making health a priority - aditya birla group · of the 2 words health and insurance, we wanted to...

A n n u a l R e p o r t2 0 1 6 - 2 0 1 7

MAKINGHEALTH APRIORITY

Our Introduction and Philosophy

Message from Chief Executive Officer

Company Highlights

Board of Directors

Leadership Team Profile

Awards and Accolades

Directors’ Report

Corporate Governance Report

Independent Auditor‘s Report

Management Report

Financial Statements

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I N D E X

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I N T R O D U C T I O N

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P H I L O S O P H Y

Aditya Birla Health is a Health Insurance Company that is genuinely interested in creating a movement towards health. With a vision and commitment to put the emphasis of health insurance on health rather than insurance, we have created an entire pro-health ecosystem that will transform us into an agent for health improvement instead of being just a tool for financial protection.

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Our Business Purpose

Empowering and motivating families to prioritize

their health and live fulfilling lives.

When two worlds come together

Great things happen when people come together. Aditya Birla Group has joined hands with South African MMI Holdings to form Aditya Birla Health, the standalone Health Insurance arm of Aditya Birla Financial Services Group.

The strength, experience & proven expertise to deliver on the

promise of health

Aditya Birla Group & MMI Holdings

Aditya Birla Group, in league of Fortune 500 Companies, is a diversified conglomerate widely recognized across India and overseas for quality products and services with operations that include financial services, manufacturing, telecom, fashion and lifestyle. �e group spans across 36 countries and 1,20,000 employees of 42 nationalities.

MMI Holdings Limited, with a legacy of 122 years, is one of the largest insurance companies in South Africa doing business in 12 African countries apart from South Africa and the United Kingdom. �e group is listed on the South African stock exchange, the JSE Limited. �ey provide long and short term insurance, asset management services, savings & investment, healthcare administration, health risk management, employee benefits and rewards programme.

Both these companies have come together with the common vision, commitment and know-how to make a positive impact on the way individuals and families adopt a healthier lifestyle.

Aditya Birla Financial Services Group

Strong legacy of building successful businesses

Aditya Birla Financial Services Group (ABFSG) is an umbrella brand for all the financial service businesses of the Aditya Birla Group. We have a significant presence across life insurance, asset management, non-banking financial companies (NBFC), housing finance, project & structured finance, private equity, broking, wealth management & distribution, general insurance broking & risk management services and online money management.

Across our 12 lines of business, we enjoy the trust of 8.8 million customers, manage assets worth `1,84,276 crore and pride ourselves for having a talent pool of over 11,000 committed employees. Spread across more than 418 cities in India through 1,384 branches and over 1,29,200 channel partners.

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Putting Health At The Heart Of Health Insurance

Get Rewarded

While some say good health is its own reward, we at Aditya Birla Health are taking it one step further.

For every step you take to be healthy, we will reward you for it.

Improve your health

Follow our Incentivized Wellness program and start getting active.

Being active earns you Active DayzTM which you can use to earn rewards.

Understand your health through specially formulated online questionnaires and a series of clinical tests

Know your health

Stay Protected

Comprehensive health insurance cover that ensures support for any medical event.

A pro-active health and wellness platform supported by cutting edge digital ecosystem that will allow us to be stake holders in your health journey, rather than the conventional role of being just a Insurance provider when a health related incidence occurs.

Our Approach

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It gives me great pleasure to share with you the second Annual Report of Aditya Birla Health Insurance Co. Limited.

�rough the past few years my colleagues and I have worked tirelessly to give shape and form to what, was more than just a business proposition but a vision and philosophy that we allwholeheartedly believed in.

We knew at the outset that we wanted Aditya Birla Heath Insurance to be more than just a financial service provider; more than just health insurance. We wanted to create a business that helped people in times of need and urge a nation where the growing incidence of lifestyle diseases was alarmingly high to take charge of its own health and become healthier.

Of the 2 words Health and Insurance, we wanted to focus on ‘Health’ over ‘Insurance’.

From the onset we were very clear of what our purpose was – to empower and motivate families to prioritize their health and live fulfilling lives. And we knew that to do this we had to make 3 things the backbone of everything we do – innovation, superior customer experience and engagement. We kept this in mind as we went about putting together our business and designing our products and processes.

We began with the design of our flagship product, Acitv Health. We worked closely with the regulator to get our license and product approval in good time leveraging the new regulations supporting our core business philosophy. Activ Health was created to combat the 2 biggest deterrents to good health viz. sedentary lifestyles and chronic diseases. To combat sedentary lifestyles we built into the product a complete pro-health ecosystem designed to track and reward active behavior. To battle chronic diseases like Diabetes, Asthma, Cholesterol and High Blood Pressure, we created an industry innovation – a specialized protocol designed to monitor and manage the conditions in addition to offering them Day 1 Cover. We also realized that today’s consumer wants his interaction to be in real time and at their fingertips. To be able to better connect our product to this consumer and be able to better integrate in their current lifestyle we have augmented the physical medium with the digital medium. We did this by investing in technology to support both the customer experience as well as the business. We can now proudly say that we are a digital-first company and our processes some of the best in the industry.

�is philosophy was also kept in mind when designing the customer’s hospitalization journey. We were cognitive of the fact that even though we wanted to have a larger health conversation with the consumer, our moment of truth was at the time of claims which is the core of health insurance. �e entire team was involved in the design of this phase, and drawing from everyone's personal hospital experiences we created a truly customer-centric journey. We felt that if there was one place where we could truly make a difference in the lives of our consumers it was here. We knew that even for a digital first generation, there are some places where old school human interaction

M E S S A G E F R O M

C H I E F E X E C U T I V E O F F I C E Rcould not be replaced, and a hospitalization event was one of them. We built a team of claims specialists purely for interaction during hospitalization to handle queries proactively and in real time, ensuring we are there for our consumers when they need us the most. �is initiative has evolved into one of our most appreciated endeavors.

We knew that to be able to touch as many lives as possible, we needed to be able to have a wide distribution reach. With that thought, we have worked tirelessly to build a multi-channeldistribution model across the agency, broking, bancassurance, digital and direct marketingchannel. Within the first 6 months of launch we have managed to create Agency network consisting of around 1800 Advisors across 7 locations (through 9 branches) with plans to have a presence in 50 cities in next 12-18 months. In Bancassurance and corporate agents & broking channel, we have strengthened our partnership with 2 bank partners & are in advanced discussion with other potential bank partners. We will continue to look at new tie-ups in this segment with a view of creating long-term strategic partnerships with key distributors and make our product accessible to as many consumers as we possibly can.

In a short period the group team have established their presence and built a strong visibility for the ABHICL brand in the group solutions market. In their journey from Oct’16 – Mar 17 , the team was able to acquire in excess of 150 clients and a premium of Rs. 50 + Crs. �e team also was able to empanel 100 brokers as distributors and importantly activate all locations where we had presence.

�ese three pillars have also been kept as the backbone of our marketing strategy. With ourphilosophy of keeping health-first in mind we have, since inception, launched a series of digital campaigns and initiatives which aim at getting

people moving and starting on their journey of health. All of these have not only been huge hits in the social media space with high response and engagement rates, but have also been recognized through many awards. We have also organized a number of on ground events to continue our effort of providing people with the opportunity to be physically active. From marathons to walkathons, cyclothons and morning fitness parties, we are constantly looking to engage and motivate India to be health conscious and fit.

And finally, but by no means least, it is one thing to preach but by no means easy to follow. And we at ABHICL decided early on that we would put our money where mouth is and start the journey to better health with our employees. We launched Vitalize, our employee engagement platform and created a culture of active living at the workplace. From fitness challenges, and midday surprise zumba sessions to structured weekend activity camps, we have ensured that our employees are brand ambassadors of the lifestyle we are advocating.

�e past 6 months have been momentous for all of us here at ABHICL. With the launch of our company we saw a philosophy that we had believed in with our heart and soul, come to life and take form. But what was more important to us and validated our belief was when we saw partners, customers and stakeholders appreciate our philosophy, extend their support and come onboard on our journey. In the short time that we have been in operations we have already taken on 200000 lives in our endeavor to Make India Healthier.

As we look ahead, we see our self as ‘India’s Health Guardian’ - through our commitment to promote healthy living while providing health insurance cover for all. It’s my privilege to have you all in this journey.

I look forward to creating new success stories with you in the years to come.

6

It gives me great pleasure to share with you the second Annual Report of Aditya Birla Health Insurance Co. Limited.

�rough the past few years my colleagues and I have worked tirelessly to give shape and form to what, was more than just a business proposition but a vision and philosophy that we allwholeheartedly believed in.

We knew at the outset that we wanted Aditya Birla Heath Insurance to be more than just a financial service provider; more than just health insurance. We wanted to create a business that helped people in times of need and urge a nation where the growing incidence of lifestyle diseases was alarmingly high to take charge of its own health and become healthier.

Of the 2 words Health and Insurance, we wanted to focus on ‘Health’ over ‘Insurance’.

From the onset we were very clear of what our purpose was – to empower and motivate families to prioritize their health and live fulfilling lives. And we knew that to do this we had to make 3 things the backbone of everything we do – innovation, superior customer experience and engagement. We kept this in mind as we went about putting together our business and designing our products and processes.

We began with the design of our flagship product, Acitv Health. We worked closely with the regulator to get our license and product approval in good time leveraging the new regulations supporting our core business philosophy. Activ Health was created to combat the 2 biggest deterrents to good health viz. sedentary lifestyles and chronic diseases. To combat sedentary lifestyles we built into the product a complete pro-health ecosystem designed to track and reward active behavior. To battle chronic diseases like Diabetes, Asthma, Cholesterol and High Blood Pressure, we created an industry innovation – a specialized protocol designed to monitor and manage the conditions in addition to offering them Day 1 Cover. We also realized that today’s consumer wants his interaction to be in real time and at their fingertips. To be able to better connect our product to this consumer and be able to better integrate in their current lifestyle we have augmented the physical medium with the digital medium. We did this by investing in technology to support both the customer experience as well as the business. We can now proudly say that we are a digital-first company and our processes some of the best in the industry.

�is philosophy was also kept in mind when designing the customer’s hospitalization journey. We were cognitive of the fact that even though we wanted to have a larger health conversation with the consumer, our moment of truth was at the time of claims which is the core of health insurance. �e entire team was involved in the design of this phase, and drawing from everyone's personal hospital experiences we created a truly customer-centric journey. We felt that if there was one place where we could truly make a difference in the lives of our consumers it was here. We knew that even for a digital first generation, there are some places where old school human interaction

could not be replaced, and a hospitalization event was one of them. We built a team of claims specialists purely for interaction during hospitalization to handle queries proactively and in real time, ensuring we are there for our consumers when they need us the most. �is initiative has evolved into one of our most appreciated endeavors.

We knew that to be able to touch as many lives as possible, we needed to be able to have a wide distribution reach. With that thought, we have worked tirelessly to build a multi-channeldistribution model across the agency, broking, bancassurance, digital and direct marketingchannel. Within the first 6 months of launch we have managed to create Agency network consisting of around 1800 Advisors across 7 locations (through 9 branches) with plans to have a presence in 50 cities in next 12-18 months. In Bancassurance and corporate agents & broking channel, we have strengthened our partnership with 2 bank partners & are in advanced discussion with other potential bank partners. We will continue to look at new tie-ups in this segment with a view of creating long-term strategic partnerships with key distributors and make our product accessible to as many consumers as we possibly can.

In a short period the group team have established their presence and built a strong visibility for the ABHICL brand in the group solutions market. In their journey from Oct’16 – Mar 17 , the team was able to acquire in excess of 150 clients and a premium of Rs. 50 + Crs. �e team also was able to empanel 100 brokers as distributors and importantly activate all locations where we had presence.

�ese three pillars have also been kept as the backbone of our marketing strategy. With ourphilosophy of keeping health-first in mind we have, since inception, launched a series of digital campaigns and initiatives which aim at getting

people moving and starting on their journey of health. All of these have not only been huge hits in the social media space with high response and engagement rates, but have also been recognized through many awards. We have also organized a number of on ground events to continue our effort of providing people with the opportunity to be physically active. From marathons to walkathons, cyclothons and morning fitness parties, we are constantly looking to engage and motivate India to be health conscious and fit.

And finally, but by no means least, it is one thing to preach but by no means easy to follow. And we at ABHICL decided early on that we would put our money where mouth is and start the journey to better health with our employees. We launched Vitalize, our employee engagement platform and created a culture of active living at the workplace. From fitness challenges, and midday surprise zumba sessions to structured weekend activity camps, we have ensured that our employees are brand ambassadors of the lifestyle we are advocating.

�e past 6 months have been momentous for all of us here at ABHICL. With the launch of our company we saw a philosophy that we had believed in with our heart and soul, come to life and take form. But what was more important to us and validated our belief was when we saw partners, customers and stakeholders appreciate our philosophy, extend their support and come onboard on our journey. In the short time that we have been in operations we have already taken on 200000 lives in our endeavor to Make India Healthier.

As we look ahead, we see our self as ‘India’s Health Guardian’ - through our commitment to promote healthy living while providing health insurance cover for all. It’s my privilege to have you all in this journey.

I look forward to creating new success stories with you in the years to come.

7

C O M P A N Y

H I G H L I G H T S

Aditya Birla Health officially commenced operations in October 2016. In 6 months we achieved results that

surpassed all expectations.

54 CrsPremium Collected

Finalised by Mar’ 17

2 Bank Partners

Hospital tie-ups

1600+

Lives Insured

2,00,000+

Activated by Mar’ 17

5 Channels

Solvency Ratio

2.88x9

B O A R D O F

D I R E C T O R S

P R O F I L E

MR. AJAY SRINIVASANNon-Executive Director

Non-Executive DirectorMR. DEVAJYOTI BHATTACHARYA

Non-Executive DirectorMR. ASOKAN NAIDU

Non-Executive DirectorMR. SUSHIL AGARWAL

Non-Executive DirectorDR. AJIT RANADE

Non-Executive DirectorMR. DANIE BOTES

Non-Executive DirectorMR. LOUIS VON ZEUNER

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Independent DirectorMR. P VIJAYA BHASKAR

Independent DirectorMR. MAHENDREN MOODLEY

Independent DirectorMS. SUKANYA KRIPALU

Independent DirectorMR. C N RAM

Chief Executive Officer& Whole Time Director

MR. MAYANK BATHWAL

Independent DirectorMR. S RAVI

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L E A D E R S H I P

P R O F I L E

MR. MAYANK BATHWALChief Executive Officer & Whole Time Director

Aditya Birla Health Insurance Co. Limited

Under Mayank’s expertise and experience, ABHICL has entered the Indian health market with a differentiated business model and has grown rapidly in less than a year.Mayank joined the Aditya Birla Group in early 1994 and worked closely in various units and projects of the group including fertilizer and copper smelting units, financial services business and power projects. Mayank has rich experience of nearly 20 years in the financial services business, across various functions and multiple lines of business.

MS. ANURADHA SRIRAMAppointed Actuary (Chief Actuarial Officer)


Anuradha oversees different aspects of the actuarial function such as pricing, reserving as per regulatory requirements, valuation, experience review and reporting. She is also responsible for product function and takes care of product design and go to market planning.

Overall, Anuradha has 24 years of industry experience.

MR. AMAR JOSHIChief Distribution Officer


Amar has been instrumental in setting up an efficient multi-channel distribution channel such as �ird Party Distribution, Tied Agency, Direct - Online & Tele Sales Channel, Bancassurance, Group business & Sales training. In addition to this he also looks at building large strategic banking relationship and variable agency model to explore growth opportunities.

Overall, Amar has 27 plus years of experience in Insurance Industry.

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MS. DARSHANA SHAHHead Marketing


Darshana oversees different aspects of brand marketing and communications such as product marketing, customer & channel engagement, digital marketing, corporate communication functions. She also drives marketing research and insight initiatives.

Overall, Darshana has 20 plus years of rich experience in marketing, brand & communication. She started her career in 1996 in IT education sector and post that was in the Retail Industry for the last 15 years.

MR. SANJAY KARNATAKHead of Information Technology


Ours being a digitally focused organization, Sanjay plays a key role in partnering with business in developing a technology enabled organization for ABHICL. He is also responsible for defining the IT architecture along with the digital strategy.

Sanjay has over 21 years of rich experience in technology management in various sectors like Insurance, Telecom, Manufacturing and Consulting.

MR. RAJIV JOSHIHead of Legal, Risk, Compliance & Secretarial


Rajiv has been instrumental in creating effective governance, risk and compliance framework by providing policies and processes to ensure regulatory compliances and risk management. in addition, through internal audit programs and periodical monitoring he also ensures effectiveness and timely strengthening of those policies and processes. He is also responsible for handling the legal affairs of the Company.

Rajiv has over 28 years of experience in secretarial, legal and compliance of which last over 9 years in financial industry viz. asset management and insurance.

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MR. SRINIVAS SUBRAMANIANHead of OperationsAditya Bir la Health Insurance Co. Limited

Srinivas has been responsible for functions such as Operations, Customer Service, Underwriting, Claims, Provider Management, Distribution Operations, DRM, Quality and Business Excellence and Group Operations processes.

Srinivas has over 25 years of rich experience in in operations, quality, business excellence, machine design, process engineering, industrial engineering and project management.

MR. SANTANU BANERJEEHead of Human Resource & AdministrationAditya Bir la Health Insurance Co. Limited

Santanu Banerjee has been responsible for human resource strategy, talent management, learning and organization effectiveness.

Santanu has over 18 years of rich experience in IT, Retail, Consulting and Financial Services.

MS. SHIKHA BAGAIChief Finance Officer Aditya Bir la Health Insurance Co. Limited

Shikha Bagai oversees Finance, Accounts, Taxation, Investments and Financial Planning functions.

Overall, Shikha has 18 years of experience in Financial Services in areas of financial planning, accounting, reporting, corporate finance and treasury function.

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Corporates with around 46% market dominated by PSU insurers; 2) Retail segment with 44% has seen relatively higher growth due to increased penetration in tier-2, tier-3 cities and 3) Government segment which forms around 10% of the industry.

At the end of the year under review, your Company’s market share stood at 0.2% (0.9% among Stand-alone health insurers) which is in line with management expectations given that we are a new entrant and have launched business in 2nd half of FY 2016-17. Going forward, we plan to be amongst the leading health insurance companies which will focus on making health a priority and deliver a differentiated business model. In order to achieve our market share objective, we will be driving our product CVP through aggressively expanding distribution network, leveraging digital delivery and creating seamless customer experience.

C. Review of Business Operations

i) Launch of Business and Product

Your Company received the certificate of registration from the Insurance Regulatory & Development Authority of India on July 11, 2016. �e Company initiated the business operations on October 5, 2016 and had a formal launch event on November 24, 2016 to launch its products.

We decided to create our business model on the philosophy of health first. We are creating a differentiated model from traditional ‘buy and forget’ to ‘buy and engage’. Your Company would serve as an enabler and influencer of health of customers, in addition to fulfilling traditional role of funding healthcare expenses. We will continue to focus on holistic approach towards health which goes beyond sickness funding into disease prevention and wellness management.

We currently have a comprehensive product suite which includes Group Activ Health, Retail Activ Health and Group Activ Secure (incl. Personal Accident / Critical illness / Hospital Cash benefits).

Key features of Activ Health includes: -

Incentivized Wellness - Wellness benefits and health returns for healthy behaviour

Chronic Care Management: Chronic care for diabetes, asthma, hypertension & hyperlipidemia

Flexible health cover – best of breed product with modularized offering to consumers

Digital Health Manager through Activ Health App

ii) Distribution Channels

Your Company follows a multi-channel distribution model across agency, broking, bancassurance, digital and direct marketing channel. �e Company will continue to create distribution capacities that are sustainable in the long-run.

Our Agency network consists of around 1800 Advisors with their spread across 7 locations (Mumbai, Pune, Delhi, Kolkata, Chennai, Bengaluru & Hyderabad) through 9 branches. �e Company has taken various initiatives in Agency channel to increase geographical expansion and to penetrate further in existing locations. We are augmenting our capacity in Agency channel & are planning to have presence in 50 cities in next 12-18 months. It will be imperative to manage capacities through timely recruitment, activation and training of sales force and agents going forward.

In Bancassurance, we have achieved impressive partnerships with 2 bank partners & are in advanced discussion with other potential bank partners. Partnerships with Corporate Agents and Brokers are also going strong. We will continue to look at new tie-ups in third party distribution segment with a view of creating long-term strategic partnerships with key distributors. In the coming years, we plan to build a strong franchisee in the bancassurance segment.

In Group segment, we are leveraging Aditya Birla Group Companies as well as new client segments including Large corporates and SMEs for our business. We are maintaining an optimal channel mix from broker as well as direct channel. Going forward, we will continue to focus on new segments to manage our top-line and margins.

To sum it up, from the very beginning our strength will be to create distribution capacities and execution of our multi-distribution strategy to deliver the right products to our customers. Given the strength of our innovative CVP and the differentiated service model including wellness and chronic care management we are confident that we will be making further in-roads in our distribution channels in the years ahead.

With an aim to simplify and digitize the policy issuance, a unique seller portal app has been launched and utilized by all the channels.

iii) Customer and Claims Management

Our challenge as one of the latest entrant in health insurer is to differentiate ourselves against the market players and also ensure that we provide a great customer experience to our insured members.

We have decided to adopt a research-based consumer-first approach for developing our products, systems, process and services. Our aim is to take pride in reporting the number of lives we have impacted positively and financial metrics is not the only benchmark that we want to be rated against.

�rough extensive research, we charted out the customer’s journey and identified the major pain points that the customers faced and designed our processes & products to ensure we address those and at the same time provide adequate differentiation from the market. Hospitalization and Claims journey of the customer came out to be the most important Moment of Truth.

To ensure that the customers have a seamless experience, we have aimed at understanding the major challenges in the standard claims processes prevalent in the industry and have identified the following key enablers:

We have a large provider network of over 1600 hospitals as on March 31, 2017 to ensure that we can provide a cashless experience to our customers

We help our customers in handholding them during admission and discharge and further support them in counseling & education during hospitalization

We plan to digitally service our customers especially during pre-authorization, proactively communicate claims status and overall case management

�e Company has processed over 3500 claims by servicing claims in-house and also by leveraging the experience of servicing partners such as TPAs. �e Company has leveraged technology to improve the turnaround time and customer experience. �e Company’s Claims team has been appreciated with many customer testimonials for good & timely response in speeding up the cashless approval and for support during hospital admission discharge.

D. Implementation of Indian Accounting Standards (IND AS) converged with International Financial Reporting Standards (IFRS)

�e IRDAI vide its circular (Ref no: IRDA/ F&A/ CIR/IFRS/038/03/2016) dated March

1, 2016 had advised the Insurers to comply with the Indian Accounting Standards (Ind AS) for financial statements for accounting periods beginning from April 1, 2018 onwards, with comparatives for the periods ending March 31, 2018. Your Company is well placed to meet this requirement within the stipulated time frame.

Your Company is also required to submit the Proforma Ind AS financial statements to the Authority from the quarter ended December 31, 2016, onwards. �ese have been complied with for third and fourth Quarter of FY 2016-17.

As mandated by the Circular, the Company has also formed a steering committee with requisite expertise to spearhead the implementation process and duly informed IRDAI about the same. �e steering committee appraises the Audit Committee and the Board about the progress made in the implementation covering the key aspects as highlighted in the circular on periodic basis.

E. Statement containing salient features of financial statements of subsidiaries

�e Company does not have any subsidiary company.

F. Reserves

During the year, no amount was transferred to General Reserve.

G. Dividend

�e Board of Directors do not recommend any dividend for the year ended March 31, 2017.

H. Transfer of Amounts to Investor Education and Protection Fund (IEPF)

Your Company did not have any funds lying unpaid or unclaimed for a period of seven years. �erefore, there were no funds which were required to be transferred to Investor Education and Protection Fund (IEPF).

I. Related Party Transactions

All the Related Party Transactions that were entered into during the financial year 2016-17 were on arm’s length basis and were in ordinary course of business.

Pursuant to Section 134(3)(h) read with Rule 8(2) of the Companies (Accounts) Rules, 2014, there are no transactions to be reported under Section 188(1) of the Companies Act, 2013.

M. Statutory Auditors, their Report and Notes to Financial Statements

M/s. PYS & Co., LLP, Chartered Accountants, were appointed as the Statutory Auditors of the Company to hold office from the conclusion of Annual General Meeting (‘AGM’) held on July 23, 2016 until the conclusion of the 6th (Sixth) AGM of the Company subject to ratification by the Members at every Annual General Meeting (‘AGM’). However, M/s. PYS & Co., LLP, the Statutory Auditors of the Company have expressed their unwillingness to act as Statutory Auditor.

In terms of Corporate Governance Guidelines issued by the IRDAI, an insurance company is required to have minimum 2 Joint Statutory Auditors. �e Corporate Governance Guidelines also prescribe requisite criteria for eligibility of firms to be appointed as Statutory Auditors of the Company. Accordingly, the Management has, after assessing eligibility, willingness and experience, proposed appointment of M/s. MZSK & Association, Chartered Accountants and M/s. Khimji Kunverji & Co., Chartered Accountants as Joint Statutory Auditors of the Company.

�e Company has received certificates from the proposed auditors confirming their eligibility and willingness for the appointment pursuant to Section 139 (1) of the Companies Act, 2013 and as per the requirement stipulated by IRDAI.

�e observations, if any, made by the Statutory Auditors of the Company in their report read with relevant notes to the Accounts are self-explanatory and, therefore do not call for any further comments.

II BASIC INFORMATION ABOUT THE COMPANY AND BUSINESS OUTLOOK

A. IRDA License

�e Company has received the Certificate of Registration from the Insurance Regulatory and Development Authority of India on July 11, 2016.

�e Board has formulated and adopted a Related Party Transactions Policy (‘Policy’) for the purpose of identification, monitoring and reporting of related party transactions. �e Policy is available on the Company’s website at www.adityabirlahealth.com/healthinsurance

All related party transactions as required under Accounting Standard 18 are reported in Related Party Disclosures under Notes to Financial Statements.

J. Conservation of Energy, Technology, Absorption, Foreign Exchange Earnings and Outgo

�e provisions of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 are not applicable to the Insurance Industry. However, your Company has been increasingly using information technology in its operations. �e details of the foreign exchange earnings and outgo is as follows:

K. Material Changes and Commitment Affecting Financial Position of the Company

�ere are no material changes and commitments, affecting the financial position of the Company which has occurred between the end of the financial year of the Company i.e. March 31, 2017 and the date of the Directors’ report.

L. Internal Financial Controls

�e Board of Directors confirm that your Company has laid down set of standards, processes and structure which enables to implement Internal Financial controls across the organization with reference to Financial Statements and that such controls are adequate and are operating effectively. During the year under review, no material or serious observation has been observed for inefficiency or inadequacy of such controls.

�e IRDAI vide its Circular dated April 7, 2015 bearing reference number IRDA/F&A/CIR/GLD/062/04/2015 has pursuant to amendment in Insurance Laws (Amendment) Act, 2015 to Section 3A of the Insurance Act, 1938, discontinued the requirement to apply for Renewal Certificate of Registration (IRDA/R6) on an annual basis. We hereby confirm that the Company has made payment of the annual fees for the financial year 2017-18 and the certificate of registration which was issued by the IRDAI on July 11, 2016 shall continue to be valid and the same is in force till the Company continues to pay such annual fee as may be prescribed by the Regulations.

B. Change in nature of business

�ere has been no change in the nature of business of the Company.

C. Change in Registered Office Address

�e Registered Office of the Company has been shifted to 10/A, Romell Tech- Park, Bldg. No. 2, 10th Floor, Nirlon Compound, Western Ex. Highway, Goregaon East, Mumbai 400063 with effect from May 10, 2016.

D. Significant and Material Orders Passed by the Regulators/ Courts / Tribunals

No significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status and Company’s operations in future.

E. Share Capital

�e Authorized Share Capital of the Company is Rs. 101,00,00,000.

�e Issued, Subscribed and Paid up Capital of the Company was Rs. 100,44,11,780 as on March 31, 2017.

During the FY 2016-17, following allotments of Equity Shares were made:

F. Issue of Equity shares with differential voting rights:

During the financial year, the Company has not issued equity shares with differential rights.

G. Transfer of Shares

During the year, there was no transfer of shares of the Company.

H. Admission of Equity Shares with National Securities Depository Limited

During the year, the Company’s Equity Shares were admitted in the records of the National Securities Depository Limited (‘NSDL’).

I. Loans given, investment made, guarantees given or security provided under Section 186 of the Companies Act, 2013

Pursuant to Section 186(11) of the Companies Act, 2013, loans made, guarantees given, securities provided or acquisition of securities by an insurance company in the ordinary course of its business are exempted from the disclosure requirement under Section 134(3)(g) of the Companies Act, 2013.

J. Public Deposits

During the year under review, the Company has not accepted any deposit from the public falling within the ambit of Chapter V (Section 73) of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.

K. Extract of Annual Return

�e details forming part of the extract of the Annual Return in form MGT-9 is annexed to the Directors’ Report.

L. Particulars of Employees

In pursuance of the Company’s aspirations to become the most preferred employer in the insurance industry, the Company continued to invest in creating a pool of talent for the growing business needs. �e Company’s total workforce stood at 438 as at March 31, 2017. Structured initiatives around talent management, learning and development and long term retention plan for talent pool across levels were implemented for skill development to enhance productivity and performance of workforce. As required under the provisions of Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the name

and other particulars of the employees are set out in the Annexure to the Directors’ Report. �e Directors’ Report is being sent to the shareholders excluding the Annexure. Any shareholder interested in obtaining a copy of the Annexure may write to the Company Secretary at the Registered Office of the Company.

M. Management Discussion and Analysis Report

Pursuant to the provisions of Regulation 3 of the Insurance Regulatory and Development Authority (Preparation of Financial Statements and Auditor’s Report of Insurance Companies) Regulations, 2002, the Management Report forms a part of the financial statements.

III CORPRATE GOVERNANCE AND SECRETARIAL MATTERS

A. Corporate Governance

�e Company has taken structured initiatives towards Corporate Governance and its practices are valued by its stakeholders. A separate report on Corporate Governance is attached separately as Annexure 1.

In compliance with “Guidelines on Corporate Governance for the Insurance Sector” issued by IRDAI, a Compliance Certificate issued by the Compliance Officer is annexed to and forms part of the Corporate Governance Report.

B. Number of Board Meetings

During the year under review 4 Board Meetings were convened and held, the details of which are given in the Corporate Governance Report. �e intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. �e detailed information about Composition, Meetings and attendance are provided in the Corporate Governance Report.

C. Committees of Board

Following are the Committees of the Board of Directors:

1. Audit Committee

2. Policyholders Protection Committee

3. Nomination & Remuneration Committee

4. Risk Management Committee

5. Investment Committe

�e detailed description, composition, number of meeting(s) held and attendance of member of respective Committees are mentioned separately in Corporate Governance Report.

D. Audit Committe

�e Company has a duly constituted Audit Committee comprising of 5 members consisting of 3 Independent Directors and 2 Non-Executive Directors. Mr. S. Ravi (an Independent Director & a Practicing Chartered Accountant) is the Chairman of the Audit Committee.

Mr. P Vijaya Bhaskar and Mr. C N Ram, Independent Directors and Mr. Ajay Srinivasan and Mr. Louis von Zeuner Non-Executive Directors, are the members of the Committee.

�e composition of the Committee is in conformity with the provision of Section 177 of the Companies Act, 2013 and the Corporate Governance Guideline issued by IRDAI.

�e other details about the Committee are provided in the Corporate Governance report.

E. Directors’ Responsibility Statement

Pursuant to Section 134(5) of the Companies Act 2013, your Directors, to the best of their knowledge and belief confirm that:

a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;

c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 2013 preventing and detecting fraud and other irregularities;

d) the Directors have prepared the annual accounts on a going concern basis; and

e) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

F. Board Evaluation

A formal evaluation mechanism has been adopted for evaluating the performance of the Board, Committees thereof, individual Directors and the Chairman of the Board. �e evaluation is based on criteria which includes, among others, providing strategic perspective, Chairmanship of Board and Committees, attendance and preparedness for the meetings, contribution at meetings, effective decision making ability and role of the Committees.

Pursuant to the requirement of the Companies Act, 2013, the annual performance evaluation of the Board, the Directors (Independent and others) individually, Chairperson, as well as applicable Committees of the Board viz. Audit Committee, Nomination and Remuneration Committee, Investment Committee, Risk Management Committee, Policyholders Protection Committee, was carried out for FY 2016-17. �e outcome of the said performance evaluation was placed at the Board Meeting held on May 8, 2017. �e Committees and the Board as a whole are functioning effectively.

G. Directors

As on March 31, 2017, your Board of Directors comprises of 13 (�irteen) Directors including one CEO & Whole Time Director, 5 (Five) Independent Directors including a Woman Director.

During the year, following were the changes in the directorship of the Company:

Mr. P Vijaya Bhaskar (DIN 06629884) was appointed as an Additional (Independent) Director w.e.f. May 10, 2016.

Mr. C N Ram (DIN 00211906) was appointed as an Additional (Independent) Director w.e.f. July 23, 2016.

Mr. Mayank Bathwal (DIN 06804440) was appointed as an Additional Director (CEO & Whole-time Director) w.e.f. July 23, 2016.

Mr. Asokan Naidu (DIN 07425396) was appointed as an Additional Director w.e.f. July 23, 2016.

Mr. Danie Jacobus Botes (DIN 07550406) was appointed as an Additional Director w.e.f. July 23, 2016.

Mr. Mahendren Moodley (DIN 07628592) was appointed as an Additional (Independent) Director w.e.f. October 1, 2016.

Mr. Louis Von Zeuner (DIN 07714084) was appointed as an Additional Director w.e.f. February 6, 2017.

Dr. Ajit Ranade (DIN 00918651) was appointed as an Additional Director w.e.f. February 6, 2017.

In accordance with the provisions of the Companies Act, 2013, Mr. Sushil Agarwal shall retire by rotation at the ensuing Annual General Meeting (‘AGM’) of the Company, and being eligible, offers himself for re-appointment.

�e Directors who were appointed as Additional Directors of the Company shall hold office until the ensuing AGM. �e Company has received notice pursuant to the provisions of Section 160 of the Companies Act, 2013 proposing appointment of aforesaid Directors at the ensuing AGM subject to the approval of Shareholders at the AGM.

�e Company has also received requisite disclosures and undertakings from all the Directors in compliance with the provisions of the Companies Act, 2013 and the Corporate Governance Guidelines issued by the IRDAI.

A detailed profile of all the Directors seeking appointment at the ensuing Annual General Meeting of the Company is given in the Corporate Governance Report, forming a part of this Annual Report.

None of the Directors of the Company are in receipt of commission from the holding company.

�e details of the remuneration paid to the Non-Executive Chairman, Executive and Non-Executive / Independent Directors of the Company for the year ended March 31, 2017 and the details on number of meetings of the Board of Directors of the Company is provided in detail in the Corporate Governance Report.

H. Declaration by Independent Directors

�e Independent Directors of the Company have given the declarations and

confirmed that they met the criteria of Independence as provided under Section 149(6) of the Companies Act, 2013.

I. Key Managerial Personnel

Pursuant to the provisions of the Companies Act, 2013, the following employees were holding the position of Key Managerial Personnel (‘KMP’) of the Company during the FY 2016-17:

Mr. Mayank Bathwal, Chief Executive Officer, (appointed w.e.f. August 28, 2015)

Ms. Shikha Bagai, Chief Finance Officer, (appointed w.e.f. September 1, 2016)

Mr. Rajiv Joshi, Company Secretary, (appointed w.e.f. February 1, 2016)

�ere have been no resignations/ removal of the Key Managerial Personnel of the Company during the FY 2016-17.

J. Corporate Social Responsibility

�e provisions of Corporate Social Responsibility were not applicable to the Company for the FY 2016-17.

K. Policy on Directors’ Appointment and Remuneration

In terms of the requirements under the Companies Act, 2013, your Company has put in place the relevant framework and Nomination and Remuneration Policy.

�e appointment and remuneration of Directors of the Company is governed by the provisions of Corporate Governance Guidelines issued by the IRDAI and the Companies Act, 2013. �e Nomination and Remuneration Committee recommends the appointment of Directors to the Board. �e Committee considers the qualifications, fit & proper status, positive attributes as per the suitability of the role and independent status as may be required of the candidate before such appointment.

�e Company has adopted an Executive Remuneration Policy which is designed to

attract, retain, and reward talented executives who will contribute to our long-term success. �e salient features of the Remuneration Policy are as follows:

�e main objective of the Policy:

a. Provide for monetary and non-monetary remuneration elements to our executives on a holistic basis;

b. Emphasize “Pay for Performance” by aligning incentives with business strategies to reward executives who achieve or exceed Group, business and individual goals.

�e Executive Remuneration Policy applies to the following:

a. Directors of the Company;

b. Key Managerial Personnel: Chief Executive Officer and equivalent, Chief Finance Officer and Company Secretary;

c. Senior Management (as defined in the Companies Act, 2013).

�e Company aims to provide competitive remuneration opportunities to its executives by positioning target total remuneration (including perks and benefits, annual incentive pay-outs, long term incentive pay-outs at target performance) and target total cash compensation (including annual incentive pay-outs) at target performance directionally between median and top quartile of the primary talent market. �e Company recognizes the size and scope of the role and the market standing, skills and experience of incumbents while positioning our executives.

�e executives are eligible to participate in the Company’s broad-based retirement, health and welfare, and other employee benefit plans. In addition to these broad-based plans, they are eligible for perquisites and benefits plans commensurate with their roles. �ese benefits are designed to encourage long-term careers.

L. Managerial Remuneration

�e details on remuneration (sitting fees) paid to the Non- Executive Directors are disclosed in the Corporate Governance Report. �e details on remuneration paid to the Chief Executive Officer are as per MGT-9 which forms part of the Directors’ Report.

M. Secretarial Audit Report

Pursuant to Section 204 of the Companies Act, 2013 read with rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company had appointed M/s. Dilip Bharadiya & Associates, a firm of Company Secretaries in Practice, as its Secretarial Auditor. �e Secretarial Audit Report for the financial year 2016-17 is annexed to this Report.

�e Board has duly reviewed the Report of the Secretarial Auditor of the Company. �e observations and comments, if any, appearing in the Secretarial Audit Report are self-explanatory and do not call for any further explanation/ clarification by the Board of Directors under Section 134 of the Companies Act, 2013.

IV POLICIES

A. Internal Audit Framework

�e Company received registration from Insurance Regulatory and Development Authority of India on 11th July 2016 and thereafter commenced its health insurance business from October 5, 2016.

�e Company had appointed M/s. KPMG as its Internal Auditor for FY 2016-17. Being first year of the operations, the Internal Audit Plan was designed to assess and strengthen the operational processes and monitor the efficacy of internal policies and controls with the objective of providing to the Audit Committee and the Board of Directors, an independent, objective and reasonable assurance on the adequacy and effectiveness of the organization’s risk management, control and governance processes. �e audit approach verifies compliance with the regulatory, operational and system related procedures and controls.

�e process followed by the Company for Internal Audit is as stated below: -

a) Establish and communicate the scope and objectives for the audit to appropriate management;b) Kick off meeting between Auditor and Auditee before commencement of audit;c) Perform walkthroughs to understand major processes and related sub-processes along with different interfaces;d) Communicate data requirements to the auditee;e) Assess and identify significant risks and perform detailed evaluation of controls over identified risks;

f) Release Issue trackers to the process owners to arrive at agreement over the issue and develop an action plan;g) Discussions to be held between the auditee and auditor on issue trackers;h) Once the issues are agreed, incorporate in the presentation format and release draft report to the process owner for consensus;i) Closure of audit between auditor and Management wherein issues are clarified and agreement on the associated risk (if any). Also resolution is agreed upon any other issue/concerns;j) Final Audit Report is released to the concerned stakeholders;k) Key audit observation along with status of implementation of open audit findings are presented by External auditor to the Audit Committee;l) �e internal auditor ensure the audit findings of the previous reports and recommendations of the Audit Committee are implemented by the concerned department through an Action Taken Report.

B. Risk Management Framework

�e Company has Risk Management framework covering procedures to identify, assess and mitigate the various key business risks. Your Company has a Risk Management Committee for developing and promoting the risk management culture of the Company. It sets overall risk policies and frameworks for the Company in line with its defined risk strategy and risk tolerance.

�e Company endeavors that all material risks can be identified and managed in a timely and structured manner with an objective to achieve sustainable growth.

�e Risk management approach is developed by taking into account the overall governance, management, reporting process, policies, philosophy, culture & regulatory framework applicable to the Company.

�e Company has an Enterprise Risk Management (ERM) framework and policy which includes key components such as Risk identification, Risk assessment, Risk response and risk management strategy, Risk monitoring, communication and reporting to mitigate key risks which are inherent in nature to Company's activities. �e risks of the Company are broadly classified into 8 categories namely Reputation Risk, People Risk, Regulatory Risk, Operational Risk, Investment Risk, Insurance Risk, Strategic Risk and Business Risk. �e key business risks identified are approved by the Risk Management Committee and monitored by the Risk Management team thereafter.

�e Risk Governance Structure of the Company has 3 lines of Defense mechanism. At the apex is Board of directors and Risk Management Committee which provide overall oversight and governance direction on Risk strategy and Risk appetite of the Company. �e Audit Committee provides assurance through Internal audit and independent control evaluation. �e Risk Management function along with support from various functions of the Company ensures smooth implementation of Risk management policy and framework through various mechanism such as risk awareness, self-assessments, risk monitoring, operational controls etc.

Operational risks are governed through Enterprise Risk Management policy and framework. �e Company has initiated a Risk Control Self-Assessment process to embed the control testing as a part of day to day operations.

�e Company’s Business Continuity and Disaster Recovery Plan ensure managing risk arising from business interruption having business impact on its operations.

Fraud risk is managed through Fraud management which is governed by the Anti-Fraud Policy and is handled internally through an Alert Committee.

Information Security risks will be governed through Information Security policy which provides management direction and support for information security in accordance with business requirements and relevant laws and regulations so that its information assets are provided comprehensive protection against the consequences of breaches of confidentiality, failures of integrity or interruptions to their availability.

�e Company’s Investments Function is governed by the Investment Committee appointed by the Board of Directors. Investment Policy and Operating Guidelines laid down by the Board while ensuring regulatory compliances also provide the framework for management and mitigation of the risks associated with investments. Asset Liability Management Policy and various ALM strategies are adopted to ensure adequate controls are put in place to mitigate risk related to Asset Liability Management.

Insurance risk exposes the company are morbidity risk, medical inflation, concentration risk and reinsurance risk. �e Company mitigates this risk by adopting various measures such as diversification of business across demography, geographical areas, underwriting policy for appropriate selection of risks, claim review policies, reinsurance arrangement etc.

Strategic risks such as changes in environment, technology, economy and the industry are monitored by the Company through its strategic planning and budgeting process.

�e Company manages its capital and solvency margin requirement through capital management policy for its insurance business to hold sufficient capital in order to cover the statutory requirements based on the IRDAI directives.

C. Customer Grievance Redressal

�e Grievance Redressal Guidelines issued by the IRDAI has established uniformity in the insurance industry in terms of definitions, timeframes for complaint resolution and classifications of complaints. In accordance with the Grievance Redressed Guidelines, the Company has drafted its policy which is policyholder-friendly. �e Company has put in place proper procedures and effective mechanism to address complaints and grievances of policyholders including mis-selling by intermediaries, ensuring compliance with the statutory requirements as laid down in the regulatory framework.

�e Company has instituted a procedure to review the Grievance and Complaints redressal mechanism at periodic intervals to provide an opportunity to initiate various process level, product level and policy level changes from time to time.

In accordance with IRDAI’s Corporate Governance Guidelines, the Company has a green field internal stringent turnaround time for all the complaints received at all touchpoints. �ere is an in-house Grievance Management team which personally is in touch with the customer until the resolution has been communicated.

To create customer awareness about the Grievance Redressal Mechanism, the Company has broadcast the escalation matrix on its website, which the customer can follow in case he/she is not satisfied with the resolution provided.

�e grievances received by the Company are reported on ‘Integrated Grievance Redressed Management System’ (IRDA - IGMS) online and a reverse feed also gets downloaded for complaints registered by customers on IGMS against the Company. Grievance Redressed team has been empowered to take decisions for ensuring effective resolution of customer complaints.

D. Whistle Blower Policy

�e Company has implemented a Whistle Blower Policy providing a platform to all the employees and Directors to report any suspected or confirmed incident of fraud/misconduct through any of the determined reporting protocols. More details are provided in the Corporate Governance Report.

E. Anti-Sexual Harassment Policy

�e Company has in place a Policy for Prevention of Sexual Harassment as per the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013. �e Complaints Committee has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. During the year under review there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressed) Act, 2013.

F. Awards/ Recognitions

During the year, our Company has won the following awards: -

Best digital marketing campaign by BBC Knowledge National Digital Marketing Awards

Abby Awards – Mobile (Bronze) by Goafest 2017

Customer Experience (Singapore) award for “Highly Commended: Best Customer Insight and Feedback Initiative” at the “3rd Annual Customer Experience in Financial Services 2017”.

New Insurance Product of the Year by Global Health Insurance Awards

Product Innovator of the Year by 2nd Annual India Insurance Summit & Awards 2017

Rising Star of the Year by 2nd Annual India Insurance Summit & Awards 2017

V OTHER STATUTORY INFORMATION

A. Solvency Margin

�e Directors are pleased to report that the assets of the Company are higher than the liabilities of the Company with a solvency margin at 2.88 times in FY 2016-17, it is above the minimum solvency margin level of 1.50 times, as specified in Section

64VA of the Insurance Act, 1938 read with the IRDA (Assets, Liabilities, and Solvency Margin of Insurers) Regulations, 2000.

Acknowledgements

�e Directors are highly grateful for all the help, guidance and support received from the Insurance Regulatory and Development Authority of India, Registrar of Companies, the Auditors M/s PYS & Co., LLP, Chartered Accountants, Reinsurers, Policyholders, Shareholders and various channel partners. �e Directors would also like to place on record their sincere appreciation for the assiduous efforts and dedicated contributions put in by the employees of the Company at all levels.

By order of the Board of Directorsfor Aditya Birla Health Insurance Co. Limited

Place: Mumbai Mr. Ajay Srinivasan Mr. Mayank BathwalDate: May 8, 2017 Director Chief Executive Officer & (DIN 00121181) Whole Time Director (DIN 06804440)

A W A R D S A N D

A C C O L A D E S

Corporates with around 46% market dominated by PSU insurers; 2) Retail segment with 44% has seen relatively higher growth due to increased penetration in tier-2, tier-3 cities and 3) Government segment which forms around 10% of the industry.

At the end of the year under review, your Company’s market share stood at 0.2% (0.9% among Stand-alone health insurers) which is in line with management expectations given that we are a new entrant and have launched business in 2nd half of FY 2016-17. Going forward, we plan to be amongst the leading health insurance companies which will focus on making health a priority and deliver a differentiated business model. In order to achieve our market share objective, we will be driving our product CVP through aggressively expanding distribution network, leveraging digital delivery and creating seamless customer experience.

C. Review of Business Operations

i) Launch of Business and Product

Your Company received the certificate of registration from the Insurance Regulatory & Development Authority of India on July 11, 2016. �e Company initiated the business operations on October 5, 2016 and had a formal launch event on November 24, 2016 to launch its products.

We decided to create our business model on the philosophy of health first. We are creating a differentiated model from traditional ‘buy and forget’ to ‘buy and engage’. Your Company would serve as an enabler and influencer of health of customers, in addition to fulfilling traditional role of funding healthcare expenses. We will continue to focus on holistic approach towards health which goes beyond sickness funding into disease prevention and wellness management.

We currently have a comprehensive product suite which includes Group Activ Health, Retail Activ Health and Group Activ Secure (incl. Personal Accident / Critical illness / Hospital Cash benefits).

Key features of Activ Health includes: -

Incentivized Wellness - Wellness benefits and health returns for healthy behaviour

Chronic Care Management: Chronic care for diabetes, asthma, hypertension & hyperlipidemia

Flexible health cover – best of breed product with modularized offering to consumers

Digital Health Manager through Activ Health App

ii) Distribution Channels

Your Company follows a multi-channel distribution model across agency, broking, bancassurance, digital and direct marketing channel. �e Company will continue to create distribution capacities that are sustainable in the long-run.

Our Agency network consists of around 1800 Advisors with their spread across 7 locations (Mumbai, Pune, Delhi, Kolkata, Chennai, Bengaluru & Hyderabad) through 9 branches. �e Company has taken various initiatives in Agency channel to increase geographical expansion and to penetrate further in existing locations. We are augmenting our capacity in Agency channel & are planning to have presence in 50 cities in next 12-18 months. It will be imperative to manage capacities through timely recruitment, activation and training of sales force and agents going forward.

In Bancassurance, we have achieved impressive partnerships with 2 bank partners & are in advanced discussion with other potential bank partners. Partnerships with Corporate Agents and Brokers are also going strong. We will continue to look at new tie-ups in third party distribution segment with a view of creating long-term strategic partnerships with key distributors. In the coming years, we plan to build a strong franchisee in the bancassurance segment.

In Group segment, we are leveraging Aditya Birla Group Companies as well as new client segments including Large corporates and SMEs for our business. We are maintaining an optimal channel mix from broker as well as direct channel. Going forward, we will continue to focus on new segments to manage our top-line and margins.

To sum it up, from the very beginning our strength will be to create distribution capacities and execution of our multi-distribution strategy to deliver the right products to our customers. Given the strength of our innovative CVP and the differentiated service model including wellness and chronic care management we are confident that we will be making further in-roads in our distribution channels in the years ahead.

With an aim to simplify and digitize the policy issuance, a unique seller portal app has been launched and utilized by all the channels.

iii) Customer and Claims Management

Our challenge as one of the latest entrant in health insurer is to differentiate ourselves against the market players and also ensure that we provide a great customer experience to our insured members.

We have decided to adopt a research-based consumer-first approach for developing our products, systems, process and services. Our aim is to take pride in reporting the number of lives we have impacted positively and financial metrics is not the only benchmark that we want to be rated against.

�rough extensive research, we charted out the customer’s journey and identified the major pain points that the customers faced and designed our processes & products to ensure we address those and at the same time provide adequate differentiation from the market. Hospitalization and Claims journey of the customer came out to be the most important Moment of Truth.

To ensure that the customers have a seamless experience, we have aimed at understanding the major challenges in the standard claims processes prevalent in the industry and have identified the following key enablers:

We have a large provider network of over 1600 hospitals as on March 31, 2017 to ensure that we can provide a cashless experience to our customers

We help our customers in handholding them during admission and discharge and further support them in counseling & education during hospitalization

We plan to digitally service our customers especially during pre-authorization, proactively communicate claims status and overall case management

�e Company has processed over 3500 claims by servicing claims in-house and also by leveraging the experience of servicing partners such as TPAs. �e Company has leveraged technology to improve the turnaround time and customer experience. �e Company’s Claims team has been appreciated with many customer testimonials for good & timely response in speeding up the cashless approval and for support during hospital admission discharge.

D. Implementation of Indian Accounting Standards (IND AS) converged with International Financial Reporting Standards (IFRS)

�e IRDAI vide its circular (Ref no: IRDA/ F&A/ CIR/IFRS/038/03/2016) dated March

1, 2016 had advised the Insurers to comply with the Indian Accounting Standards (Ind AS) for financial statements for accounting periods beginning from April 1, 2018 onwards, with comparatives for the periods ending March 31, 2018. Your Company is well placed to meet this requirement within the stipulated time frame.

Your Company is also required to submit the Proforma Ind AS financial statements to the Authority from the quarter ended December 31, 2016, onwards. �ese have been complied with for third and fourth Quarter of FY 2016-17.

As mandated by the Circular, the Company has also formed a steering committee with requisite expertise to spearhead the implementation process and duly informed IRDAI about the same. �e steering committee appraises the Audit Committee and the Board about the progress made in the implementation covering the key aspects as highlighted in the circular on periodic basis.

E. Statement containing salient features of financial statements of subsidiaries

�e Company does not have any subsidiary company.

F. Reserves

During the year, no amount was transferred to General Reserve.

G. Dividend

�e Board of Directors do not recommend any dividend for the year ended March 31, 2017.

H. Transfer of Amounts to Investor Education and Protection Fund (IEPF)

Your Company did not have any funds lying unpaid or unclaimed for a period of seven years. �erefore, there were no funds which were required to be transferred to Investor Education and Protection Fund (IEPF).

I. Related Party Transactions

All the Related Party Transactions that were entered into during the financial year 2016-17 were on arm’s length basis and were in ordinary course of business.

Pursuant to Section 134(3)(h) read with Rule 8(2) of the Companies (Accounts) Rules, 2014, there are no transactions to be reported under Section 188(1) of the Companies Act, 2013.

M. Statutory Auditors, their Report and Notes to Financial Statements

M/s. PYS & Co., LLP, Chartered Accountants, were appointed as the Statutory Auditors of the Company to hold office from the conclusion of Annual General Meeting (‘AGM’) held on July 23, 2016 until the conclusion of the 6th (Sixth) AGM of the Company subject to ratification by the Members at every Annual General Meeting (‘AGM’). However, M/s. PYS & Co., LLP, the Statutory Auditors of the Company have expressed their unwillingness to act as Statutory Auditor.

In terms of Corporate Governance Guidelines issued by the IRDAI, an insurance company is required to have minimum 2 Joint Statutory Auditors. �e Corporate Governance Guidelines also prescribe requisite criteria for eligibility of firms to be appointed as Statutory Auditors of the Company. Accordingly, the Management has, after assessing eligibility, willingness and experience, proposed appointment of M/s. MZSK & Association, Chartered Accountants and M/s. Khimji Kunverji & Co., Chartered Accountants as Joint Statutory Auditors of the Company.

�e Company has received certificates from the proposed auditors confirming their eligibility and willingness for the appointment pursuant to Section 139 (1) of the Companies Act, 2013 and as per the requirement stipulated by IRDAI.

�e observations, if any, made by the Statutory Auditors of the Company in their report read with relevant notes to the Accounts are self-explanatory and, therefore do not call for any further comments.

II BASIC INFORMATION ABOUT THE COMPANY AND BUSINESS OUTLOOK

A. IRDA License

�e Company has received the Certificate of Registration from the Insurance Regulatory and Development Authority of India on July 11, 2016.

�e Board has formulated and adopted a Related Party Transactions Policy (‘Policy’) for the purpose of identification, monitoring and reporting of related party transactions. �e Policy is available on the Company’s website at www.adityabirlahealth.com/healthinsurance

All related party transactions as required under Accounting Standard 18 are reported in Related Party Disclosures under Notes to Financial Statements.

J. Conservation of Energy, Technology, Absorption, Foreign Exchange Earnings and Outgo

�e provisions of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 are not applicable to the Insurance Industry. However, your Company has been increasingly using information technology in its operations. �e details of the foreign exchange earnings and outgo is as follows:

K. Material Changes and Commitment Affecting Financial Position of the Company

�ere are no material changes and commitments, affecting the financial position of the Company which has occurred between the end of the financial year of the Company i.e. March 31, 2017 and the date of the Directors’ report.

L. Internal Financial Controls

�e Board of Directors confirm that your Company has laid down set of standards, processes and structure which enables to implement Internal Financial controls across the organization with reference to Financial Statements and that such controls are adequate and are operating effectively. During the year under review, no material or serious observation has been observed for inefficiency or inadequacy of such controls.

�e IRDAI vide its Circular dated April 7, 2015 bearing reference number IRDA/F&A/CIR/GLD/062/04/2015 has pursuant to amendment in Insurance Laws (Amendment) Act, 2015 to Section 3A of the Insurance Act, 1938, discontinued the requirement to apply for Renewal Certificate of Registration (IRDA/R6) on an annual basis. We hereby confirm that the Company has made payment of the annual fees for the financial year 2017-18 and the certificate of registration which was issued by the IRDAI on July 11, 2016 shall continue to be valid and the same is in force till the Company continues to pay such annual fee as may be prescribed by the Regulations.

B. Change in nature of business

�ere has been no change in the nature of business of the Company.

C. Change in Registered Office Address

�e Registered Office of the Company has been shifted to 10/A, Romell Tech- Park, Bldg. No. 2, 10th Floor, Nirlon Compound, Western Ex. Highway, Goregaon East, Mumbai 400063 with effect from May 10, 2016.

D. Significant and Material Orders Passed by the Regulators/ Courts / Tribunals

No significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status and Company’s operations in future.

E. Share Capital

�e Authorized Share Capital of the Company is Rs. 101,00,00,000.

�e Issued, Subscribed and Paid up Capital of the Company was Rs. 100,44,11,780 as on March 31, 2017.

During the FY 2016-17, following allotments of Equity Shares were made:

F. Issue of Equity shares with differential voting rights:

During the financial year, the Company has not issued equity shares with differential rights.

G. Transfer of Shares

During the year, there was no transfer of shares of the Company.

H. Admission of Equity Shares with National Securities Depository Limited

During the year, the Company’s Equity Shares were admitted in the records of the National Securities Depository Limited (‘NSDL’).

I. Loans given, investment made, guarantees given or security provided under Section 186 of the Companies Act, 2013

Pursuant to Section 186(11) of the Companies Act, 2013, loans made, guarantees given, securities provided or acquisition of securities by an insurance company in the ordinary course of its business are exempted from the disclosure requirement under Section 134(3)(g) of the Companies Act, 2013.

J. Public Deposits

During the year under review, the Company has not accepted any deposit from the public falling within the ambit of Chapter V (Section 73) of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.

K. Extract of Annual Return

�e details forming part of the extract of the Annual Return in form MGT-9 is annexed to the Directors’ Report.

L. Particulars of Employees

In pursuance of the Company’s aspirations to become the most preferred employer in the insurance industry, the Company continued to invest in creating a pool of talent for the growing business needs. �e Company’s total workforce stood at 438 as at March 31, 2017. Structured initiatives around talent management, learning and development and long term retention plan for talent pool across levels were implemented for skill development to enhance productivity and performance of workforce. As required under the provisions of Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the name

and other particulars of the employees are set out in the Annexure to the Directors’ Report. �e Directors’ Report is being sent to the shareholders excluding the Annexure. Any shareholder interested in obtaining a copy of the Annexure may write to the Company Secretary at the Registered Office of the Company.

M. Management Discussion and Analysis Report

Pursuant to the provisions of Regulation 3 of the Insurance Regulatory and Development Authority (Preparation of Financial Statements and Auditor’s Report of Insurance Companies) Regulations, 2002, the Management Report forms a part of the financial statements.

III CORPRATE GOVERNANCE AND SECRETARIAL MATTERS

A. Corporate Governance

�e Company has taken structured initiatives towards Corporate Governance and its practices are valued by its stakeholders. A separate report on Corporate Governance is attached separately as Annexure 1.

In compliance with “Guidelines on Corporate Governance for the Insurance Sector” issued by IRDAI, a Compliance Certificate issued by the Compliance Officer is annexed to and forms part of the Corporate Governance Report.

B. Number of Board Meetings

During the year under review 4 Board Meetings were convened and held, the details of which are given in the Corporate Governance Report. �e intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. �e detailed information about Composition, Meetings and attendance are provided in the Corporate Governance Report.

C. Committees of Board

Following are the Committees of the Board of Directors:

1. Audit Committee

2. Policyholders Protection Committee

3. Nomination & Remuneration Committee

4. Risk Management Committee

5. Investment Committe

�e detailed description, composition, number of meeting(s) held and attendance of member of respective Committees are mentioned separately in Corporate Governance Report.

D. Audit Committe

�e Company has a duly constituted Audit Committee comprising of 5 members consisting of 3 Independent Directors and 2 Non-Executive Directors. Mr. S. Ravi (an Independent Director & a Practicing Chartered Accountant) is the Chairman of the Audit Committee.

Mr. P Vijaya Bhaskar and Mr. C N Ram, Independent Directors and Mr. Ajay Srinivasan and Mr. Louis von Zeuner Non-Executive Directors, are the members of the Committee.

�e composition of the Committee is in conformity with the provision of Section 177 of the Companies Act, 2013 and the Corporate Governance Guideline issued by IRDAI.

�e other details about the Committee are provided in the Corporate Governance report.

E. Directors’ Responsibility Statement

Pursuant to Section 134(5) of the Companies Act 2013, your Directors, to the best of their knowledge and belief confirm that:

a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;

c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 2013 preventing and detecting fraud and other irregularities;

d) the Directors have prepared the annual accounts on a going concern basis; and

e) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

F. Board Evaluation

A formal evaluation mechanism has been adopted for evaluating the performance of the Board, Committees thereof, individual Directors and the Chairman of the Board. �e evaluation is based on criteria which includes, among others, providing strategic perspective, Chairmanship of Board and Committees, attendance and preparedness for the meetings, contribution at meetings, effective decision making ability and role of the Committees.

Pursuant to the requirement of the Companies Act, 2013, the annual performance evaluation of the Board, the Directors (Independent and others) individually, Chairperson, as well as applicable Committees of the Board viz. Audit Committee, Nomination and Remuneration Committee, Investment Committee, Risk Management Committee, Policyholders Protection Committee, was carried out for FY 2016-17. �e outcome of the said performance evaluation was placed at the Board Meeting held on May 8, 2017. �e Committees and the Board as a whole are functioning effectively.

G. Directors

As on March 31, 2017, your Board of Directors comprises of 13 (�irteen) Directors including one CEO & Whole Time Director, 5 (Five) Independent Directors including a Woman Director.

During the year, following were the changes in the directorship of the Company:

Mr. P Vijaya Bhaskar (DIN 06629884) was appointed as an Additional (Independent) Director w.e.f. May 10, 2016.

Mr. C N Ram (DIN 00211906) was appointed as an Additional (Independent) Director w.e.f. July 23, 2016.

Mr. Mayank Bathwal (DIN 06804440) was appointed as an Additional Director (CEO & Whole-time Director) w.e.f. July 23, 2016.

Mr. Asokan Naidu (DIN 07425396) was appointed as an Additional Director w.e.f. July 23, 2016.

Mr. Danie Jacobus Botes (DIN 07550406) was appointed as an Additional Director w.e.f. July 23, 2016.

Mr. Mahendren Moodley (DIN 07628592) was appointed as an Additional (Independent) Director w.e.f. October 1, 2016.

Mr. Louis Von Zeuner (DIN 07714084) was appointed as an Additional Director w.e.f. February 6, 2017.

Dr. Ajit Ranade (DIN 00918651) was appointed as an Additional Director w.e.f. February 6, 2017.

In accordance with the provisions of the Companies Act, 2013, Mr. Sushil Agarwal shall retire by rotation at the ensuing Annual General Meeting (‘AGM’) of the Company, and being eligible, offers himself for re-appointment.

�e Directors who were appointed as Additional Directors of the Company shall hold office until the ensuing AGM. �e Company has received notice pursuant to the provisions of Section 160 of the Companies Act, 2013 proposing appointment of aforesaid Directors at the ensuing AGM subject to the approval of Shareholders at the AGM.

�e Company has also received requisite disclosures and undertakings from all the Directors in compliance with the provisions of the Companies Act, 2013 and the Corporate Governance Guidelines issued by the IRDAI.

A detailed profile of all the Directors seeking appointment at the ensuing Annual General Meeting of the Company is given in the Corporate Governance Report, forming a part of this Annual Report.

None of the Directors of the Company are in receipt of commission from the holding company.

�e details of the remuneration paid to the Non-Executive Chairman, Executive and Non-Executive / Independent Directors of the Company for the year ended March 31, 2017 and the details on number of meetings of the Board of Directors of the Company is provided in detail in the Corporate Governance Report.

H. Declaration by Independent Directors

�e Independent Directors of the Company have given the declarations and

confirmed that they met the criteria of Independence as provided under Section 149(6) of the Companies Act, 2013.

I. Key Managerial Personnel

Pursuant to the provisions of the Companies Act, 2013, the following employees were holding the position of Key Managerial Personnel (‘KMP’) of the Company during the FY 2016-17:

Mr. Mayank Bathwal, Chief Executive Officer, (appointed w.e.f. August 28, 2015)

Ms. Shikha Bagai, Chief Finance Officer, (appointed w.e.f. September 1, 2016)

Mr. Rajiv Joshi, Company Secretary, (appointed w.e.f. February 1, 2016)

�ere have been no resignations/ removal of the Key Managerial Personnel of the Company during the FY 2016-17.

J. Corporate Social Responsibility

�e provisions of Corporate Social Responsibility were not applicable to the Company for the FY 2016-17.

K. Policy on Directors’ Appointment and Remuneration

In terms of the requirements under the Companies Act, 2013, your Company has put in place the relevant framework and Nomination and Remuneration Policy.

�e appointment and remuneration of Directors of the Company is governed by the provisions of Corporate Governance Guidelines issued by the IRDAI and the Companies Act, 2013. �e Nomination and Remuneration Committee recommends the appointment of Directors to the Board. �e Committee considers the qualifications, fit & proper status, positive attributes as per the suitability of the role and independent status as may be required of the candidate before such appointment.

�e Company has adopted an Executive Remuneration Policy which is designed to

attract, retain, and reward talented executives who will contribute to our long-term success. �e salient features of the Remuneration Policy are as follows:

�e main objective of the Policy:

a. Provide for monetary and non-monetary remuneration elements to our executives on a holistic basis;

b. Emphasize “Pay for Performance” by aligning incentives with business strategies to reward executives who achieve or exceed Group, business and individual goals.

�e Executive Remuneration Policy applies to the following:

a. Directors of the Company;

b. Key Managerial Personnel: Chief Executive Officer and equivalent, Chief Finance Officer and Company Secretary;

c. Senior Management (as defined in the Companies Act, 2013).

�e Company aims to provide competitive remuneration opportunities to its executives by positioning target total remuneration (including perks and benefits, annual incentive pay-outs, long term

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