Shriram Asset Management Co Ltd Management Discussions

Mutual Fund Industry Performance:

The Indian mutual fund industry continued its strong growth trajectory in FY 2025, with total assets under management (AUM) crossing Rs 60 lakh crores. AUM increased by 23.1% from Rs 53.4 lakh crores in March 2024 to Rs 65.74 lakh crores by March 2025. The industry also saw strong retail participation, with folios touching 23.45 crores and SIP contributions reaching R 2.89 lakh crores for FY25. This steady growth underscores the deepening trust and preference among Indian investors for mutual funds as a long-term investment avenue.

Across categories, equity, debt, and hybrid schemes together saw net inflows of R 8.15 lakh crore during FY 2025. Among debt schemes, money market funds attracted the highest inflow followed by liquid funds. In the equity category, Flexi cap and sectoral funds attracted the strongest investor interest. (source: AMFI)

Economic Overview:

Global Economy:

FY 2025 was marked by persistent geopolitical and macroeconomic uncertainty across major economies, driven by shifting policy landscapes, trade tensions, and evolving monetary policy stances. A key global development was the return of President Trump in the U.S., which sparked renewed protectionist rhetoric. His administration introduced a series of tariffs across countries, leading to retaliatory trade measures and stoking fears of a broad-based global trade war. These developments further clouded the global economic outlook, posing fresh headwinds to growth and inflation across regions.

The U.S. economy faced increasing recessionary pressures through latter half of the year, with softening consumer sentiment, weakening labor market data, and inflation that remained sticky. These concerns led to heightened volatility in U.S. equities, particularly in March, as investors grappled with the implications of ongoing tariffs and slowing growth.

In Europe, the outlook improved modestly. The resolution of Germanys debt brake issue, along with a ramp-up in defence and infrastructure spending, supported recovery in key economies. However, overall growth remained subdued.

Japan underwent a historic monetary policy shift, as the Bank of Japan raised interest rates above zero for the first time in 17 years - ending a prolonged period of ultra-loose policy, responding to sustained wage growth and rising inflation. This triggered a sharp unwinding of the yen carry trade, leading to financial market volatility in September. Japanese equities, particularly export- oriented names, came under pressure amid a stronger yen and global trade uncertainty.

Chinas economic performance remained uneven. While broad macro data - including manufacturing and property - continued to show weakness, there were sporadic bursts of optimism driven by policy support and advances in AI and tech sectors. The announcement of breakthroughs by domestic AI firm DeepSeek, provided temporary market support, although structural issues persisted.

Across global financial markets, these developments led to repeated bouts of volatility. The U.S. dollar index, which had strengthened sharply in December, corrected in March as economic data weakened and trade war risks escalated. Global bond yields softened amid risk aversion, and crude oil prices remained range-bound with a downward bias due to growth concerns.

Overview of Indian Economy:

The Indian economy remained resilient in FY 2025, with real GDP growth estimated at 6.5%, building on the strong 9.2% in FY 2024, despite global headwinds and uneven domestic momentum. The year began on a strong note with healthy GST collections, robust credit growth, and solid PMI prints. Post-election policy continuity supported sentiment, though an erratic monsoon and infrastructure slowdown during elections moderated activity. Looking ahead, growth is expected to be supported by rural demand, urban consumption recovery, higher government capex, and stronger corporate & bank balance sheets, with the RBI projecting real GDP growth for FY 2026 at 6.5%.

Inflation eased in the latter part of FY 2025, with CPI falling to 3.6% in February 2025, from 5.2% in December, driven by a sharp seasonal correction in vegetable prices. While food inflation remained a concern for most of the year, a record rabi crop, lower crude prices, and improved supply conditions are likely to keep inflation in check. The RBI projects CPI inflation at 4.0% for FY26, assuming a normal monsoon.

In December 2024, Sanjay Malhotra took over as the 26th RBI Governor, succeeding Shaktikanta Das. The Indian Rupee hit a record low against the U.S. dollar, nearing the 88 mark in February, amid the new RBI Governors approach of minimizing intervention & letting market dynamics dictate the currencys value. Additionally, the RBI delivered two consecutive repo rate cuts to support

growth amid rising global uncertainties & tapering inflation: a 25-bps cut in February 2025 (to 6.25%)-the first in nearly five years- and another 25-bps cut in April 2025, taking the repo rate to 6.00% and shifting the policy stance to "accommodative".

Meanwhile, Indias foreign exchange reserves stood at $676.3 billion as of April 4, 2025, sufficient to cover about 11 months of imports. This strong reserve position underscores the countrys resilience against external shocks and provides the RBI with greater flexibility in managing currency volatility.

The Union Budget for FY 2026 maintained a prudent fiscal stance, targeting a lower fiscal deficit of 4.4% of GDP with nominal GDP growth pegged at 10.1%. It emphasized continued focus on infrastructure through higher capital expenditure and provided a consumption boost by revising individual income tax slabs, raising the exemption limit from R 7 lakhs to R 12 lakhs.

(Source- RBI, MOSPI, Union Budget Documents)

Equity Market Performance:

Global equity markets delivered mixed returns in FY2025, navigating geopolitical tensions, diverging central bank policies, and shifting growth expectations. The U.S. markets performed well overall, with the S&P 500 and NASDAQ rising 6.8% and 5.6% respectively. The rally was led by technology and Al-linked stocks in the first three quarters. However, sentiment turned cautious in Jan-Mar 2025 period as concerns over a potential U.S. recession and a sharp correction in overvalued tech names triggered a pullback.

European equities outshone their peers, with the DAX rallying 19.8%, supported by rising infrastructure and defense spending, falling inflation, and clarity on Germanys fiscal path. The FTSE 100 also rose 7.9%, while Frances CAC 40 underperformed, declining 5.1% on political concerns.

In Asia, performance was more muted. Japans Nikkei 225 declined 11.8% as the BoJ exited its negative interest rate regime after decades, prompting a sharp yen appreciation causing pressure on export-oriented stocks. Chinas Shanghai Composite outperformed regional peers, gaining 9.7%, supported by govt stimulus and optimism in AI segments despite persistent economic fragilities. South Koreas KOSPI dropped 9.7% during the year amid political crisis following a criminal investigation into President Yoon Suk Yeol after his failed attempt to impose martial law in the country.

In India, the Nifty 50 delivered a 5.3% return for the year, navigating multiple global and domestic headwinds. Within the broader markets, the Midcap index outperformed with a 7% gain, while the Smallcap index underperformed slightly, rising just over 5%. The year saw two distinct phases - a volatile start amid general elections, followed by a surge from June to September hitting multiple record highs as policy continuity under PM Modi was assured. This was followed by a sharp downturn from October to February, marking five consecutive months of losses, driven by weak earnings and foreign outflows.

Nifty 50	Nikkei 225	S&P 500	NASDAQ	Shanghai Composite	DAX	FTSE 100	CAC 40	KOSPI
5.3%	-11.8%	6.8%	5.6%	9.7%	19.8%	7.9%	-5.1%	-9.7%

(Source - Investing.com)

Performance of the Sectorial Indices in FY 2025

Nifty Auto	Nifty Financial Services	Nifty Consumer Durable	Nifty PSU Banks	Nifty FMCG	Nifty Pharma	Nifty IT	Nifty Metal	Nifty Energy	Nifty Media
-0.6%	19.5%	10.3%	-10.6%	-0.7%	11.3%	5.7%	10.1%	-14.0%	-17.8%

Nifty Financial Services led the pack with an impressive 19.5% surge, while Metal and Pharma indices also delivered double-digit gains of 10-11%. On the flip side, PSU Banks, Energy, and Media were the biggest laggards, posting losses of around 11-18%. (Source - NSE)

Debt & Commodity Performance:

Globally, bond yields fluctuated amid changing expectations around inflation and rate cuts. Early in the year, stubborn inflation delayed hopes of easing; however, as economic data softened - particularly in the U.S. and U.K. - expectations of monetary easing returned, pulling global yields lower.

In India, bond yields dropped by approximately 47 bps throughout the year. Until October, systemic liquidity was comfortable, supporting range-bound movement in G-sec yields. However, from November to February, liquidity conditions tightened significantly, pushing the system into high deficit. This phase saw some upward pressure on short-term yields. From late February onward, the RBI took decisive steps-injecting over R 7 lakh crore via Open Market Operations (OMOs), a reduction in the Cash Reserve Ratio (CRR), Variable Rate Repos (VRRs), and Foreign Exchange (FX) swaps-to ease liquidity. As a result, the liquidity deficit narrowed substantially by March, and the 10-year G-sec bonds rallied, aided further by rising expectations of monetary easing. (Source -RBI, Investing.com)

Gold surged 30.7% in FY 2025 to an all-time high of ~ $ 3,167, driven by safe-haven demand amid global uncertainty, geopolitical tensions, and central bank buying. Silver rose 7.6%, performing exceptionally well through most of the year. However, it saw a sharp correction in the last week of March after the U.S. announced sweeping tariffs on key trade partners, including China, triggering concerns about slowing global growth. Brent Crude fell 28.5% to $ 65.58, as increased OPEC+ supply and reduced demand expectations weighed on prices. The tariff announcement further dampened sentiment, raising fears that slower economic growth would hurt fuel demand. (Source - Trading economics)

Outlook:

India steps into FY 26 with a cautiously optimistic outlook. While macroeconomic indicators like growth, inflation, and external balances remain broadly stable, the pace of recovery in consumption and private investment will be critical to watch. Government reforms and budgetary support could aid demand, but their actual impact will hinge on execution. Global uncertainties - including trade tensions and geopolitical risks - may pose intermittent challenges for export-oriented sectors. However, Indias underlying structural strengths, strong forex reserves, and moderating inflation provide a supportive backdrop. Overall, the near-term trajectory is likely to be shaped by a mix of domestic policy follow-through and global developments.

Mutual Fund Industry as it was in FY 2024-2025:

• Assets under Management (AUM) of Indian Mutual Fund Industry as on March 31, 2025 stood at R 65.74 lakh crores.

• The cumulative SIP contributions for FY 2025 stood at R 2,89,352 crores.

• The MF Industrys AUM has grown from R 10.87 lakh crores as on March 31, 2015 to R 65.74 lakh crores as on March 31, 2025, more than a 6-fold increase in a decade.

• The total number of accounts (or folios as per mutual fund parlance) as at March 31, 2025 stood at 23.45 crores

• Mutual Fund Industry- Steps taken by the Regulators in FY 2024-2025:

There were some important changes in the regulation pertaining to the mutual fund industry during FY 2024-2025; the highlights of some of the changes are as given below:

• Institutional mechanism by Asset Management Companies for identification and deterrence of potential market abuse including front-running and fraudulent transactions in securities.

SEBI Notification no. SEBI/LAD-NRO/GN/2024/197 dated August 01, 2024 and SEBI circular no. SEBI/HO/IMD/IMD-PoD-1/P/ CIR/2024/107 dated August 05, 2024 titled "Institutional mechanism by Asset Management Companies for identification and deterrence of potential market abuse including front running and fraudulent transactions in securities" and AMFI communication dated August 14, 2024 has prescribed Standards on Institutional Mechanism that should be mandatorily followed by an asset management company (AMC) and should have in place written policies and procedures for conducting examination and taking action in case of potential market abuse including front-running and fraudulent transactions in securities by its employees and connected entities.

In light of the aforementioned notification & circular, AMFI in consultation with SEBI laid down the below Standards that the AMC is required to implement to identify and deter market abuse practices. These are the minimum specified Standards AMC is required to implement and even AMC can consider any additional measures depending on the assessment of risks of market abuse practices.

The Standards on Institutional Mechanism (the Standards) is applicable for trades relating to mutual fund schemes and shall initially be applicable for trades in equity and equity related instruments. The Standards shall be made applicable to trades in other asset classes in a phased manner as specified here in below:

Asset Class	MF AUM > R 10,000 crores	MF AUM < R10,000 crores
All trades in equity and equity related instruments (i.e. excluding overseas equity securities only)	To be implemented by Nov. 02, 2024	To be implemented by Feb. 02, 2025
All trades of passive schemes and arbitrage scheme & all overseas securities trades across all schemes	To be implemented by May 02, 2025	To be implemented by May 02, 2025
All trades in debt securities and all other securities (such as commodities, REITs, INVITs etc.)	To be implemented by Aug. 02,2025	To be implemented by Aug. 02,2025

• Introduction of a Mutual Funds Lite (MF Lite) framework for passively managed schemes of Mutual Funds

SEBI vide circular no: SEBI/HO/IMD/PoD2/P/CIR/2024/183 dated December 31, 2024, introduced Mutual Funds Lite (MF Lite) framework for passively managed schemes of Mutual Funds.

The current regulatory framework for Mutual Funds is uniformly applicable for both active and passive Mutual Fund schemes ("MF Schemes") and does not differentiate regarding applicability of provisions relating to entry barriers (viz. networth, track record, profitability), ongoing compliance cost for entities who may be desirous of launching only passive funds.

Accordingly, as various aspects of the existing regulatory framework may not be necessary for passive funds, a relaxed regime with light-touch provisions "the MF Lite Framework" is being introduced only for passive Mutual Fund schemes, with an intent to promote ease of entry, encourage new players, reduce compliance requirements, increase penetration, facilitate investment diversification, increase market liquidity and foster innovation.

• Service platform for investors to trace inactive and unclaimed Mutual Fund folios- MITRA (Mutual Fund Investment Tracing and Retrieval Assistant)

SEBI vide circular no: SEBI/HO/IMD/IMD-SEC-3/P/CIR/2025/15 dated February 12, 2025 came up with Service platform for investors to trace inactive and unclaimed Mutual Fund folios- MITRA (Mutual Fund Investment Tracing and Retrieval Assistant).

Over time, mutual fund investors may lose track of their investments, especially if made in physical form with minimal KYC details. These investments in open-ended growth mutual funds can remain active indefinitely until the investor or their legal heir requests for redemption/transfer/transmission. Non-availability details like PAN or valid contact information may cause these folios to be excluded from the unitholders Consolidated Account Statement, leading to inactivity. In such cases, inactive folios can become vulnerable to fraudulent redemptions.

In order to address the aforesaid concerns, MITRA platform is developed by RTAs to provide a searchable database of inactive and unclaimed Mutual Fund folios at an industry level which will empower the investors in following manner:

i. It helps investors identify overlooked investments or investments made by others for which they may be the rightful claimant.

ii. Encourages investors to complete KYC as per current norms, reducing the number of non-KYC compliant folios.

iii. Aims to reduce the number of unclaimed Mutual Fund folios.

iv. Contributes to building a transparent financial ecosystem and serves as a reliable medium for finding inactive and unclaimed investments.

v. Incorporates measures to mitigate fraud risk.

Performance of your Company

The performance of the Company for year ended March 31, 2025 is given in brief below:

Particulars	Year Ended March 31,2025 (Rs In lakhs)	Year Ended March 31,2024 (R In lakhs)
Total Income	675.46	820.76
Total Expenditure	2313.41	1501.44
Profit Before Tax	(1637.95)	(680.68)
Tax Provision for the Year	13.27	5.24
Balance brought forward from previous year	(2103.60)	(1423.33)
Balance carried to Balance Sheet	(3759.27)	(2103.60)

During the financial year 2024-2025, the Companys total income decreased by 17.70% to R 675.46 lakhs in 2024-2025 as compared to R 820.76 lakhs in 2023-2024. However, since the Company is still in expansion mode investing in infrastructure & resources to augment future business revenue, loss before tax increased by 140.64% to R 1637.95 lakhs in 2024-2025, as compared to R 680.68 lakhs in 2023-2024.

AUM of Shriram Mutual Fund has increased by 67.19% from R 535.76 crores as at March 31, 2024 to R 895.72 crores as at March 31, 2025 and corresponding Management Fees increased from R 98.16 lakhs in FY 2023-2024 to R 196.87 lakhs in FY 2024-2025.

Performance of Schemes of Shriram Mutual Fund:

Shriram Aggressive Hybrid Fund, launched in November 2013, delivered a CAGR of 10.08% since inception, Shriram Flexi Cap Fund, launched in September 2018, generated a CAGR of 10.51% since inception. Shriram ELSS Tax Saver Fund (ELSS), launched in January 2019, delivered a CAGR of 11.78% since inception. Shriram Balanced Advantage Fund, launched in July 2019, achieved a CAGR of 8.79% since inception. Shriram Overnight Fund, launched in August 2022, returned a CAGR of 6.47% since inception. Shriram Multi Asset Allocation Fund, launched in September 2023, delivered 9.48% (absolute return) since inception.

In addition, three new funds were launched during FY 2025:

• Shriram Nifty 1D Rate Liquid ETF (launched July 2024), which returned 6.21% (absolute) since launch.

• Shriram Liquid Fund (launched November 2024), which posted an absolute return of 7.09% as of March 2025.

• Shriram Multi Sector Rotation Fund (launched December 2024), which is in its early stage and reported an absolute return of -21.11%.

Indias 1st Sector Rotation Fund Launched:

The launch of Shriram Multi Sector Rotation Fund (SMURF) marked a significant milestone for Shriram AMC, as we introduced Indias first thematic mutual fund based on a multi sector rotation strategy. Through a high-impact, targeted PR and digital marketing campaign, we generated significant industry buzz and investor awareness.

• Award-Winning Innovation:

SMURF received the prestigious Gold at the BW Excel Awards 2025 for Best Digital New Product Launch of the Year, affirming the strength of our go-to-market strategy and product innovation.

• Extensive Media Coverage:

Our launch campaign delivered over 232 media articles, spanning top-tier financial, mainstream, and regional outlets, resulting in visibility valued at R 2.04 crore. Key media placements included The Economic Times, The Hindu Business Line, CNBC TV18, Mint, and Business Today.

• Multi-Channel Impact:

A strategic mix of digital buzz, thought leadership, regional roadshows, press conferences, and podcasts helped us connect with a broad and diverse investor base. The tagline, "Jaisa Sector Trend, Waisa Aapka Portfolio," resonated strongly with our audience and amplified the funds positioning.

Performance of Schemes of Shriram Portfolio Management Services:

During FY 2024-2025, the Company was registered as Portfolio Managers with SEBI for carrying out activities of Portfolio Management Scheme under Regulation 3 of Securities and Exchange Board of India (Portfolio Managers) Regulations, 2020.

Company on December 16, 2024 launched 3 PMS Products- Shriram LEAPS - Investment Approach, Shriram Future GEMS - Investment Approach and Shriram Liquid PMS - Investment Approach.

Portfolio Management Services (PMS) business, which was launched in 2024-2025, is an important service that your Company offers to esteemed clients. As of March 31, 2025, the PMS business had total Assets Under Management (AUM) of Rs 5.69 crore.

SMURFs successful launch underscores our commitment to product leadership, innovative outreach, and investor-focused communication.

Digital Initiatives

In line with our vision to offer seamless and investor-friendly experiences, Shriram AMC made significant strides in digital transformation during FY 2024-2025. Key initiatives include:

• Launch of the Shrifunds Investor Portal (May 2024):

A completely revamped investor portal was launched under the brand Shrifunds, delivering a user-centric design and frictionless transaction experience. Since its launch, it has witnessed a 10x increase in transaction volumes compared to the previous portal. Additionally, it has led to a 90% reduction in investor complaints and service-related challenges.

• Introduction of Group SIP (GSIP) Integrated with HRMS:

We introduced a pioneering solution for salaried investors across Shriram Group companies. This innovation allows employees to initiate and manage SIPs via their HRMS platforms, with auto-captured data minimising manual inputs. KYC, transactions, and investment monitoring can now be completed within the employees internal portal, significantly enhancing the ease of investing.

• Launch of Online Empanelment for Non-Individual Distributors:

Our newly launched portal enables non-individual distributor empanelment to be completed in under 24 hours, a remarkable improvement from the earlier process, which took 4-5 working days and involved bulky documentation and courier handling. The digitised journey has resulted in faster onboarding and improved partner satisfaction.

• UPI Autopay Enabled SIP:

To encourage wider adoption and simplify recurring investments, SIP can now be initiated using UPI Autopay, making the process faster, paperless, and more intuitive for first-time investors.

• ARN-Embedded Transaction Links for Group MIS Portals:

A specialised feature was introduced for our group companies-transaction links with embedded ARN codes integrated into their MIS portals. This enables smoother, trackable fund access for mapped distributors while maintaining compliance and visibility.

Risks and concern:

The Risk Management Manual sets out an enterprise wise risk management framework for Shriram Asset Management Company Limited and Shriram Mutual Fund. This Manual is intended to serve as a model, which will help the AMC and the Mutual Fund to monitor and mitigate the risks faced by the Company in the discharge of its business and also use risk management to increase value for investors.

Internal control system:

The Company has adequate system of internal controls commensurate with its size and level of operations to ensure that all assets of the Company are safeguarded and protected and that transaction of the Company are authorised, recorded and reported correctly, and also to ensure the efficiency of operations, compliance with internal policies and applicable laws and regulations as well as protection of resources. Moreover, the Company continuously upgrades these systems in line with the best available practices. The internal control system is supplemented by internal audits, regular reviews by management and standard policies and guidelines to ensure reliability of financials and all other records to prepare financial statements and other data. The Audit Committee of the Board reviews internal audit reports given along with management comments. The Audit Committee also monitors the implementation of suggestions given by the Committee.

Human Resources:

Employee Relations remained cordial throughout the year at all levels. Your Company would like to place its appreciation for all the hard work, dedication and efforts put in by all the employees. As on March 31, 2025, the Company had an employee strength of 73.

Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along explanations therefor, including:

(i) Debtors Turnover - 11.03

(ii) Inventory Turnover - NA

(iii) Interest Coverage Ratio - NA

(iv) Debt Equity Ratio - NA

(v) Operating Profit Margin (%) - (233%)

(vi) Net Profit Margin (%) - (244%)

Details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof: Return on net worth is (26.21%) for FY 2024-25 as compared to (8.84%) for FY 2023-24 since the Company is still in expansion mode investing in infrastructure & resources to augment future business revenue.