Background
Reliance Capital Asset Management Limited (‘the Company’) was incorporated on 24 February 1995.
The principal shareholder of the Company as at 31 March 2014 is Reliance Capital Limited.
The Company’s principal activity is to act as an investment manager to Reliance Mutual Fund (‘the Fund’) and to provide Portfolio Management Services (‘PMS’) to clients under Securities and Exchange Board of India (SEBI) (Portfolio Managers) Regulations, 1993.  The Company is registered with SEBI under the SEBI (Mutual Funds) Regulations, 1996.  The Company manages the investment portfolio of the Fund and provides various administrative services to the Fund as laid down in the Investment Management Agreement dated 12 August 1997.
Significant accounting policies
Basis of brparation
The accompanying financial statements have been brpared and brsented under the historical cost convention on the accrual basis of accounting and comply with the Accounting Standards brscribed by the Companies (Accounting Standards) Rules, 2006. The financial statements are brsented in Indian Rupees. The accounting policies set out below have been applied consistently to the periods brscribed in the financial statements except otherwise disclosed separately.
Use of Estimates
The brparation of the financial statements, in conformity with generally accepted accounting principles (GAAP), requires management to make estimates and assumptions that affect the reported amount of assets, liabilities and disclosure of contingent liabilities 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 of the date of the financial statements.  Actual results may differ from the estimates and assumptions used in brparing the accompanying financial statements. Any revision to accounting estimates is recognised prospectively in current and future periods.
Fixed assets and debrciation
Fixed assets are stated at cost of acquisition less accumulated debrciation. Cost includes all expenses incidental to the acquisition of the fixed assets.
Debrciation of fixed assets is provided on written down value method in accordance with rates specified in Schedule XIV to the Companies Act, 1956 which are mentioned as under :
Leasehold improvements are amortised over the primary period of the lease on straight-line basis or useful life of asset, whichever is lower.
Intangible assets comprising of software purchased / developed and licensing costs are amortised over the useful life of the software up to a maximum of three years commencing from the date on which such software is first utilised.
Assets individually costing Rs.5000 or less are fully debrciated in the year of purchase/ acquisition.
The Company provides pro-rata debrciation from the day the asset is put to use and for any asset sold, till the date of sale.
Impairment of assets
The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired.  If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash-generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount.  The reduction is treated as an impairment loss and is recognized in the statement of profit and loss.  If at the balance sheet date there is an indication that a brviously 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 debrciable historical cost.
Investments
Purchase and sale of investments are recorded on trade date.
Investments are classified as long term or current based on intention of the management at the time of purchase. Investments that are intended to be held for not more than 1 year from the date on which such investments are made, are classified as current. All other investments are classified as long term investments.
Long-term investments are stated at cost of acquisition. Provision for diminution is made to recognise a decline, other than temporary, in the value of investments.
Current investments are valued at the lower of cost or net realisable value. The comparison of cost and net realisable value is done separately in respect of each individual investment.
Transactions in foreign currency
Foreign currency transactions are recorded at the rates of exchange brvailing on the date of the transaction. Exchange differences, if any arising out of transactions settled during the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated at the closing exchange rate on that date.  The exchange differences, if any, are recognised in the statement of profit and loss and related assets and liabilities are accordingly restated in the balance sheet.
Employee Benefits
Provident Fund
The Company expenses its contribution to the statutory provident fund, a defined contribution scheme, made at 12% of the basic salary of each employee.
Gratuity
The Company’s gratuity benefit scheme is a defined benefit plan. The Company’s net obligation in respect of the gratuity benefit scheme is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its brsent value, and the fair value of any plan assets, if any, is deducted.
The brsent value of the obligation under such defined benefit plan is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.
The obligation is measured at the brsent value of the estimated future cash flows. The discount rate is based on the brvailing market yields of Indian government securities as at the balance sheet date for the estimated term of the obligations.
Actuarial gains and losses are recognised immediately in the statement of profit and loss.
Benefits in respect of gratuity, a defined benefit scheme, and superannuation, a defined contribution scheme, as applicable to employees of the Company are annually funded with the Reliance Life Insurance Company Limited and Birla Sun Life Insurance Company Limited respectively.
Leave Encashment
Leave Encashment which is a defined benefit, is accrued based on an actuarial valuation at the balance sheet date carried out by an independent actuary.
Compensated absences
The employees of the Company are entitled to compensated absence. The employees can carry forward a portion of the unutilized accrued leave balance and utilize it in future periods. The Company records an obligation for compensated absences in the period in which the employee renders the service that increases the entitlement. The Company measures the expected cost of compensated absence as the amount that the Company expects to pay as a result ofthe unused entitlement that has accumulated at the balance sheet date.
New fund offer expenses of mutual fund and PMS schemes
Expenses relating to new fund offer of mutual fund and PMS schemes are charged in the statement of profit and loss in the year in which such expenses are incurred except for closed ended schemes which are recognised over the duration of the scheme.
Brokerage and incentives
Brokerage and incentive payments are charged to statement of profit and loss as and when incurred.
Fund expenses
Expenses incurred  on behalf of schemes of Reliance Mutual Fund  are recognised  in the statement of profit and loss under marketing and publicity expenses unless considered recoverable from the schemes in accordance with  the provisions of  SEBI (Mutual Fund) Regulations, 1996.
Expenses directly incurred for the schemes of Reliance Mutual Fund are charged to the statement of profit and loss under respective heads.
Operating leases
Leases where the lessor effectively retains substantially all the risks and benefits of ownership over the lease term are classified as Operating Leases. Operating lease rentals are recognised as an expense on straight line basis over the lease period.
Tax
Current tax
Income tax expense comprises current tax (i.e. amount of tax for the period determined in accordance with the income tax law), deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the year).  Provision for income tax is recognised on an annual basis under the taxes payable method, based on estimated tax liability computed after taking credit for allowances and exemption in accordance with Indian Income Tax Act, 1961. In case of matters under appeal due to disallowance or otherwise, full provision is made when the said liabilities are accepted by the Company. MAT Credit entitlement is recognised where there is convincing evidence that the same can be realised in future. The company has balance of unrecognised MAT credit of Rs. 195,720,799 (P.Y.  Rs. 594,296,833) as at 31 March 2014.
Deferred tax
The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have  been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future. However, where there is unabsorbed debrciation or carried forward loss under taxation laws, deferred tax assets are recognised only to the extent there is a virtual certainty of realisation of such assets. Deferred tax assets are reviewed as at each balance sheet date and written down or written up to reflect the amount that is reasonable/virtually certain (as the casemay be) to be realised.
Earnings per share
The basic earnings per share is computed by dividing the net profit attributable to the equity shareholders by weighted average number of equity shares outstanding during the reporting year.
Number of equity shares used in computing diluted earnings per share comprises the weighted average number of shares considered for deriving basic earnings per share and also weighted average number of equity shares which would have been issued on the conversion of all dilutive potential shares. In computing diluted earnings per share only potential equity shares that are dilutive are included.
Contingencies and provisions
The Company creates a provision when there is brsent obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when  there is a possible obligation or a brsent obligation that may, but probably will not, require an outflow of resources. When there is a  possible obligation or a brsent obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
Segment Reporting
The Company is in the business of providing asset management services to the fund and portfolio management service to clients. The primary segment is identified as asset management services. As such the Company’s financial statements is largely reflective of the asset management business and there is no separate reportable segment. Pursuant to Accounting Standard (AS) 17 Segment Reporting, no segment disclosure has been made in these financial statements, as the Company has only one geographical segment and no other separate reportable business segment.
The Company has developed a system of maintenance of information and documents as required by the transfer pricing legislation under section 92 – 92F of the Income Tax Act, 1961.  Management is of the opinion that all relevant transactions are at arm’s length so that the aforesaid legislation will not have any impact on the financial statement, particularly on the amount of tax expense and that of provision for taxation.
Exceptional items disclosed in the statement of profit and loss amounting to Rs. 57,565,190 pertaining to provision for diminution of investments in offshore subsidiaries pursuant to discontinuance of operations.
Prior period items:
Brokerage expenses in FY 2013-14 is net of writeback of Rs. 134,551,144 pertaining to prior period on account of recognition of unclaimed input service tax credit on brokerage paid in earlier periods.
Demerger:
The Board of Directors at its meeting held on March 21, 2014 have approved the demerger of Azalia Distribution Private Limited with the company which would be carried out through a scheme of arrangement under Sec 391 to Sec 394 of the Companies Act, 1956. As per the scheme, appointed date is April 1, 2013. The scheme has been filed with Bombay High Court & is pending for approval of the court. In view of the above, no effect of the scheme has been recognized in the Financial Statements of this year.
Reliance Asset Management (Malaysia) SDN BHD and Reliance Capital AssetManagement UK Plc., wholly owned subsidiaries of the Company, are in the process of liquidation as on March 31, 2014.
Figures of brvious year have been regrouped, wherever required.

3.20	Disclosure pursuant to Accounting Standard - 15 (Revised) " Employee Benefits" :
A	Defined Contribution Plans:
	Amount of Rs. 46,074,997 (brvious year: Rs. 43,615,884) is recognised as an expense for provident fund and superannuation fund included in "Employee Costs"  - refer note "3.18" of the Statement of profit and loss.
B	Defined Benefit Plans:
i.	Reconciliation of opening and closing  balances of the Present Value of the Defined Benefit Obligation :
				Gratuity Benefit - Funded	Leave Benefit - Unfunded
				2014	2013	2014	2013
	Present value of Defined Benefit
	Obligation at the beginning of the year			53,298,873	41,578,818	28,285,731	33,400,236
	Interest cost			4,263,910	3,534,200	2,008,601	2,414,971
	Current service cost			9,776,432	8,992,104	19,108,128	18,101,842
	Actuarial Losses / ( Gains)			(5,573,878)	10,627,455	(18,904,831)	(19,205,128)
	Benefits paid			(9,028,231)	(11,433,704)	(6,356,429)	(6,426,190)
	Present value of Defined Benefit Obligation at the close of the year			52,737,106	53,298,873	24,141,200	28,285,731
ii	Changes in the fair value of Plan Assets and the reconciliation thereof:
				Gratuity Benefit - Funded	Leave Benefit - Unfunded
				2014	2013	2014	2013
	Fair value of Plan Assets at the beginning of the year			63,305,699	50,322,116	-	-
	Add: Expected return on Plan Assets			5,064,456	4,277,380	-	-
	Add / (Less) : Actuarial (Losses) / Gains			(565,854)	103,975	-	-
	Add: Contributions			377,576	20,035,932	6,356,429	6,426,190
	Less: Benefits Paid			(9,028,231)	(11,433,704)	(6,356,429)	(6,426,190)
	Fair value of Plan Assets at the close of the year			59,153,647	63,305,699	-	-
iii.	Amount Recognised in the Balance Sheet including a reconciliation of the brsent value of the defined obligation in (i) and  the fair value of the plan assets in (ii) to the assets and liabilities recognised in the balance sheet:
				Gratuity Benefit - Funded	Leave Benefit - Unfunded
				2014	2013	2014	2013
	Present value of DefinedBenefit obligation			52,737,106	53,298,873	24,141,200	28,285,731
	Less: Fair value of Plan Assets			59,153,647	63,305,699	-	-
	Present value of unfunded obligation			(6,416,541)	(10,006,826)	24,141,200	28,285,731
	Net Liability/(Asset) recognised in the Balance sheet			NIL	NIL	24,141,200	28,285,731
iv.	Amount recognised in the statement of profit & loss are as follows :
				Gratuity Benefit - Funded	Leave Benefit - Unfunded
				2014	2013	2014	2013
	Current Service Cost			9,776,432	8,992,104	19,108,128	18,101,842
	Interest Cost			4,263,910	3,534,200	2,008,601	2,414,971
	Expected return on Plan Assets			(5,064,456)	(4,277,380)	-	-
	Actuarial Losses / ( Gains)			(5,008,024)	10,523,480	(18,904,831)	(19,205,128)
	Past service costs			-	-	-	-
	Effect of curtailment /settlement			-	-	-	-
	Adjustments for earlier years Recognised in the Statement of Profit and Loss			-	-	-
	Total			3,967,862	18,772,404	2,211,898	1,311,685
v.	Broad Categories of plan assets as a percentage of total assets
				Gratuity Benefit - Funded	Leave Benefit - Unfunded
				2014	2013	2014	2013
						UNFUNDED	UNFUNDED
	Government of India Securities			28.09%	33.74%
	State Government Securities			-	-
	Corporate Bonds			35.46%	37.94%
	Fixed Deposit under Special Deposit Scheme			-	-
	Equity Shares			19.35%	19.14%
	Money market instruments			17.10%	9.18%
	Public Sector Bonds			-	-
	Property			-	-
				100.00%	100.00%
vi.	Actuarial Assumptions as the Balance sheet date:
				Gratuity	Leave Benefit
				2014	2013	2014	2013
	Discount Rate			9.33%	8.00%	8.00%	8.00%
	Expected rate of return on Plan Assets			9.33%	8.00%	-	-
	Salary Escalation rate -- Management Staff			5.00%	5.00%	5.00%	5.00%
	Attrition rate			For Service 4 yrs & below 25% p.a. & 2% thereafter	2% at each age + 25%Service Related	1% throughout	1% throughout
	The estimates of future salary increases considered in actuarial valuation takes into account inflation, seniority, promotion and other relevant factors.
vii.	General Descriptions of significant defined plans:
	Gratuity Plan :
	Gratuity is payable to all eligible employees of the Company on superannuation, death and permanent disablement, in terms of the provisions of the Payment of Gratuity Act 1972 or as per the Company’s Scheme whichever is more beneficial.
	Leave Plan :
	Encashment of leave can be availed by the employee for the balance in the earned account as on 1 January 2009. All carry forward earned leaves are available for availment but not encashment. Leave can be encashed subject to available balance of more than 15 days.
viii.	Five-year information
	Amounts for the current & the brvious four periods are as follows:
	Gratuity		31 March 2014	31 March 2013	31 March 2012	31 March 2011	31 March 2010
	Defined benefit obligation		52,737,106	53,298,873	41,578,818	30,902,188	27,036,202
	Fair value of plan assets		59,153,647	63,305,699	50,322,116	36,840,578	35,258,519
	(Surplus) / deficit in the plan		(6,416,541)	(10,006,826)	(8,743,298)	(5,938,390)	(8,222,317)