You are here » Home » Companies » Company Overview » HDFC Asset Management Company Ltd

HDFC Asset Management Company Ltd.

BSE: 541729 Sector: Financials
NSE: HDFCAMC ISIN Code: INE127D01025
BSE 00:00 | 24 Jan 3207.95 -14.80
(-0.46%)
OPEN

3231.95

HIGH

3244.00

LOW

3195.00

NSE 00:00 | 24 Jan 3209.50 -13.85
(-0.43%)
OPEN

3225.00

HIGH

3244.35

LOW

3194.00

OPEN 3231.95
PREVIOUS CLOSE 3222.75
VOLUME 11748
52-Week high 3844.00
52-Week low 1302.00
P/E 52.93
Mkt Cap.(Rs cr) 68,207
Buy Price 3200.00
Buy Qty 25.00
Sell Price 3204.45
Sell Qty 1.00
OPEN 3231.95
CLOSE 3222.75
VOLUME 11748
52-Week high 3844.00
52-Week low 1302.00
P/E 52.93
Mkt Cap.(Rs cr) 68,207
Buy Price 3200.00
Buy Qty 25.00
Sell Price 3204.45
Sell Qty 1.00

HDFC Asset Management Company Ltd. (HDFCAMC) - Director Report

Company director report

To the Members

Your Directors have pleasure in presenting the Twentieth Annual Report together withthe Audited Accounts of the Company for the financial year ended March 31 2019.

Financial Results

The financial performance of the Company for the financial year ended March 31 2019 issummarised as below:

Rs. (in Crore)
Financial Results For the year ended March 31 2019 For the year ended March 31 2018
Profit before Tax 1374.70 1058.23
Less: Provision for Tax (Net of Deferred Tax) 444.10 346.94
Profit after Tax 930.60 711.29
Add/(Less): Other Comprehensive Income (Net of Tax) (0.40) 0.05
Total Comprehensive Income 930.20 711.34
Balance of Retained earnings carried forward from previous year 1567.67 1333.96
Less: Interim Equity Dividend Paid 255.09 336.89
Less: Tax on Interim Equity Dividend Paid 52.43 68.58
Less: Transfer to General Reserve - 72.16
Add: Other Adjustments 0.02 -
Balance of Retained Earnings carried to Balance Sheet 2190.37 1567.67

The Company has prepared its financial statements for the year ended March 31 2019 forthe first time under Indian Accounting Standards (Ind AS). The financial statements forthe year ended March 31 2018 have been restated in accordance with Ind AS for the purposeof comparative information.

For the year ended March 31 2019 your Company posted a net profit of Rs.930.60 Croreas against Rs.711.29 Crore in the previous year. Appropriations from the net profit havebeen effected as per the summary given above.

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

Your Company does not have any subsidiary or an associate company or a joint venturecompany during the year under review.

Dividend Interim Dividend

Your Directors had declared and paid an interim dividend during the financial yearended March 31 2019 of Rs.12/- per equity share (240%) of face value of Rs.5/- each inthe month of March 2019 involving a total outflow of Rs.307.52 Crore (including dividenddistribution tax of Rs.52.43 Crore). An interim dividend of Rs.16/- (320%) per equityshare of face value of Rs.5/- each was confirmed and paid to its shareholders for previousfinancial year 2017-18.

Final Dividend

Your Directors recommend payment of final dividend for the financial year ended March31 2019 of Rs.12/- per equity share (240%) of face value of Rs.5/- each.

The total dividend for the year is Rs.24/- (480%) per equity share as against Rs.16/-(320%) per equity share of face value of Rs.5/- each for the previous year.

The dividend declared/recommended is in accordance with the principles and criteria asset out in the Dividend Distribution Policy which has been approved by the Board ofDirectors. The Dividend Distribution Policy of the Company is placed on the Company'swebsite at https://www.hdfcfund. com/about-us/governance/codes-policies and thesame is annexed as Annexure I in terms of Regulation 43A of Securities and ExchangeBoard of India (Listing Obligations and Disclosure Requirements) Regulations 2015("SEBI Listing Regulations").

Management Discussion and Analysis Report and Report of the Directors on CorporateGovernance

In accordance with the SEBI Listing Regulations the Management Discussion and AnalysisReport and the Report of the Directors on Corporate Governance form part of this report.

Transfer to General Reserves

There was no amount transferred to the General Reserves of your Company for thefinancial year 2018-19.

Initial Public Offering (IPO)

The Board of Directors of your Company is pleased to inform that during the year underreview your Company has completed its highly successful Initial Public Offer (IPO) andreceived an overwhelming response for the same with an oversubscription of about 83 times.

IPO of your Company was by way of an offer for sale of 12.01% of the post-offer paid-upequity share capital of your Company. The equity shares of your Company are listed on theNational Stock Exchange of India Limited and BSE Limited w.e.f. August 06 2018.

Capital Structure

Issue of Equity Shares on a Private Placement Basis

Pursuant to the receipt of approval of the members at the Extra Ordinary GeneralMeeting of the Company held on April 18 2018 your Company issued and allotted 1433600equity shares of the Company of Rs.5/- each at an issue price of Rs.1050/- per equityshare aggregating to Rs.1505280000/- by way of a private placement in accordance withSections 62(1)(c) 42 and other applicable provisions if any of the Companies Act 2013including the Rules framed thereunder.

Proceeds from the Private placement issue:

The funds raised from the issuance of private placement were utilised for generalcorporate purposes including enhancement of the systems infrastructure.

Allotment of Equity Shares under Employee Stock Option Schemes

During the year your Company issued and allotted 584410 equity shares of Rs.5/- eachof the Company to eligible employees on exercise of stock options granted under EmployeeStock Option Schemes of the Company.

Consequently the issued subscribed and paid-up equity share capital increased fromRs.1052776000/- divided into 210555200 equity shares of Rs.5/- each as on April 012018 to Rs.1062866050/- divided into 212573210 equity shares of Rs.5/- each as onMarch 31 2019.

Review of Operations

Your Directors are pleased to report that:

Assets under Management (AuM) of HDFC Mutual Fund ("HDFC MF") at the close offinancial year 2018-19 was Rs.343938 Crore as against an AuM of Rs.291985 Crore at theclose offinancial year 2017-18 an increase of 18%. HDFC MF is India's largest mutual fundin terms of total AuM with a market share of 14.5%. It is also the largest mutual fund interms of actively managed equity-oriented funds with a market share of 16.2%. Theactively managed equity-oriented AuM of HDFC MF at the close of financial year 2018-19 wasRs.164263 Crore as against Rs.144925 Crore at the close of financial year 2017-18 anincrease of 13%.

Your Company managed 91 lakh live accounts as on March 31 2019 predominantly those ofindividual (retail) unitholders. The Individual monthly average AUM as a percent of totalmonthly average AUM as of March 2019 was 63.0% as against 62.2% as of March 2018. YourCompany 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. Ason March 31 2019 your Company has 210 branches. ISCs of Computer Age Management ServicesPvt. Ltd. (CAMS) the Registrar and Transfer Agent of HDFC MF are Official Points ofAcceptance for transactions of Schemes of HDFC MF. These offices supplement theinvestor-servicing network of your Company. Your Company services unitholders and over75000 empanelled distributors in approximately 200 cities pan India.

Your Company is the most preferred choice for retail investors with the highest marketshare in assets from individual investors at 15.4%. Of the 1.93 Crore unique investors inmutual funds in India (as identified by PAN) we enjoy trust of 53 Lakh investors amarket share of 28%. Your Company's offering of systematic transactions further enhancesits appeal to individual investors looking to invest periodically in a disciplined andrisk-mitigating manner. Your Company processed Rs.1182 Crore through systematictransactions in the month of March 2019. These monthly flows provide a strong and growing"order book" provide predictable flows with 78.4% of live systematic investmentplans (SIPs) subscribed for a tenure of more than 5 years.

Your Company also provides portfolio management and segregated account servicesincluding discretionary non-discretionary and advisory services to high net worthindividuals (HNIs) family offices domestic corporates trusts provident funds anddomestic and global institutions. As on March 31 2019 the aggregate assets under theseservices were at Rs.9755 Crore.

New Scheme Launched Under HDFC Mutual Fund

The following open ended scheme was launched under HDFC MF during financial year2018-19:

HDFC Ultra Short Term Fund

HDFC Ultra Short Term Fund ("the Scheme") was launched in the month ofSeptember 2018. The investment objective of the Scheme is to generate regular incomethrough investments in Debt and Money Market Instruments while maintaining Macaulayduration of the portfolio between 3 months and 6 months. The Scheme aims to generateincome through investments in a range of debt and money market instruments. The Schemewould endeavour to generate returns commensurate with low levels of interest rate risk.The Scheme shall endeavour to develop a well-diversified portfolio of debt (includingSecuritised debt) and money market instruments. The Scheme may also invest in the schemesof mutual funds. The NFO of the Scheme mobilised assets to the tune of Rs.1161 Crore.

As of March 31 2019 HDFC MF offered 147 schemes across asset classes to meet thevarying investment needs of investors.

Change in fundamental attributes including other changes and merger of schemes of HDFCMutual Fund

In accordance with SEBI circular no. SEBI/HO/IMD/DF3/ CIR/P/2017/114 dated October 62017 read with circular no. SEBI/HO/IMD/DF3/CIR/P/2017/126 dated December 04 2017 on"Categorization and Rationalization of Mutual Fund Schemes" HDFC TrusteeCompany Limited Trustee to the schemes of HDFC MF categorized and rationalized theexisting open ended schemes of HDFC MF by inter alia approving certain changes to certainschemes of HDFC MF. These proposed changes were carried out by implementing changes in thefundamental attributes other changes and merger of certain schemes of HDFC MF.

Directors and Key Managerial Personnel Non-Executive Directors

In accordance with the provisions of Section 152 of the Companies Act 2013 read withthe Companies (Appointment and Qualification of Directors) Rules 2014 and the Articles ofAssociation of the Company Mr. N. K. Skeoch (DIN: 00165850) and Ms. Renu Sud Karnad (DIN:00008064) Directors are liable to retire by rotation at the ensuing Annual GeneralMeeting (AGM) and being eligible have offered themselves for re-appointment.

Necessary proposals for their re-appointment have been placed for your approval at theensuing AGM. The brief resume of these Directors and other related information have beendetailed in the Notice convening the AGM of your Company. Your Directors recommend theirre-appointment as Non-Executive Directors of your Company.

Mr. Deepak Parekh (DIN : 00009078) Non - Executive Director would attain the age of75 years on October 18 2019 and he would be able to continue his directorship in theCompany post the said date subject to the approval of members by way of a specialresolution in terms of Regulation 17(1A) of SEBI Listing Regulations. Necessary proposalfor the same has been placed for your approval at the ensuing AGM.

Independent Directors

Mr. Humayun Dhanrajgir (DIN:00004006)

Mr. P. M. Thampi (DIN:00114522) and Mr. Rajeshwar Bajaaj (DIN: 00419623) IndependentDirectors of the Company resigned with effect from the close of business hours of October31 2018. The Board placed on record a vote of thanks and appreciation for the valuablecontribution made by them over the years.

The Board appointed Mr. Dhruv Kaji (DIN: 00192559) Mr. Jairaj Purandare (DIN:00159886) and Mr. Sanjay Bhandarkar (DIN: 01260274) as Independent Directors (AdditionalDirectors) of the Company for a term of 5 consecutive years effective October 31 2018subject to the approval of members at the ensuing Annual General Meeting (AGM).

The Board also appointed Mr. Parag Shah (DIN: 00374944) and Ms. Roshni Nadar Malhotra(DIN: 02346621) as Independent Directors (Additional Directors) of the Company for a termof 5 consecutive years effective January 22 2019 and April 27 2019 respectivelysubject to the approval of members at the ensuing AGM.

Pursuant to provisions of Sections 149 150 and 152 of the Companies Act 2013 readwith the Companies (Appointment and Qualification of Directors) Rules 2014 along withSchedule IV to the Companies Act 2013 the following Independent Directors were appointedat the Extra Ordinary General Meeting of the members held on July 21 2014 to hold officefor a term of 5 consecutive years up to July 20 2019 not liable to retire by rotationon the Board of your Company:

1. Mr. Hoshang Billimoria

2. Mr. Vijay Merchant

3. Dr. Deepak Phatak

The Board re-appointed Mr. Hoshang Billimoria (DIN: 00005003) as an IndependentDirector of the Company for a second term commencing from July 21 2019 till November 292019 based on the performance evaluation subject to the approval of members throughspecial resolution at the ensuing AGM.

The necessary resolutions for the appointment/ re-appointment of the above mentioneddirectors including their brief profiles and other related information have been includedin the notice convening the ensuing AGM. Your Directors recommend their appointment/re-appointment as Independent Directors of your Company.

All the directors of the Company have confirmed that they are not disqualified forbeing appointed as directors as specified under 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 2013read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 Mr. Milind Barve Managing Director Mr. Piyush Surana Chief Financial Officer andMs. Sylvia Furtado Company Secretary are the Key Managerial Personnel of the Company.

Declaration of Independence

In accordance with the provisions of Section

134(3)(d) of the Companies Act 2013 Mr. Hoshang Billimoria Dr. Deepak Phatak Mr.Vijay Merchant Mr. Dhruv Kaji Mr. Jairaj Purandare Mr. Sanjay Bhandarkar Mr. ParagShah and Ms. Roshni Nadar Malhotra Independent Directors have submitted declarationsstating that they meet the criteria of independence as per the provisions of the CompaniesAct 2013 and SEBI Listing Regulations.

Mr. Humayun Dhanrajgir Mr. P. M. Thampi and Mr. Rajeshwar Bajaaj who resigned asIndependent Directors of the Company w.e.f. October 31 2018 had submitted declarationsat the beginning of the year stating that they meet the criteria of independence.

Number of Meetings of the Board

During the financial year 2018-19 7 (seven) meetings of the Board of Directors of yourCompany were held and the details of Board and Committee meetings held are provided in theReport of the Directors on Corporate Governance which forms part of this report.

Formal Annual Evaluation

Details on the formal annual evaluation of the performance of the Board its committeesand of individual directors are provided in the Report of the Directors on CorporateGovernance which forms part of this report.

Nomination & Remuneration Policy

In terms of the requirements under Companies Act 2013 and SEBI Listing Regulationsyour Company has put in place a Nomination & Remuneration Policy inter-aliadetailing the director's appointment remuneration criteria for determiningqualifications attributes independence of a director and other matters. The remunerationpaid to the Directors Key Managerial Personnel and Senior Management is as per theNomination & Remuneration Policy of your Company. The Nomination & RemunerationPolicy 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 stockoptions your Company has in the past granted stock options to the employees under thevarious employee stock option schemes formulated from time to time.

Your Company has formulated Employee Stock Option Scheme(s) 2015- Series I & IIIand 2017- Series I & II ("Schemes") for the purpose of administering theissue of stock options to the eligible Employees of your Company. There has been nomaterial variation in the terms of the options granted under any of these schemes and allthe schemes are in compliance with the SEBI (Share Based Employee Benefits) Regulations2014 ("ESOP Regulations"). However the above Schemes formulated prior to IPOby your Company were aligned with the ESOP Regulations. The disclosures as required underthe ESOP Regulations have been placed on the website of the Company at www.hdfcfund.com.

There were no stock options granted during the financial year 2018-19 and your Companywill not make any fresh grant of stock options under these aforesaid Schemes. No employeewas issued stock option during the year equal to or exceeding 1% of the issued capital ofthe Company at the time of grant.

Further the certificate required under Regulation 13 of the ESOP Regulations from theStatutory Auditors of the Company that the above Schemes have been implemented inaccordance with the ESOP Regulations will be available at the ensuing AGM for inspection.

Transition to Ind AS

The financial statements for the year ended March 31 2019 are the first financialstatements which the Company has prepared in accordance with Indian Accounting Standards(Ind AS). For periods up to and including the year ended March 31 2018 your Company hasprepared its financial statements in accordance with previous GAAP.

Accordingly your Company has prepared financial statements which comply with Ind ASapplicable for the year ended on March 31 2019 together with the comparative period dataas at and for the year ended March 31 2018 as described in the significant accountingpolicies. In preparing these financial statements your Company's opening balance sheetwas prepared as at April 01 2017 (your Company's date of transition to Ind AS). Note no.39 under the notes to the financial statements explains the principal adjustments made bythe Company in restating its Previous GAAP financial statements including the BalanceSheet as at April 01 2017 and the financial statements as at and for the year ended March31 2018.

Auditors and Auditors' Report Statutory Auditors

In terms of Section 139 of the Companies Act 2013 read with the Companies (Audit andAuditors) 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 5continuous years i.e. from the conclusion of 18th AGM till the conclusion of 23rdAGM subject to ratification by the members at every AGM of the Company.

In accordance with the Companies Amendment Act 2017 notified on May 07 2018 byMinistry of Corporate Affairs the appointment of statutory auditors is not required to beratified at every AGM. Accordingly no proposal for ratification of appointment of M/s. BS 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 theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 your Companyhas appointed M/s. Bhandari & Associates Company Secretaries to conduct theSecretarial Audit of your Company for the financial year 2018-19. The Secretarial AuditReport is annexed herewith as Annexure II to this report.

There were no qualifications reservation or adverse comments or disclaimer made by theStatutory Auditors of the Company M/s. B S R & Co. LLP and Secretarial Auditor of theCompany M/s. Bhandari & Associates in their audit reports.

The aforesaid Auditors of the Company have not reported any fraud as specified underSection 143(12) of the Companies Act 2013.

Internal Auditors

M/s. Deloitte Touche Tohmatsu India LLP were appointed as Internal Auditors of yourCompany for the financial year 2018-19.

Risk Management Policy

The Risk Management Policy of your Company reviewed by the Audit Committee andapproved by the Board provides for the Enterprise Risk Management (ERM) framework toidentify assess monitor and mitigate various business risks and this frameworkincorporates the systematic application of policies procedures and checks to identifypotential risks in the operational areas of the business and minimise their impact on yourCompany. The framework is designed to identify risks assess their likely impact ensurethe review of mitigation measures and requires reporting on a regular basis. The AuditCommittee of the Board of Directors at its meetings periodically reviews the progress andfunctioning of the ERM.

The primary business of your Company is to manage the schemes of HDFC Mutual Fund whichrequires specialised expertise in investment management. Since this is a very crucialaspect which has an extremely significant bearing on the performance of your Company arisk management committee is in place to oversee the risks associated with this function.This Committee reviews the progress of risk management practices pertaining to HDFC MutualFund.

Adequacy of Internal Controls

Your Company has internal control systems ^which commensurate with the size andcomplexity of its operations. The internal control systems comprise of standardisedpolicies and procedures covering all functional areas aimed at ensuring sound managementof operations reliable financial reporting safeguarding of assets and prevention anddetection of frauds and errors. The Audit Committee of the Board of Directors at regularintervals and in co-ordination with Internal and Statutory Auditors reviews the adequacyof Internal Controls within your Company.

Further the internal financial controls related to financial statements are found tobe adequate and operating effectively and that no material weakness was noticed during theyear under review.

Corporate Social Responsibility

In terms of Section 135 of the Companies Act 2013 your Company has formed a CorporateSocial Responsibility (CSR) Committee of Directors to approve activities to be undertakenexpenditure to be incurred and to monitor the performance of the CSR activities undertakenby the Company.

The CSR Committee comprises Mr. Deepak Parekh (Chairman) Mr. Vijay Merchant and Mr.Milind Barve. The Company Secretary acts as the secretary to the Committee.

Your Company undertakes its CSR activities through a variety of effective programs.Some of the thrust areas which your Company has identified to undertake CSR activities arein the areas of promoting preventive health care promoting sports and promotingeducation. These activities are broadly in accordance with the Schedule VII to theCompanies Act 2013.

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

The annual report on CSR activities in accordance with the Companies (Corporate SocialResponsibility Policy) Rules 2014 is set out at Annexure III to this report.

The contents of the CSR Policy as well as the CSR activities undertaken by the Companyare 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 asdefined under Section 2(76) of the

Companies Act 2013 read with Companies (Specification of Definitions Details) Rules2014 and applicable Accounting Standards which were in the ordinary course of businessand on arms' length basis and in accordance with the policy on Related Party Transactionsof the Company.

The Related Party Transactions Policy of the Company ensures proper approval andreporting of the concerned transactions between the Company and related parties. Thepolicy on Related Party Transactions is placed on the Company's website athttps://www.hdfcfund.com/about-us/ governance/codes-policies.

During the year there was no material transaction with any related parties as per theRelated Party Transactions Policy of the Company and all the related party transactionsentered into by the Company were in the ordinary course of business and on an arm's lengthbasis hence disclosure in Form AOC-2 is not applicable to the Company.

The disclosures pertaining to related party transactions as per the applicableAccounting Standards form part of the notes to the financial statements provided in thisAnnual Report.

Particulars of Loans Guarantees or Investments

Details of loans guarantees and investments if any covered under the provisions ofSection 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 ofSections 73 and 74 of the Companies Act 2013 read together with the Companies (Acceptanceof Deposits) Rules 2014.

Unclaimed Dividend on Shares

As at March 31 2019 dividend amounting to Rs.312/- had not been claimed byshareholders of the Company. Your Company has transferred this amount of dividend to HDFCAMC Ltd. - Unpaid Interim Dividend A/c 2018-19. Your Company will disclose a statementcontaining the names last known addresses and the unpaid dividend to be paid to eachshareholder on the Company's website at www.hdfcfund.com.

Unclaimed Suspense Account (IPO Related)

In relation to IPO of equity shares of the Company 205 number of equity shares weretransferred to the Unclaimed Suspense Account.

During the year under review 13 claims were received by Karvy Fintech Pvt. Ltd yourCompany's Registrar & Share Transfer

Agent to transfer 205 shares held in unclaimed suspense share account and afterthorough verification all the 205 shares have been transferred to the respectiveshareholders.

There were no shares lying in the Unclaimed Suspense Account (IPO) as on March 312019. Disclosure required under Regulation 39 read with Part F of Schedule V of SEBIListing Regulations is provided in the Report of Directors on Corporate Governance whichforms part of this report .

Extract of Annual Return

As per the provisions of Companies Act 2013 the details forming part of the extractof the Annual Return (in the prescribed Form MGT-9) as on the financial year ended March31 2019 is appended as Annexure IV.

A copy of the Annual Return is placed on the Company's website at www.hdfcfund.com.

Vigil Mechanism/Whistle Blower Policy

Your Company has put in place a Whistle Blower Policy. More details are provided in theReport of the Directors on Corporate Governance which forms part of this report.

Particulars Regarding Conservation of Energy Technology Absorption and ForeignExchange Earnings and Outgo

The information pertaining to the conservation of energy and technology absorption interms 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 ofenergy. However regular efforts are made to adopt appropriate energy conservationmeasures and technology absorption methods.

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

• Foreign exchange (earnings): Rs.13.23 Crore (previous year: Rs.14.09 Crore)

• Foreign exchange (expenditure): Rs.17.21 Crore (previous year: Rs.16.79 Crore -excluding Equity Dividend and Rs.145.61 Crore - including Equity Dividend)

Particulars of Employees

As on March 31 2019 your Company has 1150 employees and for the previous year yourCompany had 995 employees.

In accordance with the provisions of Rule 5(2) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the names and particulars of the topten employees in terms of remuneration drawn and of the aforesaid employees are set out inthe annexure to this report. In terms of the provisions of Section 136(1) of the CompaniesAct 2013 the Directors' Report is being sent to all shareholders of the Companyexcluding the annexure. Any shareholder interested in obtaining a copy of the annexure maywrite to the Company.

Further disclosures on managerial remuneration as required under Section 197 read withRule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 are appended as Annexure V.

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 CentralGovernment under sub-section (1) of Section 148 of the Companies Act 2013 is notapplicable to your Company.

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

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

• Details of the Audit Committee of the Board of Directors including itscomposition are provided in the Report of the Directors on Corporate Governance whichforms part of this report.

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

Directors' Responsibility Statement

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

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

(ii) Accounting policies selected were applied consistently. Reasonable and prudentjudgements and estimates were made so as to give a true and fair view of the state ofaffairs of the Company at the end of March 31 2019 and of the profit of the Company foryear ended on that date;

(iii) Proper and sufficient care has been taken for maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets 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 andsuch internal financial controls are adequate and operating effectively; and

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

Secretarial Standards

Your Company is in compliance with the provisions of the applicable SecretarialStandards issued by the Institute of Company Secretaries of India in terms of theCompanies Act 2013.

Prevention of Sexual Harassment Policy and Its Reporting

Your Company has framed and implemented a Policy on Sexual Harassment of Women atWorkplace aiming at prevention of harassment of employees which lays down the guidelinesfor identification reporting and prevention of undesired behaviour. 6 (six) InternalCommittees (IC) for different regions were constituted in accordance with the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 withwomen employees being a majority and an external member. The Policy IC Members' detailsand 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 conductedto generate awareness about the policy reporting mechanism and prevention of sexualharassment at the workplace. During the year the IC did not receive any complaintspertaining to sexual harassment.

Significant/Material Orders Passed by the Regulators

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

On December04 2018 vide a settlement order issued by SEBI your Company withoutadmitting or denying the violations settled proceedings in connection with quasi -judicial proceedings initiated in respect of certain alleged violations under SEBI (MutualFunds) Regulations 1996 and circulars and/or guidelines issued for an amount of'37856498/-.

Vide the said settlement order SEBI has stated that the quasi judicial proceedingshave been disposed off.

Material Changes and Commitments if any Affecting the Financial Position of theCompany from the Financial Year end till the Date of this Report

There have been no material changes and commitments affecting the financial position ofthe Company which have occurred between the end of the financial year 2018-19 and the dateof this Report.

Acknowledgements

The Directors take this opportunity to thank its investors shareholders bankersdistributors key partners Investor Service Centres and other service providers for theircontinued support. The Directors would like to convey their gratitude to HousingDevelopment Finance Corporation Limited and Standard Life Investments Limited promotersof your Company and look forward to their continued support.

The Directors acknowledge the valuable assistance support and guidance given by theSecurities and Exchange Board of India Association of Mutual Funds of India Reserve Bankof India Ministry of Corporate Affairs Registrar of Companies the stock exchanges anddepositories.

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

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

On behalf of the Board of Directors
Deepak S. Parekh
Mumbai Chairman
April 26 2019 (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