Nippon Life India Asset Management Ltd Management Discussions.

I. INDIAN ECONOMIC OVERVIEW

FY21 began on an uncertain note, under the shadow of an unprecedented health crisis. The onslaught of the pandemic led to extended lockdowns worldwide, disrupting normal life and work. The global health crisis soon became an economic one as well. Most countries went into full or partial lockdown to control the spread of the virus and minimise the loss of human lives. The lockdown restrictions had a grave adverse impact on people and economies in the initial months of the fiscal year. Post July 2020, most countries saw a gradual recovery driven by relaxation in restrictions as well as the various stimulus measures undertaken by the different governments across the world.

India managed this challenging situation better than most of its global peers, and the recent vaccination drive has given a renewed hope of a quicker recovery. To support the economy, the RBI and the Indian government undertook a range of measures early on, aimed at providing the requisite support through injection of liquidity into the system and relief to businesses. Some of the measures included cheap credit to the poor and MSMEs, deferment of loan repayments, production-linked incentive scheme to boost local manuFacturing, labour / land reForms, higher budgetary allocations For capital expenditure, and elongating the fiscal consolidation path to 2026. These policy measures, which initially Focused on lives over livelihood and consequently on lives as well as livelihoods, showed positive results. The advanced structural reforms led to expansion in demand and supply in the medium term, largely avoiding long term damage to production capacities. AFter declining by 24.4% and 7.3% in Q1 FY21 and Q2 FY21 respectively, the domestic economy rose by 0.4% in Q3 FY21, thereby exiting the technical recession phase. The recovery in business activities has been visible with GST collections rising from low of ~Rs. 32,200 crore in April 2020 to -Rs. 1,12,000 crore and -Rs. 1,13,000 crore in January 2021 and February 2021 respectively. Also, bank credit growth, which had slowed down to 5.1% in September 2020, rose by 6.6% in mid-February 2021.

INR hit a record low of Rs. 76.92 against USD in April 2020 beFore recovering some lost ground. As the yields rise in the USA, money will Favour the USD leading to its strengthening and weakness in INR. However, with higher Forex reserves, RBI is well equipped to manage any unwanted volatility in currency. WPI inFlation stood at 7.4% as against 4.2% in the corresponding period last year. Cumulative CPI inflation increased to 6.2% in March - April 2021 compared with 4.8% in the corresponding previous period. The 2021 Union Budget also gave a much-needed impetus to the markets - From increasing FDI in insurance From 49% to 74%, to a proposal to privatise two nationalised banks and one general insurance company, to the proposed asset reconstruction and management company to clean up banks balance sheets.

IMF Forecasts Indian economy to grow by 11.5% in FY22 and 6.8% in FY23 as it expects the monetary policy stance to remain accommodative and fiscal policy to support demand. These are one of the most upbeat forecasts as compared to other developed or emerging nations. Key drivers include a large working population, increasing financial literacy, high adoption of financial technologies, and a resilient rural economy, amongst others. A resurgence in Covid cases, resulting restrictions and any delays in vaccination drive, can act as potential deterrent to the growth forecasts. Given the current government vaccination initiatives and efforts taken to avoid further economic loss, we expect the economic growth to sustain in the coming years.

II. MUTUAL FUND SECTOR

Industry Overview

Over the last decade, the Indian MF Industry has grown at a steady pace From Rs. 7.0 lakh crore to Rs. 32.1 lakh crore, an approximately 4 times increase in a span of 10 years. Further, during the year Industry saw a healthy growth of 9% in total Folios largely due to increasing awareness and higher retail participation.

Source: AMFI

The industry assets witnessed 19% growth From Rs. 27.0 lakh crore For the quarter ended March 31, 2020, to touch Rs. 32.1 lakh crore For the quarter ended March 31, 2021, adding AUM of approx. Rs. 5.1 lakh crore during this financial year. Equities and debt assets accounted For most of these inflows during the year, reflecting the increasing risk appetite and confidence of the retail investors despite high volatility. Debt assets and equities contributed 92% of the total industry growth and increased by Rs. 2.4 lakh crore and Rs. 2.3 lakh crore respectively. The year was also significant For the ETF segment, which grew by Rs. 1.1 lakh crore to Rs. 2.9 lakh crore.

Increasing Participation from Individual Investors

This year has seen continued growth in participation, especially From retail investors in equity Funds. The MF industry added 81 lakh Folios during FY 2020-21. The rise in Folios was driven by higher Folios in the passive and fixed

income categories, taking the total number oP Polios to 9.79 crore. Folios in the passive category grew by a strong 130% Prom 32 lakh in March 2020 to 73 lakh crore in March 2021.

Asset Mix

Equity AUM, as a proportion of total AUM, rose Prom 33% in FY17 to 42% in FY21, which can be attributed to increasing awareness, Pinancialization of savings, rise in SIP etc. The share of debt-oriented schemes decreased Prom 42% in FY17 to 34% in FY21, which can be attributed to rising in yield

Source: QAAUM, AMFI

Equity: Equity Funds invest a major chunk of corpus in equity securities with the main objective of providing capital appreciation over the medium to long-term investment horizon. They are high-risk Funds and the returns are linked to the performance of capital markets. There are different types of equity Funds i.e. diversified Funds, sector-specific Funds and index-based Funds. In addition to equity Funds, Balanced / Hybrid Funds invest both in equity and debt instruments and strive to provide growth as well as regular income.

Equity AUM contributes 42% to total Industry assets and grew by 21%.

Debt: Debt Fund/Fixed Income Funds invest predominantly in rated debt or fixed income securities i.e. corporate bonds, debentures, government securities, commercial papers and other money market instruments.

Debt AUM contributes 34% to total Industry assets and grew by 27%.

Liquid: Liquid Funds / Money Market Funds invest in highly liquid money market instruments and provide easy liquidity. Liquid Funds are short duration Funds and typically used by corporate houses, institutional investors and business houses For deploying surplus liquidity For a shorter period.

Liquid AUM contributes 14% to total Industry assets and declined by 13%.

ETF: Exchange Traded Funds track an index, a commodity or a basket of assets as closely as possible, but trade like shares on the stock exchanges. They are backed by physical holdings of the commodity, and invest in stocks of companies, precious metals etc.

ETF AUM contributes 9% to total Industry assets and grew by 60%.

Top 10 AMCs AUM trends:

Indian MF industry has a total of 43 AMCs comprising private sector companies, joint ventures with foreign entities and NBFC / bank sponsored AMCs.

Source: QAAUM, AMFI

The Indian MF industry remains largely consolidated in top 10 AMCs, which account For >80% oP the industrys total AUM. Currently, Top 10 players manage Rs. 26.6 lakh crore, which accounts For 82.7% of the industry AUM.

Geographic Mix:

Historically, AUM has been concentrated in the Top 30 (T-30) cities due to presence of Institutional Investors and they have higher concentration of assets in non-equity schemes. The t-30 cities hold the majority of MF assets with a share of 84%, whereas beyond the Top-30 or B-30 cities held 16% oP assets as of March 2021. AUM Prom b-30 has higher composition of equity assets compared to t-30 cities. Further, b-30 cities gaining significance in the industry AUM mix as the SEBI

provides impetus to MF penetration beyond the top 30 cities by allowing additional TER.

Investor wise break-up of AUM

Industrys investors base can be broadly categorized as Retail, High Net worth Individual (HNI) and Institutional investors. Over last 3 years Retail, HNI & Institutional AUM has grown at a CAGR of 10%, 17% and 11% respectively. The contribution of HNI investors to Industry AUM has increased From 25% in March 2017 to 32% in March 2021.

Source: AMFI

The HNI investor MAAUM increased From Rs. 8.2 lakh crore in March 2020 to Rs. 10.2 lakh crore in March 2021, registering a growth of 25%, whereas institutional investors MAAUM increased by 26% From Rs. 11.8 lakh crore in March 2020 to Rs. 14.9 lakh crore in March 2021. Retail investors MAAUM increased by 50% From Rs. 4.7 lakh crore to Rs. 7.0 lakh crore, on account of the strong recovery in equity markets in FY21, aFter the unprecedented decline in March 2020. Majority of the retail investors assets are invested in equities.

SIP Inflow continues to grow

Systematic Investment Plan or SIP, as it is commonly known, is an investment plan offered by mutual Funds where one could invest a fixed amount in a scheme periodically at fixed interval like, once in a month.

Due to the highly volatile markets and impact of the global pandemic, Systematic Investment Plans (SIP) inflows reduced in the initial months of the year. However, inflows began to rise post October 2020, and have stabilised since then, indicating evolving behaviour and long-term investment horizon of retail investors. According to AMFI, the total inflows through SIPs in FY21 decreased by 4% to Rs. 96,080 crore. However, the breadth of the investor base continued to expand, with total number of SIP accounts at 3.72 crore as on March 31, 2021, with an addition of 61 lakh accounts during the year. In addition to a gradual increase in participation from the retail segment, the rising prominence of SIPs also lends stability to industry inflows.

Outlook

Over the last Few years, there has been a gradual increase in net financial savings and its share in the overall household savings in India has stabilised with an upwards bias. Also, share of mutual Fund assets in gross financial household assets in India rose in the last Few years, except as on March 31, 2020, as a result of the pandemic. Given the rebound in markets and MF assets in FY21, the share is expected to increase in this fiscal. Although, Indias mutual Fund penetration (AUM to GDP) rose to 12.1%, is still much lower than the world average of 63% It is also lower than many developed economies such as the United States (120%), Canada (81%), France (80%) and UK (67%), and emerging economies such as Brazil (68%) and South AFrica (48%). Indias equity mutual Fund AUM to GDP ratio is at 5%, vis-a-vis 75% in US, 55% in Canada and 40% in UK. Going Forward, Favourable demographic dividend, Formalisation of the economy, growing financial inclusion, greater disposable income and investable surplus, increasing financial savings, higher investor awareness, investor Friendly regulations, wide range of transparent and investor-Friendly products, ease of investing, tax incentives, expanding distribution coverage, digitalisation, and perception of mutual Funds as long-term wealth creators, are expected to be key drivers For the growth of the Mutual Fund industry.

III. ALTERNATIVE INVESTMENT FUNDS

Alternative Investment Fund or AIFs are pooled investment vehicles, which collects funds from sophisticated investors (both domestic as well as overseas) For investing in nontraditional investment assets (in accordance with a defined investment policy) For the benefit of its investors. The minimum investment amount by any investor in an AIF is Rs. 1 Crore.

SEBI has identified three categories of AIFs based on investments as below:

Category I: Includes funds which have positive spill over effects on the economy For which certain incentives / concessions might be considered, e.g. venture capital funds, Angel Funds, SME Funds, social venture funds, infrastructure funds etc.

Category II: Predominantly includes Funds which invest in unlisted securities and includes Funds like PE Funds, Debt Funds etc., and represents the largest segment AIF category.

Category III: Include Funds which deploy diverse or complex trading strategies including use of debt/leverage through investment in listed or unlisted debentures e.g. hedge funds or funds that invest with a view to earn short term returns form huge part of this segment.

With the growing popularity of the Alternative Investment Funds in recent times, SEBI has not only come up with various purposeful amendments to the regulations to Further strengthen and enhance transparency but have also worked working tirelessly to implement global best practices For the industry. The year 2020 has seen a stream of such changes in the regulatory Framework governing AIFs in India. Changes such as introduction of perFormance benchmarking, template For offer documents, clarity on the role and duties of investment committee, etc. will go a long way in boosting investors confidence. The regulatory environment continues to be conducive to the growth of the AIF industry.

As on December 2020, commitments raised is approx. Rs. 4.4 lakh crore of which Funds raised is approx. 48% i.e. Rs. 2.1 lakh crore. Within Funds raised, Category II (70%) represent the largest segment, Followed by Category Ill (20%). Since 2012, SEBI has permitted more than 600 AIFs to be set up. Participants include AMCs, Private Equity, Venture Capital firms, Hedge Funds, Corporates, Boutique Investment Funds, Individuals etc.

IV. PORTFOLIO MANAGEMENT SERVICES (PMS)

PortFolio Management Services (PMS) is an investment management service offered by banks, brokerage houses, wealth managers and asset management companies to wealthy investors, like high net worth individuals, or institutions. PMS is broadly divided into discretionary and non-discretionary / advisory. PMS is one of the most versatile investment vehicles. It is the most suitable investment vehicle For meaningFul/concentrated, benchmark-agnostic, bottom-up stock picking. Recently, the minimum investment amount under PMS has been revised by SEBI to Rs. 50 lakhs.

The PMS industry has seen a growth of 14.1% CAGR in the last five years between October 2015 to October 2020, with asset under management rising from Rs. 9.9 lakh crore to Rs. 19.2 lakh crore.

VI. COMPANY OVERVIEW

True Blue Asset Management Player

Nippon LiFe India Asset Management Limited (NAM India or the Company) is one of the largest asset management companies in India with over 25 years of track record, and a total AUM of Rs. 3.6 lakh crore as of March 31, 2021. The Company is involved in managing

(i) mutual Funds including exchange traded Funds (ETFs);

(ii) managed accounts, including portFolio management services (PMS), alternative investment Funds and pension Funds;

(iii) offshore Funds and advisory mandates.

The Company is promoted by Nippon LiFe Insurance Company, one of the leading private liFe insurers in Japan, with assets of over US$ 723 bn as of March 31, 2020.

The Following table illustrates the closing AUM of the Companys respective offerings:

Mutual Fund:

Nippon India Mutual Fund (NIMF) offers a well-rounded portFolio of products i.e. Equity, Debt, Liquid as well as ETF For investors to meet varying requirements. It constantly endeavours to launch innovative products and customer service initiatives to increase value to investors. The Company started mutual Fund operations in 1995 as the asset manager For Reliance Mutual Fund. As of March 31,2021, the Company managed QAAUM of Rs. 2,28,586 crore. The Company caters to one of the largest investor Folios in the industry at 99.8 lakh investor Folios. As on March 31, 2021, Nippon India Mutual Fund (NIMF) manages 68 open ended schemes (including 21 ETFs) and 81 close ended and interval schemes.

Business Strengths:

Strong base of Retail investors and assets

NIMF has always been known For its strength in the Retail segment. Over the last 2 decades, the Company has meticulously built its assets in this category and created long-term wealth its retail investors. It will continue to Focus and enhance these offerings to expand its investor base even Further. NIMFs retail AAUM contribution to total AAUM is amongst the highest in the industry at 28%. The Company plans to continue to build on its efforts in this segment with a mix of on-ground presence in smaller locations as well as continuously evolving digital assets to improve experience and on-board new investors.

Higher Share of AUM from Beyond Top 30 Locations

NIMF continues to be amongst the leaders in Beyond Top 30 cities segment or B 30 locations. B-30 locations have higher share of equity assets compared to non-equity assets. This segment contributed AUM of Rs. 41,260 crore, out of which 75% were equity assets. 18% of total assets are sourced From beyond top 30 cities, higher than the industry average. In smaller locations, there is particular need For Face-to-Face communication to get new investors into the MF Industry. NIMF holds one of the largest on-ground presences at 287 locations pan India and we endeavour to provide an all-round interface For our investors - both online and offline.

SIP and STP - Long Term & stable Inflows

SIP and STP are one of the strong pillars of the Industry and

provides long-term sustainable inflows. It also inculcates a savings habit among investors and ensures steady disciplined approach to investing rather than ad-hoc. NIMF received Rs. 656 crore in inflows From systematic transactions in March 2021, which is a recurring monthly inflow, resulting in annualized inflows of approx. Rs. 7,900 crore. The book is contributed by over 33 lakh SIP and STP Folios. The Folios have grown by 15% in FY21. The overall inflows were over Rs. 7,300 crore in FY21.

Leadership position in the Passive category

The Company has one of the largest market share in the ETF segment with assets of Rs. 37,272 crore. The Company has the largest suite of passive products in the Industry, with 22 ETF schemes and 5 Index Funds. NIMF successFully launched 8 new Funds in this Fiscal, indicating its strong commitment to the Investor First philosophy. With over 23 lakh Folios, NIMF has 42% of the industrys Folio market share. NIMF added approx. 14 lakh Folios in FY21 as compared to approx. 98,000 in FY20. Approx. 72% of the exchange volumes are contributed by NIMFs ETF schemes. There has been a consistent participation of HNI segment in passive products, indicating greater adoption by an evolved class of investors.

De-risked distribution Model

The Company has multi-channel distribution network comprising of Mutual Fund Distributors (MFDs), Foreign banks, Indian private and public sector banks, national distributors and digital platForms. It has approx. 78,400 empanelled distributors pan India as of March 31, 2021, amongst the highest in the Industry.

Penetrating Deeper into India

Currently, NAM India has a pan-India network of 287 locations, which is amongst the highest in the industry. The Company continues to Focus on locations beyond the Top 30 cities, as assets From smaller locations have higher persistency and are more profitable.more profitable.

Managed Accounts:

AIF

Our Subsidiary, Nippon LiFe India AIF Management Limited (NIAIF), manages 15 schemes of Alternative Investment Funds (AIFs) across Category II & Category Ill. NIAIF offers various strategies under Listed Equity, High Yield Real Estate Debt, Credit and Tech / VC Fof, which are privately pooled investment vehicles registered with SEBl.

The ongoing Covid-19 pandemic has impacted business activities across sectors. FY21 was most challenging For HNl / lumpsum Fund raising (given that minimum investment ticket size is Rs. 1 crore). For sectors like real estate and credit, Fund raising proved to be very difficult For most of the year. However, despite this challenging environment, NIAIF delivered strong perFormance during the year.

• Undertaken two closure of Nippon India Digital Innovation Fund (Fof)

• LOIs and Commitments raised ~USD 100 million

• The fund began its investment activities and made commitments in two underlying VC Funds

• Approval in place for two additional investments

• The scheme also conducted the 1st bi-annual meet for its investors

• Launch and initial closure of second offshore Real Estate Fund with key marquee Japanese investor completed

• Launch and initial closure of the 6th Equity scheme with the theme "Champions of 21st Century" completed

• Made 3 and 2 exits in the real estate and credit portfolios, respectively, during the year

• Delivered consistent long-term investment perFormance across asset classes. Equity Funds continue to outperForm their benchmarks and peer groups over long term

The total commitments raised across all schemes is over Rs. 3,700 crore as on March 31, 2021. With business activities gradually picking up, we expect to grow this business Further.

PMS

The Company provides portFolio management services to high net worth individuals and institutional investors. The Company has been one of the Few AMCs in India who have won and managed various prestigious government mandates in the past. During the year, the company won the prestigious Post Office LiFe Insurance mandate. At present, the company manages two prestigious government mandates i.e. Postal LiFe Insurance and Employee State Insurance Corporation (ESIC). Currently, the company offers Four equity strategies

to its investors. All investment strategies under PMS continue to outperform their benchmarks and peer groups over the long term. As on March 31, 2021, the Companys AUM, including government mandates, is over Rs. 1,22,500 crore in this segment.

Offshore Funds and advisory mandates

The Company manages offshore Funds & distribution through its subsidiaries in Singapore and Mauritius and has a representative office at Dubai. The overseas subsidiaries help to cater to institutional and high net worth investors across Asia, Australia, Middle East, UK, US, and Europe. In line with the objective to consolidate overseas operations, NAM India plans to further grow the business in Singapore, and cease operations in Mauritius in the near future.

As of March 31, 2021, the Company had a total AUM of Rs. 6,953 crore as part of its international offshore managed portFolio. The Company also acts as an Investment Advisor For India-Focused Equity and Fixed Income Funds in Japan and For a NiFty 50 ETF in Australia.

Further, as on March 31, 2021, the Company had a total AUM of Rs. 3,347 crore as international advisory mandates. NAM India, in collaboration with BBL Asset Management Company Ltd., an affiliated company of Bangkok Bank (BBL), the largest Thai commercial bank, has launched Bualuang Bharata Fund in Thailand For institutional investors and high net worth investors.

VII. OPPORTUNITIES & THREATS

Opportunities

• Under-penetration of mutual Funds in India

• Ongoing financialization of savings in India

• Increasing per capita GDP

• Increase in investors For Systematic Investment Plans

• Larger allocation by inFormed investors towards passive products

• Rise in flows From smaller cities / towns

• A strong owned distribution network with extensive reach across India

• Deepening digital channel distribution contributing to disintermediation and de-risking of sales and distribution

• Leveraging Nippon LiFes global network For international tie-ups and partnerships

• On-going consolidation in the industry

• New frontiers of growth in emerging areas of business such as AIF, international markets

Threats

• Slowdown in the economy

• Financial impact due to COVID-19 virus (global pandemic)

• Sustained weak flows into active schemes

• Intense competition amongst MFs to garner higher AUMs can increase pressure on commissions

• Impact of regulatory intervention on Fees, charges, reduction of exit loads

• Credit events impacting confidence of MF investors VIII. FINANCIAL PERFORMANCE

The financials statements of the Company For the year ended March 31, 2021, have been prepared in compliance with the Companies Act, 2013 and Indian Accounting Standards, Rules 2015. The Company has adopted Indian Accounting Standards (Ind AS) - IFRS Converged Standards with effect From April 1, 2018. (April 1, 2017 being the transition date).

Consolidated Financial Performance

Revenue

The Companys consolidated total revenue stood at Rs.1,419 crore compared to Rs. 1,193 crore in the previous year. Other income stood at Rs. 357 crore as against a loss of Rs. (10) crore in the previous year.

Expenditure

Total consolidated total expenditure For the year decreased by 14% to Rs. 542 crore, as against Rs. 633 crore in the previous year. Fee and Commission expenses For the year were Rs. 43 crore against Rs. 70 crore in the previous year - a decrease of 39%. Employee benefit expenses For the year were Rs. 271 crore against Rs. 302 crore in the previous year - a decrease of 10%.

Depreciation For the year remained at Rs. 33 crore as against the previous year. Other expenses For the year were Rs. 190 crore as against Rs. 222 crore in the previous year - a decrease of 14%.

The Profit For the year stood at Rs. 680 crore as against Rs. 415 crore in the previous year - an increase of 64%. Total Comprehensive Income For the year stood at Rs. 681 crore as against Rs. 413 crore in the previous year - an increase of 65%.

Utilisation of IPO Proceeds

As part of the IPO conducted in October 2017, NAM India had raised Rs. 589 crore From Fresh issue of equity shares. These funds were intended to be utilised towards various objectives, including branch network expansion, IT infrastructure, advertising, brand building, seed investment in AIF schemes and MF schemes, and inorganic growth as well as strategic initiatives.

The Company utilised Rs. 307 crore out of these proceeds by March 31, 2021, in line with the specified objectives. The amounts raised, utilised till date and pending utilisation, is detailed at Note no. 36 in the Notes to the Accounts of the Standalone Financial statements.

Due to the dynamic and evolving nature of the industry, continuously evolving digital ecosystem, transition to Nippon LiFe being the sole promoter, other scheme-specific issues, and more recently, the extensive impact of the ongoing pandemic and meltdown in global capital markets, NAM India not only turned conservative in utilisation of its IPO Proceeds, but also the avenues For inorganic growth and strategic initiatives have shrunk. Due to the exponential surge in digital transactions aFter the IPO, the need For rapid expansion in physical presence and opening of new branch offices has shrunk considerably. Hence, the Company went slow on branch expansion in Tier 3 and Tier 4 cities.

Further, due to scheme specific issues, becoming a constituent of the Nippon Life Group and the ongoing pandemic, the Company is conservative in spending money on brand building activities.

The AIF subsidiary launched Fewer schemes than what was envisaged at the time of IPO due to the lacklustre market in the last Few years, heightened by slower economic growth and the pandemic. These factors resulted in underutilisation of the proceeds earmarked for seed investment in new AIF and MF schemes.

Due to non-availability of inorganic opportunities at appropriate valuation and which could complement NAM Indias existing business, while the Company has constantly evaluated multiple opportunities For potential synergies, no actual acquisitions have Fructified. The Company remains open to evaluate opportunities for strategic partnerships.

Against this backdrop, NAM India will continue to explore the deployment of its IPO proceeds towards value accretive and strategic initiatives in the Future. However, unless the opportunities have value-accretive potential For shareholders, add to the profitability, or complement the existing businesses, the Company will not rush into expending the available resources. For example, the acquisition of the ETF schemes of Goldman Sachs in 2016, had helped the Company create a very strong Foundation in the ETF space, and transactions of that nature will be actively pursued. NAM India will review the strategy on deployment of these funds in the light of these factors without diluting the stated intent that any utilisation must have value accretion For shareholders at the forefront.

IX. COMPLIANCE

The Company continues to aspire to be a one hundred percent compliant corporate citizen by choice with a nonwithering Focus on strong compliance & robust corporate governance principle & processes. Companys management is not only committed but is also Fully geared up to comply with the applicable laws (in letter & spirit) and strictly Follow the ethical principles that govern business. The Company is Fully seized of the stated regulatory requirements and it thus endeavours and strives to remain ahead of the curve in so far as matters of compliance and governance are concerned. Interests of its unit holders, shareholders and other relevant stakeholders are always kept at the ForeFront while taking decisions with respect to business planning and execution.

The Board of Directors of the Company as well as that of the Trustee company also have a strong sense and Flair towards compliance and governance standards. Matters of compliance and governance are given undivided and focussed attention at the meetings of the Board. In addition to this, the Company continues to keep improving upon its underlying policies, documentation and internal processes through a seasoned and experienced in-house Compliance Team, which has an independent line of reporting to the Board.

X. RISKS AND CONCERNS

NAM India is exposed to specific risks that are particular to its businesses and the environment within which it operates, including credit risk, operational risk, competition risk, regulatory risk, human resource risk, execution risk, inFormation security risks, cyber security risks and macroeconomic risks.

Competition risk

The financial sector industry is becoming increasingly competitive and the Companys growth will depend on its ability to compete effectively. The Companys main competitors are Domestic Mutual Funds, PortFolio Management Services and Alternate Investment Funds. Further liberalisation of the Indian financial sector could lead to a greater presence or entry of new Foreign asset managers offering a wider range of products and services. This could significantly toughen the competitive environment. The Companys strong brand image, wide distribution network, diversified product offering and quality of management places it in a strong position to deal with competition effectively.

Market risk

The Company has quoted & unquoted investments in equity, debt & mutual Funds which are exposed to fluctuations in the prices of underlying assets.

Credit Risk

The Company has quoted and unquoted investments in bonds and debt oriented mutual Funds; thus the risk arising out of default or failure on the part of borrowers in meeting their financial obligations towards repayment of principal and interest exists. Hence, credit risk is a loss as a result of non-recovery of Funds both on principal and interest counts. This risk is comprehensively addressed by spreading the investments into multiple bonds and mutual funds spread across multiple issuers.

Liquidity and Interest Rate Risk

The Company is exposed to liquidity risk principally, because of investments For periods which may differ From those of its funding sources. This risk is mitigated as all the investments are done through accumulated surplus generated over a period of time and equity inFusion.

The Company has quoted and unquoted investments in bonds and debt oriented mutual Funds; thus the risk arising out of interest rate movements exists. This risk is comprehensively addressed by duration management across the portFolio.

Human Resource Risk

The Companys success depends largely upon the quality and competence of its management team and key personnel. Attracting and retaining talented professionals is therefore a key element of the Companys strategy and a significant source of competitive advantage. While the Company has a salary and incentive structure designed to encourage employee retention, a Failure to attract and retain talented professionals, or the resignation or loss of key management personnel, may have an impact on the Companys business, its Future financial perFormance and the results of its operations.

Operational risk

The Company may encounter operational and control difficulties when commencing businesses in new markets. The rapid development and establishment of financial services businesses in new markets may raise unanticipated operational or control risks. Such risks could have a materially adverse effect on the Companys financial position and the results of its operations.

The operations of the Company have been extensively automated which minimizes the operational risk arising out of human errors and omissions. A robust system of internal controls is practiced by NAM India to ensure that all its assets are safeguarded and protected against loss from unauthorised use or disposition and all its transactions are authorized, recorded and reported correctly. The Audit Committee of Board periodically reviews the adequacy of the internal controls. The Company is relentlessly Focused on quality parameters and has a dedicated quality team to proactively identiFy and address operational issues. The mandate of the quality team is also to work closely with various business teams to bring about operational efficiencies and effectiveness through Six Sigma initiatives. It is pertinent to note that NAM India has obtained an ISO 9001:2008 certification. They are among the Few companies in their respective industries to be ISO certified.

Information & Cyber security risk

NAM India has a robust InFormation Security Risk monitoring systems and tools to guard and protect sensitive customer data and guard against potential hackers and viruses. The Board of Directors have constituted a Technology Committee comprising of experts proficient in technology to oversee & review the InFormation security & Cyber security aspects on a regular basis. Robust governance, controls and sophisticated technology is adopted across lines of business to ward off cyber threats and protect inFormation residing within the company. InFormation Security has been brought under the Enterprise Risk Management Framework to enhance data protection and ward off cyber risks effectively, thereby making the overall Risk, Control & Governance Framework more robust.

Regulatory risk

As an entity in the financial services sector, the Company is subject to regulations by Indian governmental authorities, including the Securities and Exchange Board of India. Their laws and regulations impose numerous requirements on the Company. There may be Future changes in the regulatory system or in the enForcement of the laws and regulations that could adversely affect the Companys perFormance.

Pandemic risk

As a result of the Covid-19 outbreak and resultant humanitarian crisis across the world, global and domestic financial markets have seen significant decrease and volatility in a very short period. Globally, government agencies and private organisations have introduced varied measures to contain the risk. The extent to which this global pandemic will impact the economy, and in turn the Companys Future perFormance, is highly uncertain. The Company has adopted strict procedures to restrict the loss to its internal operations, as well as its stakeholders. The pandemics Full impact will depend on Future events, including the spread and severity of the pandemic, and any action taken to revive the global economy.

XI. TRAINING AND INVESTOR EDUCATION

The Company has been at the ForeFront of spreading awareness on mutual funds through its Investor Awareness / Education Programs. The objective of these programs is to create awareness about mutual Funds across the country to attract new investors into mutual Funds. Due to lockdown, all class room trainings were put on hold. While none of us had Faced such situation in the past, and as they say every cloud has a silver lining, EDGE converted this into an opportunity and moved to 100% digital training as the new way of engaging Investors. NIMF has adopted 19 districts across the country as part of the SEBI adopted districts program and conducted Investor Awareness Programs at these districts. During FY21, the Company conducted 115 Investor Awareness & Engagement Program covering over 5,600 investors across India. NIMF launched a mobile app - MFx exclusively For Investor education. The app provides all relevant information in a simple audio video format related to MF. which can be accessed any time by the prospective investor.

XII. DIGITAL TRANSFORMATION - A PERPETUAL BETA

The Company embodies a digital-first mindset and over the years, it has established itself as a Digital leader, not Just in Mutual Funds, but in the entire financial services space. From being a Digital leader, NIMF is now metamorphosing into a Digitech incubator. The goal is to drive class-leading Digital innovation to create competitive advantage and disrupt the investments space with solutions that keep todays digital savvy, millennial consumers at heart. NIMFs mature digital framework, catering to various segments and business lines, has not only helped to achieve robust and steady growth, but also helped drive many new age, industry-first and pioneering solutions for our investors and partners.

Game-changing Initiatives:

• New digital channel - WhatsApp: Pursuing the philosophy of building a digital presence in line with the preference of the investors, NIMF extended its digital footprint to WhatsApp, the largest social chat application. An innovative solution has been developed on WhatsApp for Business where retail investors are provided with the ease of initiating and completing Liquid Fund purchase transactions on WhatsApp itself, without any re-directions. They can also check their KYC status and explore other digital platforms. This move has helped NIMF unlock broader opportunities for future. The endeavour is to provide wide-ranging transaction and servicing capabilities with best-in-class transaction experience to create an independent, full-scale Digital Channel for masses

• Corporate Solutions suite: A full spectrum Digital asset has been commissioned for the Institutional business segment. The new asset gives the capability to run digital campaigns, generate leads, drive conversions as well as complete onboarding for online services, transactions and servicing. The asset is built on a Mobile-first approach with cross device compatibility and automated self-serve processes for facilitating transition to digital transactions and online services

• Investor segment expansion: Online purchases have been extended for a new investor segment viz. Hindu Undivided Family and Sole Proprietorship, to bring in newer business opportunities digitally and address the investment needs of a strong segment which could have been left under-served due to restrictions of in-person investor engagement amidst COVID-19

• Digital Launches: Nippon India Multi Asset Fund was the first ever digital NFO for the Company and, was enabled for investors and partners across all digital assets. The NIFTY Small Cap 250 Index Fund and ETF Nifty CPSE Bond Plus SDL 2020 were the other NFOs to be launched during the COVID-19 pandemic

• System driven, do-it-yourself (DIY) intelligent

measures: Smart interventions have been created on NIMFs platforms with the objective of creating a strong business impact.

• Retention nudge: Switch to Liquid option at the time of redemption which guides investors to switch their investments into Liquid Fund instead of redeeming from non-Liquid schemes

• SIP Pause Intervention: AUM retention initiative developed to counter AUM withdrawals in view of challenges due to COVID pandemic where Intelligent nudges guide investors to pause their SIP instead of cancelling it

• Smart Payment Retry: Automated Payment Retry option for investors who encounter payment related errors or failures during online purchase. The feature is designed to prevent potential drop- offs during transactions, thereby reducing business leakage

• Conversational Commerce: This one-of-its-kind initiative in the financial services space has seen consistent growth and investor traction. The voice-based interface, which has been co-created with Google and which facilitates financial transactions in NIMFs Liquid Fund, has brought many awards and accolades for the organisation. The Simply Save app, which hosts the Conversational Commerce interface has seen over 1.5 lakh new downloads since launch, and has one conversation invoked every 5 minutes

• Business Easy 2.0: The industry-first Business Easy 2.0 (B.E 2.0) app is a full spectrum, business enabling digital solutions suite that acts as a complete Customer Relationship Management tool using which Mutual Fund Distributors (MFDs) can manage their business virtually. Devoid of in-person meetings due to countrywide lockdown, the B.E 2.0 app became the mainstay of business for MFDs. The app gave them a complete dashboard view of their business, with intelligent insights about their audience and the relevant investment options. They used the app to run segmented campaigns (email & SMS) and reach out to investors with personalised transaction links with pre-embedded details that their customers had to merely authorise. They also handled the service-related needs of investors with the fully integrated Services module. Moreover, the distributors could also onboard new investors using the completely paperless e-KYC module

• Strengthening our digital distribution through strategic alliances and enhanced support to partners: Another key partner in the form of PhonePe has been added to NIMFs network which already has key names like Paytm, ETMoney, Groww, Kuvera, Tarrakki, etc., to bolster the executional leadership and expansive reach. With the immense expertise in the core business of asset management and prowess in digital business, NIMF engaged with its partners at an even deeper level and helped them navigate through the tough COVID-19 times. Expertise and knowledge were shared with the partners and their customers, advocating investment best practices and providing guidance on how to steer through volatile markets. NIMFs Fund managers and investment experts conducted exclusive webinars for these partner platforms with the intent of educating the investors and helping them take the right decisions. Also, co-branded content on similar lines was created and disseminated to investors using these Partner platforms. NIMF also extended ETFs to the bouquet of its offerings across partner platForms. These measures not only arrested attrition, but also helped to grow business volumes on such platforms

Key results:

• Digital Business rose by 31% and touched a record 18+ lakh purchase transactions, which is essentially 5 purchases every minute.

• Contribution of Digital Business to overall NIMF business stands at 53%, as against 43% in FY20.

• Digital Business share in lumpsum and SIP purchase transactions stands at 50% and 59% respectively vis-avis total purchase transactions. The same metric stood at 46% and 35% in FY20.

• Focus on long term assets resulted in 78% non-Liquid transactions compared to 25% in FY20.

• 24% of investors transacting through digital channels were new customers.

• Conversational Commerce interface (hosted on the Simply Save App) has approx. 1.5 lakh new downloads since launch and has seen one conversation invoked every 5 minutes.

Awards & Accolades:

• Asia Asset Management Best of the Best Awards 2021 - FinTech Innovation.

• IBS Intelligence Global FinTech Innovation Awards, 2020 - Most ImpactFul Project in Digitization / Paperless Initiative For Online Purchase Web & M-site.

• CII Centre For Digital transformation of confederation of Indian Industries DX Awards, 2020.

• Customer Experience For Conversational Commerce.

• Service Distribution Excellence For Business Easy 2.0.

• Internet and Mobile Association of India (IAMAI) India Digital Awards, 2020 (11th Edition) Technology Solutions - Best use of Bots (Chat & Voice) For Conversational Commerce.

• Kamikaze B2B Media Payments & Cards Awards, 2020 - Best Contactless Innovation of the Year and Best Contactless Payments Project of the Year For Conversational Commerce.

• Adobe Campaign India Champion Award 2021 - 2nd runner up.

• BFSI Digital Stallions Awards 2021 - Best use of Facebook in Mutual Funds.

Research and Development:

NIMF has always taken pride in its digital prowess and technological innovations. Having acknowledged long ago that it is not only a Mutual Fund and an Asset Management company, but also as a new age digitech enterprise that helps individuals, entities and intermediaries achieve their financial and business goals, NAM India is always at the ForeFront of adopting technology and embracing a perpetual state of digital transFormation. And, in times of COVD-19, it is this constant pursuit spanning many years that has paid off and made it #FutureReady.

XIII. INTERNAL CONTROLS

The Company maintains a system of internal controls designed to provide a high degree of assurance regarding the effectiveness and efficiency of operations, the adequacy of saFeguards For assets, the reliability of financial controls, and compliance with applicable laws and regulations.

The organisation is well structured, and the policy guidelines are well documented with pre-defined authority. The Company has also implemented suitable controls to ensure that all resources are utilized optimally, financial transactions are reported with accuracy and there is strict adherence to applicable laws and regulations.

The Company has put in place adequate systems to ensure that assets are safeguarded against loss from unauthorised use or disposition and that transactions are authorized, recorded and reported. The Company also has an exhaustive budgetary control system to monitor all expenditures against approved budgets on an ongoing basis.

The Company uses inFormation technology extensively in its operations For ensuring effective controls besides economy. It also helps the Company in providing accurate MIS and prompt information / services to its customers and other stakeholders. The Company has implemented enhanced level of InFormation System Security controls with monitoring systems to address technology risks.

The Company has an independent internal audit Function which continuously evaluates the adequacy of, and compliance with, policies, plans, regulatory and statutory requirements. Risk based approach is adopted while carrying out the audits. Internal audit also evaluates and suggests improvement in effectiveness of risk management, control and governance process. The Audit Committee of Board provides necessary oversight and directions to the internal audit Function and periodically reviews the findings and ensures corrective measures are taken.

XIV. HUMAN RESOURCES

The Company had a workForce of 991 people as on March 31, 2021. The average age of the workForce is 37 years. NAM India has a large investment team comprising of 62 employees and Risk Management Team comprises of 12 members. It also has one of the largest and experienced credit research team, comprising of 9 members, in the Indian MF industry. Members of the senior investment team have an average of over 21 years of investment management experience and are a valuable resource to the Company.

NAM India considers employees as the most valued asset, who are at the core of the business. Human capital is the most important business driver. A strong people culture is the soul of the organization and biggest competitive advantage For a sustainable growth.

As an organization, all colleagues, at every level, are part of the organizations growth strategy and are empowered enough to take business decisions. The Company takes care of them much beyond salary, pay and perks and ensures that they get best-in-class learning and career advancement opportunities. The key pillars of the core philosophy are talent care and development, empowerment and decision making at all levels, innovation, agility and digital transFormation.

The Company understands that internal selection and succession is very critical For the long-term sustenance of the business as it ensures business continuity, preserves corporate culture, enhances knowledge capital and fuels the ambitions of the companys talent leading to better retention. It is ensured that internal talent is groomed for the next level responsibilities.

The Company runs various development programmes that caters to key talent at various levels of the organization. Various talent pools like the CEO club and LEAP club Focus on developing talent for future leadership roles. As a result, over 70% of NAM Indias leaders are home grown, and many more are getting Future ready.

In line with the organizations vision to go digital, the HR processes have been moved to digital platforms to increase efficiency, effectiveness and better employee experience. The Company has invested in HR digitisation with state-of- the-art Oracle HCM For anytime and Fully mobile-enabled HR systems availability to all employees with 100% digitized HR interactions, anytime and on-demand learning- on the go, seamless and 100% digital recruitment and onboarding and host of other HR interactions, including payroll, query management, etc.

For a very high Focus on people, culture and some of the best practices in HR, the Company has been recognised thrice as AON Best Employer 2016, 2018 and 2019, and has also Featured in Indias Best Companies To Work For in 2018 by Great Place To Work. We have also been awarded the special recognition of "Jury award For "Commitment to Talent" in the latest edition of 2020 Kinecentric Best Employers Awards.

The Company is dedicated and committed to provide a great workplace that is inclusive and "equal-For-all" in all aspects as employees and customers Form the core of any and every business decision.

XV. CORPORATE SOCIAL RESPONSIBILITY

The Company has designated CSR priorities to respond to stakeholders expectations and continue working together with the society to provide distinctive values. The purpose inspires a vision to accelerate growth in business while increasing its positive social impact. The Company works towards promoting education & skill development, healthcare, rural & community development including disaster relieF, training to promote Olympic Sports, conservation of environment through its CSR programme.

The Company initiated projects in the areas of promoting preventive healthcare, education & skill development and community development in Maharashtra and Gujarat. The Company contributed of Rs. 13.46 crore in FY21, inter-alia, through non-profit centres engaged in the provision of healthcare, education and rural development.

The Company, through NGOs, is also working towards establishing scalable models of village transformation towards justice, financial inclusion and livelihood security of marginalised communities and Digital Empowerment of Rural Women Entrepreneurs.

Our offices are fitted out and maintained keeping in mind, the mission of energy conservation and environment protection. Through several initiatives, a consistent and ongoing endeavour is on to reduce the carbon footprint.

Forward looking Statement / Cautionary Statement

Statements in this Management Discussion and Analysis of Financial Condition and Results of Operations of the Company describing the Companys objectives, expectations or predictions may be Forward looking within the meaning of applicable securities laws and regulations. Forward looking statements are based on certain assumptions and expectations of Future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realised. The Company assumes no responsibility to publicly amend, modify or revise Forwardlooking statements, on the basis of any subsequent developments, information or events. Actual results may differ materially From those expressed in the statement. Important Factors that could inFluence the Companys operations include determination of tariff and such other charges and levies by the regulatory authority, changes in government regulations, tax laws, economic developments within the country and such other Factors globally.

The financial statement is prepared under historical cost convention, on accrual basis of accounting, and in accordance with the provisions of the Companies Act, 2013 (the "Act") and comply with the Accounting Standards notified under Section 133 of the Act. The management of Nippon Life India Asset Management Limited ("NAM India" or "the Company") has used estimates and judgments relating to the financial statement on a prudent and reasonable basis, in order that the financial statement reflect in a true and Fair manner, the and profit For the year.

The Following discussions on our financial condition and result of operations should be read together with our audited consolidated financial statement and the notes to these statements included in the Annual Report.

Unless otherwise specified or the context otherwise requires, all reFerences herein to "we", "us", "our", "the Company", "NAM India" or "Nippon LiFe India Asset Management Limited" are to Nippon LiFe India Asset Management Limited and its subsidiaries and associates.