Encouraging macro trends

Registering a Gross Domestic Product (GDP) growth of 6.8% India remained one of thefastest growing large economies last year. It continued the momentum witnessed over thepast five years and demonstrated gradual improvement on the back of prudent fiscal andmonetary policies aimed at achieving the right balance between growth and inflation. Ayoung aspiring population and a burgeoning middle class are likely to propel disposableincomes as well as savings in the country over the next few years. Savings fromapproximately 250 million households in India have grown at a steady pace in the past fewyears with an accelerating share offinancial savings especially after the implementationof revolutionary reforms such as demonetisation and GST. In fact the share of grossfinancial savings in total gross household savings has gone up from 41% in FY 13 to 51% inFY 18. Over the past five years India has seen remarkable growth in terms of financialinclusion the catalyst being bank accounts opened under the Pradhan Mantri Jan DhanYojana (PMJDY) which has already benefited over 35 Crore people who have deposited almostRs.1 Lakh Crore into the banking system.

A young aspiring population and a burgeoning middle class are likely to propeldisposable incomes as well as savings in the country over the next few years.

A promising future for the domestic mutual fund industry

India's mutual fund industry is growing from strength to strength on the back ofenablers such as a growing investor base healthy capital market growth ease oftransactions by advancement of technology and the regulator's efforts to make mutual fundproducts more transparent and investor-friendly. Yet penetration of mutual fund productsin India is a fraction of the global average and is lower than that of both developed andemerging economies. The industry is well-poised for strong growth catalysed by risingawareness among investors a formalising economy and growing financial inclusion. Animportant development in recent years has been the stabilisation of Indian financialmarkets and equity markets in particular owing to the growing prominence of domesticinstitutional investors including mutual funds.

The mutual fund industry's growth story will span across a longer time frame and theindustry is well- poised for exponential growth.

Technology: A facilitator for the mutual fund industry

Rising penetration of the internet and smart phones along with the availability offaster data speeds at affordable pricing are changing the face of the financial servicessector in India. Digital platforms offer high convenience and speed to consumers enablingfinancial services companies to acquire retain and expand their customer base at muchlower costs. Besides digitisation also plays a pivotal role in improving costefficiencies for banks and financial services companies. Organisations offering superiormobile and digital platforms with relevant customer propositions are likely to emerge aswinners in this highly competitive industry.

HDFC AMC: Empowered by your trust

HDFC AMC continued to be at the forefront of growth during the year. Retaining itsdominant positioning in the industry the Company has delivered a solid performance yetagain. We have gained market share and have added a healthy number of customers. We areconfident of achieving all-round profitable and sustainable growth on the back of ourdetailed strategic priorities. We look forward to being part of the deepening mutual fundpenetration in India and setting new benchmarks.

Having laid a strong foundation for the future we listed our business during the year.We would like to thank our shareholders who have reposed their faith in us. We arecommitted to create value for all our stakeholders and we seek your continued support inour future journey. It is our constant endeavour to drive higher awareness and financialliteracy across India to empower the consumers to make correct and well-informed decisionswhile investing in financial products.

Before concluding I would also like to thank all the employees of the Company fortheir unwavering commitment and wish them all the best as we step into the next fiscalyear with renewed zeal and optimism.

Best Regards

Deepak S Parekh

Chairman.