Annual Report FY2017 - Icici Prudential Life Insurance€¦ · DIRECTORS’ REPORT To the Members...

Annual Report

FY2017

DIRECTORS’ REPORT

To the Members

ICICI Prudential Pension Funds Management Company Limited

Your Directors have pleasure in presenting the Eighth Annual Report of ICICI

Prudential Pension Funds Management Company Limited (the Company) with the

audited statement of accounts for the year ended March 31, 2017.

OPERATIONS REVIEW & OUTLOOK

Industry in FY2017

The industry AUM as at March 31, 2017 was ` 1,745.61 billion (FY2016: ` 1,188.10

billion). This largely comprises funds from government sector of ` 1,522.12 billion

and corporate sector (central government pattern) of ` 107.53 billion. The AUM from

private sector and NPS lite segments was ` 70.72 billion and ` 26.39 billion

respectively, a growth of 98% and 25% over FY2016.

Company in FY2017

The subscribers’ funds managed by the Company increased from ` 7,011.4 million at

March 31, 2016 to ` 14,414.8 million at March 31, 2017, an increase of 105.6% during

the year.

The details of the subscribers’ funds are as follows:

(` million)

Asset class March 31,

2016

%

to total

March 31,

2017

%

to total

Equity (E) 2,660.8 38% 5,837.5 40%

Credit Risk Bearing Fixed

Income Instruments (C) 2,075.1 30% 4,018.4 28%

Government Securities (G) 2,275.5 32% 4,555.9 32%

Alternate Asset Class (A) - - 3.0 0%

Total 7,011.4 100% 14,414.8 100%

The performance for financial year ended March 31, 2017 is summarised as

follows:

(` million)

Particulars FY2016 FY2017

Investment management fees 0.5 1.0

Investment income 23.2 22.8

Total revenue 23.7 23.8

Personnel expenses 16.2 17.4

Other operating expenses 9.2 11.9


Depreciation/Amortisation

expenses 0.4 0.4

Total expenses 25.8 29.7

Profit/(loss) before tax (2.1) (5.9)

Tax expense 1.0 (0.2)

Profit/(loss) after tax (3.1) (5.7)

For the year ended March 31, 2017, the Company registered a loss of ` 5.7 million as

compared to a loss of ` 3.1 million for the year ended March 31, 2016.

The Company registered an operating loss of ` 28.7 million in FY2017 vis-a-vis an

operating loss of ` 25.3 million in FY2016 primarily due to increase in personnel

expenses and other operating expenses from ` 9.2 mn to ` 11.9 mn. The increase in

other operating expenses was primarily due to –

- non-refundable application fees of ` 1 mn paid to Pension Fund Regulatory &

Development Authority (PFRDA) pursuant to its Request for Proposal for

appointment of pension fund managers - increase in brokerage expenses by ` 0.6 mn incurred on behalf of scheme in

line with increase in investments. As per the terms of the Investment

Management Agreement, the brokerage expenses of schemes are borne by

shareholders - provision made for unutilised service tax on expenses, ` 0.4 mn in line with

increase in operating expense.

Ind AS Implementation

The Insurance Regulatory and Development Authority of India (IRDAI) requires

insurance companies to adopt Ind AS with effect from April 1, 2018 for itself and its

subsidiary(ies). PFRDA also issued circular directing pension fund managers to

comply with MCA guidelines on Ind AS. The Company is in the process of

implementing the same, updates of which are periodically made to its Board Audit

Committee.

DIVIDEND

The financial operations of the Company have resulted in a loss after tax of ` 5.7

million. In view of the loss incurred, the Directors are unable to recommend any

dividend.

Statement in respect of adequacy of internal financial controls with

reference to the Financial Statements

The Company has established a governance framework and a control environment,

commensurate with the size, scale and complexity of its operations. The corporate

governance framework of the Company is based on an effective independent Board,

separation of Board’s supervisory role from the executive management and

constitution of Board Committees, generally comprising a majority of independent /

non-executive directors and chaired by independent/ non-executive directors to

oversee critical areas.

The internal financial controls with reference to financial statements of the Company

comprises multiple levels of oversight as follows:

1. The Company follows a reporting and review framework comprising quarterly

review of financials. The financials prepared are reviewed by Audit

Committee.

2. The Company has fully automated processes and authority matrix based workflow

to compute/ account investment management fee, investment income and

operating expenses. System and process controls have been built on various sub

processes and activities to ensure completeness and accuracy.

3. No significant observations have been made or are outstanding against the

Company by auditors or regulators.

4. The Company has a documented risk control matrix against which the controls

pertaining to financial reporting are tested. All the controls are in place and

functioning.

5. The Company also has got internal audit conducted by an external consultant and

no observations have been made by them.

Orders, if any, passed by Regulator or Courts or Tribunals

No orders were passed by the regulators or courts or tribunals impacting the going

concern status and the Company’s operations.

Subsidiary, joint venture or associate companies

The Company continues to be the wholly owned subsidiary of ICICI Prudential Life

Insurance Company Limited.

Key Managerial Person

During the year Ms. Shweta Nayak (ACS 44318) was appointed as the Company

Secretary of the Company with effect from August 29, 2016.

Policy for Directors and Senior management position as prescribed under

Section 178 of the Companies Act 2013 (Act).

The Company has formulated a policy as prescribed under Section 178 of the

Companies Act 2013. The policy on the above is attached as Annexure – A.

BOARD OF DIRECTORS

The Board comprises of six Directors; three nominated by ICICI Prudential Life

Insurance Company Limited and three Independent Directors. The Board is

responsible for overall corporate strategy and other responsibilities as laid down by

the PFRDA. The Independent Directors are eminent personalities with significant

expertise in the fields of finance, law, and strategy. None of the Directors are related

to any other Director or employee of the Company.

The Company has received declarations from all the Independent Directors of the

Company confirming that they meet the criteria of independence as prescribed under

the Act.

There were five Meeting of the Board held during FY2017 on April 25, 2016, July 19,

2016, August 24, 2016, October 24, 2016 and January 23, 2017. The maximum

interval between any two meetings did not exceed 120 days.

The names of the Directors and their attendance at Board Meetings during the year

are set out in the following table:

Name of the Director Number of meetings attended

Mr. Sandeep Bakhshi, Chairman 4/5

Mr. Puneet Nanda 4/5

Mr. Sandeep Batra 5/5

Mr. Vinod Kumar Dhall 3/5

Mr. M. N. Gopinath 4/5

Mr. Uday Chitale 5/5

As per provisions of the Companies Act, 2013 and the Articles of Association of the

Company, Mr. Sandeep Batra (DIN: 03620913) will retire by rotation at the ensuing

Annual General Meeting and is eligible for re-appointment. Mr. Sandeep Batra has

offered himself for re-appointment.

Board Committees

I. Board Risk Management & Audit Committee

Terms of reference:

Directing and overseeing the audit plans, audited and un-audited financial results,

findings of the internal and statutory auditors, risk management, disaster recovery

and business contingency plans, recommend appointment of auditors and such

other responsibilities as may be prescribed by the Companies Act, 2013 and PFRDA.

Composition

The Board Risk Management & Audit Committee comprises of two independent

Director and at March 31, 2017 was chaired by Mr. Vinod Kumar Dhall.

There were five Meeting of the Committee held during FY2017 on April 25, 2016, July

19, 2016, August 24, 2016, October 24, 2016 and January 23, 2017.

The details of the composition of the Committee and attendance at its Meetings are

set out in the following table:

Name of the member Number of meetings attended

Mr. Vinod Kumar Dhall, Chairman 3/5



Ms. Meghana Baji^ 5/5

Mr. Beram Gazdar^ 4/5

Ms. Geeta Makhijani^ 2/5

^ As per Investment Management Agreement signed with National Pension System Trust, Risk

Management Committee shall also have Chief Executive Officer, Chief Investment Officer or Fund

Manager and Compliance Officer.

II. Board Nomination and Remuneration Committee

The Board Nomination & Remuneration Committee was constituted as per the

requirements of Companies Act, 2013 and following are the terms of reference:

Terms of reference:

To identify persons who are qualified to become directors and who may be

appointed in senior management in accordance with the criteria laid down,

recommend to the Board their appointment and removal and shall carry out

evaluation of every director’s performance.

To formulate the criteria for determining qualifications, positive attributes and

independence of a director and recommend to the Board a policy, relating to the

remuneration for the directors, key managerial personnel and other employees.

To ensure that the level and composition of remuneration is reasonable and

sufficient to attract, retain and motivate directors of the quality required to run the

company successfully.

To ensure that relationship of remuneration to performance is clear and meets

appropriate performance benchmarks.

To ensure that remuneration to directors, key managerial personnel and senior

management involves a balance between fixed and incentive pay reflecting short

and long term performance objectives appropriate to the working of the company

and its goals.

Composition

The Board Nomination and Remuneration Committee comprises of two independent

Director. There was one Meeting of the Committee during the year.

One Meeting of the Committee was held during FY2017 on April 25, 2016.

The details of the composition of the Committee and attendance at its Meetings are

set out in the following table:

Name of the member Number of meetings attended

Mr. Vinod Kumar Dhall, Chairman 0/1



Meeting of Independent Directors

There was one Independent Directors Meeting held during FY2017 on April 25, 2016.

The names of the Independent Directors and their attendance at Independent

Directors Meeting during the year are set out in the following table:

Name of the member Number of meetings

attended/held

Mr. Vinod Kumar Dhall 0/1



Sitting fees paid to independent Directors during the financial year ended

March 31, 2017:

Name of the Director Amount

(in `)

Mr. Vinod Kumar Dhall 1,20,000

Mr. M. N. Gopinath 1,00,000

Mr. Uday Chitale 2,00,000

Evaluation of Board, Committees and Directors

The Company has devised a policy for performance evaluation of the individual

directors, Board and its Committees, which includes criteria for performance

evaluation.

Accordingly, the evaluation of the Directors and Board was undertaken through

circulation of questionnaires which assessed the performance of the Board on select

parameters related to roles, responsibilities and obligations of the Board and

functioning of the Committees including assessing the quality, quantity and

timeliness of flow of information between the company management and the Board

that is necessary for the Board to effectively and reasonably perform their duties. The

evaluation criteria for the Directors was based on their participation, contribution and

offering guidance to and understanding of the areas which were relevant to them in

their capacity as members of the Board. The evaluation of the Board, Committees

and Directors for FY2017 was completed through an online survey portal.

General Body Meetings

The details of the last three Annual General Meetings (AGM) are given below:

Financial

Year ended Day, Date Start time Venue

Fifth AGM Monday, June

23, 2014

10.00 a.m. 1089, Appasaheb Marathe

Marg, Prabhadevi, Mumbai

400025

Sixth AGM Thursday, June

25, 2015



400025

Seventh AGM Friday, June

24, 2016



400025

No special resolution was passed by the members during the last three Annual

General Meeting.

General Shareholder Information

General Body Meeting Day, Date & Time Venue

Eighth AGM July 25, 2017 9:30 a.m. Conference Room, 11th

Floor, ICICI Bank Towers,

Bandra Kurla Complex,

Mumbai – 400051

PARTICULARS OF EMPLOYEES

The provisions of Section 197 of the Companies Act, 2013, read with Rule 5 of the

Companies (Appointment & Remuneration) Rules, 2014, as amended, are not

applicable as the aggregate remuneration payable do not exceed the specified limits.

SHARE CAPITAL

During the year, the paid up share capital of the Company increased by ` 20 million

pursuant to the Rights issue of shares taking the paid-up capital to ` 290 million at

March 31, 2017.

PUBLIC DEPOSITS

During the year under review, the Company has not accepted any deposits under

Section 73 of the Companies Act, 2013.

AUDITORS

M/s Khandelwal Jain and Company, Chartered Accountants were appointed as the

statutory auditor of the Company for FY2017 at the Seventh Annual General Meeting

to hold office upto the conclusion of the ensuing Annual General Meeting.

Pursuant to para 3 of the Pension Fund Regulatory and Development Authority

(‘PFRDA’) (Appointment of Auditors) Guidance Note, 2012, M/s Khandelwal Jain and

Company, Chartered Accountants have completed their maximum permissible

tenure of three years. The Board proposes to appoint M/s Khimji, Kunverji & Co. as

the Statutory Auditors for FY2018 on recommendation of the Audit Committee of the

Company.

Auditor’s Report

There are no qualification, reservation or adverse remark or disclaimer made by the

auditor in his report.

Risk Management Policy

The Company has a Board approved policy on Risk Management. The Policy sets out

the risk strategy and appetite of the Company and its objectives in respect of risk

identification, measurement, monitoring and control with regards to the

Shareholder’s fund. The policy is reviewed periodically.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT 9 is

annexed herewith as Annexure B.

Particulars of contracts or arrangements with related parties

The Company has a Board approved policy on dealing with related party transactions

on an arm's length basis. The Company shares personnel and infrastructure with its

holding company i.e. ICICI Prudential Life Insurance Company Limited. The company

has a Board approved transfer pricing policy for pricing these transactions at arm's

length and all the transactions between the Company and ICICI Prudential Life

Insurance Company Limited have been done in conformity with the same.

The particulars of material contract or arrangements entered into by the Company

with related parties referred to in sub-section (1) of section 188 of the Companies

Act, 2013 including certain arm’s length transactions under third proviso thereto is

disclosed in Form No. AOC -2 is appended as Annexure C.

Conservation of Energy and Technology absorption

In view of the nature of business activity of the Company, the information relating to

the conservation of energy and technology absorption, as required under Section

134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts)

Rules, 2014 is not required to be given.

Foreign exchange earnings and outgo

Details of foreign exchange earnings and outgo required under above Rules are as

under:

(` ‘000)


Foreign exchange earnings and outgo

- Earnings - -

- Outgo - -

Events after Balance Sheet date

There have been no material changes and commitments, affecting the financial

position of the Company, which have occurred between the end of the financial year

of the Company to which the Balance Sheet relates and the date of this report.

DIRECTORS’ RESPONSIBILITY STATEMENT

In accordance with the requirements of Section 134(3)(c) of the Companies Act,

2013, the Board of Directors confirm:

(a) in the preparation of the annual accounts, the applicable accounting standards

had been followed along with proper explanation relating to material departures;

(b) 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 at the end of the

financial year and of the profit and loss of the Company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of

adequate accounting records in accordance with the provisions of this Act for

safeguarding the assets of the Company and for preventing and detecting fraud

and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis; and

(e) the directors had devised proper systems to ensure compliance with the

provisions of all applicable laws and that such systems were adequate and

operating effectively.

ACKNOWLEDGEMENTS

The Directors are grateful to the PFRDA, National Pension System Trust (NPS Trust)

and Government of India for their continued co-operation, support and advice.

The Directors would also like to take this opportunity to express sincere thanks to its

valued customers for their continued patronage.

The Directors express their gratitude for the valuable advice and guidance received

from time to time, from the auditors and the statutory authorities. The Directors

express their appreciation to all employees. The Directors also wish to express their

gratitude to ICICI Bank Limited, Prudential Corporation Holdings Limited and ICICI

Prudential Life Insurance Company Limited for their continued trust and support.

For and on behalf of the Board

Sandeep Bakhshi

Chairman

DIN: 00109206

Date: April 25, 2017

Place: Mumbai

Criteria for appointment of a Director and officials who may be appointed in senior

management

The applicable regulatory framework governing the criteria for appointment of a Director and

officials who may be appointed in senior management comprises the Companies Act, 2013

(CA2013) and related rules prescribed by PFRDA. The Company makes appointments to the

Board keeping in view the requirements of these statutes/regulations. This policy integrates the

requirements of the relevant statutes/regulations and the Company’s internal frameworks.

1.1 Formulation of the criteria for determining qualifications, positive attributes and

independence of a Director

The criteria for determining qualifications, positive attributes and independence of a Director

shall encompass the following:

1.1.1 Qualification and definition of Independent Director as defined under CA2013

Rule 5 of the Companies (Appointment and qualification of directors) Rules, 2014 provides that

an independent director shall possess appropriate skills, experience and knowledge in one or

more fields of finance, law, management, sales, marketing, administration, research, corporate

governance, technical operations or other disciplines related to the company’s business.

Section 149 of CA2013 defines and independent director to mean a director other than a

managing director or a whole-time director or a nominee director,—

(a) who, in the opinion of the Board, is a person of integrity and possesses relevant expertise

and experience;

(b) (i) who is or was not a promoter of the company or its holding, subsidiary or associate

company;

(ii) who is not related to promoters or directors in the company, its holding, subsidiary or

associate company;

(c) who has or had no pecuniary relationship with the company, its holding, subsidiary or

associate company, or their promoters, or directors, during the two immediately

preceding financial years or during the current financial year;

(d) none of whose relatives has or had pecuniary relationship or transaction with the

company, its holding, subsidiary or associate company, or their promoters, or directors,

amounting to two per cent or more of its gross turnover or total income or fifty lakh

rupees or such higher amount as may be prescribed, whichever is lower, during the two

immediately preceding financial years or during the current financial year;

(e) who, neither himself nor any of his relatives—

(i) holds or has held the position of a key managerial personnel or is or has been

employee of the company or its holding, subsidiary or associate company in any of the

three financial years immediately preceding the financial year in which he is proposed to

be appointed;

(ii) is or has been an employee or proprietor or a partner, in any of the three financial

years immediately preceding the financial year in which he is proposed to be appointed,

of—

(A) a firm of auditors or company secretaries in practice or cost auditors of the company

or its holding, subsidiary or associate company; or

(B) any legal or a consulting firm that has or had any transaction with the company, its

holding, subsidiary or associate company amounting to ten per cent. or more of the

gross turnover of such firm;

(iii) holds together with his relatives two per cent or more of the total voting power of the

company; or

(iv) is a Chief Executive or director, by whatever name called, of any nonprofit

organisation that receives twenty-five per cent. or more of its receipts from the company,

any of its promoters, directors or its holding, subsidiary or associate company or that

holds two per cent or more of the total voting power of the company; or

(f) who possesses such other qualifications as may be prescribed.

1.1.2 Specific criteria for members of Audit Committee

Majority of the members of the Audit Committee including its Chairperson shall be persons with

ability to read and understand, the financial statement.

1.1.3. Disqualification of Directors under Companies Act, 2013

Section 164 of Companies Act, 2013 lays down certain disqualifications for appointment of

director as given below:

(1) A person shall not be eligible for appointment as a director of a company, if —

(a) he is of unsound mind and stands so declared by a competent court;

(b) he is an undischarged insolvent;

(c) he has applied to be adjudicated as an insolvent and his application is pending;

(d) he has been convicted by a court of any offence, whether involving moral turpitude

or otherwise, and sentenced in respect thereof to imprisonment for not less than six

months and a period of five years has not elapsed from the date of expiry of the

sentence:

Provided that if a person has been convicted of any offence and sentenced in

respect thereof to imprisonment for a period of seven years or more, he shall not

be eligible to be appointed as a director in any company;

(e) an order disqualifying him for appointment as a director has been passed by a court

or Tribunal and the order is in force;

(f) he has not paid any calls in respect of any shares of the company held by him,

whether alone or jointly with others, and six months have elapsed from the last day

fixed for the payment of the call;

(g) he has been convicted of the offence dealing with related party transactions under

section 188 at any time during the last preceding five years; or

(h) he has not complied with sub-section (3) of section 152.

http://www.taxmann.com/fileopen.aspx?id=102120000000029733&source=link

http://www.taxmann.com/fileopen.aspx?id=102120000000029697&source=link

(2) No person who is or has been a director of a company which -

(a) has not filed financial statements or annual returns for any continuous period of three

financial years; or

(b) has failed to repay the deposits accepted by it or pay interest thereon or to redeem any

debentures on the due date or pay interest due thereon or pay any dividend declared

and such failure to pay or redeem continues for one year or more,

shall be eligible to be re-appointed as a director of that company or appointed in other company

for a period of five years from the date on which the said company fails to do so.

(3) A private company may by its articles provide for any disqualifications for appointment as a

director in addition to those specified in sub-sections (1) and (2):

Provided that the disqualifications referred to in clauses (d), (e) and (g) of sub-section (1) shall

not take effect—

(i) for thirty days from the date of conviction or order of disqualification;

(ii) where an appeal or petition is preferred within thirty days as aforesaid against the

conviction resulting in sentence or order, until expiry of seven days from the date on

which such appeal or petition is disposed of; or

(iii) where any further appeal or petition is preferred against order or sentence within seven

days, until such further appeal or petition is disposed of.

2.1 Board Composition as per Corporate Governance guidelines prescribed by

Pension Fund Regulatory and Development Authority (PFRDA)

As per PFRDA, draft Pension Fund Regulations dated July 19, 2014, the Pension Fund company

shall complied themselves with Corporate Governance structures and requirements as per

Pension Fund Regulations

2.1.1 Board Composition

The size of the Board in addition to being compliant with legal requirements (where

applicable), should be consistent with scale, nature and complexity of business. The size

and composition should ensure that at least fifty per cent are independent directors

Pension Fund should ensure that the Board comprises of at least fifty percent of the

Directors shall have adequate professional experience in finance and financial services

related field.

Pension Fund shall ensure that the key personnel viz. Chief Executive Officer, Chief

Investment Officer, Fund Manager, Operations Manager, Compliance Officer and / or

other positions, as may be notified by Authority from time to time have the adequate

professional experience in the requisite field.

2.1.2 Fit & Proper criteria

In line with the international and domestic norms, the Directors of companies have to

meet the “fit and proper” criteria. The criteria to be satisfied, at a minimum, would relate

to integrity demonstrated in personal behaviour and business conduct, soundness of

judgment and financial soundness. Currently, the fit and proper requirements seek to

ensure that the Director should not have been convicted or come under adverse notice

of the laws and regulations involving moral turpitude or of any professional body. With a

view to ensuring that the Directors comply with the above requirement, a due diligence

enquiry should be undertaken on the person to be appointed as Director or for the

continuance of the existing Directors only after obtaining a declaration from the

proposed/existing Directors in the format for Fit & Proper declaration at the time of their

appointment/re-appointment.

The Directors are also required to enter into a Deed of Covenant as per the format

prescribed, with the insurance company, duly approved by the Board, pursuant to their

terms of appointment to ensure that there is a clear understanding of the mutual role of

the company, the Directors and the Board in Corporate Governance.

3. Conflict of Interest Framework

The Board Nomination & Remuneration Committee (Committee) would evaluate the composition

of the Board and vacancies arising in the Board from time to time. The Committee while

recommending candidature of a Director would consider the special knowledge or expertise

possessed by the candidate. The Committee would assess the fit and proper credentials of the

candidate and the companies/entities with which the candidate is associated either as a director

or otherwise as to whether such association is permissible under PFRDA guidelines/Pension

Fund regulations, the internal conflict of interest policy of the Company. If associations with

particular companies/entities are permissible subject to certain conditions, the Committee will

review the fulfilment of such conditions. For the above assessment, the Committee would be

guided by the guidelines issued by PFRDA/Pension Fund regulations from time to time in this

regard.

The principal officer(s) of the Company/ ICICI Prudential Life Insurance Company Limited have

not been found guilty of moral turpitude or convicted of economic offence or violation of

securities laws or any adverse order has been passed by any of the other financial sector

regulators or court of law or tribunal.

The Committee will also evaluate the director from the perspective of the criteria for

independence prescribed under CA2013 as well as the listing agreement. For a non-executive

director to be classified as independent he/she must satisfy the criteria of independence as

prescribed and sign a declaration of independence. The Committee will review the same and

determine the independence of a director.

4. Senior Management

The Companies Act, 2013 defines ‘‘senior management’’ under the explanation to Section 178

of the Act as personnel of the company who are members of its core management team

excluding Board of Directors comprising all members of management one level below the

executive directors, including the functional heads. In line with the same, the Board at its Meeting

held on July 23, 2014 has classified that employees of the Company in the grades of Executive

Vice President & above level official of the Company would bear the designation as “Senior

Managerial Personnel” (SMPs)

A candidate in order to fulfill the criteria of being appointed in senior management should have

proven skills, performance track record, relevant competencies, maturity and experience in

handling core functions relevant to an organisation.

Annexure B

Form No. MGT-9

EXTRACT OF ANNUAL RETURN

as on the financial year ended on March 31, 2017

[Pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies

(Management and Administration) Rules, 2014]

I. REGISTRATION AND OTHER DETAILS:

CIN U66000MH2009PLC191935

Registration Date 22/04/2009

Name of the Company ICICI Prudential Pension Funds Management Company Limited

Category / Sub-Category of the Company Company Limited by Shares

Address of the Registered office and contact details 1089, Appasaheb Marathe Marg, Prabhadevi,

Mumbai - 400025.

Tel No.:4039 1600

Website: www.iciciprupensionfund.com

Whether listed company No

Name, Address and Contact details of Registrar and Transfer

Agent, if any

3i Infotech Limited

International Infotech Park

Tower 5, 3rd Floor

Vashi Railway Station Complex

Vashi, Navi Mumbai 400 703

Maharashtra, India

Tel No. : +91-22-6792 8000

II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY

All the business activities contributing 10 % or more of the total turnover of the company shall be stated:-

Sl. No. Name and Description of main products /

services

NIC Code of the Product/

service

% to total turnover of the

company

1. Pension Funds Management

6530 100

III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES –

Sl. No. NAME AND ADDRESS OF THE COMPANY CIN/GLN HOLDING/

SUBSIDIA

RY/

ASSOCIA

TE

% of

shares

held

Applicable

Section

1. ICICI Prudential Life Insurance Company Limited

1089, Appasaheb Marathe Marg, Prabhadevi,

Mumbai - 400025.

L66010MH2000PLC127837 Holding 100% 2 (46)

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

i) Category-wise Share Holding

Category of Shareholders No. of Shares held at the beginning of the year-

April 1, 2016

No. of Shares held at the end of the year-

March 31, 2017

% Change

during the

year

Demat Physical Total % of

Total

Shares

Demat Physical Total % of

Total

Shares

A. Promoters

(1) Indian - - - - - - - - - (a) Individual - 6* 6 0.00 - 6* 6* 0.00 Nil (b) Central Govt - - - - - - - - - (c) State Govt - - - - - - - - - (d) Bodies Corporate - - - - - - - - - (e) Banks/FIs 26999994 - 26999994 100 28999994 - 28999994 100 6.89

(f) Any other - - - - - - -

Sub-total (A) (1) 26999994 6* 27000000 100 28999994 6* 29000000 100 6.89

(2) Foreign - - - - - - - - - (a) NRIs- Individuals - - - - - - - - - (b) Other- Individuals - - - - - - - - - (g) Bodies Corporate - - - - - - - - - (h) Banks/FIs - - -

(i) Any other - - - - - - - - - Sub-total (A) (2) - - - - - - - - - Total Shareholding of

Promoter (A) = (A) (1) +

(A) (2)

26999994 6* 27000000 100

28999994 6* 29000000 100

6.89

A. Public Shareholding

(1) Institutions

(a) Mutual Funds - - - - - - - - - (b) Banks/FIs - - - - - - - - - (c)Central Govt - - - - - - - - -

(d)State Govt - - - - - - - - - (e)Venture Capital Funds - - - - - - - - - (f) Insurance Companies - - - - - - - - - (g) FIIs - - - - - - - - - (h) Foreign Venture Capital

Funds

- - - - - - - - -

Sub-total (B) (1) NIL NIL

2.Non-Institutional

(a)Bodies Corp.

(i) Indian - - - - - - - - - (j) Overseas - - - - - - - - -

(b) Individuals

(i) Individual shareholders

holding nominal share

capital upto Rs. 1 lakh

- - - - - - - - -

(ii) Individual shareholders

holding nominal share

capital in excess of Rs.

1 lakh

- - - - - - - - -

(c) Others - - - - - - - - - Sub-total (B) (2) - - - - - - - - - Total Public Shareholding

(B) = (B) (1) + (B) (2)

- - - - - - - - -

B. Shares held by

Custodian for GDRs &

ADRs

- - - - - - - - -

Grand Total

(A+B+C)

26999994 6* 27000000 100

28999994 6* 29000000 100

6.89

*Shares held as nominee shareholders on behalf of ICICI Prudential Life Insurance Company Limited

(ii) Shareholding of Promoters

Sl.

No

Shareholder’s Name Shareholding at the beginning of the year-

April 1, 2016

Shareholding at the end of the year-

March 31, 2017

No. of

Shares

% of

total

Shar

es of

the

Com

pany

% of Shares Pledged/

encumbered to total

shares

No. of

Shares

% of

total

Shares

of the

Compa

ny

% of Shares

Pledged/

encumbered to

total shares

% change in

shareholding

during the year

1. ICICI Prudential Life

Insurance Company

Limited

27,000,000 100 Nil 29,000,000 100 Nil 6.89

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

No Change

(iv) Shareholding Pattern of top ten Shareholders (other than Directors, Promoters and Holders of GDRs and ADRs)

Sl.

No

Shareholding at the beginning of

the year

Date wise Increase / Decrease in

Shareholding during the year specifying

the reasons for increase / decrease (e.g.

allotment/Transfer/bonus/sweat equity

etc)

Cumulative Shareholding during the year

(at the end of the year)

No. of shares % of total shares

of the company

No. of

shares

% of total shares of the company

NIL

(v) Shareholding of Directors and Key Managerial Personnel

Sl.

No

Shareholding at the beginning of

the year

Date wise Increase / Decrease in

Shareholding during the year specifying the

reasons for increase / decrease (e.g.

allotment/Transfer/bonus/sweat equity etc)

Cumulative Shareholding during the year

(at the end of the year)

No. of shares % of total shares

of the company

No. of

shares

% of total shares of the

company

1. 2* 0.00 NIL 2* 0.00

*Shares held as nominee shareholder on behalf of ICICI Prudential Life Insurance Company Limited

V. INDEBTEDNESS

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

Secured Loans

excluding deposits

Unsecured

Loans

Deposits Total

Indebtedness

Indebtedness at the beginning of the

financial year

NIL

NIL

NIL

NIL i) Principal Amount

ii) Interest due but not paid

iii) Interest accrued but not

Total (i+ii+iii)

Change in Indebtedness during the

financial year

Addition

Reduction

NIL NIL NIL NIL

Net Change

Indebtedness at the

end of the financial year

NIL

NIL

NIL

NIL i) Principal Amount

ii) Interest due but not paid

iii) Interest accrued but not

Total (i+ii+iii) NIL NIL NIL NIL

VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

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

(`’000)

Sr.

No.

Particulars of Remuneration Name of MD/WTD/Manager

Ms. Meghana Baji , Manager

1

Gross salary

a) Salary as per provisions contained in

section 17(1) of the Income-tax Act,

1961

b) Value of perquisites u/s 17(2) Income-

tax Act, 1961

c) Profits in lieu of salary under section

17(3) Income-tax Act, 1961

5,351

0

0

2.

Stock Options 0

3.

Sweat Equity -

4. Commission

- as % of profit

- others, specify. -

5.

Others, please specify* 494

Total (A) 5,845

* Include – Tax-free Medical, Tax-free LTA, Provident Fund, Superannuation and National Pension Scheme

(Amounts rounded off to nearest decimal)

B. Remuneration to other Directors: (In `)

Sr.

No.

Particulars of Remuneration Name of Directors Total Amount

Mr. Vinod

Kumar Dhall

Mr. M. N.

Gopinath

Mr. Uday

Chitale

1. Independent Directors

Fee for attending board &

committee meetings

Commission

Others, please specify

120,000

-

100,000

-

200,000

-

420,000

-

Total (1) 120,000 100,000 200,000 420,000

2. Others Non-Executive Directors

Fee for attending board

committee meetings

Commission

Others, please specify

-

-

-

-

Total (2) - - - -

Total (B) = (1+2) 120,000 100,000 200,000 420,000

C. Remuneration to Key Managerial Personnel Other Than MD/Manager/WTD

(`’000)

Sr.

No.

Particulars of Remuneration

Key Managerial Personnel Total Amount

Mr. Harvinder Jaspal, Chief

Financial Officer^

Ms. Shweta Nayak,

Company Secretary

(August 29, 2016 to

March 31, 2017)

1 Gross salary

a) Salary as per provisions

contained in section 17(1) of

the Income-tax Act, 1961

b) Value of perquisites u/s 17(2)

Income-tax Act, 1961

c) Profits in lieu of salary under

section 17(3) Income-tax Act,

1961

480

0

328

0

808

0

2. Stock Option* -

- -

3. Sweat Equity - - -

4. Commission

- as % of profit

- Others, specify…

- - -

5.

Others, please specify**

30

22

52

Total

515

350

860

* Perquisite value of stock options exercised of the holding Company.

** Include – Tax-free Medical, Tax-free LTA, Provident Fund, Superannuation and National Pension Scheme ^ 5% of total remuneration borne by the Company.

(Amounts rounded off to nearest decimal)

VII. PENALITIES / PUNISHMENT / COMPOUNDING OF OFFFENCES

Type Sections of the

Companies Act

Brief

Description

Details of

Penalty/Punishment/

Compounding fees imposed

Authority

[RD/NCLT/COURT]

Appeal

made, if

any

A. COMPANY

Penalty

NIL Punishment

Compounding

B. DIRECTORS

Penalty

NIL

Punishment

Compounding

C. OTHER OFFICERS IN DEFAULT

Penalty

NIL Punishment

Compounding

Annexure C

Form No. AOC-2

(Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014)

The Company has a framework on mechanism of taking approvals for all transactions with related parties which was placed in

Board Risk Management & Audit Committee Meeting on January 15, 2015. The transactions between the Company and its

related parties, during the year ended March 31, 2017, were based on the principles of arm’s length.

1. Details of contracts or arrangements or transactions not at arm’s length basis:

There are no such transactions

2. Details of material contracts or arrangement or transactions at arm’s length basis

The details of material related party transactions at arm’s length principles for the year ended March 31, 2017 on an

aggregate basis is given below:

(` in million)

Sr.

no.

Name of the

related party

Nature of

relationship

Nature of contracts/

transactions

Duration

of

contracts

Salient term of

contracts/transactions FY2017

1. ICICI Prudential Life

Insurance Company

Limited

Holding

Company

Compensation/

reimbursement of

expenses towards

infrastructure sharing,

deputation of employees

and other expenses

1.Deputed personnel cost

and reimbursement of

expenses – at actuals

2. Use of office space – at

market rates

3. Use of infrastructure

and utilities – at actuals

19.9

INDEPENDENT AUDITORS’ REPORT

To the members of ICICI Prudential Pension Funds Management Company Limited

Report on the Financial Statements

We have audited the accompanying financial statements of ICICI Prudential Pension Funds

Management Company Limited (“the Company”), which comprise the Balance Sheet as at

March 31, 2017, the Statement of Profit and Loss, Cash Flow Statement for the year then ended,

and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management 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 Company in

accordance with the Accounting Standards notified under Section 133 of the Companies Act,

2013 read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility includes

design, implementation and maintenance of adequate internal controls 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, on a test basis, about the

amounts and the 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 Company’s preparation and fair presentation of the

financial statements in order to design audit procedures that are appropriate in the circumstances.

An audit also includes evaluating the appropriateness of the 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 aforesaid standalone financial statements give the information required by the Act in the

manner so required and give a true and fair view in conformity with the accounting principles

generally accepted in India:

a) in the case of Balance Sheet, of the state of affairs of the Company as at March 31, 2017;

b) in the case of the Statement of Profit and Loss, of the loss for the year ended on that date; and

c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order, 2016 (“the Order”) issued by the

Central Government of India in terms of sub-section (11) of the section 143 of the Act, we

give in the Annexure-A a statement on the matters specified in paragraphs 3 and 4 of the

Order.

2. We have inquired into the matters specified under section 143(1) and based on the

information and explanations given to us, there is no matter to be reported under this section.

3. As required by Section 143(3) of the Act, 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 purpose of our audit.

b) In our opinion, proper books of account as required by law have been kept by the

Company so far as it appears from our examination of those books.

c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with

by this Report are in agreement with the books of account.

d) In our opinion, the aforesaid financial statements comply with the Accounting Standards

specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules,

2014.

e) In our opinion and based on the information and explanations given to us, there are no

financial transactions or matters which have any adverse effect on the functioning of the

company.

f) On the basis of the written representations received from the directors as on 31st March, 2017

taken on record by the Board of Directors, none of the directors is disqualified as on 31st

March, 2017 from being appointed as a director in terms of Section 164 (2) of the Act.

g) There is no qualification, reservation or adverse remark relating to the maintenance of

accounts and other matters connected therewith.

h) The company has adequate internal financial controls system in place and there is an

operating effectiveness of such controls. A report giving our responsibilities and opinion has

been annexed as Annexure-B herewith.

i) Such other matters as are prescribed by Companies (Audit and Auditors) Rules, 2014 namely:

i. the Company does not have any pending litigations which would impact its financial

position.

ii. the Company did not have any long-term contracts including derivative contracts for which

there were any material foreseeable losses.

iii. there are no amounts which are required to be transferred to the Investor Education and

Protection Fund by the Company.

iv. The Company did not have any holdings or dealings in Specified Bank Notes during the

period from 8th November 2016 to 30th December 2016. Refer note 3.22 of notes to accounts.

For KHANDELWAL JAIN & CO.

Chartered Accountants

Firm Registration No. 105049W

(CHIRAG DOSHI)

PARTNER

Membership No.119079

Place: Mumbai


Annexure-A to the Auditors’ Report

(Referred to in Paragraph 1 of our report of other Legal and Regulatory requirement of even

date)

1. (a) The Company has maintained proper records showing full particulars, including

quantitative details and situation of fixed assets.

(b) The fixed assets have been physically verified by the management during the year and no

material discrepancies were noticed on such verification. In our opinion, the frequency of

verification of the fixed assets is reasonable having regard to the size of the Company and the

nature of its assets.

2. The activities of the Company and the nature of its business do not involve the use of

inventory. Accordingly, paragraph 3 (ii) of the Order is not applicable.

3. The Company has neither granted nor taken any loans, secured or unsecured to/ from

companies, firms, limited liability partnerships or other parties covered in the register

maintained under section 189 of the Companies Act, 2013. Accordingly, paragraph 3 (iii) of

the Order is not applicable.

4. In our opinion and according to the information and explanations given to us, the Company

has, in respect of loans, investments, guarantees, and security provisions, complied with

section 185 and 186 of the Companies Act, 2013.

5. The Company has not accepted any deposits from the public and hence paragraph 3 (v) of the

Order is not applicable.

6. According to the information and explanations given to us, the Central Government has not

prescribed the maintenance of cost records under sub-section (1) of section 148 of the Act.

7. In respect of statutory dues:

(a) According to the information and explanations given to us, the Company has been generally

regular in depositing undisputed statutory dues including Provident Fund, Employees’ State

Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty,

Value Added Tax, Cess and other material statutory dues wherever applicable, with the

appropriate authorities.

(b) According to the information and explanation given to us, there are no cases of non-deposit

of disputed Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty,

Value Added Tax and Cess with the appropriate authority.

8. The Company has not borrowed any amounts from banks, financial institutions or by issue

of debentures. Accordingly paragraph 3 (viii) of the Order is not applicable.

9. As per information given to us, no money was raised by way of initial public offer or further

public offer (including debt instruments) nor have any fresh term loans been taken by the

company during the year. Hence the provisions of clause (ix) are not applicable to the

company.

10. According to the information and explanations given to us, no fraud on or by the Company

was noticed or reported during the year.

11. According to the information and explanation given to us and the books of accounts verified

by us, the Managerial remuneration has been paid or provided in accordance with the

requisite approvals mandated by the provisions of section 197 read with schedule V to the

Companies Act.

12. The Company is not a Nidhi Company, hence the provision of clause (xii) are not applicable

to the company.

13. All transactions with related parties are in compliance with section 177 and 188 of

Companies Act, 2013 and the details have been disclosed in the Financial Statements as

required by the applicable accounting standards.

14. According to the information and explanation given to us, the Company during the year has

not made any preferential allotment or private placement of shares or fully or partly

convertible debentures, hence the provision of clause (xiv) are not applicable to the

company.

15. According to the information and explanation given to us and the books of accounts verified

by us, the Company has not entered into any non-cash transactions with directors or persons

connected with him.

16. The company is not required to be registered under section 45-IA of the Reserve Bank of

India Act, 1934.




(CHIRAG DOSHI)

PARTNER

Membership No: 119079

Place: Mumbai


Annexure -B to the Independent Auditor’s Report of even date on the financial statements

of ICICI Prudential Pension Funds Management Company Limited as on 31st March, 2017

Report on the Internal Financial Controls under clause (i) of sub-section 3 of section 143 of the

Companies Act, 2013 (“The Act”)

To the members of ICICI Prudential Pension Funds Management Company Limited

We have audited the internal financial controls over financial reporting of ICICI Prudential

Pension Funds Management Company Limited (“the Company”), as of March 31, 2017, in

conjunction with our audit of the standalone financial statements of the Company for the year

ended on that date.

Management’s Responsibility for Internal Financial Controls

The company’s Management is responsible for establishing and maintaining internal financial

controls based on the internal control over financial reporting criteria established by the

Company considering the essential components of internal control stated in the Guidance Note

on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of

Chartered Accountants of India. These responsibilities include the design, implementation, and

maintenance of adequate internal financial controls that were operating effectively for ensuring

the orderly and efficient conduct of its business, including adherence to the Company’s policies,

the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and

completeness of the accounting records, and the timely preparation of reliable financial

information, as required under the Companies Act, 2013.

Auditor’s responsibility

Our responsibility is to express an opinion on the Company’s internal financial controls over

financial reporting based on our audit. We conducted our audit in accordance with the Guidance

Note on Audit of Internal Financial Controls over Financial Reporting (the “Guidance Note”)

and the Standards on auditing as specified under section 143 (10) of the Companies Act, 2013, to

the extent applicable to an audit of internal financial controls both applicable to an audit of

Internal Financial Controls and both issued by the Institute of Chartered Accountants of India.

Those Standards and the Guidance Note require that we comply with ethical requirements and

plan and perform the audit to obtain reasonable assurance about whether adequate internal

financial controls over financial reporting was established and maintained and if such controls

operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the

internal financial control system over financial reporting and their operating effectiveness. Our

audit of internal financial reporting included obtaining an understanding of internal financial

controls over financial reporting, assessing the risk that material weakness exists, and testing and

evaluating the design and operating effectiveness of internal control based on the assessed risk.

The procedures selected depend on the auditor’s judgment, including the assessment of the risks

of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a

basis for our audit opinion on the internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company’s internal financial control over financial reporting is a process designed to provide

reasonable assurance regarding reliability of financial reporting and the preparation of financial

statements for external purposes in accordance with generally accepted accounting principles. A

company’s internal financial control over financial reporting includes those policies and

procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and

fairly reflect the transactions and dispositions of the assets of the company; (2) provide

reasonable assurance that transactions are recorded as necessary to permit preparation of

financial statements in accordance with generally accepted accounting principles, and that

receipts and expenditures of the company are being made only in accordance with authorizations

of management and directors of company; and (3) provide reasonable assurance regarding

prevention or timely detection of unauthorized acquisition, use or disposition of the company’s

assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting,

including the possibility of collusion or improper management override of controls, material

misstatements due to error or fraud may occur and not be detected. Also projections of any

evaluation of the internal financial controls over financial reporting may become inadequate

because of changes in conditions, or that the degree of compliance with the policies or

procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls

system over financial reporting and such internal financial controls over financial reporting were

operating effectively as at March 31, 2017, based on the internal control over financial reporting

criteria established by the Company considering the essential components of internal control

stated in Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued

by the Institute of Chartered Accountants of India.




(CHIRAG DOSHI)

PARTNER

Membership No.119079

Place: Mumbai


(In `)

Particulars Note No. March 31, 2017 March 31, 2016

EQUITY AND LIABILITIES

Shareholders’ funds

Share capital 3.1 290,000,000 270,000,000

Reserves and surplus 3.2 (20,125,287) (14,433,736)

269,874,713 255,566,264

Non-current liabilities

Deferred tax liabilities (net) 3.3 49,456 146,751

Current liabilities

Other current liabilities 3.4 9,116,404 7,469,335

Total 279,040,573 263,182,350

ASSETS

Non-current assets

Fixed assets 3.5

Tangible assets 48,812 113,131

Intangible assets 167,584 502,649

216,396 615,780

Non-current investments 3.6 50,000,000 50,000,000

Other non-current assets 3.7 19,753,568 206,221,620

Current assets

Current investments 3.8 9,737,267 465,334

Trade receivables 3.9 327,232 149,362

Cash and bank balances 3.10 161,223,878 2,725,897

Short-term loans and advances 3.11 78,720 76,439

Other current assets 3.12 37,703,512 2,927,918

209,070,609 6,344,950

Total 279,040,573 263,182,350

Refer accompanying significant accounting policies and other explanatory

information

The notes referred to above form an integral part of the financial statements.

As per our report of even date attached

For Khandelwal Jain & Co. For and on behalf of the Board of Directors



Chirag Doshi Sandeep Bakhshi Sandeep Batra

Partner Chairman Director

Membership No. 119079

Place: Mumbai Meghana Baji Harvinder Jaspal Shweta Nayak

Date: April 25, 2017 Chief Executive Officer Chief Financial Officer Company Secretary

ICICI PRUDENTIAL PENSION FUNDS MANAGEMENT COMPANY LIMITED

BALANCE SHEET AT MARCH 31, 2017

(In `)

Particulars Note No. March 31, 2017 March 31, 2016

Revenue from operations

Investment management fees 3.13 997,437 469,738

Other income

Interest on fixed deposits 17,774,098 17,846,823

Interest on non-convertible debentures 4,689,869 4,700,131

Interest on income tax refund 6,526 20,383

Gain on sale of investments 376,193 663,659

Total revenue (A) 23,844,123 23,700,734

Expenses

Employee benefits expense 3.14 17,446,952 16,285,892

Other expenses & provisions 3.15 11,870,696 9,158,515

Depreciation and amortisation expense 3.5 399,385 399,385

Total expenses (B) 29,717,033 25,843,792

Profit/(Loss) before tax (A-B) (5,872,910) (2,143,058)

Tax expense

Current tax 3.20 - 1,066,692

Deferred tax charge/(credit) 3.3 (97,295) (58,121)

Excess tax provision of earlier years (84,064) -

Profit/(Loss) for the period (5,691,551) (3,151,629)

Earnings/(losses) per equity share:

Basic and diluted earnings/(losses) per equity share (`) 3.16 (0.21) (0.12)

Refer accompanying significant accounting policies and other explanatory

information












STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED MARCH 31, 2017

(In `)

Particulars March 31, 2017 March 31, 2016

CASH FLOWS FROM OPERATING ACTIVITIES

Management fees received 840,763 425,166

Expenses paid (27,793,837) (24,069,012)

(Payment)/Refund of income tax - net 97,624 370,537

Interest on income tax refund 6,526 20,383

Net cash used in operating activities ( A ) (26,848,924) (23,252,927)

CASH FLOWS FROM INVESTING ACTIVITIES

Sale of investments 29,080,000 19,135,000

Purchase of investments (40,475,740) (10,900,000)

Maturity proceeds of fixed deposit 13,445,542 12,533,498

Placement of fixed deposit - (2,500,000)

Interest on fixed deposit 202,103 509,567

Interest on NCD 4,695,000 4,695,000

Net cash from investing activities ( B ) 6,946,905 23,473,065

CASH FLOWS FROM FINANCING ACTIVITIES

Issuance of share capital 20,000,000 -

Net cash used in financing activities ( C ) 20,000,000 -

Net increase in cash and cash equivalents (A+B+C) 97,981 220,138

Cash and cash equivalents at the beginning of the year 225,897 5,759

Cash and cash equivalents at the end of the period 323,878 225,897

Notes to the cash flow statement:

Cash and cash equivalents at the end of the period 323,878 225,897

Other bank balances 160,900,000 2,500,000

Cash and bank balances at the end of the period 161,223,878 2,725,897

Components of cash and cash equivalents:

Balance in current account 323,878 225,897












CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2017


Significant accounting policies and other explanatory information

1 Corporate information

ICICI Prudential Pension Funds Management Company Limited (`the Company‟) is a

wholly owned subsidiary of ICICI Prudential Life Insurance Company Limited (`the

Sponsor‟), incorporated on April 22, 2009 as a company under the Companies Act,

1956 (`the Act‟). The Company is licensed by the Pension Funds Regulatory and

Development Authority (`PFRDA‟) for acting as a Pension Fund Manager for the

management of the pension funds under the National Pension System. The license

is in force at March 31, 2017.

2 Statement of accounting policies

2.1 Basis of preparation

The accompanying financial statements are prepared and presented under the

historical cost convention, unless otherwise stated, and on accrual basis of

accounting, in accordance with accounting principles generally accepted in India, in

compliance with the Accounting Standards (`AS‟) notified under section 133 of the

Companies Act, 2013, read together with paragraph 7 of the Companies

(Accounts) Rules 2014. Accounting policies applied have been consistent with

previous year except where different treatment is required as per new

pronouncements made by the regulatory authorities.

The management evaluates all recently issued or revised accounting

pronouncements on an ongoing basis.

2.2 Use of estimates

The preparation of financial statements in conformity with generally accepted

accounting principles requires that the Company‟s management makes estimates

and assumptions that affect the reported amount of assets, liabilities, revenues and

expenses and disclosure relating to contingent liabilities as on the date of the

financial statements. The estimates and assumptions used in the accompanying

financial statements are based upon management‟s evaluation of the relevant facts

and circumstances as on the date of the financial statements. Actual results could

differ from those estimates. Any revision to accounting estimates is recognised

prospectively.

2.3 Revenue recognition

2.3.1 Investment management fees

Investment management fee is recognised on an accrual basis in accordance with

the terms of contract between the Company and the National Pension System

Trust, established by the PFRDA.

2.3.2 Income earned on investments

Interest income on investments is recognised on accrual basis. Premium or

discount on debt securities is amortised or accreted respectively over the


holding/maturity period on a straight-line basis. Dividend income is recognised

when the right to receive dividend is established.

Profit or loss on sale/redemption of debt securities is the difference between the

sale consideration net of expenses and the weighted average amortised cost as on

the date of sale.

Profit or loss on sale of equity shares/mutual fund units is the difference between

the sale consideration net of expenses and the book cost computed on weighted

average basis as on the date of sale.

2.4 Investments

Investments that are readily realisable and intended to be held for not more than a

year from the Balance Sheet date are classified as current investments. All other

investments are classified as non-current investments. Current investments are

carried at lower of cost or fair value determined on an individual security basis.

Non-current investments are carried at cost. Provision for diminution in value is

made to recognise other than temporary decline in the value of investments.

2.5 Fixed assets and Depreciation/Amortisation

Tangible assets

Fixed assets are stated at acquisition cost less accumulated depreciation. Cost

includes the purchase price and any cost directly attributable to bring the asset to

its working condition for its intended use. Subsequent expenditure incurred on

fixed assets is expensed out except where such expenditure increases the future

benefits from the existing assets beyond its previously assessed standard of

performance. Depreciation is provided using Straight-Line Method („SLM‟) prorated

from the date of being put to use, upto the date of sale, based on estimated useful

life. Assets costing upto ` 5,000 are fully depreciated in the year of acquisition.

Asset Useful life

Office equipments 5 years

Intangible assets

Intangible assets comprising software are stated at cost less amortisation.

Significant expenditure on improvements to software are capitalised when it is

probable that such expenditure will enable the asset to generate future economic

benefits in excess of its originally assessed standards of performance and such

expenditure can be measured and attributed to the asset reliably. Software

expenses are amortised using SLM over a period of 4 years from the date of being

put to use.

2.6 Impairment of assets

Management periodically assesses, using external and internal sources, whether

there is any indication that an asset may be impaired. If any such indication exists,

an estimate of the recoverable amount of the asset unit is made. Impairment occurs

where the carrying value of the asset exceeds the recoverable amount. Recoverable


amount is higher of an asset‟s net selling price and its value in use. Value in use is

the present value of estimated future cash flows expected to arise from the

continuing use of the asset and its eventual disposal. If at the Balance Sheet date

there is an indication that a previously assessed impairment loss no longer exists,

the recoverable amount is reassessed and the asset is reflected at the recoverable

amount, subject to a maximum of depreciable historical cost.

2.7 Income taxes

Direct taxes

Tax expense comprises current and deferred tax. Current income tax is measured

as the amount expected to be paid to the tax authorities in accordance with the

Income Tax Act, 1961. Deferred income taxes reflect the impact of current year

timing differences between taxable income and accounting income for the period

and reversal of timing differences of earlier years.

Deferred tax is measured based on the tax rates enacted or substantively enacted

at the Balance Sheet date. Deferred tax assets are recognised only to the extent that

there is reasonable certainty that sufficient future taxable income will be available

against which such deferred tax assets can be realised; however, where there is

unabsorbed depreciation or carried forward loss under taxation law, deferred tax

assets are recognised only if there is a virtual certainty supported by convincing

evidence of realisation of such assets.

The carrying amount of deferred tax assets are reviewed at each Balance Sheet

date. The Company writes down the carrying amount of a deferred tax asset to the

extent that it is no longer reasonably certain or virtually certain, as the case may be,

that sufficient future taxable income will be available against which deferred tax

asset can be realised. Any such write down is reversed to the extent that it

becomes reasonably certain or virtually certain, as the case may be, that sufficient

future taxable income will be available.

Minimum Alternate Tax is recognised as an asset only when and to the extent there

is convincing evidence that the company will pay normal income tax during the

specified period.

Indirect taxes

Service tax liability on output services is set-off against the service tax credits

available from tax paid on input services. Unutilised service tax credits, if any, are

carried forward for future set-off, where there is reasonable certainty of utilisation.

Provision is made for unutilised service tax credit where the utilisation is uncertain.

2.8 Provisions and contingencies

Provisions are recognised in respect of present obligations as a result of a past

event and it is probable that an outflow of resources will be required and a reliable

estimate can be made of the amount of the obligation. A disclosure of a contingent

liability is made when there is a possible obligation or present obligations that may,

but probably will not, require an outflow of resources or it cannot be reliably


estimated. When there is a possible obligation or a present obligation in respect of

which the likelihood of outflow of resources is remote, no provision or disclosure is

made.

Loss contingencies arising from claims, litigation, assessment, fines, penalties, etc

are recorded when it is possible that a liability has been incurred and the amount

can be reasonably estimated. Contingent assets are neither recognised nor

disclosed in financial statements since this may result in the recognition of income

that may never be realised.

2.9 Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the year

attributable to equity shareholders by the weighted average number of equity

shares outstanding during the year. For the purpose of calculating diluted earnings

per share, the net profit or loss for the year attributable to equity shareholders and

the weighted average number of shares outstanding during the year are adjusted

for the effects of all dilutive potential equity shares.

2.10 Cash flow statement

Cash flow statement is reported using the “Direct method” prescribed under

Accounting Standard 3 – Cash Flow Statements which requires major classes of

gross receipts and gross cash payments to be disclosed.

2.11 Cash and cash equivalents

Cash and cash equivalents for the purposes of cash flow statement comprise cash

at bank and in hand and short-term investments with an original maturity of three

months or less.

3 Notes to accounts

3.1 Share capital

The following table sets forth, for the dates indicated, the details of outstanding

share capital.

(In `)

Particulars At March 31,

2017

At March 31,

2016

Authorised:

35,000,000 (At March 31, 2016: 35,000,000)

Equity shares of ` 10 each 350,000,000 350,000,000

Issued, subscribed and fully paid up:

29,000,000 (At March 31, 2016: 27,000,000)

Equity shares of ` 10 each 290,000,000 270,000,000

(All the above equity shares of ` 10 each are

held by the holding company, ICICI

Prudential Life Insurance Company Limited

and it's nominees)

Total 290,000,000 270,000,000


The company has only one class of share having a par value of ` 10 per share. The

entire share capital is held by ICICI Prudential Life Insurance Company Limited and

the ultimate holding Company is ICICI Bank Limited.

Shareholder holding more than 5 % shares of the company is ICICI Prudential Life

Insurance Company Limited and its nominees, it holds 29,000,000 equity shares.

Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of ` 10 per

share. Each holder of equity shares is entitled to one vote per share. A

reconciliation of the shares outstanding at the beginning and at the end of the

period is as follows:

Equity shares

Year ended March 31,

2017

Year ended March 31,

2016

Number of

shares

Amount in

` Number of

shares

Amount in

`

At the beginning of

the period 27,000,000 270,000,000 27,000,000 270,000,000

Issued during the

period 2,000,000 20,000,000 - -

Outstanding at the

end of the period 29,000,000 290,000,000 27,000,000 270,000,000

3.2 Reserves and surplus

The following table sets forth, for the periods indicated, the details of reserves and

surplus.

(In `)


2017

At March 31,

2016

Surplus - Opening balance (14,433,736) (11,282,107)

Add: Profit/( Loss) for the period (5,691,551) (3,151,629)

Surplus – Closing balance (20,125,287) (14,433,736)


3.3 Deferred taxes

Deferred tax asset/liability is recognised on timing differences arising between

taxable and accounting income using the tax rates and laws that are enacted or

substantively enacted as on the Balance Sheet date. The deferred tax asset is

recognised and carried forward only to the extent that there is a reasonable

certainty that the asset will be realised in future. Deferred tax credit of ` 97,295 is

recognised during the year ended March 31, 2017. (Previous period: Deferred tax

credit of ` 58,121).

A net deferred tax liability of ` 49,456 is carried forward as detailed below:

(In `)


2017

At March 31,

2016

Deferred tax liabilities

- Difference in amortisation/depreciation

on fixed assets as per tax books and

accounting books

49,456 146,751

Net deferred tax liabilities 49,456 146,751

3.4 Other current liabilities

The following table sets forth, for the dates indicated, the details of other current

liabilities.

(In `)


2017

At March 31,

2016

Other payables

- Payable to holding company 6,043,923 5,062,584

- Tax deducted at source payable 549,027 523,095

- Service tax payable 18 -

- Payable to others for expenses 39,749 295,103

Provision for other expenses 2,483,687 1,588,553

Total 9,116,404 7,469,335


3.5 Fixed assets

The following table sets forth, for the dates indicated, the details of fixed assets.

(In `)

Particulars

Gross block Depreciation and amortisation Net block

Balance at

April 1,

2016

Additions/

(Disposals)

Balance at

March 31,

2017

Balance at

April 1,

2016

For year

ended

March 31,

2017

On

Disposals

Balance at

March 31,

2017

Balance at

March 31,

2017

Balance at

March 31,

2016

Tangible assets

Office equipment 351,664 - 351,664 238,533 64,319 - 302,852 48,812 113,131

Intangible assets

Computer software 4,660,901 - 4,660,901 4,158,251 335,066 - 4,493,317 167,584 502,649

Total 5,012,565 - 5,012,565 4,396,784 399,385 - 4,796,169 216,396 615,780

At March 31, 2016 5,012,565 - 5,012,565 3,997,400 399,385 - 4,396,785


3.6 Non-current investments

The following table sets forth, for the dates indicated, the details of non-current

investments.

(In `)


2017

At March 31,

2016

Other investments:

Investments in debentures or bonds –

quoted instruments

- 9.39% LIC Housing Finance Limited

(Maturity: August 23, 2024)

(At March 31, 2017: 50 units of face

value ` 1,000,000 each)

(At March 31, 2016: 50 units of face

value ` 1,000,000 each )

50,000,000 50,000,000

Total 50,000,000 50,000,000

Aggregate amount of investments in

debentures or bonds at market value 53,758,510 52,350,050

3.7 Other non-current assets

The following table sets forth, for the dates indicated, the details of other non-

current assets

(In `)


2017

At March 31,

2016

Service tax unutilised credit 11,131,613 8,228,003

Less: Provision for service tax

unutilised credit (11,131,613) (8,228,003)

Bank deposit with residual maturity of

more than 12 months 16,000,000 184,300,000

Accrued interest on bank deposit with

residual maturity of more than 12

months

3,596,056 21,860,689

Advance income tax 157,512 60,931

Total 19,753,568 206,221,620


3.8 Current investments

The following table sets forth, for the dates indicated, the details of current

investments.

(In `)


2017

At March 31,

2016

Investments in mutual funds - quoted

(at lower of cost or market value):

- IDFC Cash Fund – Growth

(At March 31, 2017: 5026 units and

807 fractions )

(At March 31, 2016: 258 units and

389 fractions)

9,737,267 465,334

Total 9,737,267 465,334

Aggregate amount of mutual fund

investments at market value 9,929,068 475,906

3.9 Trade receivables

The following table sets forth, for the dates indicated, the details of trade

receivables.

(In `)


2017

At March 31,

2016

Trade receivables outstanding for a

period less than six months from the

date they are due for payment

- Unsecured considered good

o Investment management

fees receivable

327,232

149,362

327,232 149,362

Trade receivables outstanding for a

period exceeding six months from the

date they are due for payment

- Unsecured considered good - -

- Unsecured considered doubtful - -

Less: Provision for doubtful debts - -

- -

Total 327,232 149,362


3.10 Cash and bank balances

The following table sets forth, for the dates indicated, the details of cash and bank

balances

(In `)


2017

At March 31,

2016

Cash and cash equivalents

Balances with banks

- Balance in current account 323,878 225,897

Other bank balances

- Term deposit with original maturity

of more than 3 months

176,900,000 186,800,000

Sub-total 177,223,878 187,025,897

Amount disclosed under other

non-current assets* (16,000,000) (184,300,000)

Total 161,223,878 2,725,897

* Term deposits with residual maturity of more than 12 months have been

disclosed under non-current assets

3.11 Short-term loans and advances

The following table sets forth, for the dates indicated, the details of short term loans

and advances.

(In `)


2017

At March 31,

2016

Others (Unsecured, considered

good)

Prepaid expenses

78,720

76,439

Total 78,720 76,439

3.12 Other current assets

The following table sets forth, for the dates indicated, the details of other current

assets.

(In `)


2017

At March 31,

2016

Interest accrued on fixed deposit 38,482,568 21,966,476

Less: Amount disclosed under other

non-current assets

(3,596,056) (21,860,689)

Net interest accrued on fixed deposit 34,886,512 105,787

Interest accrued on debenture/bonds 2,817,000 2,822,131

Total 37,703,512 2,927,918


3.13 Investment management fees

The Investment Management Fees is charged on closing funds under management

on daily basis for all the schemes. In terms of the PFRDA‟s letter no.

PFRDA/6/PFM/9/2 dated July 31, 2014, the Company has started charging

investment management fee of 0.01% per annum, with effect from August 01,

2014.

3.14 Employee benefit expenses and cost sharing arrangement

Salaries and wages

The employees are on deputation from the Sponsor and their remuneration is paid

by the Company as per the terms of employment with the Sponsor.

Cost sharing arrangement

Given the size of its operations, the Company has entered into an arrangement with

the Sponsor for sharing employees and infrastructure while maintaining adequate

firewalls between the two entities. Under this arrangement, all the appropriate costs

attributable to the Company like employee remuneration, rent, utilities, depreciation

on computers/hardware and other technology and software related expenses are

transfer priced by the Sponsor to the Company. All such costs are charged to the

Company on arm‟s length basis as per the Transfer Pricing Policy with the Sponsor.

The expenses cross charged to the Company under such agreement have been

shown as transactions with related parties under note 3.17.

The detail of salary cross charged to the company is as follows:

(In `)

Particulars

Year ended

March 31, 2017

Year ended

March 31, 2016

Salary cross charged (Net of service tax) 17,370,266 16,200,489

Add: Cenvat unavailed on current period

outstanding net of cenvat availed pertaining to

previous financial year

76,686 85,403

Net salary expense as per statement of

Profit and Loss

17,446,952 16,285,892


3.15 Other expenses

The following table sets forth, for the periods indicated, the details of other expenses.

(In `)

Particulars

Year ended

March 31, 2017

Year ended

March 31, 2016

Provision for unutilised service tax credit 2,903,611 2,514,769

Rent and utilities charges 1,870,396 1,444,771

Legal and professional fees 1,618,106 1,355,985

Information technology expenses 1,205,069 1,303,643

Brokerage expenses 1,644,627 1,046,692

PFRDA annual license fees 1,000,000 1,000,000

PFRDA RFP fees 1,000,000 -

Payments to the auditor as:

- auditor 228,874 130,147

- for reimbursement of expenses 7,157 5,618

Travelling and conveyance expenses 168,002 209,353

Miscellaneous charges 224,854 147,537

Total 11,870,696 9,158,515

3.16 Earnings per equity share

(In `)

Particulars

Year ended

March 31, 2017

Year ended

March 31, 2016

Net profit/(loss) after tax as per statement of

profit and loss available for equity shareholders

for both basic and diluted earnings per equity

share of ` 10 each (in `)

(5,691,551) (3,151,629)

Weighted average number of equity shares for

earnings per equity share

(a) For basic earnings per equity share 27,553,425 270,000,000

(b) For diluted earnings per equity share 27,553,425 270,000,000

Earnings per equity share

Basic and Diluted (in `) (0.21) (0.12)


3.17 Details of related parties and transactions with related parties

Related parties and nature of relationship:

Nature of relationship Name of the related party

Ultimate holding company ICICI Bank Limited

Holding company

(Sponsor)

ICICI Prudential Life Insurance Company Limited

Fellow subsidiaries of

holding company and

entities jointly controlled

by ultimate holding

company

ICICI Securities Limited

ICICI Securities Inc.

ICICI Securities Holding Inc.

ICICI Securities Primary Dealership Limited

ICICI Venture Funds Management Company

Limited

ICICI Home Finance Company Limited

ICICI Trusteeship Services Limited

ICICI Investment Management Company Limited

ICICI International Limited

ICICI Bank UK PLC.

ICICI Bank Canada

ICICI Lombard General Insurance Company

Limited

ICICI Prudential Asset Management Company

Limited

ICICI Prudential Trust Limited

Consolidated under AS-21

by ultimate holding

company

ICICI Strategic Investments Fund

Key management

personnel

Meghana Baji, Chief Executive Officer and Chief

Investment Officer

The following represents transactions between the Company and its related parties.

(In `)

Nature of transaction

Year ended

March 31, 2017

Year ended

March 31, 2016

ICICI Bank Limited

Conference room charges - 5,000

Total - 5,000


(In `)

Nature of transaction

Year ended

March 31, 2017

Year ended

March 31, 2016

ICICI Prudential Life Insurance

Company Limited

Employee benefits expenses 17,446,952 16,158,512

Rent and utilities 1,870,396 1,414,234

Information technology expense 187,897 143,302

Travelling & conveyance 168,002 204,500

Miscellaneous charges 205,819 136,803

Total 19,879,066 18,057,350

Balances with related parties are as follows:

(In `)


2017

At March 31,

2016

ICICI Prudential Life Insurance Company

Limited

6,043,923 5,062,584

ICICI Bank Limited - 2,000

Total 6,043,923 5,064,584

3.18 Contingent liabilities

(In `)


2017

At March 31,

2016

Bank guarantee given on behalf of

Company

Issued in favour of PFRDA 2,000,000 1,000,000

The Company has deposited with PFRDA an unconditional and irrevocable

performance bank guarantee (PBG) for the due performance and fulfillment of the

terms and conditions of the Letter of appointment under the new RFP (Request for

proposal) dated July 23, 2014 and the Investment Management Agreement (IMA).

In the event of the Sponsor or the Company being unable to service the IMA or the

terms and conditions of the Letter of appointment under the new RFP for whatever

reason, PFRDA may invoke the PBG submitted by the Company.

3.19 Encumbrances of assets

The assets of the Company are free from all encumbrances at March 31, 2017,

except for fixed deposits of ` 4,500,000 (at March 31, 2016: ` 3,500,000). Of this, `

1,000,000 (at March 31, 2016: ` 1,000,000) pertains to a deposit made with State

Bank of Travancore and ` 1,000,000 (at March 31, 2016: Nil) pertains to a deposit

made with Corporation bank as a security towards guarantee issued by the bank on


behalf of the Company in favour of PFRDA (Refer Note 3.18 Contingent Liability).

Balance of ` 2,500,000 (at March 31, 2016: ` 2,500,000) (Refer Note 3.10 Cash and

Bank Balances) pertains to a deposit made with Corporation Bank towards margin

requirement for equity trade settlement pertaining to Scheme E Tier I and II issued

in favour of National Securities Clearing Corporation Limited. The margins are

imposed by clearing houses on equity cash segment transactions for enabling

settlement on T+2 basis. The physical custody of the mentioned fixed deposits is

with the respective clearing houses, however the income accrued on the fixed

deposits shall be passed on to the Company on encashment of the mentioned

deposits.

3.20 Direct taxes

Current tax is nil (Previous period: ` 1,066,692 includes tax provision of ` 916,566

towards provision for unutilised cenvat credit pertaining to earlier year).

3.21 The Micro, Small and Medium Enterprises Development Act, 2006

Based on current information available with the Company, there are no dues

payable to suppliers who are registered under the Micro, Small and Medium

Enterprise Development Act, 2006, at March 31, 2017 (At March 31, 2016: Nil).

3.22 Details of Specified Bank Notes (SBN) held and transacted during the

period November 8, 2016 to December 30, 2016

Particulars SBN Other

denomination

notes

Total

Closing cash in hand as on

November 8, 2016

Nil Nil Nil

(+) Permitted receipts Nil Nil Nil

(-) Permitted payments Nil Nil Nil

(-) Amount deposited in

Banks

Nil Nil Nil

Closing cash in hand as on

December 30, 2016

Nil Nil Nil


3.23 Previous period comparatives

Previous period amounts have been regrouped and reclassified wherever

necessary to conform to current period‟s presentation.

For Khandelwal Jain & Co.



For and on behalf of the Board of Directors




Meghana Baji Harvinder Jaspal

Chief Executive Officer Chief Financial Officer

Shweta Nayak

Company Secretary

Place: Mumbai


Annual Report FY2017 - Icici Prudential Life Insurance€¦ · DIRECTORS’ REPORT To the Members...

Documents

Transcript of Annual Report FY2017 - Icici Prudential Life Insurance€¦ · DIRECTORS’ REPORT To the Members...