Audit Report in Form MR-3 for the financial year under review, as received from M/s. Makarand M. Joshi & Co., Company Secretaries, is attached as Annexure V to the Board’s Report. The Secretarial Audit Report is self-explanatory.

Pursuant to Regulation 34(3) and Schedule V of the SEBI Listing Regulations, the Annual Secretarial Compliance Report for the financial year under review will be submitted to the Stock Exchanges and uploaded on the website of the Company.

COST RECORDS AND AUDITORS

The provisions of Cost Records and Cost Audit as prescribed under Section 148 of the Act are not applicable to the Company.

CORPORATE SOCIAL RESPONSIBILITY

In accordance with Section 135 of the Act, your Company has constituted a Corporate Social Responsibility (“CSR”) Committee.

The CSR Committee has formulated and recommended to the Board, a Corporate Social Responsibility Policy (“CSR Policy”) indicating the activities to be undertaken by the Company, which has been approved by the Board. The CSR Policy is available on the Company’s website at https://www.adityabirlacapital. com/investor-relations/policiesand-codes.

During the financial year under review, your Company was not required to make any expenditure towards CSR projects, in absence of average net profit for three immediately preceding financial years calculated in accordance with the provisions of Section 198 of the Act. Accordingly, no CSR activity was undertaken by the Company. Considering that the Company was not required to contribute any amount towards CSR activities, report on activities as required under Companies (Corporate Social Responsibility Policy) Rules, 2014 has not been furnished.

Further details on the CSR Committee are provided in the Corporate Governance Report, which forms part of this Annual Report.

WHISTLE BLOWER POLICY / VIGIL MECHANISM

In compliance with the provisions of Section 177(9) of the Act read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 and Regulation 22 of the SEBI Listing Regulations, the Company has formulated a Whistle blower policy/ vigil mechanism for Directors and Employees to report concerns, details of which are covered in the Corporate Governance Report, which forms part of this Annual Report.

The said policy is available on the Company’s website at https://www.adityabirlacapital.com/investor-relations/ policies-and-codes.

POLICY ON PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

Your Company has in place a policy which is in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013. An Internal Complaints Committee has been set up to redress complaints, if any, received regarding sexual harassment of women. The Company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013. All employees (permanent, contractual, temporary, trainees) are covered under this policy. During the financial year under review, there were no complaints received under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

The Company has complied with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

RBI REGULATIONS

The Company has complied with all the regulations of RBI to the extent applicable as a Non-Deposit taking Systemically Important - Core Investment Company.

HUMAN RESOURCES

Your Company along with its Subsidiaries has always aspired to be an organization and a workplace which attracts, retains and provides a canvas for talent to operate. Our vision of being a leader and a role model in a broad based and integrated financial services business and a culture that is purpose driven gives meaning to our people.

We believe that meaning at work is created when people relate to the purpose of the organization, feel connected to their leaders and have a sense of belonging. Our focus stays strong on providing our people a work environment that welcomes diversity, nurtures positive relationships, provides challenging work assignments and provides opportunities based on meritocracy for people to grow and build their careers with us in line with their aspirations.

As on 31st March 2021, the employee strength of the Company was 29 and along with the Subsidiaries it had 22,759 employees.

The workforce along with Subsidiaries comprises of more than 71% millennials and 27% women.

Talent Management

Your Company’s and its Subsidiaries'' philosophy of building leaders from within continues to guide the actions towards identifying, developing, and nurturing talent. With greater emphasis on futuristic thinking, digital mindset and customer-first approach while adhering to our culture and values, we have made some major shifts towards developing our people for the future of financial services.

In the last two years:

• more than 75% of employees in our talent pool have been covered in various development programs

• more than 82% of leadership requirements have been fulfilled internally

• around 500 employees across levels have moved into new or larger roles

Employee Wellness and Engagement

The health and wellbeing of our people have always been our top priority. Your Company along with its Subsidiaries has put in place robust processes for employee safety and support with 800 Flu Prevention Managers trained on safety protocols and assigned to check-in with employees and their families at regular intervals and supporting them when needed.

Availability of medical infrastructure and support systems were a huge challenge in the initial days of the pandemic and we

devised a comprehensive support mechanism through which our employees were provided home testing support, on call doctor assistance, hospitalization support etc. A 24*7 helpline number was used for central dissemination of information and for employees to reach out for any help on the above.

A comprehensive wellness program was launched during the year which is aimed at helping employees improve their physical as well as emotional wellbeing. This will continue to be a key area of focus for the Company.

Your Company along with Subsidiaries also recognised the need to augment its efforts towards maintaining positivity in the workforce and keeping them engaged. Through internal social networks, leadership connect and digital events, your Company along with its subsidiaries focused on sustaining emotional connect and camaraderie among its employees.

The celebration of Aditya Birla Capital Day, the annual event to recognize excellence and exemplary performance of employees digitally is reflective of the culture of the Company and its Subsidiaries that focuses on connecting with and recognising the efforts of its people.

COVID Management

While we faced unprecedented challenges, the Company and its Subsidiaries were able to tide through the difficult times solely because of the collaborative efforts of teams across multiple businesses. We were early to transition all our employees across 850 branches to working from home well before the national lockdown was announced in March 2020.

We were also amongst the first in the industry to open our offices and branches to welcome customers when the lockdowns were relaxed, indicative of our deep commitment towards them. Our preparations before reopening covered all aspects of safety for our customers and employees.

Learning

Your Company''s and its Subsidiaries’ philosophy is to provide every employee with continuous opportunities to learn & grow. Our learning interventions create an organisation wide impact as these are focused on enabling employees to do better at work.

An AI enabled learning app provides employees easy access to super personalized content that meets their unique individual requirements. 16,000 relevant courses, videos & webinars were hosted on Gyanodaya Virtual Campus (GVC) which is Aditya Birla Group''s e-Learning platform for employees. Employees leveraged these resources to enhance their skills and knowledge.

Additionally, with 3000 E Learning courses, 19K video based modules and 300 micro-learning modules our employees have the flexibility to learn anytime and from anywhere. While self-paced learning is available 24x7x365, one can also attend live virtual instructor led sessions through our in-house corporate university-ABC University. It creates and delivers need based

learning solutions on behavior, sales effectiveness, functional and leadership development.

SUSTAINABILITY

Your Company along with its Subsidiaries designs and delivers products and solutions that enable its customers to meet their needs. In the process, the Company and its Subsidiaries contribute to the nation’s inclusive and sustainable development agenda, with a special focus on responsible finance, as well as global sustainability goals. Driven by proven expertise and an unwavering focus on governance, we are embedding sustainability into every lending and investment decision, with a special focus on Environmental, Social and Governance (ESG) parameters. Our customers are at the heart of everything we do.

The detailed Sustainability Report will be made available on the website of the Company at https://www.adityabirlacapital. com/investor-relations/sustainability-reports

SECRETARIAL STANDARDS OF INSTITUTE OF COMPANY SECRETARIES OF INDIA

Your Company is in compliance with the Secretarial Standards specified by the Institute of Company Secretaries of India (“ICSI”) on Meetings of the Board of Directors (SS-1) and General Meetings (SS-2).

CODE FOR PROHIBITION OF INSIDER TRADING

Pursuant to SEBI (Prohibition of Insider Trading) Regulation 2015, as amended, the Company has a Board approved code of conduct to regulate, monitor and report trading by insiders and a Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information.

Further details on the same form part of the Corporate Governance Report.

AWARDS AND RECOGNITIONS

During the financial year under review, your Company and its Subsidiaries have been felicitated with awards and recognitions across various functional areas which has been elaborated under Awards and Recognitions section in this Annual Report.

OTHER DISCLOSURES

In terms of applicable provisions of the Act and SEBI Listing Regulations, your Company discloses that during the financial

i. there was no issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except under Employee Stock Option Scheme referred to in this Report.

ii. there was no Scheme for provision of money for the purchase of its own shares by employees or by trustees for the benefit of employees.

iii. there was no public issue, rights issue, bonus issue or preferential issue, etc.

iv. there was no issue of shares with differential rights.

v. there was no transfer of unpaid or unclaimed amount to Investor Education and Protection Fund (IEPF).

vi. no significant or material orders were passed by the Regulators or Hon’ble Courts or Tribunals which impact the going concern status and Company’s operations in future.

vii. there were no proceedings for Corporate Insolvency Resolution Process initiated under the Insolvency and Bankruptcy Code, 2016.

viii. there was no failure to implement any Corporate Action.

ACKNOWLEDGEMENTS

Your Directors take this opportunity to express their appreciation for the support and co-operation extended by our various partners and other business associates. Your Directors gratefully acknowledge the ongoing co-operation and support provided by all Statutory and Regulatory Authorities.

Your Board also acknowledges the support and contribution of Company’s bankers, Stock Exchanges, Registrar of Companies, Depositories, the Reserve Bank of India, Securities and Exchange Board of India, Central and State Governments and other regulatory bodies and the shareholders who have always supported and helped the Company to achieve its objectives.

Your Directors place on record their appreciation for the exemplary contribution made by the employees of the Company and its Subsidiaries at all levels. Their dedicated efforts and enthusiasm have been pivotal to your Company''s and its Subsidiaries'' growth.

Director’s Report