To the Members
We are pleased to present the Directors' Report on the business and operations of yourCompany along with the audited Financial Statements of Account for the financial yearended 31st March 2020.
The financial statements of your Company is prepared in accordance with the provisionof the Companies Act 2013 and the Indian Accounting Standards (hereinafter referred to asthe "Ind AS") as notified by Ministry of Corporate Affairs pursuant to section133 of the Companies Act 2013 read with Rule 3 of the Companies (India AccountingStandards) Rules 2015 and Companies (India Accounting Standards) Amendment Rules 2016and other relevant provisions of the Act as amended from time to time.
The Company's financial performance for the financial year ended 31st March 2020 ascompared to the previous financial year ended is summarised below:
(Rs. In Million)
|Particulars || |
| ||Year Ended March 312020 ||Year Ended March 312019 ||Year Ended March 312020 ||Year Ended March 312019 |
|Gross Income ||8617.91 ||10082.52 ||8899.65 ||10811.33 |
|Gross Expenses ||4855.07 ||5159.64 ||5486.57 ||5844.97 |
|Profit Before Tax ||3762.84 ||4922.88 ||3413.08 ||4966.36 |
|Tax ||671.25 ||1439.30 ||663.87 ||1446.93 |
|Profit After Tax and Others ||3091.59 ||3483.58 ||2714.66 ||3568.47 |
|Dividend ||692.30 ||764.24 ||692.30 ||764.24 |
|Paid up Capital ||1267.87 ||1267.87 ||1267.87 ||1267.87 |
|Net Worth ||25946.34 ||24078.55 ||27723.04 ||26158.48 |
As on 31st March 2020 your Company has 4 (four) direct subsidiaries and 3 (three)step-down subsidiaries. The synopsis of performance of our subsidiaries is provided asunder:
UTI International Limited:
UTI International Limited ("UTI International") was incorporated as a limitedliability company under the laws of Guernsey on 30th January 1996 pursuant to an Act ofthe Royal Court of the Guernsey Island. UTI International is engaged in the business ofinvestment management of equity and debt funds as authorized by its memorandum ofincorporation.
UTI International looks after the administration and marketing of offshore fundsmanaged by UTI AMC. It also acts as Management Company for these funds as required underthe Guernsey Law. UTI International is also responsible for developing new products aswell as new business opportunities for the Company's offshore activities. The UTIInternational has two subsidiaries - UTI Investment Management Company (Mauritius) Limitedand UTI International (Singapore) Private Limited.
The Gross Income of UTI International (consolidated) for the FY 2019-20 was GBP1307841 as compared to GBP 11069221 in the previous financial year and Net Loss forthe financial year ended 31st March 2020 was GBP 5769234 as compared to Net Profit ofGBP 4638722 in the previous financial year.
UTI Retirement Solutions Limited:
UTI Retirement Solutions Limited ("UTI RSL") was incorporated on December 142007 under the Companies Act 1956 at Mumbai Maharashtra. UTI RSL manages the pensionfunds and assets of Central and State Government Employees and employees of the privatesector. UTI RSL is engaged in the business of carrying out the operations as pension fundmanager as directed by the Pension Fund Regulatory and Development Authority("PFRDA") and the Board of Trustees of the National Pension System Trust set upunder the Indian Trust Act 1882 and to undertake wholesale asset management asprescribed by the Government or PFRDA as authorized by its memorandum of association.
The Gross Income of UTI RSL for the FY 2019-20 was Rs. 14.25 Crore as compared to Rs.10.30 Crore in the previous financial year. The Net Profit for the financial year ended31st March 2020 was Rs. 4.36 crore as compared to Rs. 2.61 crore during the previousfinancial year.
UTI Venture Funds Management Company Private Limited:
UTI Venture Funds Management Company Private Limited ("UTI VF") wasincorporated on 27th March 2001 under the Companies Act 1956 at Bangalore Karnataka as'UTI Venture Funds Management Company Limited'. The principal business of UTI VF is tomanage venture capital funds and private equity funds.
The Company strives to create value for its portfolio companies by providing themindustry knowledge access to local talent and its business network in the Indian andoverseas markets. UTI VF is registered with SEBI as a Venture Fund Management Company.
UTI Private Equity Limited is the subsidiary of UTI VF. UTI Private Equity Limited isengaged in the business of investment holding as authorised by the Financial ServicesCommission.
The Gross Income of UTI VF for the FY 2019-20 was Rs. 74.38 lakhs as against Rs.77.04lakhs in the previous financial year and Net Loss for the year ended 31st March 2020 wasRs. 47.44 lakhs as against Net Loss of Rs.86.59 lakhs in the previous financial year.
UTI Capital Private Limited:
UTI Capital Private Limited ("UTI CPL") was incorporated on May 13 2011under the Companies Act 1956 at Mumbai Maharashtra. It is engaged in the business ofinvestment management as authorized by its memorandum of association.
The Gross Income of UTI CPL for the FY 2019-20 was Rs. 8.04 crore as compared toRs.9.00 crore in the previous financial year. The Net Loss for the financial year ended31st March 2020 was Rs.1 .43 crore as against profit of Rs.0.77 crore in the previousfinancial year.
The audited statements of accounts of the subsidiary companies together with theReports of their Directors and Auditors for the period ended on 31 st March 2020 areattached to this Annual Report.
None of the Companies have become or ceased to be Subsidiary during the FY 2019-20. TheCompany does not have any Associate or Joint Venture Company as on 31st March 2020.
There is no change in Authorised and Paid-up Share Capital of your Company during theFY 2019-20. The paid-up equity share capital of your Company as at the end of the FY2019-20 stood at Rs.1267872540 (One Hundred & Twenty Six Crore Seventy Eight LakhSeventy Two Thousand Five Hundred and Forty Rupees only) divided into 126787254 (TwelveCrore Sixty Seven Lakh Eighty Seven Thousand Two Hundred and Fifty Four only) equityshares of face value of Rs. 10 each.
The Board of Directors are pleased to recommend a Final Dividend of Rs.7/- per equityshare (70%) of face value of Rs.1 0/- each amounting to Rs.887.511 million for the FY2019-20. The Final Dividend subject to the approval of Members at the Annual GeneralMeeting to be held on Friday 27th November 2020 will be paid to those equityshareholders: -
a) whose name appears as beneficial owners as at the end of business hours on Friday20th November 2020 in the list of beneficial owners to be furnished by NationalSecurities Depository Limited (NSDL) and Central Depository Services (India) Limited(CDSL) in respect of the shares held in electronic form; and
b) whose name appears as members in the register of members of the Company on Friday20th November 2020.
Pursuant to Section 91 of the Companies Act 2013 and Regulation 42 of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the register of members andshare transfer books of the Company shall remain closed from Saturday 21st November 2020to Friday 27th November 2020 (both days inclusive) for determining the entitlement ofthe members to the dividend if declared for the FY 2019-20.
Pursuant to the changes made under the Income-tax Act 1961 dividends paid ordistributed by the Company shall be taxable in the hands of the Shareholders. Accordinglyyour Company shall make the payment of the Final Dividend after deduction of tax atsource.
The Board of Directors has adopted the Dividend Distribution Policy in accordance withthe provisions of Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 as amended. The dividend recommended by the Board is in accordance withthe criteria set out in the Dividend Distribution Policy.
The Dividend Distribution Policy is enclosed as Annexure I to this Report.
Transfer to Reserves
During the FY 2019-20 no amount has been transferred to the General Reserves of yourCompany.
Particulars of loans guarantees or investments
The details of loans guarantees and investments if any covered under Section 186 ofthe Companies Act 2013 has been provided under Note No. 5 6 and 7 to the financialstatements.
Particulars of Contracts or Agreements with Related Party
In accordance with the provisions of Section 188 of Companies Act 2013 and Regulation23 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 asamended the Policy on Materiality of Related Party Transactions and dealing with RelatedParty Transactions was approved by the Board of Directors at its meeting held on 1 6thDecember 201 9 which was further amended pursuant to the resolution passed by the Boardat its meeting held on 28th October 2020.
During the FY 201 9-20 your Company has entered into transactions with related partiesas defined under Section 2 (76) of the Companies Act 2013 read with Companies(Specification of Definitions Details) Rules 2014 and applicable Accounting Standardswhich were in the ordinary course of business and on arms' length basis. No MaterialRelated Party Transactions i.e. transactions exceeding 10% of the annual consolidatedturnover as per the last audited financial statement were entered during the year by yourCompany. Accordingly the disclosure of Related Party Transactions as required underSection 134(3)(h) of the Companies Act 2013 in Form AOC-2 is not applicable.
However detailed disclosure on related party transactions as per IND AS-24 containingname of the related party and details of the transactions entered with such related partyhave been provided under Note No. 31 of the Standalone financial statements.
During the FY 201 9-20 your Company has not accepted any deposits under Sections 73 ofthe Companies Act 201 3 read together with the Companies (Acceptance of Deposits) Rules2014.
In accordance with Section 139 of Companies Act 2013 M/s. G D Apte CharteredAccountants (FRN: 100515W) was appointed as Statutory Auditor of the Company. TheAuditors' Report on financial statements for FY 2019-20 is enclosed with the financialstatements in this Annual Report.
Pursuant to the provisions of Section 204 of the Companies Act 2013 read together withCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 your Companyhas appointed Vishal N Manseta Practicing Company Secretaries (ACS 251 83 and CP No.8981) as Secretarial Auditor of the Company. The Report of the Secretarial Audit isenclosed as Annexure II.
During the year under review there were no instances of any fraud reported by theStatutory Auditor or Secretarial Auditor to the Audit Committee or the Board pursuant toSection 143(12) of the Companies Act 2013.
Auditors of the Scheme of UTI Mutual Fund
Pursuant to the applicable provisions of SEBI (Mutual Funds) Regulations 1996 M/s.Haribhakti & Co. LLP Chartered Accountants was appointed as Statutory Auditors forSchemes of UTI Mutual Fund. M/s. Chokshi & Chokshi LLP Chartered Accountants wasappointed as Internal Auditors for various Schemes of UTI Mutual Fund. Both the auditorsperiodically submit their reports which are placed before the Audit Committee and Boardof your Company and of UTI Trustee Company Private Limited (Trustees of UTI Mutual Fund)for discussion review and implementation of their recommendations.
Adequacy of Internal Financial Control
Your Company has put in place adequate internal financial controls with reference tothe financial statements some of which are outlined below.
Your Company has adopted accounting policies which are in line with the AccountingStandards prescribed in the Companies (Accounting Standards) Rules 2006 that continue toapply under Section 133 and other applicable provisions if any of the Companies Act2013 read with Rule 7 of the Companies (Accounts) Rules 2014 and relevant provisions ofthe Companies Act to the extent applicable. These are in accordance with generallyaccepted accounting policies in India. Changes in policies if any are approved by theAudit Committee in consultation with the Statutory Auditors.
The policies to ensure uniform accounting treatment are also followed by thesubsidiaries of your Company. The accounts of the subsidiary companies are audited bytheir respective Statutory Auditors for consolidation.
Your Company operates in SAP an ERP system and has many of its accounting recordsstored in an electronic form and backed up periodically. The ERP system is configured toensure that all transactions are integrated seamlessly with the underlying books ofaccounts. Your company has automated processes to ensure accurate and timely updation ofvarious master data in the underlying ERP system.
Your Company operates a centralized accounts department which handles all payments.This ensures adherence to all policies laid down by the management.
Your Company in preparing its financial statements makes judgements and estimates basedon sound policies and uses external agencies to verify / validate them as and whenappropriate. The basis of such judgements and estimates are also approved by the StatutoryAuditors and Audit Committee.
The Management periodically reviews the financial performance of your Company againstthe approved plans across various parameters and takes necessary action wherevernecessary.
Your Company believes that the key to building an Organization is it's employees andnurturing people capability is the core of driving business excellence. As anOrganization we are committed to maintaining an environment that values theircontributions and provides opportunities for personal and professional growth. UTI AMCended the year with a workforce strength of 1361 employees.
Each and every employee is expected to work with all stakeholders viz. clients otheremployees distributors investors etc. in a respectful manner. Every employee is expectedto strictly adhere to Company's Rules Code of Conduct and any violation is appropriatelyaddressed. We encourage culture that promotes the highest ethical standards employeeRelations in the Organization continued to be healthy cordial and progressive.
Your Company recognizes its responsibility and continues to strive to provide a safeworking environment for its employees free from sexual harassment and discrimination. Wehave defined Policy on Prevention of Sexual Harassment which is reviewed by the InternalComplaints Committee (ICC) at regular intervals. There are no pending complaints and nofresh complaints have been received at the end of the year.
During the Financial Year 2019-20 some key focus areas and initiatives taken up were
Promote Performance Culture and Reinforce Meritocracy
We have a Performance Management System that is very transparent objective andstrength of our System. The Performance Management System aligns Organization goals withkey objectives. Role based scorecards at the employee level coupled with Managerialfeedback provide clarity and support to help employees excel. Development of ouremployees recognizing and rewarding their performance is of prime importance to us. Theprimary objective of our Performance Management System is to drive a high-performanceculture.
Growth @ UTI AMC
Career progression is based on merit & potential. Opportunities are available todevelop skills on the job by taking up newer and challenging roles. Through internal jobannouncements it is ensured that all our Employees are made aware of and have theopportunity to apply for open positions before consideration of external candidates foremployment for specific openings. The principal objective is to create developmentalcareer opportunities for all Employees by providing a platform to gain cross-functionalexperience and expertise.
Your Company continues to hire laterally for specialised positions. To boost our brandand increase customer engagement your Company has turned to digital marketing and hasrecently assembled a well-rounded Digital Marketing Team.
Campus Recruitment has been one of the major recruitment channels during the FY2019-20. This initiative will allow your Company an opportunity to identify talent at anearly stage and nurture the same. Your Company also visits specialised campuses like ICAIfor Chartered Accountants. The assignments offered to this group is specialized and domainspecific. The hiring in this space is need based and as per requirements by the business.We have aesthetically designed Induction Kits for New Recruits with information includedin digital format.
The HRMS System helps us be in line with the latest technology trends and have aplatform that is more interactive user friendly and one that integrates various HRfunctions and processes. This enhances our ability to manage employees in a more flexibleagile and customized manner. In addition we have also taken up an initiative that willimprove our service delivery and payroll data quality.
Employee Engagement and Communication
We strive to strengthen our connect with employees. We are highly enthused to wipe outany dull moment in the work-life of our employees. UTI AMC also conducts several employeeengagement events both at local and national level. With the objective of encouraging anatmosphere of fun camaraderie and to provide our employees a platform to showcase theirtalent and creativity participation activities around three broad themes - SocialCulture and Sports were organized such as - Festivities & celebrations for NavaratriDiwali Republic Day Independence Day etc. Quizzes through the year a well stockedin-house library programs on wellness and health initiatives including Yoga &Meditation by experts in-house teams of several indoor and outdoor sports andopportunities to participate in all external & internal corporate sports activities.
In order to encourage and foster continuous and transparent communication channelsacross the length and breadth of the Company a structured methodology is followed. Thisincludes various mechanisms like - visits to Regions and UFCs skip level chats townhalls intranet internet mass mailers messages from Top / Senior Team etc. Through suchcommunication platforms Employees get opportunities for skip level leadership level andcross functional interaction. These channels are also actively used for seeking feedbackknowledge sharing and engagement initiatives.
During the FY 2019-20 Employees were appreciated under our recognition program -'Achievers Club' for their performance efforts and excellence at UTI AMC and in turncreate a 'Culture of Appreciation'. There are Spot Rewards for immediate gratification andinstant recognition. There are separate category of awards for the 'Best Sales Team' and'Best Fund Manager'. Reporting Managers can nominate their team members for 'Employee ofthe Quarter' award.
Learning & Development
An extensive bouquet of training programmes have been delivered covering on-boardingfunctional and behavioural training. The on-boarding training ensures that new Employeesare trained comprehensively and equipped with necessary know-how required for the role.Functional training programs enable skill development regular updates and buildexpertise. We focus on role specific learning plan and ensure effective use of blendedlearning methods. Our Learning & Development team partners with business leaders andmanagers to focus on developing employees and carving leaders out of our own Employees.Specific programs are planned so as to ensure one builds expertise in her / his own chosencareer. During the pandemic situation your Company has been focusing on different ways ofenhancing knowledge within the organisation by arranging trainings interactions readingmaterials research reports etc. In addition your Company also introduced a newinitiative - Quiz Up - a learning and engagement initiative which enables increase theEmployee's knowledge base on topics related to UTI Products Mutual Fund IndustryEconomy SEBI Regulations and Financial & Economic concepts. The initiative alsoprovides an opportunity for the Employees to learn and earn points through the medium ofmultiple quizzes. The earned points can be redeemed towards knowledge enhancement byparticipating in workshops / training programs / certification programs etc.
Your Company also has in place an Educational Assistance Policy enabling Employees totake up higher professional studies.
We look forward to a stronger focus on meritocracy change management increaseefficiencies and build an effective Organization. HR principles and policies will befurther sharpened. We will retain develop and continue to attract talent with requisiteskills to help shape a better UTI AMC Ltd. and foster employee engagement productivityand motivation. Your Company aims at developing a culture that enables Employees todevelop their leadership capabilities.
The total number of employees of your Company as on 31st March 2020 is 1361. TheEmployee Benefit Expenses for the year Ended 31st March 2020 was Rs. 3398.6 million ascompared to Rs. 3066.5 million for the year ended 31st March 2019. This increase wasprimarily due to expenses incurred in respect of the employee stock option scheme and anincrease in salaries and wages of non-managerial employees pursuant to wage settlemententered into with them.
Information required under section 197(12) of the Act read with rule 5 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 forms part of thisreport.
In terms of the provisions of section 136 of the Companies Act 2013 the Annual Reportis being sent to members excluding the aforementioned information. The information will beavailable on the website of the Company at www.utimf.com.
In accordance with Section 1 77 of Companies Act 2013 your Company has adoptedWhistle Blower Policy to supplement the codes of ethics staff rules anti bribery policyand anti-fraud policy of the Company.
The details related to Vigil Mechanism is provided in the Corporate Governance Reportforming part of this Annual Report.
Prevention of Sexual Harassment Policy at workplace
Your Company has in place an Anti-Sexual Harassment Policy in line with therequirements of Sexual Harassment of Women at the Workplace (Prevention Prohibition &Redressal) Act 2013. All the Employees of the Company as well as any person employed forany work on regular temporary ad-hoc or daily wage basis including a contract workerco-worker probationer trainee apprentice or called by any other such name are coveredunder this policy.
Your Company has constituted Internal Complaints Committee (ICC) to enquire into thecases of sexual harassment at offices / UFCs across India. The details related tocomplaints filed and disposed-off if any are provided in the Corporate Governance Reportforming part of this Annual Report.
Directors and Key Managerial Personnel
As on 31st March 2020 the Board comprised of 11 (eleven) members consisting of 8(eight) Independent Directors [including 3 (three) woman directors] 2 (two) Non-ExecutiveNon Independent Directors and 1 (one) Whole Time Director. The Chairperson of the Companyis a Non-Executive Independent Director. During the FY 2019-20 5 (five) new directorshave been inducted on the Board of your Company.
Mr. Imtaiyazur Rahman was appointed as an Additional Director and Whole Time Directorof the Company with effect from 28th April 2019. The appointment was approved by theshareholders at Annual General Meeting of the Company held on 22nd August 2019 for aperiod of three years with effect from 23rd August 2019
till 22nd August 2022 not liable to retire by rotation. Further the Board ofDirectors at its meeting held on 12th June 2020 based on the recommendation ofNomination & Remuneration Committee appointed Mr. Imtaiyazur Rahman as ChiefExecutive Officer of the Company with effect from 13th June 2020.
Mr. Ashok Shah was appointed as an Additional Director (Independent Category) of theCompany with effect from 7th May 2019. The appointment was approved by the shareholdersat Annual General Meeting of the Company held on 22nd August 2019 for a period of threeyears with effect from 22nd August 2019 until the conclusion of AGM to be held in 2022not liable to retire by rotation.
Ms. Dipali Sheth Ms. Jayashree Vaidhyanathan and Mr. Rajeev Kakar were appointed asAdditional Directors (Independent Category) with effect from 20th November 2019. Theappointments were approved by the shareholders at the Extra-Ordinary General Meeting heldon 16th December 2019 for a period of five years with effect from 16th December 2019till 15th December 2024 not liable to retire by rotation.
Mr. Edward Bernard was appointed as an Additional Director (Non-Executive Category)with effect from 1st October 2018. The appointment was approved by the shareholders atAnnual General Meeting of the Company held on 22nd August 2019 liable to retire byrotation.
Key Managerial Personnel
In terms of Section 2 (51) and Section 203 of the Companies Act 2013 the followingare the Key Managerial Personnel (KMP) of your Company:
- Mr. Imtaiyazur Rahman Whole Time Director and Chief Executive Officer
- Mr. Surojit Saha Chief Financial Officer
- Mr. Arvind Patkar Company Secretary
Mr. Imtaiyazur Rahman relinquished the position of Chief Financial Officer of theCompany with effect from close of office hours on 16th December 2019. Subsequently theBoard of Directors at its meeting held on 16th December 2019 appointed Mr. Surojit Sahaas Chief Financial Officer of the Company with effect from close of office hours on 16thDecember 2019.
Mr. Kiran Vohra ceased to be the Company Secretary of the Company with effect from 11thDecember 2019. Subsequently the Board of Directors at its meeting held on 16thDecember 2019 appointed Mr. Arvind Patkar as Company Secretary of the Company witheffect from 16th December 2019.
The Board of Directors at its meeting held on 12th June 2020 based on therecommendation of Nomination & Remuneration Committee appointed Mr. Imtaiyazur Rahmanas Chief Executive Officer of the Company with effect from 13th June 2020.
Number of Board Meetings
The Board met 9 (nine) times during the FY 2019-20. The maximum interval between anytwo meetings did not exceed 120 days as prescribed in the Companies Act 2013. Thedetails of the composition of the Board and its Committees and of the meetings held andattendance of the Directors at such meetings have been disclosed in the CorporateGovernance Report forming part of this Annual Report.
Declaration of Independence
Your Company has received necessary declarations from each Independent Directors underSection 149(7) of the Companies Act 2013 that he / she meets the criteria ofindependence laid down in
Section 149(6) of the Companies Act 2013 and Regulation 25 of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015.
All Independent Directors are registered in Independent Director's Database maintainedby Indian Institute of Corporate Affairs in compliance with the provisions of Rule 6 ofCompanies (Appointment and Qualifications of Directors) Rules 2014.
Audit & Systems
Your Directors believe that internal audit control is a necessary concomitant of theprinciple of governance that freedom of management should be exercised within a frameworkof appropriate checks and balances. Your Company remains committed to ensuring aneffective internal control environment that provides assurance on the efficiency ofoperations and security of assets.
Well established and robust internal audit processes both at business and corporatelevels continuously monitor the adequacy and effectiveness of the internal controlenvironment across the Company and the status of compliance with operating systemsinternal policies and regulatory requirements. In the networked IT environment of yourCompany valuation of IT security continues to receive focused attention of the internalaudit team which includes IT specialists.
Corporate Social Responsibility
Your Company gives utmost importance to CSR Initiatives in order to operate in aneconomically socially and environmentally sustainable manner while recognizing theinterest of stakeholders. The Company believes in the philosophy of compassionate caregenerosity and compassion characterised by a willingness to build a society that worksfor everyone.
In terms of Section 135 of Companies Act 2013 your Company had constituted CorporateSocial Responsibility (CSR) Committee of directors comprising of Ms. Uttara DasguptaChairperson Mr. Dinesh Kumar Mehrotra Member and Mr. Edward Cage Bernard Member. A CSRsub-Committee of officials was also constituted to identity the projects carry out theground work empanelling the agencies/NGOs/Organisations and other related activities andrecommend the projects to be undertaken.
The CSR Committee recommends the amount of expenditure to be incurred on the activitiesrelated to CSR and monitors the CSR Policy from time to time.
The Company has adopted a Policy on Corporate Social Responsibility in compliance withthe requirements of the Companies Act and the Companies (Corporate Social ResponsibilityPolicy) Rules 2014.
In accordance with the provisions of the Companies Act 201 3 the targeted CSRExpenditure for the FY 2019-20 was Rs. 9.52 crore. Total amount sanctioned during the FY201 9-20 was Rs. 9.01 crore disbursements against the same are being made in installmentsas per the progress of the project. The disbursement of funds depends upon the pace ofimplementation of the projects.
The annual report on our CSR activities is provided as Annexure III to this report.
Risk management is one of our key focus areas and we have established processes andsystems to ensure robust firm-wide risk management. The Board of Directors formulates andperiodically reviews our risk management policies procedures and processes which includethe delegation of investment and financial responsibilities the establishment ofprudential investment norms the approval and dissemination of guidelines andrestrictions as well as the establishment of counter-party limits. The Board also reviewsthe performance of funds against the relevant benchmark and competing funds.
Our risk management structure also includes:
1. Risk Management Committee: consists of five members of the Board and meets at leasttwice a year to review the overall risk management policies and guidelines andimplementation thereof and undertakes risk management in respect of critical projects oractivities;
2. Equity and Debt Steering Committees: Equity Steering
Committee consists of four members and our Debt Steering Committee consists of twomembers. Meetings are held on a regular basis to review funds' performance and strategyreports as well as to discuss products strategies and market developments;
3. Department of Risk Management: consists of seven members and reviews portfolio risksaffecting our funds conducts performance attribution of funds vis-a-vis their respectivebenchmarks and competing funds tracks the adherence of portfolio characteristics to therespective scheme mandates and computes various portfolio analytics to judge the risk andreturn indicators over a period of time;
4. I nvestment Committee: consists of four members and meets on a monthly basis toreview among other things the performance of our funds top securities transactions andexceptions if any to establish investment norms or scheme limits; and
5. Department of Internal Audit: consists of four members who oversee the work of thechartered accountancy firm appointed to carry out our internal audit function. TheDepartment of Internal Audit together with the Investment Committee and the Department ofRisk Management ensures that the policies procedures and processes laid down by theBoard and the Board Risk Management Committee are effectively implemented.
Effective risk management is critical to the operation of our business. Your Companyhave adopted certain policies and procedures in managing the various risks applicable toour operations including:
1. I nvestment risk: Our funds are exposed to underperformance risk with respect toboth the relevant benchmarks and competing funds due to investment related risks whichinclude market risks and credit risks. The measures are taken to address and mitigate suchrisks include prudential investment limits well- documented investment policies andprocedures (including regarding the delegation of powers research methodologies riskevaluation framework and brokers' empanelment policy) sophisticated market informationtools a dedicated securities research team experienced fund managers and a regularperformance reporting and review mechanism.
2. Liquidity risk: Liquidity risk mainly arises in respect of open- ended funds whichtypically allow investors to redeem their units at any time. If a significant number ofinvestors opt for redemption from a particular fund at the same time the fund may faceliquidity risk. The risk is particularly high in respect of income funds considering thelow level of debt securities actively traded in Indian markets and the high concentrationof investors in select funds. The measures we take to address and mitigate liquidity riskinclude reviewing our portfolio positions in light of average trading volumes andhistorical redemption of funds regularly reviewing illiquid equity positions observingconcentration limits for single positions issuers and sectors and prudential issuer andsector norms having a high proportion of the fixed income investments of
our relevant funds in highly-rated fixed income securities and having a line of creditavailable to address our liquidity shortfalls;
3. Operational risk: Operational risk is the risk of loss from inadequate or failedinternal processes and systems or from external events including employee errorsimproper documentation of transactions failure of operational and information securityprocedures computer systems software or other equipment business interruptions andinappropriate behaviour of employees or vendors. The measures we take to address andmitigate operational risk include internal control systems including a concurrent auditsystem for dealing and NAV computation and an outsourced internal audit function astraight-through investment processing system isolating and monitoring the dealing roomservice level agreements with third party vendors conducting disaster recovery drills atleast twice a year separating front-office and back-office functions an effectivecustomer redress mechanism periodic training for our sales team an independentcompliance officer supported by experienced officers and insurance coverage;
4. Market risk: Market risk is the possibility of loss arising from changes in thevalue of a financial instrument as a result of changes in market variables such as equityprices interest rates exchange rates or other asset prices or higher volatility offunds or returns as compared to benchmark or competing funds. The measures we take toaddress and mitigate market risk include implementing investment guidelines and positionlimits in terms of individual stocks sectors and industries having experienced fundmanagers closely monitoring investments and positions as well as measuring risk-adjustedperformance;
5. Credit risk: Credit risk is the risk of loss in market value of debt securities dueto downgrading by credit rating agencies or default in payment by issuers. The measuresare taken to address and mitigate credit risk include establishing counterparty exposurelimits and placing restrictions on investments in unrated or low-rated debt securities;and
6. Regulatory risk: Our business is highly regulated and we may be impacted by newlaws rules and regulations or changes in existing ones which may affect our ability tooperate. The measures we take to address and mitigate regulatory risk include followingregulatory limits and carrying on compliance audits on a monthly basis.
The Company has a 'Policy for Evaluation of the Performance of the Board of Directors'in accordance with the provisions of Section 134(3)(p) of Companies Act 2013 and SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 as amended with anaim to formulate the procedures and prescribe the criteria to evaluate the performance ofthe entire Board of the Company as well as to assess and enhance the effectiveness of theBoard as a whole.
Initial Public Offer (IPO)
During the FY 2019-20 the Board of Directors has approved taking steps to initiate theprocess for an Initial Public Offering (IPO) of your Company by way of an offer for saleby State Bank of India Life Insurance Corporation of India Punjab National Bank Bank ofBaroda and T. Rowe Price International Ltd.
The Company had successfully completed the IPO process during the FY 2020-21 and theequity shares of the Company are listed on National Stock Exchange of India Limited andBSE Limited on 12th October 2020.
Employee Stock Options Scheme
The Company introduced an Employee Stock Option Scheme called the "UTI AMCEmployee Stock Option Scheme - 2007". Each Employee on the rolls of the Company as onDecember 16 2019 and few Employees from its subsidiaries were granted options. Thevesting of the options is from expiry of one year from grant date till four years fromgrant date as per Plan. Under the scheme 2191544 equity shares have been granted to theeligible employees and each option entitles the holder thereof to apply for and beallotted number of equity share granted of the Company having face value of Rs 10/- eachfor an exercise price of Rs.728/- during the exercise period. Vesting of the options shalltake place over a maximum period of 3 (three) years with a minimum vesting period of 1(one) year from the date of grant i.e. 16th December 2019. The exercise period would bemaximum of 4 (four) years from the date of vesting of options. Grant was made based onparameters such as Tenure Performance Role Total Cost to Company etc.
Conservation of Energy & Technology absorption
Your Company operates in an industry which generally does not consume high levels ofenergy. However adequate measures or efforts wherever viable are taken to ensure energyconservation.
Since your Company does not own any manufacturing facility the above said particularsmentioned in the Companies (Accounts) Rules 2014 are not applicable.
Foreign Exchange Earnings and Outgo:
In accordance with the provisions of Section 134 of the Companies Act 2013 and Rule8(3) of Companies (Accounts) Rules 2014 the details of foreign exchange earnings andoutgo are mentioned below:
(Rs. in crore)
|Particulars ||For the year ended 31st March 2020 ||For the year ended 31st March 2019 |
|Foreign Exchange Earnings ||4.85 ||4.32 |
|Foreign Exchange Outgo ||6.85 ||7.72 |
Your company spent foreign exchange for undertaking foreign business tours training ofemployees and payment towards professional fees.
Extract of Annual Return
Pursuant to Section 134(3)(a) read with Section 92(1) of the Act Annual Return of theCompany is available on our website at www.utimf.com.
Your Company has complied with the applicable Secretarial Standards i.e. SS-1 andSS-2 relating to 'Meetings of the Board of Directors' and 'General Meetings'respectively issued by the Institute of Company Secretaries of India.
Significant and Material Orders
There are no significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and your Company's operations in future.
Material changes and commitments affecting financial position between the end of thefinancial year and date of the report
There has been no material changes and commitments affecting the financial position ofthe Company between the end of the FY 2019-20 and the date of this Report.
In terms of the applicable provisions of the Companies Act 2013 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 as amended your Companyadditionally discloses that during the FY 2019-20:
- There was no change in the nature of business of the Company;
- There was no revision in the financial statements or Board
Report of the Company;
- Disclosure pertaining to maintenance of cost records as specified by the CentralGovernment under Section 148 (1) of the Companies Act 2013 is not applicable to theCompany.
- The Company has not issued any shares with differential voting rights; and
- The Company has not issued any Sweat Equity Shares. Directors' ResponsibilityStatement
Pursuant to the requirement under Section 134(3)(c) and Section 1 34(5) of theCompanies Act 201 3 with respect to Directors' Responsibility Statement it is herebyconfirmed that:
(i) in the preparation of the annual accounts for the FY 2019-20 the applicableaccounting standards had been followed along with proper explanation relating to materialdepartures if any;
(ii) the accounting policies have been selected and applied consistently and judgmentsand estimates have been made so that they are reasonable and prudent so as to give a trueand fair view of the state of affairs of the company at the end of the financial year i.e.31st March 2020 and of the profit and loss of the company for that period;
(iii) the proper and sufficient care have been taken for the maintenance of adequateaccounting records in accordance with the provisions of this Companies Act 201 3 forsafeguarding the assets of the company and for preventing and detecting fraud and otherirregularities;
(iv) the annual accounts have been prepared on a going concern basis;
(v) t hat proper internal financial controls were in place and that the financialcontrols were adequate and were operating effectively.
(vi) that systems to ensure compliance with the provisions of all applicable laws werein place and were adequate and operating effectively.
The Board of Directors would like to place on record its gratitude for the valuablesupport co-operation and guidance received from the Government of India Ministry ofCorporate Affairs Registrar of Companies Securities and Exchange Board of India ReserveBank of India Sponsors and the major Shareholder of your Company and the Association ofMutual Funds in India. We are also thankful to our Shareholders Investors of UTI MutualFund schemes Auditors Custodians Registrar and Transfer Agents Banks DistributorsMerchant Bankers Law Firms and all other service providers for their valued support. Wewould also like to thank the employees for their commitment collaboration and partnershipdemonstrated by them during the year.
For and on behalf of the Board of Directors
| ||Dinesh Kumar Mehrotra |
| ||(Chairman) |
| ||(DIN: 00142711) |
|Date: 28th October 2020 || |
|Place: Mumbai || |