To the Board Directors of Trustee Franklin Templeton Trustee Services Private Limited
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Independent Auditor’s Report To the Board Directors of Trustee Franklin Templeton Trustee Services Private Limited Franklin Templeton Mutual Fund – Franklin India Low Duration Fund (No. of segregated portfolios in the scheme -2) Report on the Audit of the Financial Statements Qualified Opinion We have audited the financial statements of Franklin India Low Duration Fund (No. of segregated portfolios in the scheme -2) – Total Portfolio (the ‘Scheme’) of Franklin Templeton Mutual Fund, consisting of the Main portfolio and Segregated portfolio (refer note 1), which comprise the balance sheet as at 31 March 2021 and the revenue account and cash flow statement for the year then ended, and notes to the financial statements, including a summary of the significant accounting policies. In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion section of our report, the aforesaid financial statements give a true and fair view in conformity with the accounting principles generally accepted in India relating to the liquidation basis of accounting of the state of affairs of the Scheme as at 31 March 2021, its net surplus and cash flows for the year ended on that date. Basis for Qualified Opinion We draw attention to Note 17 of the financial statements, regarding the ongoing judicial process including the matters pending with the Hon’ble Supreme Court and the appeal made by Franklin Templeton Asset Management (India) Private Limited (the ‘AMC’) and being made by Franklin Templeton Trustee Services Private Limited (the ‘Trustee’) to the Securities Appellate Tribunal (‘SAT’) on the Orders of the Securities and Exchange Board of India (the ‘SEBI’) in relation to the governance and affairs of the Scheme. Pursuant to the direction (without prejudice to the rights and contentions of the parties) of the Hon’ble Supreme Court, the Trustee obtained the approval / consent of the unitholders for winding up of the Scheme. However, the other aspects and issues in the petition of the AMC and some of the unit holders including the governance and affairs of the Scheme and interpretation of regulation 18(15) (c) and regulation 39 of the Securities and Exchange Board of India (Mutual Funds) Regulation, 1996 , as amended (the ‘Regulations’) are still pending before the Hon’ble Supreme Court. In the meanwhile, upon consideration of observations of the forensic auditor and response submitted by the AMC and the Trustee, the SEBI issued show cause notices to the AMC, the Trustee and 8 employees of the AMC (including an ex-employee). All the parties submitted responses to the show cause notice and post that the SEBI issued Orders to the AMC on 7 June 2021 and the Trustee and 8 employees of the AMC (including an ex-employee) on 14 June 2021 inter-alia directing the AMC to refund to the Scheme, the investment management and advisory fees collected from 4 June 2018 (i.e. date from which categorization circular was effective) till 23 April 2020 amounting to Rs. 41.19 crores (including interest), imposing restrictions on the AMC on launching new debt schemes and imposing monetary penalty on the AMC and the Trustee and 8 employees of the AMC (including an ex-employee).
Independent Auditor’s Report (Continued) Franklin Templeton Trustee Services Private Limited Franklin Templeton Mutual Fund – Franklin India Low Duration Fund (No. of segregated portfolios in the scheme -2) Basis for Qualified Opinion (Continued) The AMC has filed an appeal against the SEBI’s Order on 21 June 2021. On 28 June 2021, SAT issued an interim stay on the SEBI’s Order and directed AMC to deposit Rs. 250 Crore (consolidated amount across the board for all the schemes under winding up) in an escrow account within three weeks from the date of the order. The Trustee and 8 employees of the AMC (including an ex- employee) are in the process of filing an appeal against the SEBI’s Order with SAT. The final outcome of this appeal is pending as on the reporting date. Given the uncertainty relating to the outcome of the appeal, the Scheme has not recognized an asset for the recovery of fee from the AMC. Whilst the matter is pending to be further admitted/ heard by SAT, management, the Trustee and the AMC, based on their review of the findings of the SEBI’s Order, believe this should not have a material impact on the financial statements of the Scheme for the year ended 31 March 2021. However, given the fact that certain matters related to the governance and affairs of the six schemes are pending before the Hon’ble Supreme Court and the aforesaid Order of SEBI is being challenged in appeal before SAT (as above) and given the uncertainty, we are unable to comment on the consequential impact, if any, these matters may have on these financial statements for the year ended 31 March 2021. We further draw attention to Note 9d of the financial statements, regarding accrual of trail commission in the Scheme post issuance of the notice of its winding up i.e. from 24 April 2020 to 17 March 2021. The AMC vide letter dated 19 April 2021 sought guidance of the SEBI on the payment of trail commission post issuance of the notice of its winding up. The SEBI vide letter dated 12 May 2021 clarified that trail commission due and payable till the date of issuance of the notice of winding up i.e. 23 April 2020 can be charged to the schemes under winding up. The AMC vide letter dated 26 May 2021, has sought further clarification from SEBI on payment of such commission for the period 24 April 2020 to 17 March 2021.The SEBI vide letter dated 2 July 2021 re-iterated that trail commission due and payable till the date of issuance of the notice of winding up i.e. 23 April 2020 can be charged to the schemes under winding up. Management believes that under Regulation 54, distribution commission is a recurring expense payable within the ‘total expense ratio’ as disclosed in the scheme information document. Management is in the process of evaluating the letter and next steps to be taken in this regard. Since, management is yet to complete its assessment and decide on the future course of action, trail commission amounting to Rs. 5.51 Crore has not been reversed for the period 24 April 2020 to 17 March 2021. Had the Scheme not accrued the trail commission for the period from 24 April 2020 to 17 March 2021, ‘Commission to Agent’ expenses and ‘Other Current Liabilities’ would have been lower by Rs. 5.51 crores and ‘net surplus for the year’ and ‘retained surplus’ of the Scheme would have been higher by Rs. 5.51 crores. We conducted our audit in accordance with the Standards on Auditing (‘SAs’) issued by the Institute of Chartered Accountants of India (the ‘ICAI’). Our responsibilities under those SAs are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Scheme in accordance with the Code of Ethics issued by the ICAI and we have fulfilled our other ethical responsibilities in accordance with the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.
Independent Auditor’s Report (Continued) Franklin Templeton Trustee Services Private Limited Franklin Templeton Mutual Fund – Franklin India Low Duration Fund (No. of segregated portfolios in the scheme -2) Emphasis of Matters We draw attention to Note 2 to the financial statements, which explain that in view of the decision of the Trustee to wind-up the Scheme and to cease any business activity in respect of the Scheme, the going concern assumption is not valid for the preparation of the financial statements of the Scheme. Accordingly, the financial statements of the Scheme have been prepared on a liquidation basis i.e. assets are measured at lower of carrying amount and estimated net realizable values and liabilities are stated at their estimated settlement amounts. Further to the decision taken by the Trustee to wind-up the scheme, some unitholders sent legal notices and filed writ petitions before Hon’ble High Courts of Madras, Delhi and Gujarat challenging the decision of the Trustee to wind up the scheme without the consent of the unitholders and raising concerns over non-compliance with the investment objectives of the Scheme. The single bench of Hon’ble Gujarat High Court issued a stay order against the notice dated 28 May 2020 issued by the Trustee to conduct E-voting and Unitholder’s meet for winding up of the Scheme. The Trustee and the AMC filed a special leave petition before Hon’ble Supreme Court along with a petition to transfer the writ petitions pending before various High courts to a single High court. On 19 June 2020, Hon’ble Supreme Court transferred all the aforesaid matters to Hon’ble High Court of Karnataka with a direction to hear and finally decide the matter within three months. On 24 October 2020, Hon’ble Karnataka High Court upheld that the decision taken by the Trustee to wind up the schemes can be implemented only after obtaining the consent of the unitholders by simple majority. The Trustee and the AMC filed an appeal on 23 November 2020 with Hon’ble Supreme Court on certain aspects of the Judgement of Hon’ble High Court of Karnataka. The petitioners before the various High courts also filed separate SLPs before the Supreme Court and all these matters were listed together. With a view to proceed with orderly realization of value from Scheme’s assets and distribution to unitholders at the earliest, the Trustee had sought permission of Hon’ble Supreme Court to seek the approval of unitholders for winding up the Schemes, to which permission was granted by Hon’ble Supreme Court on 3 December 2020. As per the interim order passed on 3 December 2020 and 9 December 2020 by Hon’ble Supreme Court, E-voting was held from 26 December 2020 to 28 December 2020 followed by a unitholders meeting on 29 December 2020 and the results of this voting exercise was delivered to Hon’ble Supreme Court by the SEBI appointed independent observer. On 18 January 2021, Hon’ble Supreme Court disclosed the result and advised the Trustee to compute the results based on units as well. For the Scheme, out of the votes cast, 97.23 % of unitholders representing 98.08 % of units, voted in favour of winding up. However, few unitholders raised some objections on the E-voting process and after concluding the hearing Hon’ble Supreme Court has reserved the matter for pronouncing order. On 2 February 2021, Hon’ble Supreme Court permitted the Scheme to distribute cash generated by the Scheme as of 15 January 2021 to the unitholders and directed SBI MF to distribute this amount to unitholders. On 12 February 2021, Hon’ble Supreme Court upheld the results of the e-voting under Regulation 18 (15) (c) held in December 2020 and confirmed the winding up of the six schemes and appointed SBI Mutual Funds Management Private Limited (‘SBI MF’) to undertake the exercise of winding up, which would include liquidation of assets and distribution to unitholders. SBI MF had filed the standard operating procedure (‘SOP’) for liquidation of assets and distribution of cash to unit holders with the Hon’ble Supreme Court on 8 March 2021 which was taken on record and accepted by the Hon'ble Supreme Court on 18 March 2021. However the other aspects and issues in the petition of the Appellant and some of the unit holders including the governance and affairs of the Scheme and interpretation of regulation 18(15) (c) and regulation 39 of the Regulations are still pending before the Hon’ble Supreme Court.
Independent Auditor’s Report (Continued)
Franklin Templeton Trustee Services Private Limited
Franklin Templeton Mutual Fund – Franklin India Low Duration Fund (No. of
segregated portfolios in the scheme -2)
Emphasis of Matters (Continued)
Management believes that the aforementioned litigations would not have a material impact on the
financial statements of the Scheme.
We draw attention to Note 18 to the financial statements which states that whilst the COVID-19
impact has been factored in the fair valuation of fixed income securities in the financial statements
as at 31 March 2021, however the ongoing COVID – 19 situation could increase the uncertainty and
adversely affect the ultimate realizable value of the Scheme’s fixed income securities, from that
estimated as at 31 March 2021.
Our opinion is not modified in respect of these matters.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements of the current period. These matters were addressed in the
context of our audit of the financial statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters. In addition to the matter described in the Basis
for Qualified Opinion section we have determined the matters described below to be the key audit
matters to be communicated in our report
Key audit matter How the matter was addressed in our audit
Fair valuation of fixed income securities
Refer Note 2 (c) to the financial statements
▪ Fair valuation of debt securities is a subjective Our audit procedures included the following:
area with judgment applied in determining fair ▪ We understood, evaluated and tested the design
value. and operating effectiveness of key controls around
▪ Determination of fair valuation of securities is the fair valuation of debt securities.
dependent on various factors including issuer ▪ We tested valuation policy approved by the
specific factors, general factors, availability and Trustees for its compliance with the Regulations.
quality of data. ▪ We checked the fair value used by the Scheme for
▪ Fair valuation of fixed income securities requires the debt securities were in accordance with the
application of valuation principles prescribed by valuation policy.
the Regulations. ▪ We evaluated judgements and estimates used
▪ We have identified fair valuation of fixed income while determining the fair valuation of debt
securities as a key audit matter because of inherent securities comprising of assumptions and
subjectivity of estimates and judgement and its relevance of data sources.
significance to the financial statements.Independent Auditor’s Report (Continued) Franklin Templeton Trustee Services Private Limited Franklin Templeton Mutual Fund – Franklin India Low Duration Fund (No. of segregated portfolios in the scheme -2) Other Information Management of the AMC is responsible for the other information. The other information comprises the information included in the Annual Report but does not include the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of Management and Those Charged with Governance for the Financial Statements The Scheme’s management, the Board of Directors of the Trustee and the Board of Directors of the AMC (collectively referred to as ‘Management’) are responsible for the preparation of these financial statements that give a true and fair view of the state of affairs, results of operations and cash flows of the Scheme in accordance with the accounting policies and standards specified in the Ninth Schedule of the Regulations and the accounting principles generally accepted in India relating to the liquidation basis of accounting. This responsibility includes design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. In preparing the financial statements, Management is responsible for assessing the Scheme’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless Management either intends to liquidate the Scheme or to cease operations, or has no realistic alternative but to do so. In the present case Management intends to liquidate the Scheme. Management are responsible for overseeing the Scheme’s financial reporting process. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Independent Auditor’s Report (Continued)
Franklin Templeton Trustee Services Private Limited
Franklin Templeton Mutual Fund – Franklin India Low Duration Fund (No. of
segregated portfolios in the scheme -2)
Auditor’s Responsibilities for the Audit of the Financial Statements (Continued)
As part of an audit in accordance with SAs, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control;
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Scheme’s internal controls;
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by Management;
• Conclude on the appropriateness of Management’s use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Scheme’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditor’s report to the related disclosures in the 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’s report. However, future events or
conditions may cause the Scheme to cease to continue as a going concern. In the present case,
liquidation basis of accounting has been used since the Trustee have concluded that the use of
going concern basis is not appropriate in the facts and circumstances as stated in Note 2.
• Evaluate the overall presentation, structure and content of the financial statements, including
the disclosures and whether the financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies
in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
Report on Other Legal and Regulatory Requirements
1 As required by Regulation 55 (4) of the Regulations, we report that:
(a) We have obtained all information and explanations which, to the best of our knowledge
and belief, were necessary for the purposes of the audit; and
(b) Except for the effects of the matters described in the Basis for Qualified Opinion paragraph
above, the balance sheet and the revenue account have been prepared in accordance with
the accounting policies and standards as specified in the Ninth Schedule of the Regulations
as applicable in the context of liquidation basis of accounting.Independent Auditor’s Report (Continued)
Franklin Templeton Trustee Services Private Limited
Franklin Templeton Mutual Fund – Franklin India Low Duration Fund (No. of
segregated portfolios in the scheme -2)
Report on Other Legal and Regulatory Requirements (Continued)
2 As required by Clause 5 (ii) (2) of the Eleventh Schedule of the Regulations, we report that the
balance sheet and the revenue account are in agreement with the books of account of the
Scheme.
3 As required by the Eight Schedule of the Regulations, we report that, except for the effects of
the matters described in the Basis for Qualified Opinion paragraph above, in our opinion and
on the basis of information and explanations given to us, the methods used to value non - traded
securities as at 31 March 2021, as determined by the Board of Directors of the AMC, are in
accordance with the Regulations and other guidelines issued by the SEBI as applicable and
approved by the Board of Directors of the Trustee, are fair and reasonable. This is in the context
of liquidation basis of accounting whereby non-traded securities are measured at lower of
carrying amount and estimated net realisable value.
For B S R & Co. LLP
Chartered Accountants
Firm's Registration No: 101248W/W-100022
Sameer Mota
Mumbai Partner
5 July 2021 Membership No. 109928
UDIN: 21109928AAAATA3082FRANKLIN TEMPLETON MUTUAL FUND
BALANCE SHEET AS AT MARCH 31, 2021
(All amounts in thousands of Rupees)
Franklin India Low Duration Fund-Segregated Portfolio 2 - Franklin India Low Duration Fund (No. of segregated Portfolios
Franklin India Low Duration Fund (No. of segregated Portfolios Franklin India Low Duration Fund-Segregated Portfolio 1 -
Schedules 10.90% Vodafone Idea Ltd (02-Sep-2023) P/C 03 Sep 2021 – in the scheme -2) – Total portfolio i.e. Main portfolio &
in the scheme -2) – Main portfolio 8.25% Vodafone Idea Ltd (10-Jul-2020) – Segregated portfolio
Segregated portfolio Segregated portfolio
As at As at As at As at As at As at As at As at
March 31, 2021 March 31, 2020 July 10, 2020 March 31, 2020 March 31, 2021 March 31, 2020 March 31, 2021 $$ March 31, 2020
LIABILITIES
1 Unit Capital 2(b) & 3 45,35,092 1,40,16,644 19,43,743 21,03,093 19,36,318 21,03,093 84,15,153 1,82,22,830
2 Reserves and Surplus 4
2.1 Unit Premium Reserve (29,33,830) (29,40,196) (1,62,708) (1,59,539) (6,02,705) (5,93,093) (36,99,243) (36,92,828)
2.2 Unrealised Appreciation Reserve 1,26,496 94 - - - - 1,26,496 94
2.3 Retained Surplus 81,85,818 1,62,10,641 2,00,657 (19,43,554) (13,33,613) (15,10,000) 70,52,862 1,27,57,087
3 Borrowings
3.1 Borrowings from CCIL - 51,58,000 - - - - - 51,58,000
4 Current Liabilities and Provisions 5
4.1 Current Liabilities 1,23,674 1,38,467 776 - - - 1,24,450 1,38,467
TOTAL 1,00,37,250 3,25,83,650 19,82,468 - - - 1,20,19,718 3,25,83,650
ASSETS
1 Investments 2(c) & 6
1.1 Listed Securities
1.1.1 Other Debentures and Bonds 83,68,224 2,00,90,811 - - - - 83,68,224 2,00,90,811
1.2 Unlisted Securities
1.2.1 Privately Placed Debentures and Bonds 2,88,739 97,15,232 - - - - 2,88,739 97,15,232
1.2.2 Privately Placed Debentures and Bonds - - - -
-Below Investment Grade and Default - 5,09,524 - 5,09,524
1.3 Money Market Instruments
1.3.1 Commercial Papers - 5,28,411 - - - - - 5,28,411
1.4 Units of Mutual Fund 9,56,621 - - - - - 9,56,621 -
2 Other Current Assets 7
2.1 Cash and Bank Balances 2,51,881 42,372 19,82,468 - - - 22,34,349 42,372
2.2 Reverse Repo Lending - 9,14,358 - - - - - 9,14,358
2.3 Others 1,71,785 7,82,942 - - - - 1,71,785 7,82,942
TOTAL 1,00,37,250 3,25,83,650 19,82,468 - - - 1,20,19,718 3,25,83,650
$$ Includes balances as at July 10, 2020 for Segregated portfolio -1
Reference to significant accounting policies 1 to 19
The accompanying schedules are integral part of this Balance Sheet.
As per our attached report of even date
For B S R & Co. LLP For Franklin Templeton Trustee For Franklin Templeton Asset Management
Chartered Accountants Services Private Limited (India) Private Limited
Firm's Registration No.: 101248W/W-100022
Sd/- Sd/- Sd/- Sd/- Sd/-
Sameer Mota Sandra Martyres Tabassum Inamdar S. Jayaram Santosh Kamath
Partner Director Director Director Managing Director &
Membership No: 109928 Chief Investment Officer –
Fixed Income
Sd/- Sd/- Sd/- Sd/-
Place : Mumbai Shilpa Shetty Sanjay Sapre Sandeep Nair Kunal Agarwal
Date : July 5, 2021 Director President Vice President Vice President &
Portfolio Manager –
Fixed IncomeFRANKLIN TEMPLETON MUTUAL FUND
REVENUE ACCOUNT FOR THE YEAR ENDED MARCH 31, 2021
(All amounts in thousands of Rupees)
Franklin India Low Duration Fund-Segregated Portfolio 2 - Franklin India Low Duration Fund (No. of segregated Portfolios
Franklin India Low Duration Fund (No. of segregated Portfolios Franklin India Low Duration Fund-Segregated Portfolio 1 -
Schedules 10.90% Vodafone Idea Ltd (02-Sep-2023) P/C 03 Sep 2021 – in the scheme -2) – Total portfolio i.e. Main portfolio &
in the scheme -2) – Main portfolio 8.25% Vodafone Idea Ltd (10-Jul-2020) – Segregated portfolio
Segregated portfolio Segregated portfolio
Year ended Year ended For the period ended For the period January 24,2020 Year ended For the period January 24,2020 Year ended Year ended
to to
March 31, 2021 March 31, 2020 July 10, 2020 March 31, 2020 March 31, 2021 March 31, 2020 March 31, 2021 $$$ March 31, 2020
1 INCOME & GAINS
1.1 Interest ( Refer Note No.16) 2(d) & 8 24,39,005 57,73,186 1,74,988 - 1,76,387 - 27,90,380 57,73,186
1.2 Profit on inter-scheme transfer of investments 2(d) 712 2,82,112 - - - - 712 2,82,112
1.3 Profit on sale/redemption of investments in securities (other than inter-scheme transfer) 2(d) 1,50,829 - 26,446 - - - 1,77,275 -
1.4 Change in Unrealised Appreciation in the value of Investments 2(c) & 6(ii) 1,26,402 (20,876) - - - - 1,26,402 (20,876)
1.5 Other Income 2(e ) & 2(g) 534 12,067 - - - - 534 12,067
27,17,482 60,46,489 2,01,434 - 1,76,387 - 30,95,303 60,46,489
2 EXPENSES & LOSSES
2.1 Loss on sale/redemption of investments in securities (other than inter-scheme transfer) 2(d) - 2,96,186 - - - - - 2,96,186
2.2 Management Fees 9 5,978 2,04,656 - - - - 5,978 2,04,656
2.3 GST on Management Fees 9 1,076 36,837 - - - - 1,076 36,837
2.4 Transfer Agents Fees and Expenses 605 19,587 - - - - 605 19,587
2.5 Custodian Fees 2 3,745 - - - - 2 3,745
2.6 Trusteeship Fees 9 24 844 - - - - 24 844
2.7 Commission to Agents 59,334 1,52,750 - - - - 59,334 1,52,750
2.8 Investor Education Expenses 2(f) 323 11,248 - - - - 323 11,248
2.9 Marketing and Distribution Expenses 2,714 5,701 - - - - 2,714 5,701
2.10 Audit Fees 509 338 - - - - 509 338
2.11 Change in Unrealised Depreciation in value of Investments 2(c) & 6(ii) (36,08,860) 34,27,523 (19,43,554) 19,43,554 - 15,10,000 (55,52,414) 68,81,077
2.13 Provision for default securities 35,26,810 - - - - - 35,26,810 -
2.13 Other Operating Expenses 5,169 6,833 777 - - - 5,946 6,833
(6,316) 41,66,248 (19,42,777) 19,43,554 - 15,10,000 (19,49,093) 76,19,802
3 NET SURPLUS/(DEFICIT) FOR THE YEAR/ PERIOD 27,23,798 18,80,241 21,44,211 (19,43,554) 1,76,387 (15,10,000) 50,44,396 (15,73,313)
4 Transfer from Retained Surplus 4 1,62,10,641 3,42,44,937 (19,43,554) - (15,10,000) - 1,27,57,087 3,42,44,937
5 Add: Balance Transfer from Unrealised Appreciation Reserve 4 94 20,970 - - - - 94 20,970
6 Less: Balance Transfer to Unrealised Appreciation Reserve 4 1,26,496 94 - - - - 1,26,496 94
7 Add / (Less): Equalisation Credit/(Debit) 2(b) (1,06,22,219) (1,96,85,960) - - - - (1,06,22,219) (1,96,85,960)
8 Income Available for Appropriation 81,85,818 1,64,60,094 2,00,657 (19,43,554) (13,33,613) (15,10,000) 70,52,862 1,30,06,540
9 Dividend Appropriation
9.1 Income Distributed during the Year / Period 14 0* (1,76,356) - - - - 0* (1,76,356)
9.2 Tax on Income Distributed during the Year / Period ## 14 - (73,097) - - - - - (73,097)
10 RETAINED SURPLUS / (DEFICIT) CARRIED 4 81,85,818 1,62,10,641 2,00,657 (19,43,554) (13,33,613) (15,10,000) 70,52,862 1,27,57,087
(8+9)
FORWARD TO THE BALANCE SHEET
$$$ Includes balances during the period April 1, 2020 to July
10, 2020 for Segregated portfolio -1
## Income distribution is subject to deduction of TDS at the
applicable rates effective April 1, 2020
* Amount is less than rupees one thousand
Reference to significant accounting policies 1 to 19
The accompanying schedules are integral part of this Revenue Account.
As per our attached report of even date
For B S R & Co. LLP For Franklin Templeton Trustee For Franklin Templeton Asset Management
Chartered Accountants Services Private Limited (India) Private Limited
Firm's Registration No.: 101248W/W-100022
Sd/- Sd/- Sd/- Sd/- Sd/-
Sameer Mota Sandra Martyres Tabassum Inamdar S. Jayaram Santosh Kamath
Partner Director Director Director Managing Director &
Membership No: 109928 Chief Investment Officer –
Fixed Income
Sd/- Sd/- Sd/- Sd/-
Place : Mumbai Shilpa Shetty Sanjay Sapre Sandeep Nair Kunal Agarwal
Date : July 5, 2021 Director President Vice President Vice President &
Portfolio Manager –
Fixed IncomeFRANKLIN TEMPLETON MUTUAL FUND
CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2021
(All amounts in thousands of Rupees)
Franklin India Low Duration Fund- Franklin India Low Duration Fund-
Franklin India Low Duration Fund (No. of segregated Portfolios in the scheme -2) – Main Segregated Portfolio 1 - 8.25% Vodafone Segregated Portfolio 2 - 10.90% Vodafone
portfolio Idea Ltd (10-Jul-2020) – Segregated Idea Ltd (02-Sep-2023) P/C 03 Sep 2021 –
portfolio Segregated portfolio
Year ended Year ended For the period ended Year ended
March 31, 2021 March 31, 2020 July 10, 2020 March 31, 2021
Cashflow from operating activities
Surplus/(Deficit) for the year before equalisation and income distribution. 27,23,798 18,80,241 21,44,211 1,76,387
Add / (Less) :Change in Unrealised Appreciation in value of Investments (1,26,402) 20,876 - -
Add / (Less) :Change in Unrealised Depreciation in value of Investments (36,08,860) 34,27,523 (19,43,554) -
Add / (Less) :Amortization of premium / discount on investment cost (1,19,220) (16,81,168) - -
Add / (Less) :Interest income (24,95,834) (58,18,929) (1,74,988) (1,76,387)
Add / (Less) :Interest expense on borrowing 56,829 45,743 - -
Adjustments for:-
(Increase)/Decrease in Investments at cost 2,50,84,876 3,51,39,421 19,43,554 -
(Increase)/Decrease in Other current assets (2,330) 32,700 - -
Increase/(Decrease) in Current liabilities 29,861 (12,925) 776 -
Cash Generated from / (used in) operating activities before 2,15,42,718 3,30,33,482 19,69,999 -
adjustement for interest received and paid
Interest income received 30,90,894 61,57,384 1,74,988 1,76,387
Interest expense paid on borrowing (57,949) (45,743) - -
Net Cash Generated from / (used in) operating activities (A) 2,45,75,663 3,91,45,123 21,44,987 1,76,387
Cashflow from financing activities
Increase/(Decrease) in Unit capital (94,81,552) (2,06,08,569) (1,59,350) (1,66,775)
Increase/(Decrease) in Unit premium @@@ (1,06,15,853) (2,31,20,488) (3,169) (9,612)
Adjustments for:-
Increase/(Decrease) in Redemption Payable (43,483) (2,401) - -
(Increase)/Decrease in Subscription Receivable 18,427 39,290 - -
Dividend paid during the year - (1,36,752) - -
Increase/(Decrease) in Loans and Borrowings (51,58,000) 51,58,000 - -
Increase/(Decrease) in Unclaimed Redemption (10) 10 - -
Increase/(Decrease) in Unclaimed distributed income (14) 14 - -
Increase/(Decrease) in units pending allotment (27) (73,434) - -
Net Cash Generated from / (used in) financing activities (B) (2,52,80,512) (3,87,44,330) (1,62,519) (1,76,387)
Net Increase/(Decrease) in cash and cash equivalents (A+B) (7,04,849) 4,00,793 19,82,468 -
Cash and Cash Equivalents as at the beginning of the year 9,56,730 5,55,937 - -
Cash and Cash Equivalents as at the close of the year 2,51,881 9,56,730 19,82,468 -
Components of cash and cash equivalents
Balances with banks in current accounts 2,51,881 9,56,730 19,82,468 -
2,51,881 9,56,730 19,82,468 -
@@@ includes amount of (3,458,452) adjusted on account of segregation
of portfolio during the financial year 2019-2020.
Note 1 :Cash and Cash Equivalents includes Reverse Repo balances
(Current Year - Nil & Previous Year - INR 914,358) and bank balances in
current account pertaining to Investor education accruals, unclaimed
redemptions/ dividends etc.
Note 2 :The Above Cashflow Statement has been prepared under the
indirect method for identifying operating cash flows as set out in Accounting
Standard 3 - Cash Flow Statement (Revised 1997), issued by the Institute of
Chartered Accountants of India.
As per our attached report of even date
For B S R & Co. LLP For Franklin Templeton Trustee For Franklin Templeton Asset Management
Chartered Accountants Services Private Limited (India) Private Limited
Firm's Registration No.: 101248W/W-100022
Sd/- Sd/- Sd/- Sd/- Sd/-
Sameer Mota Sandra Martyres Tabassum Inamdar S. Jayaram Santosh Kamath
Partner Director Director Director Managing Director &
Membership No: 109928 Chief Investment Officer –
Fixed Income
Sd/- Sd/- Sd/- Sd/-
Place : Mumbai Shilpa Shetty Sanjay Sapre Sandeep Nair Kunal Agarwal
Date : July 5, 2021 Director President Vice President Vice President &
Portfolio Manager –
Fixed IncomeFRANKLIN TEMPLETON MUTUAL FUND
SCHEDULES TO THE BALANCE SHEET AS AT MARCH 31, 2021 AND REVENUE ACCOUNT FOR THE YEAR ENDED MARCH 31, 2021
(All amounts in thousands of Rupees)
1. BACKGROUND
Franklin Templeton Mutual Fund (‘the Fund’) was established as a trust under the Indian Trusts Act, 1882, by way of a trust deed dated January 4, 1996, a supplementary trust deed dated March 30, 1996 and August 26, 2005 executed
by Templeton International Inc. USA, the sponsor of the Fund. Templeton International Inc. is a part of the Franklin Templeton Investments group.
In accordance with the Securities and Exchange Board of India (‘SEBI’) (Mutual Funds) Regulations, 1996 (‘the SEBI Regulations’), the Board of Directors of Franklin Templeton Trustee Services Private Limited (‘the Trustee’) has
appointed Franklin Templeton Asset Management (India) Private Limited ('the AMC') to manage the Fund’s affairs and operate its Schemes.
The objective and other feature of the schemes covered in the condensed financial statement are as under:
Scheme Name Nature of the Scheme Date of Allotment Scheme Objective Plans Offered ##
Franklin India Low Duration Fund Open Ended Mutual Fund Scheme February 7, 2000 The primary objective of the Scheme is to earn The Scheme offers its investors three plans: the Monthly IDCW Plan, the
regular income for investors through investment Quarterly IDCW Plan, and the Growth Plan (‘the Plans’). Effective January 1,
primarily in debt securities 2013, in accordance with SEBI Circular no. CIR/IMD/DF/21/2012 dated
September 13, 2012, the Scheme introduced a new Plan under each of the
Existing plan / option, termed as ‘Direct’.”
IDCW - Income Distribution cum capital withdrawal
## On April 23, 2020, the Trustee issued a winding up notice thereby deciding to wind up the scheme in accordance with Regulation 39(2)(a) of the SEBI Regulations. Effective April 24, 2020, fresh subscriptions / redemptions are not
permitted in the scheme on account of the winding up notice.
This scheme is under winding-up and SBI Funds Management Private Limited has been appointed as the liquidator as per the order of Hon'ble Supreme Court dated February 12, 2021.
SEBI vide its Circular no. SEBI/HO/IMD/DF3/CIR/P/2017/114 dated October 6, 2017 read along with Circular no. SEBI/HO/IMD/DF3/CIR/P/2017/126 dated December 4, 2017 (the “Circulars”) had issued directions for categorization
and rationalization of all the Mutual Fund Schemes in order to standardize the scheme categories and characteristics of each category. Pursuant to the circulars, the Board of Directors of Franklin Templeton Trustee Services Private
Limited and Franklin Templeton Asset Management (India) Private Limited have approved the proposed categorization and changes in name/ features of the schemes. Subsequently, changes in name/ features of this scheme (as
applicable) on account of the proposed categorization was notified to SEBI and the changes were made effective June 4, 2018.
During FY 2019-20, the Scheme has included provisions related to creation of segregated portfolios in the Scheme Information Document (SID) with effect from December 26, 2019. This change in fundamental attribute of the Scheme
was done in accordance with regulation 18(15A) of the SEBI (Mutual Funds) Regulations, 1996.
During FY 2019-20, the Scheme has modified its asset allocation and has included Investment in debt instruments having structured obligations/ credit enhancements with effect from January 29, 2020. This change in fundamental
attribute of the Scheme was done in accordance with regulation 18(15A) of the SEBI (Mutual Funds) Regulations, 1996.
Pursuant to the rating downgrade of the security to ‘below investment grade’, the following segregated portfolios were created on January 24, 2020 with the approval of the Board of Directors of the Trustee and AMC, in accordance with
the SEBI Regulations and as per the provisions of the Scheme Information Document (SID):
Effective date of
Name of the segregated portfolio creation
Franklin India Low Duration Fund-Segregated Portfolio 1 - 8.25%
24-Jan-20
Vodafone Idea Ltd (10-Jul-2020) ###
Franklin India Low Duration Fund-Segregated Portfolio 2 - 10.90%
24-Jan-20
Vodafone Idea Ltd (02-Sep-2023) P/C 03 Sep 2021
These securities of Vodafone Idea Ltd. were fair valued on January 16, 2020 in accordance with fair valuation principles of SEBI Regulations.
In accordance with the SEBI circular no. SEBI/HO/IMD/DF2/CIR/P/2018/160 dated December 28, 2018, all existing investors in the scheme as on the date of the segregation have been allotted same number of units in the segregated
portfolio as held in the main portfolio at a face value of Rs. 1 each as per the resolution of the Board of Trustees dated January 25, 2020 for Vodafone Idea. Resultantly, the segregated portfolio has the same number of corresponding
plans as in the main portfolio. As required by the aforesaid SEBI circular, the units of the segregated portfolio were listed on National Stock Exchange (NSE) on February 7, 2020 for Vodafone Idea to facilitate exit to unitholders in the
segregated portfolio.
### Post the creation of the segregated portfolio (8.25% Vodafone Idea Ltd 10JUL20) on January 24, 2020, the annual coupon was due and received by the segregated portfolio on June 12, 2020. Subsequently, the full principal due,
along with the interest from June 12, 2020 to July 9, 2020 was received by the segregated portfolio on the maturity date i.e. July 10, 2020. These amounts were distributed to the unitholders proportionately in ratio of their holdings in the
segregated portfolio.
All the figures pertain to the main portfolio, unless stated otherwise.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation of financial statements
The financial statements are prepared in accordance and conformity with the accounting policies and standards specified in the Ninth Schedule to the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 (‘SEBI
Regulations’). The significant accounting policies are in the context of the fact that on 23 April 2020, the Trustee passed a resolution for winding up of the Scheme and issued a notice to wind up the Scheme in accordance with
Regulation 39(2)(a) of the SEBI Regulations. This was consequent to steep fall in liquidity in certain segments of the corporate bond market primarily due to the Covid-19 crisis and the resultant lock-down of the Indian economy.
Considering the significant and unprecedented economic and financial challenges posed, coupled with heightened redemption pressure, the Trustee was of the considered opinion that an event has occurred wherein winding up of the
Scheme was the only viable option to preserve value for unitholders and to enable an orderly and equitable exit for all investors in these unprecedented circumstances. As per the legal advice received by the Fund/ Trustee/ AMC,
Regulation 39(2)(a) of the SEBI Mutual Fund Regulations 1996 and the decision to wind-up a scheme takes effect on the date of publication of notice under regulation 39(3)(b) and further authorization from unitholders is needed for the
Trustee or any other person to take steps consequent upon the winding up of the Scheme, viz., liquidation of assets and distribution of proceeds to unitholders after meeting liabilities of the Scheme. In view of the notice to wind up as
mentioned above, on and from 24 April 2020, the Trustee and the AMC have:
(a) ceased to carry on any business activity in respect of the Scheme;
(b) ceased to create or cancel units in the Scheme; and
(c) ceased to issue or redeem units in the Scheme.
On 28 May 2020, the Trustee issued notice to unitholders for E-voting and Unitholders’ meet to seek approval by simple majority of votes to authorize the Trustee or Deloitte Touche Tohmastu India LLP (Deloitte) to take further steps
for winding up of the Scheme as per Regulation 41(1) of the SEBI Regulations.
Further to the decision taken by the Trustee to wind-up the scheme, some unitholders had sent legal notices and filed writ petitions before the Hon’ble High Courts of Madras, Delhi and Gujarat challenging the decision of the Trustee to
wind up the Scheme without the consent of the Unitholders and raising concerns over non-compliance with the investment objectives of the Scheme. The single bench of Hon’ble Gujarat High Court issued a stay order against the notice
dated 28 May 2020 issued by the Trustee to conduct E-voting and Unitholders meet for winding up of the Scheme. The Trustee and AMC filed a special leave petition before the Hon’ble Supreme Court along with a petition to transfer
the writ petitions pending before various High courts to a single High court. On 19 June 2020, the Hon’ble Supreme Court transferred all the aforesaid matters to the Hon’ble High Court of Karnataka with a direction to hear and finally
decide the matter within three months. The Hon’ble High Court of Karnataka upheld the authority of the Trustee to wind up the six fixed income schemes in its judgment dated 24 October 2020. The Hon’ble High Court Karnataka also
held that there was nothing wrong in the decision-making process and that no interference is called for in the decision taken by the Trustee on 23 April 2020 to wind up the schemes. It further directed that the decision of winding up can
be implemented only after obtaining the consent of unitholders under sub-clause (c) of clause 15 of Regulation 18 of the SEBI (Mutual Funds) Regulations, 1996.
The Trustees and the AMC filed an appeal on 23 November 2020 with the Hon’ble Supreme Court on certain aspects of the judgement of the Hon’ble High Court of Karnataka. The petitioners before the various High courts also filed
separate Special Leave Petitions (‘SLPs’) before the Hon’ble Supreme Court and all these were listed together. With a view to proceed with orderly realization of value from Scheme assets and distribution to Unitholder at the earliest, the
Trustee had sought permission of the Hon’ble Supreme Court to seek the approval of Unitholder for winding up the Schemes, for which the permission was granted by the Hon’ble Supreme Court on 3 December 2020. As per the interim
order passed on 3 December 2020 and 9 December 2020 by the Hon’ble Supreme Court, E-voting was held from 26 December 2020 to 28 December 2020 followed by a unitholders meeting on 29 December 2020 to seek unitholder’s
consent and the results of this voting exercise was delivered to the Hon’ble Supreme Court by the SEBI appointed independent observer. On 18 January 2021, the Hon’ble Supreme Court disclosed the results and advised the Trustee to
compute the results based on units as well. In Franklin India Low Duration Fund, out of the votes cast, 97.23 % of unitholders representing 98.08 % of units, voted in favour of winding up. However, few unitholders raised some
objections on the E-voting process and after concluding the hearing the Hon’ble Supreme Court had reserved the matter for pronouncing order. On 2 February 2021, the Hon’ble Supreme Court permitted the schemes to distribute cash
generated by the schemes (as of 15 January 2021) to the unitholders and directed SBI Funds Management Private Limited (‘SBI MF’) to distribute this amount to unitholders. Accordingly, Rs.1625.36 crore available in the scheme was
processed for distribution on 12 February 2021 to the unitholders in proportion to their entitlement. On 12 February 2021, Hon’ble Supreme Court upheld the results of the e-voting under regulation 18 (15) (c) held in December 2020
and confirmed the winding up of the six fixed income schemes and appointed SBI MF to undertake the exercise of winding up, which would include liquidation of assets and distribution to unitholders. SBI MF had filed the standard
operating procedure (SOP) for liquidation of assets and distribution of cash to unit holders with the Hon’ble Supreme Court on 8 March 2021 which was taken on record and accepted by the Hon'ble Supreme Court on 18 March 2021.
Further, as a part of liquidation exercise, amounts tabulated as below were processed for distribution to the unitholders in proportion to their entitlement. Various other aspects related to winding-up are still sub judice.FRANKLIN TEMPLETON MUTUAL FUND
SCHEDULES TO THE BALANCE SHEET AS AT MARCH 31, 2021 AND REVENUE ACCOUNT FOR THE YEAR ENDED MARCH 31, 2021
(All amounts in thousands of Rupees)
Distribution to unitholders
Tranche Amounts in 000’s
Tranche 1 based on NAV as on 12 February 16,253,603
2021
Tranche 2 based on NAV as on 9 April 2021 1,410,000
Tranche 3 based on NAV as on 30 April 2021 2,897,500
Tranche 4 based on NAV as on 4 June 2021 1,060,000
Total 21,621,103
Based on the understanding of the matters as explained above and as per legal advice received, the management, Trustee and AMC believe that the aforementioned litigations would not have a material impact on the financial statements
of the Scheme.
In view of the decision taken by the Trustee to wind up the Scheme (further substantiated by the consent of majority of the unitholders who voted for the resolution of winding up), the going concern assumption is not valid for the
preparation of financial statements of the Scheme. Accordingly, the financial statements of the Scheme have been prepared on a liquidation basis. Under the liquidation basis of accounting, assets are measured at lower of carrying
amount or estimated net realizable values and liabilities are stated at their estimated settlement amounts. Investments are fair valued as per SEBI Regulations hence the fair value is the carrying value for investments. Since the financial
statements already reflect the fair value of investments as at 31 March 2021, no other adjustments to the valuation of investments are required for the change from a going concern basis to a liquidation basis of accounting. Refer Note
2(g) with regard to liquidation expenses.
Use of estimates
The preparation of the financial statements in conformity with Generally Accepted Accounting Principles ('GAAP') requires management to make judgments, estimates and assumptions that affect the application of accounting policies
and reported amounts of assets, liabilities and the disclosure of contingent liabilities on the date of the financial statements and reported amounts of income and expenses during the reporting period. Actual results could differ from those
estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Any revision to accounting estimates is recognized prospectively in current and future periods.
(a) Determination of net asset value (NAV):
- The NAV of a Scheme is computed separately for units issued under the various plans / options of the relevant schemes. The corresponding scheme’s investments and other net assets are managed as a single portfolio. For
computing the NAV’s for various plans / options, daily income earned, including realized and unrealized gains or losses in the value of investments and derivatives and expenses incurred by the corresponding scheme are
allocated to the plans / options in proportion to the net assets of immediately preceding day plus subscriptions less redemptions for the day of the respective plan / options.
- Commission expenses are not allocated to the NAV of Direct Plans.
(b) Unit capital:
- Unit capital represents the net outstanding units at the balance sheet date, thereby reflecting all transactions relating to the period ended on that date.
Unit Premium Reserve
- When units are issued or redeemed, the net premium or discount to the face value of unit is transferred / charged to the unit premium reserve, after an appropriate portion of the issue proceeds and redemption payout is credited
or debited respectively to the equalization reserve.
Equalization Reserve
- In case of open-ended schemes, when units are issued or redeemed, distributable surplus per unit (net of unit premium reserve) as on date of the transaction (including distributable surplus at the beginning of the year) is
determined. The per units so determined is credited or debited to the equalization account on issue/redemption of each unit respectively.
Effective April 24, 2020, fresh subscriptions / redemptions are not permitted in the scheme on account of the winding up notice. SEBI circular no. SEBI/HO/IMD/DF3/CIR/P/2020/086 dated May 20, 2020 prescribes that the
units of Mutual Fund schemes which are in the process of winding-up in terms of Regulation 39(2)(a) of the SEBI Regulations, shall be listed on a recognized stock exchange. Accordingly, the process of listing is currently in
progress and the AMC is awaiting guidance from stock exchanges and SEBI regarding the manner of listing and subsequent trading of these schemes.
(c) Investments:
Accounting for investment transactions
- Purchase and sale of investments are recorded on the date of the transaction, at cost and sale price respectively, after considering brokerage charges, commission, securities transaction tax, fees payable and any other charges
customarily included in the trade note. The front-end fee receivable, if any, is reduced from the cost of investment.
- In terms of SEBI circular no. CIR/IMD/DF/21/2012 dated September 13, 2012, brokerage and transaction costs (including all taxes) incurred for the purpose of execution of trade in excess of 0.12% in case of cash market
transaction and 0.05% in case of derivatives transactions is charged to the Total Expense Ratio of the Scheme. Effective December 9, 2019, Brokerage and transactions costs for derivative transactions is charged to the realized
gain/loss on sale of investments.
- Interest paid / received from the last interest payment date till the date of purchase / sale of investments by the schemes is not included in the cost of purchase / sale of investments. For purchase, the interest is debited to
interest accrued but not due account. Similarly, for sale, interest from the last interest payment date up to the date of sale is not treated as an addition to sale value but credited to interest accrued but not due account.
- The net unrealized gain or loss in the value of investments is determined separately for each category of investments. The change in the net unrealized gain or loss, if any, between two balance sheet dates is recognised in the
revenue account. However, change in net unrealized gain, if any, is transferred to unrealized appreciation reserve before arriving at Income Available for Appropriation.
- Right entitlements are recognised as investments on the ex-rights date.
- Bonus entitlements are recognised as investments on the ex-bonus date.
- Other Corporate Action entitlements are recognised on the ex-date.
Valuation of investments
Asset Class Traded Non- Traded Thinly Traded* / Unlisted
Equity Shares / Equity Related/ REIT’s / Valued at the last quoted closing price on the National Valued at the last quoted closing price on NSE or Valued "in good faith" as determined, in accordance with the SEBI
Preference Shares Stock Exchange of India Limited (NSE). If a security is BSE or other recognised stock exchange (in that Regulation.
not traded on NSE, it will be valued at the last quoted order) on the earliest previous day would be used,
closing price on Bombay Stock Exchange Limited (BSE) provided such day is not more than thirty days
or any other stock exchange (in that order). prior to the valuation day.
Foreign Securities Valued at the last available traded or quoted price on the Valued at the last available traded or quoted price
valuation day on the relevant stock exchange around the on the relevant stock exchange, provided such day
time of closure of Indian stock markets (which is currently is not more than thirty days prior to the valuation
3:30 p.m. IST). In case of schemes eligible to invest in day. If no prices are available for the 30 days, then
foreign securities wherein the NAV is computed and valued at fair value as determined “in good faith”
declared on the next business day, the foreign securities by the AMC.
would be valued at the last available traded or quoted price
on the relevant stock exchange at the time of computation
of NAV (which is currently around 3:30 a.m. IST).
*Security where monthly traded amount is less than INR 5 lacs and volume is less than 50,000 is considered as thinly traded.FRANKLIN TEMPLETON MUTUAL FUND
SCHEDULES TO THE BALANCE SHEET AS AT MARCH 31, 2021 AND REVENUE ACCOUNT FOR THE YEAR ENDED MARCH 31, 2021
(All amounts in thousands of Rupees)
Asset Class Traded / Non-Traded Valuation Policy
Debt and Money Market Instruments with Traded / Non – Traded Valued basis average of security level prices received from AMFI appointed/designated agencies viz: CRISIL and ICRA.
residual maturity > 60 days (30 days, wef
from June 20, 2019**) Prior to September 24, 2019
If security level price for new security purchased (primary allotment or secondary market) is not available, the security will be
valued at weighted average traded price available on public platform i.e. FIMMDA, NSE and BSE if it meets qualification criteria
of 5 Crores or more for Bonds and at least one trade of Rs.25 Crores or more for Money Market Instruments. Else, AMC own trade
is considered for valuation.
Post September 24, 2019***
If security level price for new security purchased (primary allotment or secondary market) is not available, the security will be
valued at weighted average purchase yield of security on the date of purchase.
Debt and Money Market Instruments with Traded Valued at weighted average traded price available on public platform i.e. FIMMDA, NSE and BSE with qualification criteria of
residual maturity < =60 days (30 days, wef considering trades at least 3 trades aggregating to 100 Crs. If market trades satisfying the above criteria are not available on the
from June 20, 2019**) public platforms, AMC’s own trade to be considered for valuation.
If the AMC’s own trade(s) also do not satisfy the criteria, then the security will be treated as ‘Non-Traded’.
Post September 24, 2019***
If market trades satisfying the above criteria are not available on the public platforms, then the security will be treated as ‘Non-
Traded’.
Effective February 14, 2020
Valued at weighted average traded price available on public platform i.e. FIMMDA, NSE and BSE with a qualification criteria for
primary market trade as at least 1 trade of Rs. 25 crores or more and a qualification criteria for secondary market trades as at least
1 trade of Rs. 5 crore or more for Bonds and Rs. 25 crores or more for Money Market Instrument. Prior to this, these securities
were valued at weighted average traded price available on public platform i.e. FIMMDA, NSE and BSE with a qualification
criteria of considering trades at least 3 trades aggregating to 100 crores.
Effective June 30, 2020 $$$
All money market and debt securities including floating rate securities are valued at average of security level prices obtained from
valuation agencies. Prior to this, these securities were valued at weighted average traded price available on public platform i.e.
FIMMDA, NSE and BSE as per the qualification criteria.
Non-Traded The security will be amortized by constant yield (last traded yield) and Straight-line method for non-coupon bearing instrument
and coupon bearing instrument respectively.
The amortized price may be used for valuation as long as it is within ±0.10% of the reference price derived from benchmark yield
provided by agencies appointed by AMFI. In case the variance exceeds ±0.10%, the valuation will be adjusted to bring it within the
band of +/-0.10%.
Post June 20, 2019**
The amortized price variance may be used for valuation as long as it is within ±0.025% of the reference price. In case the variance
exceeds ±0.025%, the valuation will be adjusted to bring it within the band of +/-0.025%.
Reference price shall be the average of the security level price of such security as provided by the agencies appointed by AMFI.
Effective June 30, 2020 $$$
All money market and debt securities including floating rate securities are valued at average of security level prices obtained from
valuation agencies. Prior to this, these securities were amortized by constant yield (last traded yield) and Straight-line method for
non-coupon bearing securities and coupon bearing securities respectively.
Government Securities including State Traded / Non-Traded Valued basis average of security level prices received from AMFI appointed/designated agencies viz: CRISIL and ICRA.
Development Loan irrespective of residual
maturity
Treasury Bills maturity > 60 days (30 days Traded / Non-Traded Valued basis average of security level prices received from AMFI appointed/designated agencies viz: CRISIL and ICRA.
wef from June 20, 2019**)
Prior to September 24, 2019
If security level price for new security purchased (primary allotment or secondary market) is not available, the security will be
valued at weighted average traded price available on CCIL website if it meets qualification criteria of 5 Crores or more for Bonds
and at least one trade of Rs.25 Crores or more for Money Market Instruments. Else, AMC own trade is considered.
Post September 24, 2019***
All securities irrespective of maturities will be valued basis average of security level prices received from AMFI
appointed/designated agencies viz: CRISIL and ICRA.
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