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HDFC Asset Management Company Ltd.

BSE: 541729 Sector: Financials
NSE: HDFCAMC ISIN Code: INE127D01025
BSE 00:00 | 17 Jan 3263.40 19.00
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3258.00

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3271.75

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3245.00

NSE 00:00 | 17 Jan 3263.25 18.45
(0.57%)
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3257.90

HIGH

3270.40

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3241.05

OPEN 3258.00
PREVIOUS CLOSE 3244.40
VOLUME 25302
52-Week high 3844.00
52-Week low 1302.00
P/E 58.83
Mkt Cap.(Rs cr) 69,386
Buy Price 3261.50
Buy Qty 160.00
Sell Price 3263.15
Sell Qty 2.00
OPEN 3258.00
CLOSE 3244.40
VOLUME 25302
52-Week high 3844.00
52-Week low 1302.00
P/E 58.83
Mkt Cap.(Rs cr) 69,386
Buy Price 3261.50
Buy Qty 160.00
Sell Price 3263.15
Sell Qty 2.00

HDFC Asset Management Company Ltd. (HDFCAMC) - Auditors Report

Company auditors report

To the Members of

HDFC Asset Management Company Limited

Report on the audit of the financial statements

Opinion

We have audited the accompanying financial statements of HDFC Asset ManagementCompany Limited (the 'Company') which comprise the Balance Sheet as at March 312019 the Statement of Profit and Loss (including Other Comprehensive Income) theStatement of Changes in Equity and the Statement of Cash Flows for the year then endedand notes to the financial statements including a summary of the significant accountingpolicies and other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 (the 'Act') in the manner so required and give a true and fair view inconformity with the Indian Accounting Standards specified under Section 133 of the Actread with the Companies (Indian Accounting Standards) Rules 2015 as amended ('Ind AS')and other accounting principles generally accepted in India of the state of affairs ofthe Company as at March 31 2019 and its profit and other comprehensive income thechanges in equity and its cash flows for the year ended on that date.

Basis for opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder Section 143 (10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the audit of the financial statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India (the 'ICAI') togetherwith the ethical requirements that are relevant to our audit of these financial statementsunder the provisions of the Act and the Rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our opinion.

Other matter

The opening balance sheet as at April 01 2017 (transition date) included in thesefinancial statements is based on the previously issued statutory financial statements ofthe Company prepared in accordance with the Companies (Accounting Standards)Rules2006auditedbythepredecessor auditor whose report for the year ended March 31 2017 datedApril 28 2017 expressed an unmodified opinion on those financial statements as adjustedfor the differences in the accounting principles adopted by the Company on transition toInd AS which have been audited by us.

Our opinion is not modified in respect of this matter.

Key audit matters

Key audit matters are those matters that in our professional judgement were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters:

Key audit matter How the matter was addressed in our audit
Transition date accounting
Refer to the accounting policies in the Financial Statements: Significant accounting policies - Basis of preparation and Note 39 to the financial statements: "Transition date choices and application"
Adoption of new accounting framework (Ind AS)
Effective April 01 2018 the Company adopted the Ind AS notified by the Ministry of Corporate Affairs with the transition date of April 01 2017. Our key audit procedures included:
Design / controls
The following are the major impact areas for the Company upon transition: • Assessed the design implementation and operating effectiveness of key internal controls over management's evaluation of transition date choices and exemptions availed in line with the principles under Ind AS 101.
• Classification and measurement of financial assets
• Accounting for employee stock options
• Additional disclosures as per the requirements of the new financial reporting framework.
• Evaluated management's transition date choices and exemptions for compliance / acceptability under Ind AS 101;
Transition to the new financial reporting framework is an intricate process involving multiple decision points for management i.e. Ind AS 101 First • Understood the methodology implemented by management to give impact on the transition;
Time Adoption prescribes choices and exemptions for first time application of Ind AS principles at the transition date.
We identified the transition date accounting as a key audit matter because of the significant degree of management judgement in the first time application of Ind AS principles as at the transition date particularly in the areas noted above and the additional disclosures associated with transition to Ind AS. • Test checked the computations associated with the transition adjustments;
• Assessed areas of significant estimates and management judgement in line with principles under Ind AS;
• Compared the reasonableness of management assumptions in respect of recognition and measurement of financial instruments employee stock options etc.
Revenue Recognition: Investment Management Fee
Refer to the accounting policies in the Financial Statements: Significant accc financial statements: Asset Management Services Investment Management Fee is the most significant account balance in the Statement of Profit and Loss. Accounting policies - Note 3.5 Revenue Recognition and Note 20 to the
Our audit procedures included:
Design / controls
Key aspects relating to timing and recognition of revenue in respect of management fee are set out below: • Understood and evaluated the design and implementation of key controls in place around recognition of investment management fee;
• The calculation of investment management fees is based on a percentage of the Assets Under Management ('AUM') of the funds managed by the Company in accordance with guidelines prescribed under SEBI (Mutual Fund) Regulations 1996 as amended from time to time
• Test checked management review controls over recognition of investment management fee.
Substantive tests
• Evaluated the appropriateness of recognition of revenue in respect of investment management fee income based on the requirements of Ind AS 115;
• Investment Management fee is accrued based on a five step model as set out in Ind AS 115 "Revenue from Contract with Customers"
• The contracts include a single performance obligation that is satisfied over time and the investment management fee earned is considered as variable consideration that is included in the transaction price to the extent that no significant revenue reversal is expected to occur. • Obtained AUM and investment management fee from the Company and then reconciled investment management fee to amounts included in financial statements;
• Test checked that investment management fee rates were approved by authorised personnel;
• Obtained and read the investment management fee certification reports issued by the statutory auditors of mutual fund schemes in accordance with generally accepted assurance standards for such work;
• Test checked investment management fee invoices and reconciled with the accounting records;
• Evaluated the adequacy of disclosures relating to the investment management fee earned by the Company.

Other information

The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Director'sreport and management discussion & analysis report but does not include the financialstatements and our auditor's report thereon. The Director's report and managementdiscussion & analysis report is expected to be made available to us after the date ofthis auditor's report.

Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.

In connection with our audit of the financial statements our responsibility is to readthe other information identified above when it becomes available and in doing soconsider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated.

Management's responsibility for the financial statements

The Company's management and Board of Directors are responsible for the matters statedin Section 134(5) of the Act with respect to the preparation of these financial statementsthat give a true and fair view of the state of affairs profit / loss and othercomprehensive income changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Ind AS specifiedunder Section 133 of the Act read with relevant rules issued thereunder. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgements and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.

In preparing the financial statements management and Board of Directors areresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

Board of Directors is also responsible for overseeing the Company's financial reportingprocess.

Auditor's responsibility for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.

As part of an audit in accordance with SAs we exercise professional judgement andmaintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of the Act we are also responsible for expressing our opinion on whether the Companyhas adequate internal financial controls with reference to financial statements in placeand the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.

• Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

Report on other legal and regulatory requirements

As required by the Companies (Auditor's Report) Order 2016 ('the Order') issued by theCentral Government of India in terms of Section 143 (11) of the Act we give in the"Annexure A" a statement on the matters specified in paragraph 3 and 4 of theOrder to the extent applicable.

(A) As required by Section 143 (3) of the Act we report that:

a) we have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit;

b) in our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;

c) the Balance Sheet the Statement of Profit and Loss (including Other ComprehensiveIncome) Statement of Changes in Equity and the Statement of Cash Flows dealt with by thisreport are in agreement with the books of account;

d) in our opinion the aforesaid financial statements comply with the Ind AS specifiedunder Section 133 of the Act read with relevant rules issued thereunder;

e) on the basis of the written representations received from the Directors as on March31 2019 and taken on record by the Board of Directors none of the Directors aredisqualified as on March 31 2019 from being appointed as a Director in terms of Section164 (2) of the Act and

f) with respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate report in "Annexure B".

(B) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

i. the Company has disclosed the impact of pending litigation as at March 31 2019 onits financial position in the financial statements - refer note 31 to the financialstatements;

ii. the Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;

iii. there were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company and

iv. the disclosures in the financial statements regarding holdings as well as dealingsin specified bank notes during the period from November 08 2016 to December 30 2016 havenot been made in these financial statements since they do not pertain to the financialyear ended March 31 2019.

(C) With respect to the matter to be included in the Auditor's Report under Section197(16) of the Act:

I n our opinion and according to the information and explanations given to us theremuneration paid by the Company to its Directors during the current year is in accordancewith the provisions of Section 197 of the Act. The remuneration paid to any Director isnot in excess of the limit laid down under Section 197 of the Act. The Ministry ofCorporate Affairs has not prescribed other details under Section 197 (16) of the Act whichare required to be commented upon by us.

For B S R & Co. LLP
Chartered Accountants
Firm's Registration No. 101248W/W-100022
Akeel Master
Mumbai Partner
April 26 2019 Membership No. 046768

Annexure A to the Independent Auditor's Report

March 31 2019 (Referred to in our report of even date)

i. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of property plant and equipment.

(b) The Company has a regular programme of physical verification of its property plantand equipment by which all the property plant and equipment are verified annually. In ouropinion this periodicity of physical verification is reasonable having regard to the sizeof the Company and the nature of its assets.

No material discrepancies were noticed on such verification.

(c) The title deeds of immovable properties recorded as property plant and equipmentin the books of account of the Company are held in the name of the Company.

ii. The Company is a service company primarily rendering investmentmanagementservicesportfolio management services and investment advisory services. Accordingly it does nothold any inventories. Thus paragraph 3 (ii) of the Order is not applicable to theCompany.

iii. According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms limited liabilitypartnerships or other parties covered in the register maintained under Section 189 of theAct. Thus paragraph 3 (iii) of the Order are not applicable to the Company.

iv. In our opinion and according to the information and explanations given to us theCompany has not advanced any loan given any guarantee or provided any security inconnection with loan to any of its Directors or to any person in whom the Director isinterested. The Company has complied with the provisions of Section 186 of the Act withrespect to the investments made.

v. In our opinion and according to the information and explanations given to us theCompany has not accepted deposits as per the directives issued by Reserve Bank of Indiaand the provisions of Sections 73 to 76 or any other relevant provisions of the Act andRules framed thereunder. Thus paragraph 3 (v) of the Order is not applicable to theCompany.

vi. The Central Government has not prescribed the maintenance of cost records underSection 148 (1) of the Act for any of the services rendered by the Company. Accordinglyparagraph 3 (vi) of the Order is not applicable to the Company.

vii. (a) According to the information and explanations given to us and on the basis ofour examination of the books of account amounts deducted / accrued in the books ofaccount in respect of undisputed statutory dues including provident fund income taxservice tax goods and services tax cess and other material statutory dues have beenregularly deposited during the year by the Company with the appropriate authorities. Asexplained to us the Company did not have any dues on account of sales tax wealth taxemployees' state insurance duty of customs duty of excise and value added tax. Accordingto the information and explanations given to us no undisputed amounts payable in respectof provident fund income tax service tax goods and services tax cess and othermaterial statutory dues were in arrears as at March 31 2019 for a period of more than sixmonths from the date they became payable.

(b) According to the information and explanations given to us there are no dues ofprovident fund goods and services tax cess and other material statutory dues which havenot been deposited by the Company on account of disputes. The dues outstanding on accountof dispute are as follows:

Name of the statute Nature of dues Amounts (In Rs.) Period to which the amount relates Forum where dispute is pending
Income Tax Act 1961 Income Tax 2705330 A.Y. 2008-09 High Court of Bombay
Income Tax Act 1961 Income Tax 741823 A.Y. 2010-11 Income Tax Appellate Tribunal
Income Tax Act 1961 Income Tax 1168753 A.Y. 2011-12 Income Tax Appellate Tribunal
Income Tax Act 1961 Income Tax 1324 140 A.Y. 2012-13 Income Tax Appellate Tribunal
Income Tax Act 1961 Income Tax 15169451 A.Y. 2012-13 Commissioner of Income Tax Appeal
Income Tax Act 1961 Income Tax 1198635 A.Y. 2013-14 Income Tax Appellate Tribunal
Income Tax Act 1961 Income Tax 17087204 A.Y. 2013-14 Commissioner of Income Tax Appeal
Income Tax Act 1961 Income Tax 2518814 A.Y. 2014-15 Income Tax Appellate Tribunal
Service Tax Service Tax 367707 FY. 2006-07 FY. 2007-08 F.Y. 2008-09 Commissioner of Service Tax (Appeal -I)

viii. In our opinion and according to the information and explanations given to us theCompany has not taken any loan or borrowing from financial institution bank governmentor debenture holders. Thus paragraph 3 (viii) of the Order is not applicable to theCompany.

ix. During the year ended March 31 2019 the Company completed Initial Public Offer('IPO') through an Offer for sale of equity shares held by Housing Development FinanceCorporation Limited and Standard Life Investments Limited. Accordingly the Company didnot receive any proceeds from this IPO. The Company did not raise any money by way offurther public offer.

x. According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.

xi. According to the information and explanations given to us and based on ourexamination of the records the Company has paid / provided for managerial remuneration inaccordance with the requisite approvals mandated by the provisions of Section 197 readwith Schedule V to the Act.

xii. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company as per the Act. Thus paragraph 3 (xii) of the Order is notapplicable to the Company.

xiii. According to the information and explanations given to us and based on ourexamination of the records of the Company all transactions entered into by the Companywith the related parties are in compliance with Sections 177 and 188 of the Act whereapplicable and details of such transactions have been disclosed in the financialstatements as required by the applicable accounting standards.

xiv. According to the information and explanations given to us and based on ourexamination of the records the Company has entered into private placement of equityshares of the Company during the year and has complied with the requirements of Section 42of the Act. According to the information and explanations given to us the amounts raisedthrough private placement of fully paid equity shares have been used for the purpose forwhich funds were raised.

xv. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with Directors or person connected with him. Thus paragraph 3(xv) of theOrder is not applicable to the Company.

xvi. According to the information and explanations given to us the Company is notrequired to be registered under Section 45-IA of the Reserve Bank of India Act 1934.Thus paragraph 3 (xvi) of the Order is not applicable to the Company.

For B S R & Co. LLP
Chartered Accountants
Firm's Registration No. 101248W/W-100022
Akeel Master
Mumbai Partner
April 26 2019 Membership No. 046768

Annexure B to the Independent Auditor's Report

March 31 2019 (Referred to in our report of even date)

Report on the Internal Financial Controls with reference to the financial statementsunder Clause (i) of subsection 3 of Section 143 of the Companies Act 2013 ('the Act')

(Referred to in paragraph (A.f.) under 'Report on Other Legal and RegulatoryRequirements' section of our report of even date)

Opinion

We have audited the internal financial controls with reference to financial statementsof HDFC Asset Management Company Limited (the 'Company') as of March 31 2019 inconjunction with our audit of the financial statements of the Company for the year endedon that date.

In our opinion the Company has in all material respects adequate internal financialcontrols with reference to financial statements and such internal financial controls wereoperating effectively as at March 31 2019 based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India (the 'Guidance Note').

Management's responsibility for internal financial controls

The Company's management and Board of Directors are responsible for establishing andmaintaining internal financial controls based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to Company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Act.

Auditor's responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note and the Standards on Auditing prescribed underSection 143 (10) of the Act to the extent applicable to an audit of internal financialcontrols with reference to financial statements. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls with reference tofinancial statements were established and maintained and whether such controls operatedeffectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of such internal financial controlsassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal financial control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment of therisks 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 toprovide a basis for our audit opinion on the Company's internal financial controls withreference to financial statements.

Meaning of internal financial controls with reference to financial statements

The Company's internal financial controls with reference to financial statements is aprocess designed to provide a reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles.

The Company's internal financial controls with reference to financial statementsincludes those policies and procedures that (1) pertain to the maintenance of recordsthat in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the

Company; (2) provide reasonable assurance that transactions are recorded as necessaryto permit preparation of financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the Company are being madeonly in accordance with authorisations of management and Directors of the Company and (3)provide reasonable assurance regarding prevention or timely detection of unauthorisedacquisition use or disposition of the Company's assets that could have a material effecton the financial statements.

Inherent limitations of internal financial controls with reference to financialstatements

Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial controls with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.

For B S R & Co. LLP
Chartered Accountants
Firm's Registration No. 101248W/W-100022
Akeel Master
Mumbai Partner
April 26 2019 Membership No. 046768