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HDFC Asset Management Company Ltd.

BSE: 541729 | NSE: HDFCAMC |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE127D01025 | SECTOR: Finance - Investments

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Annual Report

For Year :
2021 2019 2018

Director’s Report

Your Directors have the pleasure in presenting the Twenty-second Annual Report together with the Audited Accounts of your Company for the financial year ended March 31, 2021.

Financial Results

The financial performance of your Company for the financial year ended March 31, 2021 is summarised as below:

'' (in Crore)

FINANCIAL RESULTS

For the year ended March 31,2021

Profit before Tax

Less: Provision for Tax (Net of Deferred Tax)

Profit after Tax

Add/(Less): Other Comprehensive Income (Net of Tax)

Total Comprehensive Income (A)

Balance of Retained earnings carried forward from previous year

Less: Equity Dividend Paid for earlier year Less: Tax on Equity Dividend Paid for earlier year Less: Other Adjustments Total (B)

1,748.95 1,653.05 423.19 390.64

1,325.76 1,262.41

(0.69) (3.08)

1,325.07 1,259.33

3,133.52 2,190.37

595.96 255.11 - 52.44 8.63

2,537.56 1,874.19

Balance of Retained Earnings Carried to Balance Sheet (A B)

3,862.63 3,133.52

For the year ended March 31, 2021, your Company posted a net profit of '' 1,325.76 Crore as against '' 1,262.41 Crore in the previous year. Appropriations from the net profit have been effected as per the summary given above.

For a detailed analysis of the financial performance of your Company for the year under review, refer to report on Management Discussion and Analysis.

Your Company does not have any subsidiary or an associate company or a joint venture company.

Dividend

Your Directors recommend payment of dividend of '' 34/- per equity share (680%) of face value of '' 5/- each for the financial year ended March 31, 2021 as against '' 28/- (560%) per equity share of face value of '' 5/- each for the previous year.

The dividend pay-out ratio for the proposed dividend for the year ended March 31, 2021 is 54.61%.

The dividend recommended is in accordance with the parameters and criteria as set out in the Dividend Distribution Policy which has been approved by the Board of Directors. The Dividend Distribution Policy of the Company is placed on the Company’s website at https://www.hdfcfund. com/about-us/governance/codes-policies and the same

is annexed as Annexure I in terms of Regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI Listing Regulations”).

Management Discussion and Analysis Report,Report of the Directors on Corporate Governance and Business Responsibility Report

Management Discussion and Analysis, Corporate Governance and Business Responsibility Reports form part of this report.

Transfer to Reserves

There is no amount proposed to be transferred to the reserves. For complete details on movement in Reserves and Surplus during the financial year ended March 31, 2021, please refer to the Statement of Changes in Equity included in the financial statements.

Capital Structure

During the year, your Company issued and allotted 1,50,877 equity shares of '' 5/- each of the Company to eligible employees on exercise of stock options granted under Employee Stock Option Schemes of the Company.

Consequently, the issued, subscribed and paid-up equity share capital increased from '' 1,06,40,16,625/- represented by 21,28,03,325 equity shares of '' 5/- each as on April 01, 2020 to '' 1,06,47,71,010/- represented by 21,29,54,202 equity shares of '' 5/- each as on March 31, 2021.

Review of Operations

Assets under Management (AUM)* of HDFC Mutual Fund (HDFC MF) at the close of FY 20-21 was ''3.96 Lakh Crore as against an AUM of '' 3.19 Lakh Crore at the close of FY 19-20, an increase of 24%. The Annual Average AUM grew by 3% to '' 3.84 Lakh Crore. HDFC MF is one of India’s largest mutual funds in terms of total AUM with a market share of 12.6% based on closing AUM. It is also the largest mutual fund in terms of actively managed equity-oriented funds, with a market share of 12.9 %. The actively managed equity-oriented AUM at the close of FY 20-21 was '' 1.65 Lakh Crore as against '' 1.20 Lakh Crore at the close of FY 19-20, an increase of 38%. The actively managed equity-oriented annual average AUM constituted 38.4% of the total annual average AUM and fell by 9% to '' 1.48 Lakh Crore.

Your Company managed 90 lakh live accounts as on March 31, 2021, predominantly those of individual (retail) unitholders. The Individual monthly average AUM as a percent of total monthly average AUM as of March 2021 was 57.6% as against 57.2% as of March 2020. Your Company has established a strong and wide network of Investor Service Centres (ISCs) rendering services to its unit holders located at various locations across the country. Your Company has 227 ISCs as on March 31,2021. ISCs of Computer Age Management Services Ltd. (CAMS), the Registrar and Transfer Agent of HDFC MF, are Official Points of Acceptance for transactions of Schemes of HDFC MF. These offices supplement the investorservicing network of your Company. Your Company services unitholders and over 65,000 empanelled distributors in over 200 cities pan India.

Your Company is the most preferred choice for individual investors, with the highest market share in assets from individual investors at 13.7%. Of the 2.28 Crore unique investors in mutual funds in India (as identified by PAN), we enjoy trust of 53 Lakh investors, a market penetration of 23%. Your Company’s offering of systematic transactions further enhances its appeal to individual investors looking to invest periodically in a disciplined and risk-mitigating manner. Your Company processed '' 11,100 Crore through systematic transactions from April 2020 to March 2021. These monthly flows provide a strong and stable order book, provide predictable flows, with 84% of live systematic investment plans (SIPs) subscribed for a tenure of more than 5 years. Your Company also provides portfolio management and segregated account services, including discretionary, non-discretionary and advisory services, to high net worth individuals (HNIs), family offices, domestic corporates, trusts, provident funds and domestic and global institutions. As on

March 31, 2021, the aggregate assets under these services were at '' 9,735 Crore.

All our operations continue to work remotely using the existing infrastructure in place. We have been able to successfully continue Work from Home for employees, even in remote locations. A safe environment following all the necessary protocols, was created to enable essential employees to operate from the office/ branches. Our strong IT systems and digital infrastructure facilitated our operations to continue seamlessly and also aided in managing the additional online transactions and activity.

Schemes Launched

Two new schemes were launched during the financial year -HDFC Banking ETF and HDFC Dividend Yield Fund.

Fundamental Attributes Changed

During the year, changes in fundamental attributes were made to the following funds - HDFC Multi Asset Fund, HDFC Flexi Cap Fund (Erstwhile HDFC Equity Fund) & HDFC Capital Builder Value Fund, details of which were announced through addendums dated 21st December 2020, 22nd December 2020 & 13th January 2021 respectively. HDFC Housing Opportunities Fund was converted to an open-ended equity scheme following Housing and Allied Activities Theme, details of which were announced through an addendum dated 12th December 2020.

* For details on Mutual Fund AUM, refer Page 6 & 7

Directors and Key Managerial Personnel Non-Executive Directors

During the year, Mr. Norman Keith Skeoch (DIN: 00165850), Non-Executive Director of the Company, director nominated by Standard Life Investments Limited (SLI), one of the Promoters of the Company, has resigned as Director of the Company with effect from close of business hours of January 20, 2021. Since, Mr. Skeoch had retired from the board of Standard Life Aberdeen, he also stepped down as a Chief Executive of Standard Life Aberdeen. Mr. Skeoch deemed it appropriate to consequently also resign as a Non-Executive Director of your Company.

The Board places on record its appreciation for the contributions made by Mr. Skeoch during his long association with the Company.

The Board of Directors of the Company at its meeting held on January 20, 2021, based on the recommendation of the Nomination & Remuneration Committee, approved the appointment of Mr. Rushad Abadan (DIN: 08035538) as an Additional Director (Non-Executive Non-Independent) on the Board of Directors of the Company, liable to retire by rotation, effective from January 21, 2021. Mr. Abadan has been nominated by SLI.

Pursuant to the provisions of Section 161 of the Companies Act, 2013 (the Act) and Articles of Association of the Company, Mr. Rushad Abadan shall hold office as an Additional Director up to the date of the ensuing Annual General Meeting (AGM) and is eligible for appointment as Director. The resolution for aforesaid appointment along with the brief profile of Mr. Rushad Abadan form part of the Notice convening the AGM of your Company. Your Directors recommend his appointment as Non-Executive Director of your Company.

In accordance with the provisions of Section 152 of the Act read with the Companies (Appointment and Qualification of Directors) Rules, 2014 and the Articles of Association of the Company, Mr. Keki Mistry (DIN: 00008886) and Ms. Renu Karnad (DIN: 00008064), Directors, are liable to retire by rotation at the ensuing AGM and being eligible have offered themselves for re-appointment.

Necessary proposals for their re-appointment have been placed for your approval at the ensuing AGM. The brief profile has been detailed in the Notice convening the AGM of your Company. Your Directors recommend their re-appointment as Non-executive Directors of your Company.

Executive Director

During the year, the members at their 21st AGM of the Company had re-appointed Mr. Milind Barve (DIN: 00087839) as the Managing Director of your Company for a period effective from November 01, 2020 up to January 31, 2021. Further, in order to ensure a smooth transition of the business activities and handover from Mr. Barve to his successor, Mr. Navneet Munot, the Board of Directors of the Company at its meeting held on January 20, 2021, based on the recommendation of the Nomination & Remuneration Committee, extended the term of Mr. Milind Barve as the Managing Director of your Company for a further period effective from February 1, 2021 up to February 15, 2021, subject to approval of the shareholders.

Necessary proposal for Mr. Barve’s re-appointment including payment of remuneration has been placed for your approval at the ensuing AGM. Your Directors recommend his re-appointment as Managing Director of your Company for the aforesaid period.

Members may note that during the year, Mr. Milind Barve’s term as the Managing Director came to an end on February 15, 2021 and he ceased to be a Director of the Company. Mr. Milind Barve has served the Company as the Managing Director since inception effective July 04, 2000. Mr. Barve has been the longest-serving Managing Director in the Indian mutual fund industry. He has successfully led the acquisition of Zurich, listing of shares of the Company and driven the growth in the AUM to make HDFC AMC as one of the largest Asset Management Companies of the country.

The Board places on record its sincere appreciation for the valuable contribution made by Mr. Barve in building and growing the Company to what it is today. Mr. Barve''s stewardship of the Company has been characterised by strategic thinking, innovative ideas and his tireless efforts to increase the creditability and visibility of HDFC Mutual Fund. The Board thanks Mr. Barve for his dedication and contribution to the Company.

The Board of Directors of the Company at its meeting held on January 20, 2021, based on the recommendation of the Nomination & Remuneration Committee, approved the appointment of Mr. Navneet Munot (DIN: 05247228) as an Additional Director/Managing Director & Chief Executive Officer (CEO) of the Company for a period effective from February 16, 2021 up to June 30, 2024, subject to the approval of the shareholders at ensuing AGM of the Company.

Necessary proposal for appointment of Mr. Navneet Munot including payment of remuneration has been placed for your approval at the ensuing AGM. Your Directors recommend his appointment as Managing Director & CEO of your Company.

Independent Directors

During the year, the members at their 21st AGM of the Company had appointed Mr. Shashi Kant Sharma (DIN: 03281847) as an Independent Director of the Company for a term of 5 consecutive years effective from October 26, 2019.

Mr. Dhruv Kaji, Mr. Jairaj Purandare, Mr. Sanjay Bhandarkar, Mr. Parag Shah, Ms. Roshni Nadar Malhotra and Mr. Shashi Kant Sharma, Independent Directors, have submitted declarations stating that they meet the criteria of independence as per the provisions of the Companies Act, 2013 and SEBI Listing Regulations.

All the Independent Directors have also confirmed that in terms of Rule 6(3) of the Companies (Appointment and Qualification of Directors) Rules, 2014, they have registered themselves with the Independent Director’s database as prescribed under the Act.

In the opinion of the Board, the Independent Directors fulfill the conditions specified under the Companies Act, 2013, the Rules made thereunder and SEBI Listing Regulations and are independent of the management.

All the directors of the Company have confirmed that they are not disqualified for being appointed as directors pursuant to Section 164 of the Companies Act, 2013.

Key Managerial Personnel

In accordance with the provisions of Sections 2(51) and 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, Mr. Navneet Munot, Managing Director & CEO,

Mr. Piyush Surana, Chief Financial Officer and Ms. Sylvia Furtado, Company Secretary are the Key Managerial Personnel (KMP) of the Company.

During the year, Mr. Milind Barve, Managing Director, ceased to be KMP of the Company w.e.f. February 15, 2021 upon the end of tenure as Managing Director of the Company and Mr. Navneet Munot, Managing Director & CEO, has been appointed as one of the KMP of the Company w.e.f. February 16, 2021.

Number of Meetings of the Board

During the FY 20-21, 7 (seven) meetings of the Board of Directors of your Company were held and the details of Board and Committee meetings held are provided in the Report of the Directors on Corporate Governance, which forms part of this report.

Annual Evaluation

Formal annual evaluation of the performance of the Board, its committees and of individual directors are conducted by the Board and details of the same are provided in the Report of the Directors on Corporate Governance, which forms part of this report.

Nomination & Remuneration Policy

In terms of the requirements under the Companies Act, 2013 and SEBI Listing Regulations, your Company has in place a Nomination & Remuneration Policy, inter-alia, detailing the director''s appointment, remuneration, criteria for determining qualifications, attributes, independence of a director and other matters. The remuneration paid to the Directors, Key Managerial Personnel and Senior Management is as per the Nomination & Remuneration Policy of your Company. The Nomination & Remuneration Policy is placed on the Company’s website at https://www. hdfcfund.com/about-us/governance/codes-policies

Issue of Employee Stock Options

In line with the practice of incentivising the employees through issue of stock options, your Company, pursuant to approval granted by the Shareholders of the Company at the Annual General Meeting held on July 23, 2020, has formulated Employees Stock Option Scheme - 2020 (ESOS - 2020) in terms of SEBI (Share Based Employees Benefits) Regulations, 2014 (ESOP Regulations”). Accordingly, the Nomination & Remuneration Committee (NRC) of Board of Directors at its meeting held on February 22, 2021 has approved the said ESOS - 2020 and also grant of 11,45,000 stock options representing 11,45,000 equity shares of '' 5/- each to the eligible employees of the Company as determined by the NRC, under ESOS - 2020 at grant price of '' 2,934.25 per option. No employee was

issued stock option, during the year equal to or exceeding 1% of the issued capital of the Company at the time of grant.

Your Company has also granted stock options to the employees in the past under the various employee stock option schemes viz. Employee Stock Option Scheme(s) 2015 - Series I and 2017 - Series I & II (Schemes”) formulated from time to time for the purpose of administering the issue of stock options to the eligible Employees of your Company. There has been no material variation in the terms of the options granted under any of these Schemes and all the Schemes are in compliance with the ESOP Regulations. However, the above Schemes, formulated prior to IPO by your Company, were aligned with the ESOP Regulations. Your Company will not make any fresh grant of stock options under these aforesaid Schemes.

Disclosures as required under the ESOP Regulations have been placed on the website of the Company at www.hdfcfund.com

Further, the certificate required under Regulation 13 of the ESOP Regulations from the Statutory Auditors of the Company that all the employee stock option schemes have been implemented in accordance with the ESOP Regulations will be available at the ensuing AGM for inspection.

Auditors and Auditor''s Report

Statutory Auditors

In terms of Section 139 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, M/s. B S R & Co. LLP, Chartered Accountants (ICAI FRN: 101248W/W-100022) were appointed as the Statutory Auditors of your Company for a period of 5 continuous years i.e. from the conclusion of 18th AGM till the conclusion of 23rd AGM, subject to ratification by the members at every AGM of the Company.

In accordance with the Companies Amendment Act, 2017 notified on May 7, 2018 by the Ministry of Corporate Affairs, appointment of the statutory auditors is not required to be ratified at every AGM. Accordingly, no proposal for ratification of appointment of M/s. B S R & Co. LLP as Statutory Auditors of the Company will be placed at the ensuing AGM.

Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company had appointed M/s. Bhandari & Associates, Company Secretaries to conduct the Secretarial Audit of your Company for the FY 20-21. The Secretarial Audit Report is annexed herewith as Annexure II to this report.

The internal control systems comprise of standardised policies and procedures covering all functional areas aimed at ensuring sound management of operations, reliable financial reporting, safeguarding of assets and prevention and detection of frauds and errors. The Audit Committee of the Board of Directors, at regular intervals and in co-ordination with Internal and Statutory Auditors, reviews the adequacy of Internal Controls within your Company.

Further, the internal financial controls related to financial statements are found to be adequate and operating effectively and that no material weakness has been noticed during the year under review.

Corporate Social Responsibility

In terms of Section 135 of the Companies Act, 2013, your Company has formed a Corporate Social Responsibility (CSR) Committee to approve activities, expenditure to be incurred and monitor the performance of the CSR activities undertaken by the Company.

The CSR Committee comprises Mr. Deepak Parekh (Chairman), Mr. Parag Shah and Mr. Navneet Munot. The Company Secretary acts as the secretary to the Committee.

The Company undertakes its CSR activities through a variety of effective programs. The major thrust of the CSR activities of the Company is in the area of promoting preventive health care through its contribution towards Indian Cancer Cure Fund Project. This project aims to provide financial aid for treatment to underprivileged and low income patients diagnosed with any curable/ early detected cancers through the empanelled hospitals. Given the current COVID-19 situation, your Company had also contributed to the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM Cares Fund) to provide relief to those affected by any kind of emergency or distress situation such as that posed by COVID 19 pandemic. The Company has also undertaken other CSR activities under promotion of education.

The Board of Directors and the CSR Committee review and monitor from time to time all the CSR activities being undertaken by the Company.

The annual report on CSR activities in accordance with the Companies (Corporate Social Responsibility Policy) Rules, 2014 (as amended from time to time), is set out at Annexure III to this report.

The amount remaining unspent under Section 135(5) of the Companies Act, 2013, pursuant to ongoing projects undertaken by your Company, has been transferred to Unspent Corporate Social Responsibility Account in accordance with Section 135(6) of the Companies Act, 2013, and such amount shall be spent by your Company in

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There were no qualifications, reservation or adverse comments or disclaimer made by the aforesaid Auditors in their audit reports.

The said Auditors of the Company have not reported any fraud as specified under Section 143(12) of the Companies Act, 2013.

Internal Auditors

M/s. Deloitte Touche Tohmatsu India LLP, were appointed as Internal Auditors of your Company for the financial year 2020-21.

Risk Management Policy

The Risk Management Policy of your Company, reviewed by the Audit Committee and approved by the Board, provides for the Enterprise Risk Management (ERM) framework to identify, assess, monitor and mitigate various business risks. This framework incorporates the checks, process and procedures to identify potential risks in the operational areas of the business and minimise their impact on your Company. The framework is designed to identify risks, assess their likely impact, ensure the review of mitigation measures and requires reporting on a regular basis. The Audit Committee of the Board of Directors at its meetings periodically reviews the functioning of the ERM.

The primary business of your Company is to act as an investment manager to HDFC Mutual Fund which requires specialised expertise in investment management. Since this is a very crucial aspect which has an extremely significant bearing on the performance of your Company, a Risk Management Committee is in place to oversee the risks associated with this function. This Committee also reviews the progress of risk management practices pertaining to HDFC Mutual Fund.

With rapid technological and digital advancement in securities markets cyber risks are inevitable, hence having strong Cyber Risk Management is essential. The Company has a strong Cyber Risk Management framework wherein cyber risk and it’s mitigations are monitored at the Information Technology and Security Committee and Risk Management Committee of the Company. Key areas covered under the Cyber Risk Management are strong adherence to the Board approved Information and Cyber Security Policies, compliance with SEBI guidelines and ISO 27001 standards to ensure that we are in line with industry best practices. The Company maintains a robust cyber security architecture and has in place a cyber resilience framework to protect the integrity of data and guard against breaches of privacy.

Adequacy of Internal Controls

Your Company has internal control systems which are commensurate with the size and complexity of its operations.

The Composition of the CSR Committee, CSR Policy as well as the CSR activities undertaken by the Company is available on the Company’s website at https://www.hdfcfund.com/ about-us/corporate/csr

Particulars of Contracts or Arrangements with Related Parties

During the year, your Company has entered into transactions with related parties as defined under Section 2(76) of the Companies Act, 2013 read with Companies (Specification of Definitions Details) Rules, 2014 and applicable Accounting Standards, which were in the ordinary course of business and on arms’ length basis and in accordance with the policy on Related Party Transactions of the Company.

The Related Party Transactions Policy of the Company provides for proper approval processes and reporting requirements of the concerned transactions between the Company and related parties.

The policy on Related Party Transactions is placed on the Company’s website at https://www.hdfcfund.com/about-us/ governance/codes-policies

During the year, there was no material transaction with any related parties as per the Related Party Transactions Policy of the Company and/or any other related party transaction entered into by the Company that require disclosure in Form AOC-2, hence, disclosure in Form AOC-2 is not applicable to the Company.

The disclosures pertaining to related party transactions as per the applicable Accounting Standards form part of the notes to the financial statements provided in this Annual Report.

Particulars of Loans, Guarantees and Investments

Details of loans, guarantees and investments, if any, covered under the provisions of Section 186 of the Companies Act, 2013 are provided in the notes to financial statements.

Deposits

During the year, your Company has not accepted any deposits within the meaning of Sections 73 and 74 of the Companies Act, 2013 read together with the Companies (Acceptance of Deposits) Rules, 2014.

Unclaimed Dividend on Shares

As at March 31, 2021, dividend amounting to '' 44.56 Lakh had not been claimed by shareholders of the Company and is lying in the respective Unpaid Dividend Accounts.

Your Company has disclosed the statement containing the names, last known addresses and the unpaid dividend to be paid to each shareholder on the Company’s website at

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Annual Return

Pursuant to Section 92(3) read with Section 134(3)(a) of the Companies Act, 2013, the Annual Return as on the financial year ended March 31, 2021 is placed on the Company’s website at https://www.hdfcfund.com/about-us/financial/ annual-reports

Vigil Mechanism/Whistle Blower Policy

Whistle Blower Policy is in place and details of the same are provided in the Report of the Directors on Corporate Governance, which forms part of this report.

Particulars Regarding Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The information pertaining to the conservation of energy and technology absorption in terms of Section 134(3)(m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 is stated as below:

(a) Conservation of energy and technology absorption

Your Company is in financial services industry and does not consume high levels of energy. However, regular efforts are made to adopt appropriate energy conservation measures and technology absorption methods. With Work from Home on account of COVID-19, the Company has reduced considerable consumption of energy.

(b) Foreign Exchange, earnings and expenditure during the year

• Foreign exchange (earnings): '' 10.34 Crore (previous year: '' 33.77 Crore)

• Foreign exchange (expenditure): '' 15.35 Crore (previous year: '' 18.55 Crore)

Particulars of Employees

As on March 31, 2021, your Company has 1,254 employees and for the previous year, your Company had 1,194 employees.

In accordance with the provisions of Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and particulars of the top ten employees in terms of remuneration drawn are set out in the annexure to this report. In terms of the provisions of Section 136(1) of the Companies Act, 2013, the Directors’ Report is being sent to all shareholders of the Company excluding the annexure. Any shareholder interested in obtaining a copy of the annexure may write to the Company.

Further, disclosures on managerial remuneration as required under Section 197 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are appended as Annexure IV.

Other Disclosures

• There was no change in the nature of the business of the Company.

• There was no revision in the financial statements of the Company.

• Disclosure pertaining to maintenance of cost records as specified by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013, is not applicable to your Company.

• Your Company has not issued any sweat equity shares to the employees of the Company.

• Your Company has not issued equity shares with differential rights as to dividend, voting or otherwise.

• There was no application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 during the year.

• There was no one time settlement entered into with any Bank or financial institutions in respect of any loan taken by the Company.

• Details of the Audit Committee of the Board of Directors including its composition are provided in the Report of the Directors on Corporate Governance, which form part of this report.

• There was no receipt of any remuneration or commission by the Managing Director of the Company from its holding company.

Directors'' Responsibility Statement

In accordance with the provisions of Section 134(5) of the Companies Act, 2013 and based on the information provided by the management, your Directors state that:

(i) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(ii) Accounting policies selected were applied consistently. Reasonable and prudent judgements and estimates were made so as to give a true and fair view of the state of affairs of the Company at the end of March 31, 2021 and of the profit of the Company for year ended on that date;

(iii) Proper and sufficient care has been taken for maintenance of adequate accounting records in

accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities;

(iv) The annual accounts of the Company have been prepared on a going concern basis;

(v) Internal financial controls have been laid down to be followed by the Company and such internal financial controls are adequate and operating effectively; and

(vi) Proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Secretarial Standards

Your Company is in compliance with the provisions of the applicable Secretarial Standards issued by the Institute of Company Secretaries of India in terms of the Companies Act, 2013.

Prevention of Sexual Harassment Policy and its Reporting

Your Company has framed and implemented a Policy on Sexual Harassment of Women at Workplace aiming at prevention of harassment of employees which lays down the guidelines for identification, reporting and prevention of undesired behaviour. 6 (six) Internal Committees (IC) for different zones were constituted in accordance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 with women employees being a majority and an external member. The Policy, IC Members’ details and the penal consequences of violating the said Act/ Policy are displayed at all offices/ ISCs and on the intranet of the Company. Regular employee awareness sessions are conducted to generate awareness about the policy, reporting mechanism and prevention of sexual harassment at the workplace. During the year, the IC did not receive any complaints pertaining to sexual harassment.

Significant/Material Orders passed by the Regulators

There are no significant and material orders by any regulator, court, tribunal impacting the going concern status of the Company and its operations in future.

Material changes and commitments, if any, affecting the Financial Position of the Company from the Financial Year end till the date of this Report

There have been no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year 2020-21 and the date of this Report.

Acknowledgements

The Directors take this opportunity to thank its investors, shareholders, trustee company, bankers, distributors, key partners, Investor Service Centres and other service providers for their continued support. The Directors would like to convey their gratitude to Housing Development Finance Corporation Limited and Standard Life Investments Limited, promoters of your Company and look forward to their continued support.

The Directors acknowledge the valuable assistance, support and guidance given by the Securities and Exchange Board of India, Association of Mutual Funds in India, Reserve Bank of India, Ministry of Corporate Affairs, Registrar of Companies, Stock exchanges and Depositories.

The Directors wish to place on record their appreciation to employees at all levels for their dedication and commitment.

The Directors also acknowledge the faith reposed in HDFC Mutual Fund by its investors and look forward to their continued support.

On behalf of the Board of Directors Deepak S. Parekh

Mumbai Chairman

April 27, 2021 (DIN: 00009078)

CIN: L65991MH1999PLC123027 Registered Office:

HDFC House, 2nd Floor, H. T. Parekh Marg 165 - 166, Backbay Reclamation, Churchgate Mumbai - 400 020.

Tel.: 022 - 6631 6333, Fax: 022 - 66580203

Director’s Report