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(i) The Disclosure Document has been filed with the Board along with the certificate in the prescribed format in terms of Regulation 14 of the SEBI (Portfolio Managers) Regulations, 1993 as amended from time to time.

(ii) The purpose of the Disclosure Document is to provide essential information about the portfolio services in a manner to assist and enable the investors in making informed decision for engaging a Portfolio Manager.

(iii) The Disclosure Document contains the necessary information about the Portfolio Manager, required by an investor before investing. The investor is advised to carefully read this entire document before making investment decision and to retain it for future reference.

(iv) All the intermediaries involved in the scheme are registered with SEBI as on the date of the document.

(v) The Principal Officer designated by the Portfolio Manager is:

Name Mr. Ravinder Parkash Seth

Address S-8,DDA,Shopping Complex, Mayur Vihar Phase–I, Delhi-91

Telephone No.: +91-11-43035555

Email ID [email protected]

This disclosure document is dated 30th September 2014.

Index

1. Disclaimer………………………………………………………………………………………………………………………. 4

2. Definitions……………………………………………………………………………………………………………………… 4

3. Description…………………………………………………………………………………………………………………….. 5

3.1 History, Present Business and Background of the Portfolio Manager………………. 5

3.2 Promoters of the Portfolio Manager, Directors and their background…………….. 5

3.3 Group Companies information/Firms of the Portfolio Manager………………………. 6

3.4 Key Management Personnel……………………………………………………………………………. 6

3.5 Details of Services being offered……………………………………………………………………… 7

4. Penalities, Pending Litigations etc………………………………………………………………………………….. 7

5. Services Offered……………………………………………………………………………………………………………… 7

5.1 Types of the services/Products Offered……………………………………………………………. 7

5.2 Investment Objective………………………………………………………………………………………… 7

6. Risk Factors…………………………………………………………………………………………………………………….. 8

7. Client Representation……………………………………………………………………………………………………… 9

7.1 Details of client’s accounts activated…………………………………………………………………. 9

7.2 Transactions with related parties……………………………………………………………………….. 9

8. Financial performance of the Portfolio Manager…………………………………………………………..... 10

8.1 Balance Sheet As on 31st March Ending…………………………………………………………….. 10

8.2 Income Statement…………………………………………………………………………………………….. 11

9. Performance of the Portfolio Manager…………………………………………………………………………… 12

10. Nature of Expenses………………………………………………………………………………………………………… 12

11. Taxation…………………………………………………………………………………………………………………………. 12

12. Accounting Policies………………………………………………………………………………………………………… 16

13. Investors Services………………………………………………………………………………………………………….. 17

14. Grievance Redressal and Dispute Settlement Mechanism…………………………………………….. 17

1. Disclaimer This Document has been prepared in accordance with the Securities and Exchange Board of India (Portfolio Managers) Regulations 1993 India (SEBI), as amended from time to time and filed with Securities and Exchange Board of India. This document has neither been approved nor disapproved by SEBI nor has SEBI certified the accuracy or adequacy of the contents of the Document. 2. Definitions

a. "Act” means the Securities and Exchange Board of India Act, 1992 b. “Agreement” means the agreement executed between the Portfolio Manager and its clients and shall

include all modifications, alterations or deletions thereto made in writing upon mutual consent of the parties there to, in terms of Regulation 14 of SEBI (Portfolio Managers) Regulations, 1993 as amended from time to time issued by the Securities and Exchange Board of India.

c. “Application” means the application made by the Client to the Portfolio Manager to place the monies and/or securities therein mentioned with the Portfolio Manager for Portfolio Management Services. Upon execution of the Agreement by the Portfolio Manager, the Application shall be deemed to form an integral part of the Agreement. Provided that in case of any conflict between the contents of the Application and the provisions of the Agreement, the provisions of the Agreement shall prevail.

d. “Assets” means (i) the Portfolio and/or (ii) the Funds. e. “AUM” means Asset Under Management f. “Bank Account” means one or more accounts opened, maintained and operated by the Portfolio Manager

in the name of the Clients or in the name of the portfolio manager, as the case may be, maintained in terms of the Power Of Attorney given by the Clients for the purpose of managing funds on behalf of the investors with any of the Scheduled Commercial Banks.

g. “Elite Wealth Advisors Ltd” or ”Portfolio Manager” or “Company” or “EWAL” means a company incorporated under the Companies Act, 1956 and registered with SEBI to act as a Portfolio Manager in terms of SEBI (Portfolio Managers) Regulations, 1993 vide Registration No. INP000003021 dated 3rd November 2008.

h. “Board” means the Securities and Exchange Board of India i. “Body Corporate” shall have the meaning assigned to it or under clause (7) of section 2 of the

Companies Act j. “Client” or “Investor” means anybody corporate, partnership firm, Individual, HUF, association of

person, body of individuals, trust, statutory authority or any other person who registers with the Portfolio Manager for availing portfolio management services.

k. “Depository Account” means one or more account or accounts opened, maintained and operated by the Portfolio Manager in the name of the Clients or in the name of portfolio manager, as the case may be, maintained in terms of the Power Of Attorney given by the Clients for the purpose of managing custody on behalf of the investors with any depository or depository participant registered under the SEBI (Depositories and Participants) Regulations 1996

l. “Disclosure Document” means a document issued by Elite Wealth Advisors Limited for offering portfolio management services, prepared in terms of Schedule V of the SEBI (Portfolio Managers) Regulations 1993.

m. “Discretionary Portfolio Management Services” means the portfolio management services rendered to the client, by the Portfolio Manager on the terms and conditions contained in the agreement, where under the Portfolio Manager exercises any degree of discretion in investments or management of the assets of the client.

n. “Non Discretionary Portfolio Management Services” means the service rendered by a Portfolio Manager who manages the funds accordance with the directions of the client

o. “Funds” means the monies placed by the client with the Portfolio Manager and any accretions thereto. p. “NRI” Non-Resident Indian or Persons of Indian Origin q. “Parties” means the Portfolio Manager and the Client; and “Party” shall be construed accordingly. r. “Person” Any person being associate, subsidiary, interconnected company or a company under the same

management within the meaning of section 370 (1B) of the Companies Act, 1956 or in the same group. s. “Portfolio” means the total holdings of all investments, securities and funds belonging to the client. t. “Portfolio Manager” means any person who pursuant to a contract or arrangement with a client, advises

or directs or undertakes on behalf of the client (whether as a discretionary portfolio manager or otherwise)

the management or administration of a portfolio of securities or the funds of the client, as the case may be and in the current case it shall mean Elite Wealth Advisors Limited.

u. “Regulations” means the Securities and Exchange Board of India (Portfolio Managers) Regulations, 1993, as amended from time to time

v. “Rules” means Securities and Exchange Board of India (Portfolio Managers) Rules, 1993, as may be amended from time to time.

w. “SEBI” means the Securities and Exchange Board of India established under sub-section (1) of Section 3 of the Securities and Exchange Board of India Act, 1992, as amended from time to time.

x. “Securities” includes:- “Securities” as defined under the Securities Contracts (Regulation) Act, 1956; Shares, scrips, stocks, bonds, warrants, convertible and non-convertible debentures, fixed return

investments, equity linked instruments, or other marketable securities of a like nature, negotiable instruments, deposits, money market instruments, commercial paper, certificates of deposit, units issued by the Unit Trust of India and/or by any mutual funds, mortgage backed or other asset backed securities, derivatives, derivative instruments, options, futures, foreign currency commitments, hedges, IRS swaps, FRAs or netting off and any other securities issued by any company or other body corporate, any trust, any entity, the Central Government, any State Government for the purpose of raising public loan and having one of the forms specified in clause (2) of section 2 of the Public Debt 1944, American Depository receipts, Global Depository receipts or any local or statutory authority and all money rights or property that may at any time be offered or accrue (whether by rights, bonus, redemption, preference, option or otherwise) and whether in physical or dematerialized form in respect of any of the foregoing or evidencing or representing rights or interest therein; and Any other instruments or investments (including borrowing or lending of securities) as may be permitted by applicable law from time to time.

3. Description 3.1 History, Present Business and Background of the Portfolio Manager: Elite Wealth Advisors Limited (previously known as Elite Stock Management Limited), more popularly known as Elite Wealth, is one of today’s upcoming equity research and broking houses of India. Elite Wealth is an integrated financial services organisation. We offer a wide range of products and services for wealth generation solutions for all its customers, such as Individuals, Corporate, HNI and institutions based on creative value-investing ideas. Its strength lies in its customer-centric approach and a firm commitment to make their money work for them. Elite Wealth was established in 1990 to provide financial services to Retail, High Net worth Individuals, Corporate and Institutional clients. Soon after, it acquired membership of National Stock Exchange of India Ltd. (NSEIL), Bombay Stock Exchange Ltd. (BSE), MCX Stock Exchange Limited (MCX-SX), National Securities Depository Ltd. (NSDL) and Central Depository Services (India) Ltd (CDSL). Elite Wealth holds registration from Securities and Exchange Board of India (SEBI) to trade, both in Equity and Derivatives segment of NSEIL and BSE. Elite Wealth also has a membership of National Stock Exchange of India Ltd. (NSEIL) and MCX Stock Exchange for Currency Derivatives. Its sister concern (Elite Comtrade Pvt. Ltd.) holds membership of Multi-Commodity Exchange (MCX) and National Commodity Derivative Exchange (NCDEX) to trade in Bullion, Commodity and Agro Derivatives. During 2009, EWAL has ventured in the PMS arena with the focus to generate above-average market returns for its clients in line with the clients’ investment objectives. To achieve this, EWAL is equipped with an in-house team of fundamental and technical research analysts to support the investment decision-making process. The team is supported by a host of financial database and information packages like Capitaline, Ace Equity, Newswire 18, Falcon and other analysis and decision support applications. 3.2 Promoters of the Portfolio Manager, Directors and their background:

(i) Promoters: The main promoter of Elite Wealth Advisors Ltd. is Mr Ravinder Parkash Seth. (ii) Directors and their background:

EWAL is steered by a highly talented and motivated team. Elite Wealth is committed to customer

fulfillment in an extremely professional, transparent and ethical environment. Our professional and trained personnel are devoted to their customers and are readily available for providing personalized attention.

a. Mr. Ravinder Parkash Seth (Founder & Managing Director) Mr.Ravinder Parkash Seth has more than 23 years of experience in the Capital Markets. An Electronics Engineer by qualification started Elite Wealth Advisors Ltd. in the year 1990, as a stock broking company with the idea of making peoples’ money work for them’. b. Mr. Gudala Agaiah He joined the Board of Directors of Elite Wealth Advisors Ltd. in January 1991 and possesses nearly 20 years of capital market experience. He is M.A c. Mrs. Indu Seth She joined the Board of Directors of Elite Wealth Advisors Ltd. in January 1992 and possesses nearly 17 years of capital market experience. Her qualification is B.Sc and B.ed. d. Mr. Ankur Seth He joined the Board of Directors of Elite Wealth Advisors Ltd.in July 2009 and possesses nearly 8 years of capital market experience. He has Certificate in FMB.

3.3 Group Companies Information/Firms of the Portfolio Manager Name of the Group Company Relationship

M/s Elite Comtrade Private Limited Associate Company M/s Elite Realty Consultant Private Limited Associate Company M/s Elite Insurance Brokers Private Limited Subsidiary Company

3.4 Key Management Personnel (PMS Division)

Key Management Personnel Designation

Mr Ravinder Parkash Seth Principal Officer Mr. Vikram Luthra Chief Operating Officer Sanjay Dutt Sharma Compliance Officer Mr. Vindhyachal Prasad Tripathi PMS Manager Mr. C. Srinivasa Kalyan Research Analyst Mr. Diwan Singh Manager-DP Operations Ashish Goyal Manager-Operations

3.4 Details of the Services Being Offered Elite Wealth Advisors Limited offers discretionary, non-discretionary and advisory portfolio management services as per the individual client agreements.

The minimum investment amount to be invested under portfolio management Rs Twenty five Lakhs Only, however the minimum amount varies under different investment options.

4. Penalties, Pending Litigations Etc: Penalties, Pending Litigations or Proceedings, findings of inspection or investigations for which action may have been taken or initiated by any regulatory authority:

Sr.

Particulars Action

All cases of penalties imposed by the Board or the directions issued by the Board under the Act or Rules or Regulations made there under.

None

The nature of the penalty/direction. None

Penalties imposed for any economic offence and/ or for violation of any securities laws.

None

Any pending material litigation/legal proceedings against the portfolio manager / key personnel with separate disclosure regarding pending criminal cases, if any.

None

Any deficiency in the systems and operations of the portfolio manager observed by the Board or any regulatory agency.

None

Any enquiry/ adjudication proceedings initiated by the Board against the portfolio manager or its directors, principal officer or employee or any person directly or indirectly connected with the portfolio manager or its directors, principal officer or employee, under the Act or Rules or Regulations made there under..

None

5. Services Offered:

5.1 The current service offering of the Portfolio Manager is: 1. Discretionary Portfolio Management Services: The portfolio account of the client is managed at the

full discretion and liberty of the Portfolio Manager. An Agreement outlining the details of services including the objectives, rights and responsibilities, fees and expenses, etc is entered into with each client separately.

2. Non Discretionary Portfolio Management Services: The portfolio which the Portfolio Manager manages in accordance with the directions and permission of the client.

3. Advisory Portfolio Management Services: The client is advised on buy/sell decisions within the overall risk profile with/without any BackOffice responsibility for trade execution, custody or accounting functions.

5.2 Empanelled Broker: Elite Wealth Advisors Limited (SEBI Registration No. NSE:INB/INF/INE230805133 BSE : INB/INF010805134,MCX SX :INE 260805133, MCX-SX: INB/INF260805131) is empanelled broker for the purpose of Equity trading under the administrative services of the Portfolio Manager and Elite Wealth Advisors Limited (SEBI Registration No. NSDL: IN301670, SEBI Registration No. CDSL: IN DP-CDSL-577-2010) is empanelled Depository Participant for Demat account purpose under the administrative services of the Portfolio Manager. 5.3 Investment Objective: The general objective is to formulate and device the investment philosophy to achieve long-term growth of the capital by investing in assets, which generates reasonable returns and ensures liquidity. The actual portfolio management style will vary in line with each client profile with regards to his risk tolerance level and specific preferences or concerns (the specific objective will be as mentioned in the agreement with the client). The investment objective is to generate steady returns for its client over a period of time by investing in good companies. The stock selection lays greater emphasis on companies with good corporate governance and excellent management track record. It would participate in emerging sector and turn around stories so as to participate and capture sharp rallies.

It aims to deliver superior returns in Low to medium term by investing in fundamentally strong stocks with momentum approach, coupled with active profit booking.

6. Risk Factor:

The risk factors, as perceived by management, in respect of the portfolio management services offered are enlisted below:

Investment in equities, derivatives and mutual funds are subject to market risks. There is no assurance or guarantee on the achievement of objectives of the schemes and appreciation of

the value of or return on the investments made. There may be depreciation of such value of investments or return thereon to an unpredictable extent.

The Portfolio Manager’s investment decisions may not be always profitable, as actual market movements may be at variance with anticipated trends.

The Portfolio Management service is subject to risk arising from investment objective, investment strategy and asset allocation.

Investment value of the portfolio can go up or down depending upon the factors and forces affecting the capital markets

The performance of the schemes may be affected by changes in Government policies, general levels of interest rates and risks associated with trading volumes, liquidity and settlement systems in equity and debt markets.

Portfolio Manager may, considering the overall level of risk of the portfolio, invest in lower rated/ unrated securities offering higher yields. This may increase the risk of the portfolio. Such investments shall be subject to the scope of investments as laid down in the Agreement

Liquidity of the Portfolio’s investments is inherently restricted by trading volumes in the securities in which it invests

Any act of omission or commission by the Portfolio Manager under this agreement will be solely at the risk of the client and the portfolio manager will not be liable for any act of omission or commission or failure to act save and except in cases of gross negligence, willful default and or/fraud of the Portfolio Manager

All risks arising out of refusal by a company or corporation for whatever reasons , to register or transfer of any securities so purchased and refused to be transferred in the name of the client or the Portfolio Manager by the company or corporation concerned, may be sold by Portfolio Manager ,at the best available market rate, will be at the risk and responsibility of the client concerned

Past performance of the portfolio manager does not indicate the future performance of the same scheme in future or any other future schemes of the portfolio manager.

The investments of the fund and the resultant investment are subject to a very wide range of risks which includes amongst others and by way of illustration loss in value of investments due to, inter alia, overall economic slowdown and anticipated bad corporate performance, environmental or political problems, change in monetary or fiscal policy (change in tax laws and rates), change in government policies and regulations with regards to industry and exports, Act of States, sovereign actions, Act of God, Act of War and Civil disturbance, delisting or market closure, relatively small number of scrips accounting for a large proportion of trading volume.

Risks attached with the use of derivatives:

Derivatives/futures and options being highly leveraged instruments are affected by risks different from those associated with stocks and bonds. High degree of skill, diligence, expertise, investment techniques and risk analysis is required for investing in such instruments. The value of derivative instruments is affected even by a small price movement of the underlying security.

Derivatives require the maintenance of adequate controls to monitor the transactions entered into, the ability to assess the risk that a derivative adds to the portfolio and the ability to forecast price or interest rate movements correctly.

There is the possibility that a loss may be sustained by the portfolio as a result of the failure of another party (usually referred to as the “counter party”) to comply with the terms of the derivatives contract.

Other risks in using derivatives include the risk of mis pricing or improper valuation of derivatives and the inability of derivatives to correlate perfectly with underlying assets, rates and indices.

Trading in derivatives

SEBI in terms of Securities and Exchange Board of India (Portfolio Managers) Amendment Regulations, 2002, has permitted all the Portfolio Managers to participate in the derivatives trading subject to observance of guidelines issued by SEBI in this behalf. Pursuant to this, the Portfolio Managers may use various derivative and hedging products from time to time, as would be available and permitted by SEBI, in an attempt to protect the value of the portfolio and enhance the Clients’ interest.

Accordingly, the Portfolio Manager may use derivatives instruments like Stock Index Futures, Options on Stocks and Stock Indices or other such derivative instruments as may be introduced from time to time, as permitted by SEBI.

7. Client Representation:

7.1 Details of client’s accounts activated:

2011‐2012 Discretionary Services

Sr.No. Client Type No. of clients as on 31st March 2012

Funds Managed (Rs. Cr)

1 Individual Resident 43 6.7282 Non Resident 11 7.0479

2 Corporate Resident 2 0.2287 Non Resident FII

Total 56 14.0049

Non Discretionary Services



1 Individual Resident 1 0.1313 Non Resident

2 Corporate Resident Non Resident FII

Total 1 0.1313

Advisory Services



1 Individual Resident 1 0.0521

Non Resident 2 Corporate Resident

Non Resident FII

Total 1 0.0521

Grand Total for 2011‐2012 14.1883






Total 39 11.4328






Total 1 0.1317

Advisory Services





Total 1 0.0585

Grand Total for 2012‐2013 41 11.6230






Total 28 10.5346




1 Individual Resident Non Resident


Total

Advisory Services





Total 1 0.0577

Grand Total for 2013‐2014 10.5924

7.2 Transactions with Related Parties: Related Party Disclosures as per AS-18 of ICAI for the year ended 31st March, 2011. List of Related Parties with whom transactions have taken place and relationship

Name of the Related Party Relationship

DIRECTORS Indu Seth Director Ankur Seth Director Gudala Agaiah Director

8. Financial Performance of the Portfolio Manager

8.1 Balance Sheet as on 31st March Ending for EWAL

(In Rupees)

Particulars As at As At March 31, 2014 March 31, 2013

EQUITY AND LIABILITIES Shareholders' Fund Share Capital 42,500,000 42,500,000 Reserves & Surplus 82,123,108 91,134,856

124,623,108 133,634,856

Current Liabilities

Short Term Borrowings 17,779,518 19,158,050 Trade Payables 123,441,817 105,303,989 Other Current Liabilities 11,446,475 9,777,716 Short Term Provisions 18,125,788 8,866,795

170,793,598 143,106,549

Total 295,416,706 276,741,406

ASSETS

Noncurrent Assets

Fixed Assets 8,172,905 8,482,783 Non‐current Investments 8,551,000 8,573,314 Deferred Tax Assets (Net) 1,174,862 1,047,361 Long Term Loans & Advances 21,203,559 28,688,524

39,102,326 46,791,983

Current Assets

Inventories 1,194,420 7,822,553 Trade Receivables 34,260,561 44,981,382 Cash and Cash Equivalents 182,194,231 148,179,855 Short Term Loans & Advances 31,176,703 22,253,442 Other Current Assets 7,488,465 6,712,191

256,314,380 229,949,423

Total 295,416,706 276,741,405

8.2. Income Statement

(In Rupees)

Particular

For the year ended For the year ended 31st March, 2014 31st March, 2013

INCOME

Revenue from Operations 73,516,496 88,761,897 Other Income 18,856,706 13,777,471

Total Revenue 92,373,201 102,539,368

EXPENSES

Employee Benefit Expenses 28,275,595 33,386,518 Finance Cost 3,239,404 1,926,218 Depreciation &Amortisation Expenses 2,148,852 2,792,544 Other Expenses 50,966,390 56,629,008

Total Expenses 84,630,241 94,734,288

Profit (Loss) Before Tax 7,742,960 7,805,080

Tax expense 1,822,230 2,245,959

Current tax 1,949,731 2,524,348 Deferred tax (127,501) (278,389)

Profit/(Loss) for the period 5,920,730 5,559,122 Notes: 1. Above figures are based on audited financial Statements 2. The audited financial statement shall be available on request

9. Performance of Portfolio Manager

Disclosure of Performance of the Portfolio Manager for the last three years: Year FY2014 FY2013 FY2012

Portfolio Performance (%), Net of all fees and charges levied by the Portfolio Manager

+28% +7.61% -9%

Benchmark Performance +17.09% +7.1% -11.06%

10. Nature of Expenses: Various types of fees/expenses/cost chargeable to the clients are:

1) Investment Management and Advisory Fees 2) Custodian fees and demat account charges 3) Fund Accounting Fees / Audit fees and legal charges 4) Brokerage and Transaction charges The actual expenses payable by the client to the Portfolio Manager for the services will be as mentioned in the agreement with the client.

11. Taxation: The following summary outlines the key tax implications to clients investing through the services offered by the portfolio manager based on the prevailing taxation laws, taking into account the amendments made by the Finance Act, 2008. Tax implications are detailed in this document for general purposes, which are based on the law and practice currently in force in India. Client should be aware that the fiscal rules and their interpretation may change. There can be no guarantee that the tax position or the proceed tax position prevailing at the time of investment in the portfolio will endure indefinitely in view of Individual nature of tax consequences, each client is advised to consult his /her own professional advisor.

Dividend Tax Implications to the Different Categories of Investors General

Investment in securities is subject to the provisions of the Indian Income Tax Act.1961, particularly provisions with regard to Capital Gain under section 45-50 is of special relevance, and the incomes earned out of the securities investment are subject to deduction of tax at source.

In view of the individual nature of tax consequences on the income, capital gains or otherwise, arising from investments under the scheme, the client are advised to consult their tax advisors with respect to the specific tax liabilities/exemptions applicable, as a result of participation in the schemes.

Income to clients either in the form of gains from investments or interests or dividends shall be subject to applicable rates of tax under the Income Tax Act, 1961, in force from time to time

Portfolio Manager shall not be responsible for assisting in, or completing the fulfillment of the clients’ tax obligations.

Tax deduction at source

Presently, tax is withheld at source for non-residents and residents. If any tax is required to be withheld on account of any future legislation, the Portfolio Manager shall be obliged to act in accordance with the regulatory requirements in this regard.

Advance tax installment obligations.

It shall be the clients’ responsibility to meet the obligation on account of advance tax installments payable on the due dates under the Income tax Act, 1961.

Securities Transaction Tax:

Securities Transaction Tax (“STT”) is applicable on transactions of purchase or sale of equity shares in a company or a derivative or units of Mutual Funds or Exchange Traded Funds (ETFs) entered into on a recognized stock

Finance Act, 2006 has revised the rates for levy of Securities Transaction Tax under Chapter VII of the Finance (No. 2) Act 2004 with effect from June 01, 2006. STT will be levied as per tax slabs prescribed by authority from time to time.

Tax Implication where Transaction in Securities is in nature of trade or business: Income arising from purchase and sale of shares (for the sake of brevity, the term “shares” has been used below as an illustration but the same includes other types of securities) can give rise to business income or capital gains in the hands of the investor. The issue of income characterization as above is essentially a question of fact and dependent on whether the shares are held as Business/Trading assets or on Capital Account. Based on judicial decisions, all of the following factors and principles need to be considered while determining the nature of assets as above:

Motive for the purchase of shares. Frequency of transactions and the length of period of holding of the shares. Treatment of the shares and profit or loss on their sale in the accounts of the assessee. Source of funds out of which the shares were acquired – borrowed or own. Existence of an objects clause permitting trading in shares - relevant only in the case of corporate. Acquisition of the shares – from primary market or secondary market. Infrastructure employed for the share transactions by the client including the appointment of managers, etc. Any single factor discussed above in isolation cannot be conclusive to determine the exact nature of the shares. All

factors and principles need to be construed harmoniously. Further, the background of the investor (Professional vs. a trader in shares) would also be a relevant factor in determining the nature of the shares.

Considering the above, the profits or gains arising from transaction in securities could be taxed either as “Profits or Gains of Business or Profession” under section 28 of the Act or as “Capital Gains” under section 45 of the Act.

Profit and Gains of Business or Profession: Various income streams that may arise from securities held under PMS:

Profit/Gains on sale of securities Dividend income on shares income distribution on units Interest income on debt securities

a) If the investment under the Portfolio Management Services is regarded as “Business/Trading Asset” then the gain/loss arising there from is likely to be taxed as income from business.

b) Dividend from securities referred to in section 115-O, will be exempt under section 10(34) of the Act. Dividends other than that referred to in section 115-O and interest income will be taxable as Income from Other Sources.

c) Income from units of Mutual Funds specified under clause 10(23D) is exempt from tax under section 10(35) of the Act. Further, it has been clarified that income arising from transfer of units of Mutual Fund shall not be exempt under section 10(35).

d) Finance Act 2005 has inserted proviso (d) to Section 43(5), whereby transactions in respect of trading in derivatives shall not be considered as a Speculative Transaction, provided the transaction is carried out electronically on screen based systems through a stock broker or sub-broker or intermediary registered under SEBI or by banks or mutual funds on a recognized stock exchange and is supported by time stamped contract note. In respect of Foreign Institutional Investors (FIIs) fulfilling conditions laid down under section 115AD of the Act, income (other than the dividend referred to in section 115-O) received in respect of securities (other than units referred to in section 115AB) will be chargeable at the rate as may be applicable from time to time. Surcharge on income tax will be chargeable at the rate as may be applicable from time to time. Further, cess at the rate as may be applicable from time to time on the income tax (including applicable surcharge) would be applicable for all categories of assessee.

Losses under the head business income:

In the case of loss under the head ‘Profits and Gains of Business or Profession’, it can be set off against the income from any other source under the same head or income under any other head (except income from Salary) in the same assessment year. Further, if such loss cannot be set off against any other head in the same assessment year, then it will be carried forward and shall be set off against the profits and gains of the business, within the period of eight subsequent assessment years. According to section 94(7) of the Act, if any person buys or acquires shares within a period of three months prior to the record date fixed for declaration of dividend or distribution of income and sells or transfers the same within a period of three months from such record date, then losses arising from such sale to the extent dividend or income received or receivable on such shares, which are exempt under the Act, will be ignored for the purpose of computing his income chargeable to tax. According to section 94(7) of the Act, if any person buys or acquires units within a period of three months prior to the record date fixed for declaration of dividend or distribution of income and sells or transfers the same within a period of nine months from such record date, then capital losses arising from such sale to the extent of income received or receivable on such units, which are exempt under the Act, will be ignored for the purpose of computing his income chargeable to tax. Further, sub-section (8) of Section 94 provides that, where additional units have been issued to any person without any payment, on the basis of existing units held by such person then the loss on sale of original units shall be ignored for the purpose of computing income chargeable to tax, if the original units were acquired within three months prior to the record date fixed for receipt of additional units and sold within nine months from such record date. However, the loss so ignored shall be considered as cost of acquisition of such additional units held on the date of sale by such person. Tax Implication where transaction in Securities is in the nature of Investments: Where investment under the Portfolio Management Services is treated as investment, then the profit or loss from transfer of securities shall be taxed as Capital Gains under section 45 of the Act. Dividends referred to in section 115-O will be exempt under section 10(34). Dividend other than that referred to in section 115-O and interest income from securities will be taxed under the head Income from Other Sources. Income from units of Mutual Funds specified under clause 10(23D) is exempt from tax under section 10(35) of the Act. Further, it has been clarified that income arising from transfer of units of Mutual Fund shall not be exempt under section 10(35).

i) Long Term Capital Gains: Under Section 10(38), Long Term Capital Gains on sale of Equity Shares in a company or units of Equity Oriented Fund are exempt from income tax provided such transactions are entered into a recognized stock exchange or such units are sold to the Mutual Fund and such transactions are chargeable to STT. In respect of capital gains not exempted under section 10(38), the provisions for taxation of long-term capital gains for different categories of assesses are explained hereunder: a) For Individuals and HUFs

Long-term Capital Gains in respect of listed security and units of Mutual Fund held for a period of more than 12 months will be chargeable under section 112 of the Act at the rate of 20% plus cess as applicable. Capital gains would be computed after taking into account cost of acquisition as adjusted by Cost Inflation Index notified by the Central Government and expenditure incurred wholly and exclusively in connection with such transfer. In case, where taxable income as reduced by long term capital gains is below the exemption limit, the long term capital gains will be reduced to the extent of the shortfall and only the balance long term capital gains will be charged at the flat rate of 20% plus cess as applicable. In the case of listed securities and units of Mutual Fund, an assessee will have an option to apply concessional rate of 10% plus cess as applicable, provided the long term capital gains are computed without substituting indexed cost in place of cost of acquisition. Long-term Capital Gains in respect of shares of an unlisted company held for a period of more than 12 months and any other non-listed security (other than units of Mutual Fund) held for a period of more than 36 months will be chargeable under section 112 of the Act at the rate as may be applicable from time to time.

b) For Indian Companies

Long-term Capital Gains in respect of listed securities and units of Mutual Fund held for a period of more than 12 months will be chargeable under section 112 of the Act at the rate as may be applicable from time to time. Capital gains would be computed after taking into account cost of acquisition as adjusted by Cost Inflation Index notified by the Central Government and expenditure incurred wholly and exclusively in connection with such transfer. It is further provided that an assessee will have an option to apply concessional rate as may be applicable from time to time, provided the long term capital gains are computed without substituting indexed cost in place of cost of acquisition. Long-term Capital Gains in respect of shares of an unlisted company held for a period of more than 12 months and any other non-listed security (other than units of Mutual Fund) held for a period of more than 36 months will be chargeable under section 112 of the Act at the rate as may be applicable from time to time.

c) For Non-resident Indians Non resident Indians are permitted to be governed by the general provisions of the Act or the special provisions contained under 115 E of the Act. Under section 115E of the Act for non-resident Indians, income by way of long-term capital gains in respect of specified assets purchased in foreign currency as defined under section 115C (which includes shares, debentures, deposits in an Indian Company and security issued by Central Government) is chargeable at the rate as may be applicable from time to time. Such long-term capital gains would be calculated without indexation of cost of acquisition.

d) For Foreign Institutional Investors (FIIs) fulfilling conditions laid down under section 115AD Under section 115AD of the Act, income by way of long-term capital gains (other than the gains exempted under section 10(38)) in respect of securities (other than units referred to in section 115AB) will be chargeable at the rate as may be applicable from time to time. Such gains would be calculated without indexation of cost of acquisition.

ii) Short Term Capital Gains: Section 111A of the Act provides that short-term capital gains arising on sale of Equity Shares of a company or units of Equity Oriented Fund entered into a recognized stock exchange and on sale of units of Equity Oriented Fund to the Mutual Fund are chargeable to income tax at rate as may be applicable from time to time, provided such transactions are entered on a recognized stock exchange and are chargeable to STT. Further, Section 48 provides that no deduction shall be allowed in respect of STT paid for the purpose of computing Capital Gains. In respect of capital gains not chargeable under section 111A, the provisions for taxation of short-term capital gains for different categories of assessees are explained hereunder: Short Term Capital Gains in respect of shares of a company, units of Mutual Fund and any other listed securities held for a period of not more than 12 months and unlisted securities (other than shares of a company and units of Mutual Fund) held for a period of not more than 36 months is added to the total income. Total income including short-term capital gains is chargeable to tax as per the relevant slab rates. In respect of FIIs fulfilling conditions under section 115AD of the Act, income by way of short-term capital gains in respect of securities (other than units referred to in section 115AB) will be chargeable at the rate as may be applicable from time to time.

iii) Capital Loss: Losses under the head "Capital Gains" cannot be setoff against income under any other head. Further within the head "Capital Gains", losses arising from the transfer of long-term capital assets cannot be adjusted against gains arising from the transfer of a short-term capital asset. However, losses arising from the transfer of short-term capital assets can be adjusted against gains arising from the transfer of a long-term capital asset or a short-term capital asset. Under Section 10(38) of the Act, Long Term Capital Gains on sale of equity shares in a company and units of Equity Oriented Fund are exempt from income tax provided such transactions are entered on a recognized stock exchange or such units are sold to the Mutual Fund and are chargeable to STT. Hence, losses arising from such transactions of sale of equity shares of a Company and units of Equity Oriented Fund entered into a recognized stock exchange and sale of units of Equity Oriented Fund to the Mutual Fund would not be eligible for set-off against taxable capital gains.

Unabsorbed long-term capital loss (other than that relating to sale of equity shares and units of Equity Oriented Fund as stated in para above) can be carried forward and set off against the long-term capital gains arising in any of the subsequent eight assessment years. Unabsorbed short-term capital loss can be carried forward and set off against the income under the head Capital Gains in any of the subsequent eight assessment years. According to section 94(7) of the Act, if any person buys or acquires shares within a period of three months prior to the record date fixed for declaration of dividend or distribution of income and sells or transfers the same within a period of three months from such record date, then capital losses arising from such sale to the extent dividend or income received or receivable on such shares, which are exempt under the Act, will be ignored for the purpose of computing his income chargeable to tax. According to section 94(7) of the Act, if any person buys or acquires units within a period of three months prior to the record date fixed for declaration of dividend or distribution of income and sells or transfers the same within a period of nine months from such record date, then capital losses arising from such sale to the extent of income received or receivable on such units, which are exempt under the Act, will be ignored for the purpose of computing his income chargeable to tax. Further, sub-section (8) of Section 94 provides that, where additional units have been issued to any person without any payment, on the basis of existing units held by such person then the loss on sale of original units shall be ignored for the purpose of computing income chargeable to tax, if the original units were acquired within three months prior to the record date fixed for receipt of additional units and sold within nine months from such record date. However, the loss so ignored shall be considered as cost of acquisition of such additional units held on the date of sale by such person.

12. Accounting Policies SEBI (Portfolio Managers) Rules and Regulations do not explicitly lay down detailed accounting policies. The accounting policies followed are as under:

i. The Portfolio Manager shall keep in safe custody the Funds / Securities of the clients in a separate Bank Account and Depository Account.

ii. The management and administration of the said accounts are subject to periodical inspection and audit by an independent auditor.

iii. The Company follows “Accrual” method of accounting. iv. All incomes and expenses are accounted as per Accounting Standard as prescribed under the Companies

(Accounting Standards) Rules 2006, referred to in section 211(3C) of the Companies Act 1956.. v. Dividend income earned by the Portfolio shall be recognized, not on the date the dividend is declared, but on

the date the share is quoted on an ex-dividend basis. For investments, which are not quoted on the stock exchange, dividend income would be recognized on the date of declaration of dividend (date of annual general meeting)

vi. In determining the holding cost of investments and the gains or loss on sale of investments, the “First in First Out” method shall be followed for each security.

vii. Transactions for purchase or sale of investments shall be recognized as of the trade date and not as of the settlement date, so that the effect of all investments traded during a financial year are recorded and reflected in the financial statements for that year. Where investment transactions take place outside the stock market, for example, acquisition through private placement or purchases or sales through private treaty, the transaction would be recorded, in the event of a purchase, as of the date on which the portfolio obtains an enforceable obligation to pay the price or, in the event of a sale, when the portfolio obtains an enforceable right to collect the proceeds of sale or an enforceable obligation to deliver the instruments sold.

viii. Bonus shares to which the portfolio becomes entitled shall be recognized only when the original shares on which the bonus entitlement accrues are traded on the National Stock Exchange on an ex-bonus basis or the Stock Exchange, Mumbai (if the scrip is not traded on the valuation date on the National Stock Exchange) as the case may be. Cost of bonus shares are taken as Zero. Similarly, rights entitlements shall be recognized only when the original shares on which the right entitlement accrues are traded on the stock exchange on an ex-right basis.

ix. The cost of investments acquired or purchased shall include grossed-up brokerage, stamp charges and any charge customarily included in the broker’s bought note. In respect of privately placed debt instruments any front-end discount offered may be reduced from the cost of the investment.

x. The Investments in Equity, Mutual Fund and Exchange Traded Funds will be valued at the closing market price of Exchange (NSE or BSE) as they may be or at the Repurchase Net Asset Value declared for the

relevant scheme on the date of the report or any cut off date or the market value of the debt instrument at the cut off date or at the last available price on the exchange or the most recent will be reckoned.

xi. Profits/Losses on Derivative transactions are accounted in books as “Profit/loss on Derivatives” only on closing of the derivative position. As such margins paid to the broker in respect of open position in derivative margin is reflected as “Margin Money Account” as receivable from broker under current assets till such position remains open.

xii. The Portfolio Manager and the clients may adopt any specific norms or methodology for valuation of investments or accounting the same, as may be mutually agreed between them on a case by case basis

xiii. As far as possible the portfolio Manager is complying with the relevant Accounting Standards issued By ICAI investments are valued in accordance with the accounting standard 2 on Valuation of inventories.

xiv. Revenue arising from interest and dividends is accounted for in accordance with Accounting Standard 13 on accounting for investments.

13. Investor Services

Investment Relationship Officer The details of Investor Relationship Officer who shall attend to the investor queries and complaints are as follows:

Name Praveen Poddar, AVP - Business Development Address S-8, DDA Shopping Complex, Mayur Vihar, Near Jeevan Anmol

Hospital, Phase 1, Delhi 110091 Telephone No. +91-11-43035555 Email id p.poddar@elitewealth,in

14. Grievance Redressal and Dispute Settlement Mechanism: Grievance Redressal:

The aforesaid personnel of the Portfolio Manager shall attend to and address any client query or concern as soon as practicably possible.

Dispute Settlement Mechanism: All disputes, differences, claims and questions whatsoever, which shall arise either during the subsistence of the agreement with a client or afterwards with regard to the terms thereof or any clause or thing contained therein or otherwise in any way relating to or arising there from or the interpretation of any provision therein shall be, in the first place settled by mutual discussions, failing which the same shall be referred to and settled by arbitration in accordance with and subject to the provisions of the Arbitration and Conciliation Act, 1996 or any statutory modification or re-enactment thereof for the time being in force. The arbitration proceedings shall be held in Delhi and conducted in English. The agreement with the clients shall be governed by, construed and enforced in accordance with the laws of India. Any action or suit involving the agreement with a Client or the performance of the agreement by either party of its obligations will be conducted exclusively in courts located within the state of Delhi in India.

For Elite Wealth Advisors Limited Sd/- Sd/- Ravinder Parkash Seth Indu Seth Director Director Date: 30.09.2014 Place: New Delhi

FORM C SECURITIES AND EXCHANGE BOARD OF INDIA (PORTFOLIO MANGERS) REGULATION, 1993

(Regulation 14) ELITE WEALTH ADVISORS LIMITED

S-8 DDA Shopping Complex, Mayur Vihar, Phase – 1, Delhi - 110091 Telephone Number: 011- 43035516-17 , 43035555 Fax + 011-22755893

We confirm that:

i) The Disclosure Document forwarded to the Board is in accordance with the SEBI (Portfolio Managers) Regulations, 1993 and the guidelines and directives issued by the Board from time to time;

ii) The disclosures made in the Disclosure Document are true, fair and adequate to enable the investors to make a well informed decision regarding entrusting the management of the portfolio to ELITE WEALTH ADVISORS LIMITED in its Portfolio Management Scheme;

iii) The Disclosure Document has been duly certified by an independent chartered accountant on 30.09.2014.

Date: 30.09.2014 Signature of Principal Officer Sd/- Place: Delhi Ravinder Parkash Seth S-8, DDA Shopping Complex,

Mayur Vihar, Phase 1, Delhi 110091

Gyan Praveen & Associates Chartered Accountants

To,

The Board of Directors,

Elite Wealth Advisors Limited

S-8, DDA Shopping Complex,

Mayur Vihar Phase-1,

New Delhi-110091

Sub: CA Certificate

We have examined the disclosure document for a Portfolio Management Services Prepared in accordance with Regulation 14 of SEBI (Portfolio Managers) Regulations, 1993 by Elite Wealth Advisors Limited. Based on our examination of Disclosure Document, audited accounts and other relevant records and information furnished by the Management, we certify that the disclosures made in the Disclosure Document for Portfolio Management Services are true, fair and adequate to enable the investors to make a well informed decision. This Certificate has been issued to the Securities and Exchange Board of India for the sole purpose of certifying the contents of the disclosure Document for Portfolio Management Services and should not be used or reference for any other purpose without our prior written consent. For Gyan Praveen & Associates Chartered Accountants Sd/- Deepankar Seth (M.No. 078731) Date: 30.09.2014 Place: New Delhi

Documents

P Mana gement Services (PMS) Disclosure Document (DD) · Grievance Redressal and Dispute Settlement Mechanism ... with the Securities and Exchange Board of India ... of Multi-Commodity