Aditya Birla Sun Life AMC Ltd Management Discussions

ECONOMIC OVERVIEW Global Economy

The year 2024 continued the theme of US exceptionalism with world output estimated to have grown at a 3.2% pace, similar to 2023. The US led the way growing at 2.8% in 2024 and the Euro Area lagged at around 0.8%. Central banks began their rate cutting cycles across the world with the Fed recalibrating policy to less restrictive levels and pausing after delivering a 100 bps in rate cuts.

The global economic outlook has shifted in the wake of tariffs and trade tensions. In the US, softer economic data and aggressive tariffs have clouded the growth outlook with forecasters downgrading their view of 2025 GDP growth to sub 1%. On the other hand, there has been a sea change in German/ EU fiscal priorities, with both Germany and the EU promising a big increase in defence and infrastructure spending as they look to insource national security.

The early tariffs announced by US are well above all analyst expectations and the increase in tariff can potentially show up in inflation over the next couple of quarters. Global growth will suffer as trade policy uncertainty clouds investment decisions. The Developed Markets Central Banks, particularly US is facing multiple trade-offs with growth expected to be softer and inflation stickier than previously expected. The Fed raised its core inflation (excluding the volatile food and energy components) projections for 2025 to 2.8% from 2.5%. Uncertainty about the economic outlook remains high and the Fed remains patient as policy is well positioned to respond to risks on both sides of the mandate. There is an asymmetric skew with the Fed on hold if inflation proves more persistent but more aggressive cuts if growth falters or inflation falls faster than expected.

Indian Economy

The Indian economy grew by 6.5% in FY25 which is close to its 25-year average growth of 6.4%. The number is decent, on top of past three years of growth averaging 8.8%, which was boosted by post-Covid growth catch-up and base effects. Agriculture grew by a healthy 4.6% on the back of a good monsoon. Growth in industry was relatively weak at 5.6%, dragged down by both mining and manufacturing, while construction growth was strong. Growth in services sector was decent at 7.3%. On the demand side of GDP, there was healthy pick-up in private final consumption expenditure, while there was some moderation in gross fixed capital formation.

Inflation declined in the last quarter of FY25 averaging 3.73% below RBIs inflation target of 4%. The average inflation in the year was 4.63% with a benign core inflation at 3.5%, but high food inflation at 6.73%. Given the lag relationship between rainfall, output and final consumer prices, the erratic rainfall of 2023-24 cropping season spilled over into high food inflation in FY25. However, the good rainfall of 2024 and the good agricultural harvest, has finally started pushing food inflation lower. Inflation is expected to remain contained in FY26 given the IMD forecast of good rainfall in 2025 as well as the decline in global commodity prices.

Indias external account witnessed pressure beginning the second half of September 2024, on sharp rise in capital outflows, in the wake of rising US dollar, as markets started pricing change in political dispensation in US. Oct-Dec quarter witnessed record capital account deficit resulting in record high balance of payment deficit. On the positive side, Indias current account remained comfortable with strong growth in services exports underpinning current account resilience. RBI undertook significant forex interventions to keep INR relatively stable which however resulted in decline in forex reserves. INR performance in FY25 was broadly in line with EM peer economies.

The Government of India continued with fiscal consolidation in FY25 and the fiscal deficit for the year ended at 4.8% of GDP, compared to the budgeted 4.9%, and against 5.6% in FY24. Government has continued with fiscal consolidation in FY26 as well, reducing fiscal deficit to 4.4% from 4.8% of GDP. The new fiscal roadmap given by government shifts from deficit to debt levels. Government will endeavour to reduce debt to 50% (plus-minus 1%) by FY31. Assuming nominal growth of 10.5% of GDP and debt level at 49.7% (moderate case), this will entail fiscal deficit moving towards 3.5% by FY31.

Indias economic outlook for FY26 remains healthy and according to IMF, India is likely to remain the fastest growing major economy in the world. The RBI has forecasted that the Indian economy will grow by 6.5% in FY26 as well, which is in line with most private and official forecasts. The pick-up in consumption that was witnessed in the previous fiscal year should continue in FY26 given the broadening of post-Covid recovery, easier monetary policy, IMD forecast of a good monsoon and various government schemes to provide income support. Pick-up in consumption and easier monetary policy should also support corporate capex. However, the key growth risk stems from external sector and the repercussions of global trade tensions via trade, financial flows and confidence channels.

MUTUAL FUND INDUSTRY OVERVIEW

In FY25, the mutual fund industry witnessed significant growth and resilience marked by increased investor participation and strong fund performance despite facing market volatility and global uncertainties. Net equity sales of Rs 5.4 Lakh Crore were recorded in FY25 through new fund offerings and existing funds.

Within the existing equity and hybrid categories, sectoral/ thematic, arbitrage funds, flexi cap funds, small cap funds and multi cap funds schemes saw the highest net inflows.

• The Industrys Average Assets under Management (AAUM) for the quarter ended 31^st March, 2025 reached Rs 6742 Lakh Crore, recording a growth of 25% over the same period last year. The corresponding AAUM for the quarter ended 31^st March, 2024 was Rs 54.11 Lakh Crore.

• The Industrys Equity AAUM stood at Rs 39.98 Lakh Crore for the quarter ended 31^st March, 2025, up by 29% from the same period last year. Corresponding Equity AAUM for the quarter ended 31^st March, 2024 was Rs30.93 Lakh Crore.

• The inflows to mutual funds via systematic investment plans (SIPs) have been on an upswing during the fiscal year 2025, rising from Rs 19,271 Crore in March 2024 to Rs 25,926 Crore in March 2025, reflecting a year-on-year jump of 35% in the financial year.

• As of 31^st March, 2025, the total number of mutual fund investors stood at around 24 Crore compared to around 18 Crore on 31^st March, 2024, reflecting a year-on-year increase of 32%.

• The retail investors Monthly Average AUM (MAAUM) surged to Rs 40.31 Lakh Crore, growing by 21% year-on-year and contributing 60% of the total Monthly Average AUM.

• The mutual fund monthly average AUM for March 2025 from B30 cities was at Rs 12.17 Lakh Crore, which accounted for 18% of the total AUM.

COMPANY OVERVIEW Company strategy

ABSLAMC is a leading investment manager, focused on promoting financial inclusion, strengthening financial markets, and growing the mutual funds industry. Our customer-first approach drives us to provide long-term investment solutions and consistent investment performance. We support this with strong risk management and governance framework, research- based fund management, and the use of technology to improve service delivery. These principles have helped us expand our AUM size over the years and establish a strong customer base. They have also allowed us to succeed in the mutual fund space and continue to drive our growth in alternative assets.

Key Trends Shaping the Mutual Funds Industry

Surge in Retail Participation: The mutual fund industry has seen a notable rise in retail investor engagement, driven by increased financial literacy, easier access to investment platforms, and a growing preference for market-linked savings options.

Growing Popularity of Systematic Investment Plans (SIPs): SIPs continue to gain traction as investors seek disciplined, long-term wealth creation strategies. The steady rise in SIP inflows underscores investors confidence in mutual funds as a preferred investment avenue.

Digital Transformation: Enhanced digital infrastructure and mobile-based investment solutions have simplified mutual fund investing, leading to broader outreach, especially among younger and tech-savvy investors.

Diverse and Innovative Product Offerings: The expansion of fund categories such as sectoral/thematic funds, arbitrage funds, flexi-cap funds, and small-cap funds offers investors a wide range of options aligned with varying risk appetites and investment goals.

Penetration into Emerging Markets: Increasing penetration in B30 cities and semi-urban areas is broadening the investor base, driven by rising disposable incomes and improved financial access beyond metropolitan regions.

Regulatory Initiatives Supporting Investor Confidence:

Ongoing regulatory reforms aimed at transparency, investor protection, and simplifying processes have enhanced trust in the mutual fund ecosystem.

To build scalable business and deliver long-term value to our customers and shareholders, we focus on:

Scaling retail franchises and diversifying product offerings

• Drives the retail sales growth by building an ecosystem that leverages the strengths of Virtual Relationship Manager (VRM), Emerging Markets, Service to Sales and Direct Channel.

• Grow and diversify product offerings by utilizing market research, innovation, and identifying areas of product differentiation.

• Provide financial literacy to the existing and next generation of investors and distributors, contributing to overall financial inclusion in the country.

Expanding geographic reach and strengthening multi-channel distribution network

• Continue to widen our geographic reach and investor base by expanding in high potential and under-penetrated markets.

• Along with focus on Mutual Fund Distributors (MFDs), build scale in the National distributors and banking channel with a special attention on cooperative and PSU banks to capitalize their extensive network.

• Build deeper engagement and loyalty with customers and distributors to increase wallet share and build long term relationship.

Performance overview

The profit before tax for FY25 was Rs 1,245 Crore growing by 23% year-on-year and profit after tax was Rs 931 Crore growing by 19% year-on-year. Our Companys overall Quarterly Average Assets under Management (QAAUM) as on 31^st March, 2025 stood at Rs 4,05,641 Crore, a growth of 17% year-on-year.

Leveraging digital platforms to deliver better service

• Leverage digital platforms and capabilities to drive customer acquisition, ensure seamless accessibility and improve customer experience.

• Execute strategic tie-ups and exclusive partnerships with fintech and new-age tech distributors to drive digital sales.

Building alternate assets and passive business

• Scale alternative assets business, including Alternate Investment Funds (AIF), Portfolio Management Services (PMS), Real Estate, and Offshore offerings.

• Leverage presence in GIFT City to launch new funds and broaden our offerings.

• Drive growth in passive business through strategic partnerships and digital platforms.

Mutual fund QAAUM as on 31^st March, 2025 stood at Rs 3,81,724 Crore growing by 15% year on year, with market share of

5.7%. Mutual fund Equity QAAUM as on 31^st March, 2025 was Rs 1,69,065 Crore growing by 11% year on year, with a market share of 4.2%.

Growing SIP book Systematic Investment Plans (SIPs) have become a preferred size and ensure customer stickiness while creating long-term investment choice for retail investors. As a key player in the value for investors. As a result of these efforts, our SIP and STP industry, we have undertaken initiatives to enhance traction in book reached Rs 1,316 Crore in March 2025 from Rs 1,252 Crore SIPs. Our Companys constant endeavour is to build our SIP book in March 2024.

Customer Acquisition

Customer acquisition continues to be a key focus area for our Company. We added approximately 27 Lakh new folios in FY25, bringing our total folios to 1.06 Crore, as of 31^st March, 2025.

Management Discussion and Analysis (Contd.)

Increasing Retail Franchise with a Focus on B30 Markets

Over the last few years, we have dedicated our efforts to expanding our retail franchise and growing our geographical presence across B30 cities. Our Company has expanded its pan-India presence to over 300 locations, with more than 80% located in B30 cities. Individual MAAUM in March 2025 was Rs1,84,471 Crore, compared to Rs 1,73,238 Crore in March 2024 growing by 6% year-on-year. The Institutional MAAUM size was Rs1,94,035 Crore in March 2025, up from Rs 1,57,178 Crore in March 2024, showing a growth of 23% year-on-year. The B30 MAAUM reached Rs 64,534 Crore in March 2025 compared to Rs 57,816 Crore in March 2024 growing by 12% year-on-year.

Multi-Channel Distribution Network Strategy

As part of our overall strategy, our Company is focused on building the retail sales segment across T30 and B30 markets. We have been strengthening our multi-channel sales ecosystem and distribution network by integrating key levers of Direct Channel, Emerging Markets, Virtual Relationship Manager, Service to Sales and Sampark. Our multi-channel market initiatives, aimed at deepening our presence, have yielded positive results.

• Direct Channel Provide personalized attention and tailored solutions to meet the unique needs and preferences of high-net-worth clients. Our service framework C.A.R.E (Customized, Analytics, Responsive, Effective) embodies personalized solutions, utilizing analytics and ensuring a responsive service experience for our esteemed customers.

• Emerging Markets aim to tap into potential rural and emerging markets at an early stage to build growth. It also aims at deepening product awareness through continuous engagement drives for investors and distributors.

• Virtual Relationship Manager (VRM) enhances the new distributor experience through virtual assistance and guidance, focusing primarily on increasing activations, SIPs, and gross sales. It aims to upgrade Mutual Fund Distributors (MFDs) to high-potential business partners and integrate them into Retail Sales. It focuses on the new MFDs to help them achieve their financial goals.

• Under Service to Sales, Service RMs effectively engage with investors and facilitate their investment decision. They identify opportunities for win back, retention and upselling.

• Sampark, our Companys distribution expansion initiative, empanels and onboards new distributors. It follows a One- click, end-to-end digitally enabled distributor empanelment journey to make the process seamless.

Distribution Strength

In FY25, our Company expanded its pan-India network of empanelled distributors to include 89,000+ KYD-compliant MFDs, 300+ national distributors, and 90+ banks. We continue to expand our distributor base and have empanelled 10,500+ new MFDs during the reporting period.

Scaling up the Passives and Alternate Assets Business

Passives

The passive product offering yielded positive results, with our Companys assets growing over 3 times from Rs 9,962 Crore in March 2022 to Rs 34,694 Crore in March 2025. We expanded our existing product suite to include 53 products. The customer

Passive AUM

ETF base in this category has also grown to around 11,60,000 folios, increasing 3 times since March 2022. Additionally, the Company holds the top rank in the Index Debt category based on Average AUM for the quarter ended 31^st March, 2025.

Alternate Asset Business

On the alternative business front, to meet the growing needs of HNIs and family offices, our Company has strengthened the team to enhance PMS and AIF offerings in both equity and fixed income. Our PMS asset grew significantly to Rs 11,330 Crore in March 2025 compared to Rs 3,075 Crore in March 2024. During the year we also won the ESIC mandate under the advisory route and have started portfolio management for ESIC. Our company has also launched the Performing Private Credit Opportunity Fund under AIF offering. In order to build size in this category, both from domestic and global investors, we also committed our own capital to support growth of this fund out of our treasury portfolio.

On the offshore front, our Company has successfully completed fund raising for ABSL Global Emerging Market Equity Fund. Currently fund raising is underway for India ESG Engagement Fund, ABSL Flexi Cap Fund, ABSL Global Bluechip Fund. The offshore AUM grew to Rs12,070 Crore in Q4 FY25 from Rs 10,545 Crore in Q4 FY24.

On the real estate front, our AUM is Rs490 Crore for Q4 FY25, and currently fund raising underway for Aditya Birla Real Estate Credit Opportunities Fund (Cat II AIF).

Risk Management

Our Company is committed to consistently delivering strong investment performance, supported by our stable and highly experienced investment team, which boasts extensive industry knowledge and expertise. We uphold a comprehensive risk management framework that supervises firm-wide governance, risk, and compliance. Our risk management systems and procedures reflect our dedication to ethical and profitable operations, ensuring adherence to best practices, laws, rules, and regulations. The Risk function operates independently from the investment function. These measures are designed to prevent significant misstatements or losses, protect assets, maintain precise accounting records, ensure the reliability of financial information, and identify and manage business risks.

Compliance

Our compliance function monitors compliance with regulatory requirements laid down by the Securities and Exchange Board of India (SEBI) with respect to mutual fund, portfolio management services and alternative investment funds activities and other business activities permitted under Regulation 24(b) of SEBI (Mutual Funds) Regulations, 1996. Various internal policies and procedures ensure compliance with the regulatory requirements in relation to above businesses. To comply with applicable statutory requirements, the compliance team has established robust systems, policies and processes. There are set guidelines for personal dealings for AMC and Trustee Directors as well. The compliance team stays updated on new regulatory requirements and provides relevant functions with necessary guidance for implementation. Additionally, it reviews the status of implementation by coordinating with respective functions.

The compliance team not only monitors compliance status but also drafts and issues product offer documents, releases notices/addendums related to product documents, reviews marketing materials before dissemination, and ensures timely filing of various reports with the Board, regulators, and the concerned agencies.

IT and Digital

In a highly dynamic and competitive market, we believe that technology plays a central role in providing a seamless experience for our investors and driving the success of our business operations. Last year, we focused on enhancing customer experience by optimizing our APIs and Infrastructure, which enabled greater system reliability, faster performance, and enhanced integration. Building on this progress, we have now initiated a comprehensive transformation of our user experience, backend systems, and data platform. This transformation aims to further elevate the seamless experience we provide to our customers while empowering our businesses to make faster and more informed data-driven decisions. Through advanced analytics and a data-driven approach, we continue to analyse trends, identify opportunities, and optimize processes, enabling strategic initiatives and improving overall performance.

Marketing

Last year, we intensified efforts to build our brand awareness and consideration by enhancing our brand salience through multiple marketing campaigns such as:

• #ThinkLike30 - An Investor Awareness campaign which urged the public at large to adopt the mindset of a 30- year old with adequate importance to passion as well as experience. The message was further made actionable by advocating for SIPs and Multi Asset Allocation Funds - both being time-tested investing approaches which could enable live this mindset.

• Powered by Tech, Guided by Wisdom - Our Quant NFO launch campaign introduced a unique investment avenue to the public wherein a rule-based, quantitative framework built with advanced technology and the wisdom earned through years of fund management experience, promised to enhance their long-term investing experience. Through this campaign, we garnered our highest-ever collection in an Actively managed thematic NFO.

• Arm Your Portfolio by Investing In Indias Defence Sector - Our Nifty India Defence Index NFO launch campaign which introduced the avenue of investing in companies that are likely to benefit from the strategic indigenization of defence equipment manufacturing and increasing government spends in the sector. Through this campaign, we garnered our highest-ever collection in a Passively-managed Thematic NFO.

• The Believer of India - Conglomerate NFO launch -

The campaign aimed to help people realise that they have been a key contributor to Indias growth story. Everyday, Indians across generations have directly or indirectly supported conglomerates as consumers, making these companies successful businesses. Now, it is time for them to invest in these conglomerates and benefit from their growth. Our Print and Outdoor innovation captured the essence of this insight and garnered conversations and led to a successful product launch, garnering 1300 Crore + AUM.

• India Infrastructure Index NFO launch - With a bold communication route, this campaign appealed to the masses by showcasing the work completed and planned across the infrastructure sector. This helped in garnering visibility and driving awareness about the product launch. Strategic markets were chosen for an outdoor and print campaign delivering 30L + reach, helping successfully launch the product.

• The Volatile Times - A tactical innovative Print campaign that enabled us to pitch our focused funds. Looking at the market volatility we took over the masthead of The Economic Times and replaced it with "The Volatile Times". Keeping the half page blank- we evoked a sense of blankness that comes with decision making during volatile times and provided a solution in the form of our two funds. These funds were chosen as they help investors diversify their investments and sail smoothly through volatile times.

• Sabse Important Plan - Our "Sabse Important Plan" campaign focused on educating investors about the crucial role of Systematic Investment Plans (SIPs) in achieving financial goals. It emphasized that dreams, like owning a business or traveling, require planning, and SIPs provide a disciplined approach to realizing those aspirations.

The campaign used relatable scenarios to illustrate how SIPs can transform aspirations into reality, targeting millennials and promoting long-term, stable investment solutions. The objective through this campaign has been to make systematic investing a fundamental part of financial planning.

• Vantage Point 2025 - An exclusive, by-Invite event for the Top MFDs of the country to network, engage and deepen our partnerships. The 2-day grand experience helped us fortify our relationships with our thought leadership and research insights shared with this knowledgeable audience so that they in turn can guide their investors with the right investment strategies for the times ahead.

Training and Investor Education

We have a dedicated team for investor education to increase awareness and understanding of our mutual funds. We believe in creating a community of well-informed, financially literate investors capable of making decisions with a comprehensive understanding of the potential investment risks and rewards. Our training modules appeal to a wide range of investors across various demographics of age, profession, gender, geographic location, and language. They have been designed to be sustainable, scalable, and successful in their objectives to reach, teach and actively engage with common investors. As on 31^st March, 2025, we reached more than 12,67,000 people through 16,240+ training sessions.

Operations

The primary focus of our operations team is to execute all stages of the transaction process with minimal errors. The team aims to ensure prompt and efficient delivery of services to our clients. We intend to manage our front-office and back-office operations efficiently to provide a high level of customer satisfaction. We have established process controls to ensure accuracy and speed in transaction processing, such as time stamping and bar-coding transactions, as well as the automated process of credit confirmation. The processes are documented and audited periodically. End-to-end processing of transactions, maintenance of data records and servicing are managed by Computer Age Management Services Limited (CAMS),registrar and share transfer agent of Aditya Birla Sun Life Mutual Fund.

Customer Service

At ABSLAMC, our commitment to excellence in service and operations has been pivotal in enhancing customer experience. With a robust Operations & Customer Service framework we focus on optimising processes, leveraging technology and ensuring the highest standards of quality across all activities thereby achieving our Organisational strategic goals. Our service delivery model which includes our Back office, Branches & Call Centres have been refined to enhance customer experience by improving customer interaction and responsiveness leading to stronger client advocacy. We strive to empower our customers with realtime information and offer them a seamless investing experience through a host of value-added services and digital solutions.

Human Resources

As of 31^st March, 2025, our workforce stands at 1,403 permanent employees with gender diversity at 29%, reflecting our continued focus on building a diverse, inclusive, and high-performing organization. We remain committed to creating a workplace where every employee feels valued and empowered to grow.

This year, we placed a strong emphasis on capability building, with a focus on enabling employees to take ownership of their learning through GenAI-powered tools. These innovations are helping make learning more accessible, personalized, and scalable across the organization. For our front-line sales (FLS) teams who play a key role in customer engagement and business growth- we introduced 2-Way GenAI role-play tool that allows teams to simulate real-life customer conversations, test product knowledge, and sharpen objection-handling skills. With instant feedback and scoring, employees are better equipped to assess their readiness and improve in a self-directed, cost-effective manner. Supporting this is Succeedo, our multilingual AI chatbot, which gives teams real-time access to product information which has improved the speed and accuracy of customer responses, driving better service quality and sales effectiveness.

We have strengthened our organizational structure by leveraging internal talent to take on expanded roles and new responsibilities, thereby enabling us to drive continuity, retain institutional knowledge, and reinforce our culture. As we continue to evolve, we remain committed to building a strong internal talent bench by providing meaningful career opportunities for our people.

To proactively manage retention, we deployed a predictive analytics tool to identify employees who are at high risk of attrition. This data-driven approach has enabled targeted personalised conversations with employees which has helped to significantly reduce overall attrition-delivering one of the best retention rates in the industry. This initiative reflects our commitment to using technology not just for efficiency, but to build a more responsive and people-centric organization.

To nurture early-career talent, we launched the First10 Best10 program for employees with under 10 years of experience. With a focus on role movement, cross functional exposure, mentorship and structured learning, this program will help build a strong pipeline of future leaders. Our Employee engagement Index (Vibes Survey) showed a meaningful improvement from the previous survey, highlighting increased employee confidence, motivation, and alignment with our purpose.

Employee well-being remained central to our people strategy, and we have ensured that all employees in Mumbai completed their annual health assessment which is a testament to our commitment towards preventive healthcare. Simultaneously, workplace safety was reinforced through regular audits, compliance training, and enhanced safety protocols, ensuring a secure and supportive environment for all.

Together, all these efforts reflect our commitment towards building capability, enabling performance, and nurturing wellbeing thereby creating a workforce that is agile, motivated, and ready to lead our next phase of growth.

FINANCIAL PERFORMANCE Statement of Profit & Loss Account

(in Rs Cr)

Particulars	Financial Year		Change
	FY25	FY24	Y-o-Y
Revenue from Operations	1,685	1,353	25%
Employee Benefits Expense	365	320	14%
Fees and Commission Expense	47	35	34%
Depreciation and Amortization	40	35	15%
Other Expenses1	289	242	20%
Total Expenses	741	632	17%
Operating Profit	944	721	31%
Other Income	301	287	5%
Profit Before Tax	1,245	1,008	23%
Tax Expense	314	228	38%
Profit After Tax	931	780	19%

1 Includes Finance Cost

Balance Sheet

(in Rs Cr)

Particulars	As at 31st March, 2025	As at 31st March, 2024
Share Capital	144	144
Other Equity	3,583	3,025
Total Equity	3,727	3,169
Financial Liabilities	226	203
Non-financial Liabilities	161	130
Total Equity & Liabilities	4,114	3,502
Investments	3,692	3,122
Other Financial Assets	180	140
Non-financial Assets	242	240
Total Assets	4,114	3,502

CAUTIONARY STATEMENT

The statements in the Management Discussion and Analysis and the Boards Report describing the Companys objectives, projections, estimates, expectations or predictions may be forward-looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. The Company is not obliged to publicly amend, modify or revise any forward-looking statements, based on any subsequent development information or events or otherwise.