Directors Report of HDFC Asset Management Company Ltd.

Mar 31, 2025

Your Directors take great pleasure in presenting the Twenty-Sixth Annual Report together with the Audited Financial Statements of your Company for the financial year ended March 31, 2025.

Financial Performance

The financial performance of your Company for the financial year ended March 31, 2025 is summarized as below:

(1 in Crore)
Financial Results	For the yea r ended March 31,2025	Fortheyearended March 31,2024
Profit before Tax	3,286.44	2,478.19
Less: Provision for Tax (Net of Deferred Tax)	825.39	532.31
Profit after Tax	2,461.05	1,945.88
Add / (Less): Other Comprehensive Income (Net of Tax)	(2.78)	(1.59)
Total Comprehensive Income (A)	2,458.27	1,944.29
Balance of Retained earnings carried forward from previous year	5,979.94	5,060.30
Less: Equity Dividend Paid for earlier year	-	1,024.65
Less: Interim Equity Dividend Paid for earlier year	1,495.05	-
Less: Debt Instruments through Other Comprehensive Income	0.07	-
Less: Other Adjustments	(0.11)	-
Total(B)	4,484.93	4,035.65
Balance of Retained Earnings Carried to Balance Sheet (A B)	6,943.20	5,979.94

For the year ended March 31, 2025, your Company posted a net profit of 12,461.05 Crore as against 11,945.88 Crore in the previous year. Appropriations from the net profit have been affected 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.

Dividend

Your Directors recommend payment of final dividend of 190/- per equity share (1800%) of face value of 1 5/- each for the financial year ended March 31, 2025 as against Interim Dividend of 170/- per equity share (1400%) of face value of 15/- each for the previous year.

The dividend pay-out ratio for the said dividend for the year ended March 31, 2025 is 78.18%.

The Final 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 of the Company. The Dividend Distribution Policy of the

Company is placed on the Companyâs website at https://www. hdfcfund.com/about-us/corporate-governance/code-policy in terms of Regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulationsâ).

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

Management Discussion and Analysis Report and the Report of the Directors on Corporate Governance form part of this report.

In compliance with Regulation 34(2)(f) of the SEBI Listing Regulations, the Business Responsibility and Sustainability Report (''BRSRâ) along with the report on reasonable assurance of the BRSR Core, consisting a set of Key Performance Indicators (KPIs) / metrics under nine Environmental, Social & Governance attributes for the financial year ended March 31, 2025, provided by SGS India Private Limited, forms a part of this Annual 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, 2025, please refer to the Statement of Changes in Equity included in the financial statements.

Capital Structure

During the year, your Company issued and allotted 3,09,086 equity shares of I 5/- each of the Company to eligible employees on exercise of stock options granted under Employee Stock Option Scheme of the Company.

Consequently, the issued, subscribed and paid-up equity share capital increased from 11,06,74,20,000/- represented by 21,34,84,000 equity shares of 15/- each as on April 1, 2024 to 11,06,89,65,430/- represented by 21,37,93,086 equity shares of 15/- each as on March 31, 2025.

During the year under review, the Company has not issued any:

a) shares with differential rights as to dividend, voting or otherwise.

b) sweat equity shares.

Review of Operations

Assets under Management (AUM) of HDFC Mutual Fund ("HDFC MF") at the close of FY 2024-25 was 1 7.54 Lakh Crore as against an AUM of 1 6.07 Lakh Crore at the close of FY 2023-24, an increase of 24%. Total Annual Average AUM for FY 2024-25 was 1 7.48 Lakh Crore versus 1 5.44 Lakh Crore for FY 2023-24. HDFC MF is one of Indiaâs largest mutual funds in terms of total AUM with a market share of 11.5% based on closing AUM. It is also one of the largest mutual funds in terms of actively managed equity-oriented funds, with a market share of 12.9% based on closing AUM. The actively managed equity-oriented AUM at the close of FY 2024-25 was 1 4.70 Lakh Crore as against 1 3.75 Lakh Crore at the close of FY 2023-24, an increase of 25%. The actively managed equity-oriented annual average AUM constituted 61% of the total annual average AUM and increased by 49% to 1 4.54 Lakh Crore.

Your Company managed a total of 233 Lakh live accounts as on March 31, 2025, predominantly those of individual (retail) unitholders. The Individual monthly average AUM as a percent of total monthly average AUM for March 2025 was steady at 70%. Your Company has 280 offices as on March 31, 2025. Your Company has over 95,000 distribution partners.

Your Company is one of the most preferred choices of individual investors, with a market share of 13.2% of the

individual monthly average AUM for March 2025. Of the 5.42 Crore unique investors in mutual funds in India (as identified by PAN//PEKRN), we enjoy trust of 1.32 Crore investors, a market penetration of 24%. Your Companyâs 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 1 43,035 Crore through systematic transactions from April 2024 to March 2025. These monthly flows provide a strong and stable "order book", provide predictable flows, with 90% of systematic investment plans (SIPs) subscribed for a tenure of more than 5 years.

The Company extends Portfolio Management, Segregated Account Services, along with Alternative Investment Funds to High Net-worth individuals, family offices, domestic corporates, trusts, provident funds and domestic cum global institutions, with aggregate assets of 1 5,133 Crore as on March 31, 2025.

Schemes Launched

The following new schemes were launched during the financial year -

1. HDFC Manufacturing Fund

2. HDFC NIFTY100 Low Volatility 30 Index Fund

3. HDFC Nifty500 Multicap 50:25:25 Index Fund

4. HDFC Nifty LargeMidcap 250 Index Fund

5. HDFC Nifty India Digital Index Fund

6. HDFC Nifty100 Quality 30 Index Fund

7. HDFC Nifty Top 20 Equal Weight Index Fund

Directors and Key Managerial Personnel

Non-Executive Director

In accordance with the provisions of Section 152(6) of the Companies Act, 2013 ("the Act") read with the Companies (Appointment and Qualification of Directors) Rules, 2014 and the Articles of Association of the Company, Mr. Deepak S. Parekh (DIN: 00009078), Non-Executive Non-Independent Director and Chairman, is liable to retire by rotation at the forthcoming Annual General Meeting (AGM) of the Company scheduled to be held on June 25, 2025 and being eligible has offered himself for re-appointment.

Mr. Deepak S. Parekh, Non-Executive Non-Independent Director and Chairman of the Company having attained the prescribed age limit of 75 years, Special Resolution is proposed in accordance with Regulation 17(1A) ofSEBI Listing Regulations for continuation of his directorship on the Board of Directors of the Company. The members

at their 20^th & also at the 23^rd AGM of the Company had approved the continuation of directorship of Mr. Parekh beyond 75 years of age by passing a Special Resolution.

Necessary proposal for his re-appointment has been placed for your approval at the forthcoming AGM. The brief profile has been detailed in the Notice convening the AGM of your Company. Your Directors recommend his re-appointment as a Non-Executive Non-Independent Director and Chairman of your Company.

Managing Director & Chief Executive Officer

During the year, the members, at the 25^th AGM of the Company had re-appointed Mr. Navneet Munot (DIN: 05247228) as the Managing Director & Chief Executive Officer (CEO) of the Company for a period of five (5) years effective from July 1, 2024 upto June 30, 2029.

Independent Directors

Mr. Dhruv Kaji, Mr. Jairaj Purandare, Mr. Sanjay Bhandarkar, Mr. Parag Shah and Ms. Roshni Nadar Malhotra, Independent Directors, have submitted declarations stating that they meet the criteria of independence as per the provisions of the Act 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. Further, in terms of Rule 6(4) of the Companies (Appointment and Qualification of Directors) Rules, 2014, one Independent Director has passed the Online Proficiency Self-Assessment test conducted by Indian Institute of Corporate Affairs (IICA) and the other four Independent Directors were not required to appear for the said test as required by IICA as they fulfil the criteria stipulated under Rule 6(4) of the Companies (Appointment and Qualification of Directors) Rules, 2014.

In the opinion of the Board, the Independent Directors fulfil the conditions specified under the Act, 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 Act.

Key Managerial Personnel

In accordance with the provisions of Sections 2(51) and 203 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as

amended, Mr. Navneet Munot, Managing Director & Chief Executive Officer, Mr. Naozad Sirwalla, Chief Financial Officer and Ms. Sonali Chandak, Company Secretary are the Key Managerial Personnel of the Company as on March 31, 2025.

Further, during the year, Ms. Sonali Chandak was appointed as Company Secretary & Head- Legal and Compliance officer of the Company under SEBI Listing Regulations w.e.f., July 16, 2024 in place of Ms. Sylvia Furtado who resigned from the services of the Company w.e.f., close of business hours of July 15, 2024.

Number of Meetings of the Board and Committees

During the FY 2024-25, 8 (eight) 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.

Review of Subsidiary Company

Your Company has a Wholly Owned Subsidiary Company viz. HDFC AMC International (IFSC) Limited (''HDFC IFSC'') which was incorporated on May 27, 2022. HDFC IFSC is registered with International Financial Services Centres Authority (''IFSCA'') as a Registered Fund Management Entity - Retail category and carries out fund management activities from Gujarat International Finance Tec-City (GIFT) City.

HDFC IFSC offers a comprehensive suite of Alternative Investment Funds to a diverse clientele, including High-Net-worth Individuals (HNIs), private banks, insurance companies, financial institutions, foreign investors, multilateral organizations, sovereign funds, pension funds and global institutional investors. HDFC IFSC works with a diverse set of distribution partners and currently has over 250 empanelled distributors which include mutual fund distributors, national distributors, banks and foreign distributors.

The following Category III open-ended Alternative Investment Funds (AIFs) under the IFSCA (Fund Management) Regulations, 2025, were launched during the financial year by HDFC IFSC:

1. HDFC India Flexi Cap Fund

2. HDFC India Balanced Advantage Fund

3. HDFC India Mid-Cap Opportunities Fund

As per the investment objectives of the above AIFs, the net assets of the said Funds are entirely invested into the respective open-ended schemes of HDFC Mutual Fund in India. Further, HDFC IFSC is in process of completing the operational requirements for the launch of 2 funds viz. HDFC

India Small Cap Fund and HDFC India Nifty 50 Fund. Further, in order to provide more product options to non-resident investors, HDFC IFSC is in the process of undertaking the necessary filings / documentation for the launch of another Category III open ended AIFs - HDFC India Asset Allocator Fund. In addition to products for non-resident investors which invest in India, HDFC IFSC also intends to evaluate and finalise possible strategies for products whose primary focus would be on one or more global / non-Indian strategies. Such global strategies can also be offered to resident Indian investors under the Liberalised Remittance Scheme (LRS) / Overseas Portfolio Investment (OPI) route.

HDFC IFSC acts as a Fund Management Entity for the above-mentioned funds and has Assets under Management of US$146.89 Million as on March 31, 2025. HDFC IFSC managed a total of 50 active accounts as on March 31, 2025.

Further, the Board at its meeting held on April 17, 2025, inter-alia, approved the audited financial statements including the consolidated financial statements of the Company for the financial year ended March 31, 2025, subject to approval of members of the Company.

In accordance with the provisions of Section 136 of the Act, the annual report of the Company, the audited financial statements and the related information of HDFC IFSC are placed on the website of the Company. Shareholders may download the documents referred to above from the Companyâs website or may write to the Company for the same. Further, the said documents shall also be available for inspection by the members at the registered office of the Company.

Pursuant to Section 129(3) of the Act, a statement containing salient features of the financial statements of HDFC IFSC in the prescribed Form AOC-1 forms part of the financial statements.

Except for the above subsidiary, during the financial year 2024-25 and as of the date of this report, your Company did not have any other subsidiary or an associate company or a joint venture company.

Annual Evaluation

Details of the annual performance evaluation of the Board, its committees and of individual directors 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 Act and SEBI Listing Regulations, your Company has in place a

Nomination & Remuneration Policy, inter-alia, detailing the directorâs appointment, remuneration, criteria for determining qualifications, attributes, independence of a director, malus and clawback provisions applicable in the exceptional circumstances such as fraud that require a financial restatement, reputational harm to the Company or exposing the Company to substantial risk 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 said Nomination & Remuneration Policy is placed on the Companyâs website at https://www.hdfcfund.com/about-us/corporate-governance/code-policy.

Issue of Employee Stock Options

During the year, the Nomination & Remuneration Committee (NRC) at its meetings held on April 10, 2024, June 7, 2024 and January 14, 2025 has granted 18,000, 72,000 and 7,500 Stock Options representing 97,500 Equity Shares of 15/- each to the eligible employees of your Company and HDFC IFSC, as determined by the NRC, under ESOS - 2020 at grant price of 1 3,703.90/-, 1 3,760.50/- and 1 3,834.55/- per option, respectively. No employee was issued Stock Options, during the year equal to or exceeding 1% of the issued capital of the Company at the time of grant.

There has been no material variation in the terms of the Stock Options granted under ESOS - 2020 and Company in compliance with the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 (''SBEB Regulationsâ).

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

Further, the Certificate required under Regulation 13 of the SBEB Regulations from the Secretarial Auditors of the Company that ESOS - 2020 have been implemented in accordance with the SBEB Regulations will be available at the forthcoming AGM for inspection.

ESOP & PSU Scheme - 2025

On the recommendation of NRC, the Board at its meeting held on April 17, 2025, had approved the adoption and implementation of the Employees Stock Options and

Performance-linked Stock Units Scheme - 2025 (''ESOP & PSU Scheme - 2025â or ''Schemeâ) in terms of the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, subject to the approval of members.

A maximum of 25,00,000 (Twenty Five Lakh) ESOPs and PSUs may be offered and granted under the aforesaid Scheme, in aggregate, out of which aggregate PSUs shall not exceed 50% of the said total pool of 25,00,000, which on exercise, would entitle not more than 25,00,000 (Twenty Five Lakh) equity shares of face value of 15/- each of the Company. Further, the Company has sought an approval of Members for adoption and implementation of the ESOP & PSU Scheme - 2025 vide its postal ballot notice dated April 17, 2025, and the e-voting process for this approval is currently ongoing.

Also, on the recommendation of the NRC, the Board at its meeting held on April 17, 2025, had decided that the Company/ NRC shall not grant/ allot the 8,73,719 unallocated stock options that still exist under ESOS - 2020 of the Company. However, the ESOS 2020 will remain operational till such time the stock options granted earlier under the ESOS 2020 are either exercised, lapsed or forfeited as the case may be.

Auditors and Auditor''s Report

Statutory Auditors

In terms of Section 139 of the Act read with the Companies (Audit and Auditors) Rules, 2014, M/s. B S R & Co. LLP, Chartered Accountants (ICAI FRN: 101248W/W-100022) were re-appointed as the Statutory Auditors of your Company for a period of 5 continuous years i.e. from the conclusion of 23^rdAGM till the conclusion of 28^th AGM of the Company.

The Auditorâs Report on the financial statements of the Company for the financial year ended March 31, 2025 forms part of the Annual Report.

Secretarial Auditor

Pursuant to the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company has appointed M/s. Makarand M. Joshi & Co., (''MMJCâ) Company Secretaries to conduct the Secretarial Audit of your Company for the FY 2024-25. The Secretarial Audit Report is annexed herewith as Annexure I to this report.

Further, in terms of the SEBI (Listing Obligations & Disclosure Requirements) (Third Amendment) Regulation, 2024, the Board has recommended the appointment of MMJC as the Secretarial Auditors of the Company for a term of five consecutive financial years commencing from April 1, 2025 till March 31, 2030. The appointment will be subject to the membersâ approval at the forthcoming AGM.

There were no qualifications, reservations 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 Act.

Internal Auditors

M/s. M P Chitale & Co were appointed as an Internal Auditors of your Company for the financial year 2024-25.

Enterprise Risk Management Policy

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

The Company has a strong Cyber Risk Management framework wherein cyber risk and mitigation controls are monitored by Information Technology and Security Committeeand RiskManagementCommitteeofthe Company. Key areas covered under the Cyber Risk Management are strong adherence to the Board approved Information and Cyber Security Policies, SEBI guidelines and ISO 27001:2022. The Company maintains robust cyber security posture to protect the confidentiality and integrity of data.

SEBI vide its Master Circular for Mutual Funds dated June 27, 2024, Chapter 4 on Risk Management Framework (RMF) for Mutual Funds, HDFC Mutual Fund has adopted a Policy of Enterprise Risk Management with effect from April 1, 2022. As part of the framework, Risk Management function has incorporated policies, procedures, roles & responsibilities of the management, the Board of the Company and the Board of HDFC Trustee Company Limited. The Board of your Company has approved the Risk Management framework, revised few policies in line with the said SEBI circular and has implemented risk measures outlined in the said circular. The terms of reference of the Risk Management Committee has been enhanced in line with requirements of the said SEBI circular as its main function is to oversee the risks associated with the business of mutual fund at the enterprise level, regulatory, compliance, operation and other functions of Company.

Adequacy of Internal Controls

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

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, review 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 Act, your Company has formed an Environmental, Social & Governance and Corporate Social Responsibility (''ESG & CSRâ) Committee to inter-alia approve activities to be undertaken, expenditure to be incurred and to monitor the performance of the CSR activities undertaken by the Company. The said committee also oversees the development and implementation of the Companyâs ESG framework.

The Committee consist Mr. Deepak S. Parekh (Chairman), Mr. Parag Shah, Mr. Sanjay Bhandarkar 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 areas of promoting education and health care. The Company also undertakes CSR activities in the areas of promoting sports and environment sustainability. These activities are in accordance with Schedule VII to the Act.

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

The annual report on CSR activities along with the executive summary for Impact Assessment Reports of the applicable projects, in accordance with the Companies (Corporate Social Responsibility Policy) Rules, 2014 as amended, is set out at Annexure II to this report.

During the year, the Company has fully spent the required amount towards CSR activities.

The composition of the ESG & CSR Committee, CSR Policy, CSR activities undertaken by the Company and the complete Impact Assessment Reports of the applicable projects are available on the Companyâs website at https://www.hdfcfund. com/about-us/corporate-profile/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 Act read with Companies (Specification of Definitions Details) Rules, 2014, SEBI Listing Regulations and applicable Accounting Standards, which were in the ordinary course of business and on armsâ length basis and in accordance with the policy on Related Party Transactions of the Company.

The Policy ensures proper approval and reporting of the concerned transactions between the Company and related parties.

The policy on Related Party Transactions is placed on the Companyâs website at https://www.hdfcfund.com/about-us/ corporate-governance/code-policy.

During the year, there was no material transaction with any related parties as per the Related Party Transactions Policy of the Company or any other related party transaction entered into by the Company that requires 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 or Investments

Details of loans, guarantees and investments, if any, covered under the provisions of Section 186 of the Act 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 Act read together with the Companies (Acceptance of Deposits) Rules, 2014.

Unclaimed Dividend on Shares

As at March 31, 2025, unclaimed dividend amounting to 199,13,752/- which has not been claimed by shareholders of the Company and is lying in the respective Unpaid Dividend Accounts of the Company.

Your Company has disclosed the statement containing the names, last known addresses of those shareholders whose dividend is unpaid on the Company''s website at www. hdfcfund.com.

Annual Return

Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return as on the financial year ended March 31, 2025 is placed on the Companyâs 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.

Fraud Monitoring / Prevention

Your Company has in place the ''Policy for Prevention of Fraudsâ, aimed at promoting consistently ethical organizational behaviour by assigning responsibility and enforcement of controls to aid prevention and detection of fraud in the Company. Frauds, if any identified by and/or reported to the Company are investigated for assessment of root cause and relevant corrective steps shall be undertaken including any preventive actions. No frauds were identified/ reported for the financial year 2024-25.

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 Act, read with the Companies (Accounts) Rules, 2014 is stated as below:

(a) Conservation of energy and technology absorption

Your Company does not consume high levels of energy and regular efforts are made to adopt appropriate energy conservation measures and technology absorption methods.

(b) Foreign Exchange, earnings and expenditure during

the year -

â¢ Foreign exchange earnings: I 0.01 crore (previous year: I 0.01 crore)

â¢ Foreign exchange expenditure: I 4.94 crore (previous year: I 11.68 crore)

Particulars of Employees

As on March 31, 2025, your Company has 1,618 employees and for the previous year, your Company had 1,509 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 Act, the Directorsâ 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 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are appended as Annexure III.

Other Disclosures

â¢ There was no change in the nature of the business of the Company.

â¢ There was no revision in the financial statements of the Company.

â¢ During the year, there was no receipt of any remuneration or commission by the MD & CEO of the Company from its Holding Company and Subsidiary Company.

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

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

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

â¢ 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 forms part of this report.

Directors'' Responsibility Statement

In accordance with the provisions of Section 134(5) of the Act 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, 2025 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 Act 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) I nternal 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 Act.

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 Membersâ 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 received no complaint 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 2024-25 and the date of this Report.

Acknowledgements

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.

Mar 31, 2024

The Directors take great pleasure in presenting the Twenty-Fifth Annual Report together with the Audited Financial Statements of your Company for the financial year ended March 31, 2024.

Financial Performance

The financial performance of your Company for the financial year ended March 31, 2024 is summarized as below:

(Rs. in Crores)
Financial Results	For the yea r ended March 31,2024	Fortheyearended March 31, 2023
Profit before Tax	2,478.19	1,870.61
Less: Provision for Tax (Net of Deferred Tax)	532.31	446.69
Profit after Tax	1,945.88	1,423.92
Add / (Less): Other Comprehensive Income (Net of Tax)	(1.59)	0.42
Total Comprehensive Income (A)	1,944.29	1,424.34
Balance of Retained earnings carried forward from previous year	5,060.30	4,531.82
Less: Equity Dividend Paid for earlier year	1,024.65	895.86
Total(B)	4,035.65	3,635.96
Balance of Retained Earnings Carried to Balance Sheet (A B)	5,979.94	5,060.30

For the year ended March 31, 2024, your Company posted a net profit of '' 1,945.88 Crore as against '' 1,423.92 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.

Dividend

The 25^th Annual General Meeting (AGM) of the Company is scheduled to be held on July 25, 2024 and the Company for the last two financial years has been paying dividend to its shareholders in the month of June, considering the same, your Directors at their meeting held on June 7, 2024 have declared an interim dividend for the financial year ended March 31, 2024 of '' 70/- per equity share (1400%) of face value of '' 5/- each of the Company instead offinal dividend of '' 70/- per equity share for the financial year ended March 31, 2024 as recommended earlier at the meeting held on April 19, 2024.

The dividend pay-out ratio for the said dividend for the year ended March 31, 2024 is 76.80%.

The interim dividend declared 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 of the Company. The Dividend Distribution Policy of the Company is placed on the Companyâs website at https://www. hdfcfund.com/about-us/corporate-governance/code-policy in terms of Regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulationsâ).

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

Management Discussion and Analysis Report and the Report of the Directors on Corporate Governance form part of this report.

In compliance with Regulation 34(2)(f) of the SEBI Listing Regulations, the Business Responsibility and Sustainability Report (''BRSRâ) along with the report on assurance of the BRSR Core, consisting of a set of Key Performance Indicators (KPIs) / metrics under nine Environmental, Social & Governance attributes for the financial year ended March 31, 2024 provided by M/s. B S R & Co. LLP, Chartered Accountants, the Statutory Auditors of your Company, forms a part of this Annual 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, 2024, please refer to the Statement of Changes in Equity included in the financial statements.

Capital Structure

During the year, your Company issued and allotted 59,284 equity shares of '' 5/- each ofthe Company to eligible employees on exercise of stock options granted under Employee Stock Option Scheme of the Company.

Consequently, the issued, subscribed and paid-up equity share capital increased from '' 1,06,71,23,580/- represented by 21,34,24,716 equity shares of '' 5/- each as on April 1,2023 to '' 1,06,74,20,000/- represented by 21,34,84,000 equity shares of '' 5/- each as on March 31, 2024.

During the year under review, the Company has not issued any:

a) shares with differential rights as to dividend, voting or otherwise.

b) sweat equity shares.

Review of Operations

Assets under Management (AUM) ofHDFC Mutual Fund ("HDFC MF") at the close of FY 2023-24 was '' 6.07 Lakh Crore as against an AUM of '' 4.37 Lakh Crore at the close of FY 2022-23, an increase of 39%. Total Annual Average AUM for FY 2023-24 was '' 5.44 Lakh Crore versus '' 4.36 Lakh Crore for FY 2022-23. HDFC MF is one of Indiaâs largest mutual funds in terms of total AUM with a market share of11.4% based on closing AUM. It is also one ofthe largest mutual funds in terms ofactively managed equity-oriented funds, with a market share of 12.8% based on closing AUM. The actively managed equity-oriented AUM at the close of FY 2023-24 was '' 3.75 Lakh Crore as against '' 2.32 Lakh Crore at the close of FY 2022-23, an increase of 62%. The actively managed equity-oriented annual average AUM constituted 56% of the total annual average AUM and increased by 40% to '' 3.04 Lakh Crore.

Your Company managed a total of 166 Lakh live accounts as on March 31, 2024, predominantly those of individual (retail) unitholders. The Individual monthly average AUM as a percent of total monthly average AUM for March 2024 was 70.8% as against 67.2% for March 2023. 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 254

branches as on March 31, 2024. Official Points of Acceptance for transactions ofHDFC MF also include ISCs of Computer Age Management Services Ltd. (CAMS), the Registrar and Transfer Agent of HDFC MF. These offices further strengthen the servicing network of your Company. Your Company services unitholders and over 85,000 distribution partners.

Your Company is one of the most preferred choices of individual investors, with a market share of 13.3% of the individual monthly average AUM for March 2024. Of the 4.46 Crore unique investors in mutual funds in India (as identified by PAN/PEKRN), we enjoy trust of 96 Lakh investors, a market penetration of 22%. Your Companyâs 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 '' 28,264 Crore through systematic transactions from April 2023 to March 2024. These monthly flows provide a strong and stable "order bookâ, provide predictable flows, with 87% of 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 & global institutions. As on March 31, 2024, the aggregate assets under these services were at '' 2,425 Crore. In our HDFC AMC Select AIF FOF-I, commitments for the period ended March 31,2024 were around '' 800 Crore.

Schemes Launched

Following new schemes were launched during the financial year -

1. HDFC S&P BSE 500 Index Fund

2. HDFC NIFTY Midcap 150 Index Fund

3. HDFC NIFTY Smallcap 250 Index Fund

4. HDFC Defence Fund

5. HDFC Non-Cyclical Consumer Fund

6. HDFC NIFTY 1D RATE LIQUID ETF

7. HDFC Charity Fund for Cancer Cure

8. HDFC Transportation and Logistics Fund

9. HDFC Technology Fund

10. HDFC Pharma and Healthcare Fund

11. HDFC NIFTY PSU BANK ETF

12. HDFC NIFTY200 Momentum 30 Index Fund

13. HDFC Nifty Realty Index Fund

Mergers of the following schemes were also announced:

HDFC FMP 3360D March 2014 (1) merged into HDFC Banking and PSU Debt Fund vide notice and addendum dated April 28, 2023.

Review of Subsidiary Company

Your Company has a Wholly Owned Subsidiary Company viz. HDFC AMC International (IFSC) Limited (''HDFC IFSC'') which was incorporated on May 27, 2022.

During the year under review, HDFC IFSC has received a Certificate of Registration from International Financial Services Centres Authority (''IFSCA'') for Registered Fund Management Entity - Retail category, pursuant to which it can carry out fund management, investment advisory and Portfolio Management Services (PMS) activities from Gujarat International Finance Tec-City (GIFT City).

Further, during the year under review HDFC IFSC has received an approval from IFSCA for launch of 6 funds viz. HDFC India Small Cap Fund, HDFC India Equity Savings Fund, HDFC India Flexi Cap Fund, HDFC India Balanced Advantage Fund, HDFC India Mid-Cap Opportunities Fund and HDFC India Nifty 50 Fund (the ''Funds'') as Category III open ended Alternative Investment Funds (AIFs) under the IFSCA (Fund Management) Regulations, 2022. These Funds will be feeders into certain domestic mutual fund schemes and/ or Exchange Traded Funds (ETFs), managed by the Company in India.

HDFC IFSC is in process of completing the operational requirements for the launch of said 6 Funds, which it proposes to offer to the investors in international markets and HDFC IFSC is reaching out to prospective investors for the same.

Further, the Board at its meeting held on April 19, 2024, inter alia, approved the audited financial statements including the consolidated financial statements of the Company for the financial year ended March 31, 2024 subject to approval of members of the Company.

In accordance with the provisions of Section 136 of the Companies Act, 2013 ("the Actâ), the annual report of the Company, the audited financial statements and the related information of the HDFC IFSC are placed on the website of the Company. Shareholders may download the documents referred above from the Company''s website or may write to the Company for the same. Further, the said documents shall also be available for inspection by the shareholders at the registered office of the Company.

Pursuant to Section 129(3) of the Act, a statement containing salient features of the financial statements of HDFC IFSC in the prescribed Form AOC-1 forms part of the financial statements.

Except for the above subsidiary, your Company does not have any other subsidiary or an associate company or a joint venture company during the year under review.

Information on Promoter Companies

Change in the Holding Company and Promoter from Housing Development Finance Corporation Limited to HDFC Bank Limited

Pursuant to the composite scheme of amalgamation of: (i) HDFC Investments Limited and HDFC Holdings Limited, wholly-owned subsidiaries of Housing Development Finance Corporation Limited ("HDFC Limitedâ) with and into HDFC Limited; and (ii) HDFC Limited with and into HDFC Bank Limited ("HDFC Bankâ), HDFC Bank has become the Holding Company and Promoter of the Company with effect from July 01, 2023.

Reclassification of Abrdn Investment Management Limited From ''''Promoter'''' Category to ''''Public'''' Category

Pursuant to the receipt of approval from the the Securities and Exchange Board of India (SEBI), abrdn Investment Management Limited ("abrdnâ), one of the promoters of the Company, on June 20, 2023, sold its entire stake in the Company i.e. 10.20% of the paid up capital of the Company and requested the Company to reclassify them from the "Promoterâ category to "Publicâ category in accordance with Regulation 31A of the SEBI Listing Regulations.

Accordingly, the Company after carrying out the requisite compliance under Regulation 31A of SEBI Listing Regulations made an application to National Stock Exchange ofIndia Limited and BSE Limited (''Stock Exchangesâ), for such reclassification. Basis the application, Stock Exchanges had on September 18, 2023 approved reclassification of abrdn from ''Promoterâ Category to ''Public'' Category.

Consequent to the above, HDFC Bank has become the sole Promoter of the Company.

Directors and Key Managerial Personnel

Non-Executive Directors

In accordance with the provisions of Section 152 of the Act, 2013 read with the Companies (Appointment and Qualification of Directors) Rules, 2014 and the Articles of Association of the Company, Ms. Renu S. Karnad (DIN: 00008064), Non-Executive Director, is liable to retire by rotation at the upcoming Annual General Meeting (AGM) of the Company scheduled to be held on July 25, 2024 and being eligible has offered herself for re-appointment. Necessary proposals for her re-appointment has been placed for your approval at the upcoming AGM. The brief resume and other related information have been detailed in the Notice convening the AGM of your Company. Your

Directors recommend her re-appointment as Non-Executive Director of your Company.

During the year, Mr. Rushad Abadan (DIN: 08035538), NonExecutive Director of the Company, director nominated by abrdn Investment Management Limited ("abrdn"), has resigned as Director of the Company with effect from close of business hours of April 18, 2023, pursuant to withdrawal of his nomination by abrdn.

Further, during the year, Mr. Keki Mistry (DIN: 00008886), had expressed his desire not to get re-appointed and accordingly, he ceased to be a Non-Executive Director of the Company at the conclusion of the AGM held on June 26, 2023.

The Board of Directors of the Company at its meeting held on January 11, 2024, based on the recommendation of the Nomination & Remuneration Committee, approved the appointment of Mr. V. Srinivasa Rangan (DIN: 00030248) as an Additional (Non-Executive) Director (Nominee of HDFC Bank Limited) effective from January 12, 2024.

Further, as required under Regulation 17(1C) of the SEBI Listing Regulations, the Company had on March 1, 2024, obtained approval of the shareholders of the Company through Postal Ballot for appointment of Mr. V. Srinivasa Rangan as a NonExecutive Director (Nominee of HDFC Bank Limited, Promoter of the Company), liable to retire by rotation.

Managing Director and Chief Executive Officer

Pursuant to the provisions of Section 196, 197, 198, 203 of the Act read with Schedule V and other applicable provisions, if any, ofthe Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and SEBI Listing Regulations, the Board of Directors of the Company at its meeting held on June 7, 2024, based on the recommendation of the Nomination & Remuneration Committee has re-appointed Mr. Navneet Munot (DIN: 05247228) as the Managing Director & Chief Executive Officer of the Company, not liable to retire by rotation, for a period of five years effective from July 1, 2024 up to June 30, 2029, subject to approval of the shareholders.

Necessary proposal for his re-appointment including payment of remuneration has been placed for your approval at the upcoming Annual General Meeting (AGM) of the Company scheduled to be held on July 25, 2024. Your Directors recommend his reappointment as MD & CEO of your Company.

Independent Directors

Pursuant to the provisions of Sections 149 and 152 of the Act read with the Companies (Appointment and Qualification of Directors) Rules, 2014, along with Schedule IV to the Act and SEBI Listing Regulations, Mr. Dhruv Kaji (DIN: 00192559),

Mr. Jairaj Purandare (DIN: 00159886), Mr. Sanjay Bhandarkar (DIN: 01260274), Mr. Parag Shah (DIN: 00374944) and Ms. Roshni Nadar Malhotra (DIN: 02346621), Independent Directors, were re-appointed at the AGM held on June 26, 2023, for a second term of 5 consecutive years, on the Board of your Company.

Mr. Dhruv Kaji, Mr. Jairaj Purandare, Mr. Sanjay Bhandarkar, Mr. Parag Shah, and Ms. Roshni Nadar Malhotra, Independent Directors, have submitted declarations stating that they meet the criteria of independence as per the provisions of the Act 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. Further, in terms of Rule 6(4) of the Companies (Appointment and Qualification of Directors) Rules, 2014, one Independent Director has passed the Online Proficiency SelfAssessment test conducted by Indian Institute of Corporate Affairs (IICA) and the other four Independent Directors were not required to appear for the said test as required by IICA as they fulfil the criteria stipulated under Rule 6(4) of the Companies (Appointment and Qualification of Directors) Rules, 2014.

In the opinion of the Board, the Independent Directors fulfil the conditions specified under the Act, 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 Act.

Key Managerial Personnel

In accordance with the provisions of Sections 2(51) and 203 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, Mr. Navneet Munot, MD & CEO, Mr. Naozad Sirwalla, Chief Financial Officer and Ms. Sylvia Furtado, Company Secretary are the Key Managerial Personnel of the Company as on March 31, 2024.

On June 6, 2024, Ms. Sylvia Furtado resigned as Company Secretary & Head-Legal (Key Managerial Personnel) and Compliance Officer of the Company under SEBI Listing Regulations with effect from close of business hours of July 15, 2024. The Board placed on record its appreciation for the contribution made by Ms. Furtado during her association with the Company.

Further, the Board of Directors of the Company at its meeting held on June 7, 2024, based on the recommendation of the Nomination & Remuneration Committee, has appointed Ms. Sonali Chandak as Company Secretary & Head-Legal (Key Managerial Personnel) and Compliance Officer of the Company under SEBI Listing Regulations with effect from July 16, 2024.

Number of Meetings of the Board

During the FY 2023-24, 9 (nine) 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

Details on the formal annual evaluation conducted of the performance of the Board, its committees and of individual directors 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 Act 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 said Nomination & Remuneration Policy is placed on the Company''s website at https://www.hdfcfund.com/about-us/ corporate-governance/code-policy.

Issue of Employee Stock Options

In line with the practice of incentivizing the employees through issue of stock options, your Company, pursuant to approval granted by the Shareholders of the Company at the AGM held on July 23, 2020, has formulated Employees Stock Option Scheme - 2020 (ESOS - 2020). During the year, the Nomination & Remuneration Committee (NRC) of Board of Directors at its meetings held on April 25, 2023 and January 10, 2024 has granted 10,50,000 and 38,800 stock options representing 10,88,800 equity shares of '' 5/- each to the eligible employees of your Company as determined by the NRC, under ESOS -2020 at grant price of '' 1,780.90/- and '' 3,415.25/- per option, respectively. 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.

There has been no material variation in the terms of the options granted under ESOS - 2020 and Company in compliance with

the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 (''ESOP Regulations'').

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 Secretarial Auditor of the Company that Employees Stock Option Scheme 2017 - Series I and ESOS 2020 have been implemented in accordance with the ESOP Regulations will be available at the upcoming AGM for inspection.

The Board of Directors, on the recommendation of the Nomination & Remuneration Committee and pursuant to the provisions of the Act and ESOP Regulations has at its meeting held on June 7, 2024, approved to extend benefit and coverage of ESOS - 2020 of the Company to the eligible employees of HDFC AMC International (IFSC) Limited, a Wholly Owned Subsidiary of the Company.

Necessary proposal for the above has been placed for your approval at the upcoming AGM of the Company scheduled to be held on July 25, 2024.

Auditors and Auditor''s Report

Statutory Auditors

In terms of Section 139 of the Act read with the Companies (Audit and Auditors) Rules, 2014, M/s. BSR & Co. LLP, Chartered Accountants (ICAI FRN: 101248W/W-100022) were re-appointed as the Statutory Auditors of your Company for a period of 5 continuous years i.e. from the conclusion of 23^rd AGM till the conclusion of 28^th AGM of the Company.

The Auditor''s Report on the financial statements of the Company for the financial year ended March 31, 2024 forms part of the Annual Report.

Secretarial Auditor

Pursuant to the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company has appointed M/s. Bhandari & Associates, Company Secretaries to conduct the Secretarial Audit of your Company for the FY 2023-24. The Secretarial Audit Report is annexed herewith as Annexure I to this report.

There were no qualifications, reservations 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 Act.

Internal Auditors

M/s M P Chitale & Co, were appointed as an Internal Auditors of your Company for the financial year 2023-24.

Enterprise Risk Management Policy

The Company has a strong Cyber Risk Management framework wherein cyber risk and mitigation controls are monitored by 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, SEBI guidelines and ISO 27001:2013. The Company maintains robust cyber security posture to protect the confidentiality and integrity of data.

SEBI vide its Master Circular for Mutual Funds dated May 19, 2023, Chapter 4 on Risk Management Framework (RMF) for Mutual Funds, HDFC Mutual Fund has adopted a Policy of Enterprise Risk Management with effect from April 1, 2022. As part of the framework, Risk Management function has incorporated policies, procedures, roles & responsibilities of the management, the Board of the Company and the Board of HDFC Trustee Company Limited. The Board of your Company has approved the Risk Management framework, revised few policies in line with the said SEBI circular and has implemented risk measures outlined in the said circular. The terms of reference of the Risk Management Committee has been enhanced in line with requirements of the said SEBI circular as its main function is to oversee the risks associated with the business of mutual fund at the enterprise level, regulatory, compliance, operation and other functions of Company.

Adequacy of Internal Controls

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

Corporate Social Responsibility

In terms of Section 135 of the Act, your Company has formed an Environmental, Social & Governance and Corporate Social Responsibility (ESG & CSR) Committee to inter-alia approve activities to be undertaken, expenditure to be incurred and to monitor the performance of the CSR activities undertaken by the Company. The said committee also oversee the development and implementation of the Companyâs ESG framework.

During the year, in view ofMr. Sanjay Bhandarkarâs experience in ESG domain, he was appointed as a member of the Committee and consequent to which the Committee consists Mr. Deepak S. Parekh (Chairman), Mr. Parag Shah, Mr. Sanjay Bhandarkar and Mr. Navneet Munot. The Company Secretary acts as the Secretary to the Committee.

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

During the year, the Company has fully spent the required amount towards CSR activities.

The composition of the ESG & CSR Committee, CSR Policy, CSR activities undertaken by the Company and the complete Impact Assessment Reports of the applicable projects are

available on the Companyâs website at https://www.hdfcfund. com/ about-us/corporate-profile/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 Act read with Companies (Specification of Definitions Details) Rules, 2014, SEBI Listing Regulations and applicable Accounting Standards, which were in the ordinary course of business and on armsâ length basis and in accordance with the policy on Related Party Transactions of the Company.

The Policy ensures proper approval and reporting of the concerned transactions between the Company and related parties.

The policy on Related Party Transactions is placed on the Companyâs website at https://www.hdfcfund.com/about-us/ corporate-governance/code-policy.

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 or Investments

Details of loans, guarantees and investments, if any, covered under the provisions of Section 186 of the Act 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 Act read together with the Companies (Acceptance of Deposits) Rules, 2014.

Unclaimed Dividend on Shares

As at March 31, 2024, unclaimed dividend amounting to '' 77,99,149/- which has not been claimed by shareholders of the Company and is lying in the respective Unpaid Dividend Accounts of the Company.

Your Company has disclosed the statement containing the names, last known addresses of those shareholders whose dividend is unpaid on the Company''s website at www.hdfcfund.com.

Annual Return

Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return as on the financial year ended March 31,2024 is placed on the Companyâs website at https://www.hdfcfund. com/about-us/financial-information/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 Act, read with the Companies (Accounts) Rules, 2014 is stated as below:

(a) Conservation of energy and technology absorption

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

â¢ Foreign exchange (earnings): '' 0.01 crore (previous year: '' 3.31 crore)

â¢ Foreign exchange (expenditure): '' 11.68 crore (previous year: '' 10.06 crore)

Particulars of Employees

As on March 31, 2024, your Company has 1,509 employees and for the previous year, your Company had 1281 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 ofthe 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 Act, the Directorsâ 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 of the Act read with Rule 5(1) of the

Companies (Appointment and Remuneration of Managerial

Personnel) Rules, 2014 are appended as Annexure III.

Other Disclosures

â¢ There was no change in the nature of the business of the Company.

â¢ There was no revision in the financial statements of the Company.

â¢ During the year, there was no receipt of any remuneration or commission by the MD & CEO of the Company from its Holding Company and Subsidiary Company.

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

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

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

â¢ 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 forms part of this report.

Directors'' Responsibility Statement

In accordance with the provisions of Section 134(5) of the Act

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 31,2024 and of the profit of the Company for year ended on that date;

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

(v) I nternal 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 Act.

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 Membersâ 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 received no complaint 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 2023-24 and the date of this Report.

Acknowledgements

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.

Mar 31, 2023

Your Directors have the pleasure in presenting the Twenty-Fourth Annual Report together with the Audited Accounts of your Company for the financial year ended March 31, 2023.

Financial Results

The financial performance of your Company for the financial year ended March 31, 2023 is summarised as below:

(I in Crore)
Financial Results	For the year ended March 31,2023	For the year ended March 31,2022
Profit before Tax	1,870.61	1,855.29
Less: Provision for Tax (Net of Deferred Tax)	446.69	462.16
Profit after Tax	1,423.92	1,393.13
Add/(Less): Other Comprehensive Income (Net of Tax)	0.42	0.49
Total Comprehensive Income (A)	1,424.34	1,393.62
Balance of Retained earnings carried forward from previous year	4,531.82	3,862.63
Less: Equity Dividend Paid for earlier year	895.86	724.43
Total(B)	3,635.96	3,138.20
Balance of Retained Earnings Carried to Balance Sheet (A B)	5,060.30	4,531.82

For the year ended March 31, 2023, your Company posted a net profit of I 1,423.92 Crore as against I 1,393.13 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.

Dividend

Your Directors recommend payment of dividend of I 48/- per equity share (960%) of face value of I 5/- each for the financial year ended March 31, 2023 as against I 42/- (840%) per equity share offace value of I 5/- each for the previous year.

The dividend pay-out ratio for the proposed dividend for the year ended March 31, 2023 is 71.95%.

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 of the Company. The Dividend Distribution Policy of the Company is placed on the Companyâs website at https://www.hdfcfund.com/about-us/ corporate-governance/code-policy in terms of Regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulationsâ).

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

Management Discussion and Analysis Report and the Report of the Directors on Corporate Governance form part of this report.

Further, pursuant to Regulation 34(2)(f) of the SEBI Listing Regulations, the Company has published the Business Responsibility and Sustainability Report for the financial year ended March 31, 2023, which also forms a part of the 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, 2023, please refer to the Statement of Changes in Equity included in the financial statements.

Capital Structure

During the year, your Company issued and allotted 1,46,164 equity shares of I 5/- each of the Company to eligible employees on exercise of stock options granted under Employee Stock Option Scheme of the Company.

Consequently, the issued, subscribed and paid-up equity share capital increased from I 1,06,63,92,760/- represented by 21,32,78,552 equity shares of I 5/- each as on April 1, 2022 to I 1,06,71,23,580/- represented by 21,34,24,716 equity shares of I 5/- each as on March 31, 2023.

During the year under review, the Company has not issued any:

(a) shares with differential rights as to dividend, voting or otherwise.

(b) sweat equity shares.

Review of Operations

Assets under Management (AUM)* of HDFC Mutual Fund ("HDFC MFâ) at the close of FY 2022-23 was '' 4.37 Lakh Crore as against an AUM of '' 4.08 Lakh Crore at the close of FY 2021-22, an increase of 7%. Total AAAUM was at '' 4.36 Lakh Crore versus '' 4.34 Lakh Crore as of March 31, 2022. HDFC MF is one of Indiaâs largest mutual funds in terms of total AUM with a market share of 11.1% based on closing AUM. It is also one of the largest mutual funds in terms of actively managed equity-oriented funds, with a market share of 11.9%. The actively managed equity-oriented AUM at the close of FY 22-23 was '' 2.32 Lakh Crore as against '' 2.00 Lakh Crore at the close of FY 21-22, an increase of 16%. The actively managed equity-oriented annual average AUM constituted 50% of the total annual average AUM and increased by 15% to '' 2.17 Lakh Crore.

Your Company managed 114 Lakh live accounts as on March 31, 2023, predominantly those of individual (retail) unitholders. The Individual monthly average AUM as a percent of total monthly average AUM as of March 2023 was 67.2% as against 62.4% as of March 2022. 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 228 branches as on March 31, 2023. 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 investor servicing network of your Company. Your Company services unitholders and over 75,000 empanelled distributors.

Your Company is one of the most preferred choices for individual investors, with a market share in assets from individual investors at 12.9%. Of the 3.77 Crore unique investors in mutual funds in India (as identified by PAN//PEKRN), we enjoy trust of 66 Lakh investors, a market penetration of18%. Your Companyâs 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 '' 17,383 Crore through systematic transactions from April 2022 to March 2023. These monthly flows provide a strong and stable "order

bookâ, provide predictable flows, with 86% 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, nondiscretionary and advisory services, to high net worth individuals (HNIs), family offices, domestic corporates, trusts, provident funds and domestic & global institutions. As on March 31, 2023, the aggregate assets under these services were at '' 1,825 Crore. We announced first close of our HDFC AMC Select AIF FOF on March 31, 2023 with commitments adding up to '' 400 Crore.

Schemes Launched

Following new schemes were launched during the financial year -

1. HDFC FMP1158D July 2022

2. HDFC NIFTY 100 ETF

3. HDFC NIFTY NEXT 50 ETF

4. HDFC FMP 1406D August 2022

5. HDFC Silver ETF

6. HDFC NIFTY Growth Sectors 15 ETF

7. HDFC NIFTY100 Quality 30 ETF

8. HDFC NIFTY50 Value 20 ETF

9. HDFC NIFTY100 Low Volatility 30 ETF

10. HDFC NIFTY200 Momentum 30 ETF

11. HDFC FMP 1359D September 2022

12. HDFC Silver ETF Fund of Fund

13. HDFC NIFTY G-Sec Dec 2026 Index Fund

14. HDFC NIFTY G-Sec July 2031 Index Fund

15. HDFC NIFTY IT ETF

16. HDFC NIFTY Private Bank ETF

17. HDFC Business Cycle Fund

18. HDFC NIFTY G-Sec Jun 2027 Index Fund

19. HDFC NIFTY G-Sec Sep 2032 Index Fund

20. HDFC FMP 1204D December 2022

21. HDFC Long Duration Debt Fund

22. HDFC S&P BSE 500 ETF

23. HDFC NIFTY Midcap 150 ETF

24. HDFC NIFTY Smallcap 250 ETF

25. HDFC FMP 2638D February 2023

26. HDFC Nifty SDL Oct 2026 Index Fund

27. HDFC MNC Fund

28. HDFC Nifty G-Sec Apr 2029 Index Fund

29. HDFC Nifty G-Sec Jun 2036 Index Fund

30. HDFC FMP 1269D March 2023

31. HDFC NIFTY SDL Plus G-Sec Jun 2027 40:60 Index Fund

Mergers of the following schemes were also announced:

HDFC FMP 1381D September 2018 (1) and HDFC FMP 1372D September 2018 (1) into HDFC Corporate Bond Fund and HDFC FMP 1344D October 2018 (1) into HDFC Medium Term Debt Fund vide notice and addendum dated May 16, 2022.

* For details on Mutual Fund AUM, refer Page 6.

Review of Subsidiary Company

Your Company had incorporated a wholly owned subsidiary company - HDFC AMC International (IFSC) Limited ("HDFC IFSC" or the "Fund Management Entityâ or the "FME") in Gujarat International Finance Tec-City (Gift City), Gandhinagar, Gujarat on May 27, 2022 for providing investment management, advisory and related services. During the year, the FME has received an inprinciple approval from International Financial Services Centres Authority (''IFSCAâ) for registration under Registered Fund Management Entity (Retail) category and is in process offulfilling the requirements for obtaining a certificate of registration from IFSCA and pursuant to which the FME will commence its business operations with initial plans of managing funds which would primarily be feeders into certain domestic mutual fund schemes and/or ETFs in India.

Accordingly, the Board at its meeting held on April 25, 2023, inter alia, approved the audited financial statements including the consolidated financial statements of the Company for the financial year ended March 31, 2023 subject to approval of members of the Company.

In accordance with the provisions of Section 136 of the Companies Act, 2013 ("the Act"), the annual report of the Company, the annual financial statements and the related documents of the HDFC IFSC are placed on the website of the Company. Shareholders may download the annual financial statements referred above from the Companyâs website or may write to the Company for the same. Further, the documents shall also be available for inspection by the shareholders at the registered office of the Company.

Pursuant to Section 129(3) of the Act, a statement containing salient features ofthe financial statements ofthe subsidiary in the prescribed Form AOC-1 forms part of the financial statements.

Except for the above subsidiary, your Company does not have any other subsidiary or an associate company or a joint venture company during the year under review.

Information on Promoter Companies Amalgamation of Housing Development Finance Corporation Limited, Holding Company

During the year, the composite scheme of amalgamation ("Scheme") for the amalgamation of: (i) HDFC Investments

Limited and HDFC Holdings Limited, wholly-owned subsidiaries of Housing Development Finance Corporation Limited ("HDFC Limited") with and into HDFC Limited; and (ii) HDFC Limited with and into HDFC Bank Limited ("HDFC Bank") under Sections 230to 232 of the Companies Act, 2013, was filed with Honâble National Company Law Tribunal, Mumbai Bench, Mumbai ("NCLT").

On March 17, 2023, Final Order was passed by NCLT sanctioning the said Scheme. Basis the above, the Company has made final application to SEBI for change in control of the Company/ change in co-sponsor(s)/promoter under SEBI (Mutual Funds) Regulations, 1996, SEBI (Portfolio Manager) Regulations, 2020 and SEBI (Alternative Investment Funds) Regulations, 2012, as applicable.

Stake sale by abrdn Investment Management Limited

During the year, your Company was in receipt of letter from abrdn Investment Management Limited ("abrdn"), one of the promoters holding 10.21% of the paid-up share capital of the Company, intimating their intention to sell the entire stake in the Company subject to applicable SEBI (Mutual Funds) Regulations, 1996 ("SEBI MF Regulations"). In this connection, SEBI had granted its approval permitting abrdn to reduce its shareholding in the Company to less than 10%, subject to the Company complying with the requirements specified under SEBI MF Regulations. Your Company has complied with the above requirements and abrdn can now reduce its stake in the Company thereby ceasing to be the co-sponsor of HDFC Mutual Fund.

Directors and Key Managerial Personnel

Non-Executive Directors

In accordance with the provisions of Section 152 of the Act, Mr. Keki Mistry (DIN: 00008886), Non-Executive Director, will retire by rotation at the ensuing Annual General Meeting (AGM) of the Company. Mr. Mistry, who is eligible for reappointment, has conveyed that he does not intend to seek re-appointment and will retire on completion of his current term at the ensuing AGM.

Mr. Mistry has always provided constructive and valuable advice from time to time for business strategy, financial matters and governance perspective for over 15 years as board member of the Company. The Board placed on record its acknowledgement and appreciation for the valuable contributions made by Mr. Mistry.

Necessary proposal to not fill up the vacancy caused by retirement of Mr. Keki Mistry has been placed for your approval at the ensuing AGM.

During the year, Mr. Rushad Abadan (DIN: 08035538), Non- Executive Director of the Company, director nominated

by abrdn Investment Management Limited (formerly Standard Life Investments Limited) (AIML), one of the Promoters of the Company, has resigned as Director of the Company with effect from close of business hours of April 18, 2023 pursuant to withdrawal of his nomination by AIML.

The Board placed on record its appreciation for the contribution made by Mr. Abadan during his association with the Company.

Independent Directors

Mr. Shashi Kant Sharma (DIN: 03281847), Independent Director, has resigned as Director of the Company with effect from April 11, 2022 as he was not in a position to devote adequate time to the affairs of the Company due to his pre-occupation.

The Board placed on record its appreciation for the contribution made by Mr. Sharma during his association with the Company.

Pursuant to the provisions of Sections 149 and 152 of the Companies Act, 2013 read with the Companies (Appointment and Qualification of Directors) Rules, 2014, along with Schedule IV to the Companies Act, 2013 and SEBI Listing Regulations, Mr. Dhruv Kaji (DIN: 00192559), Mr. Jairaj Purandare (DIN: 00159886), Mr. Sanjay Bhandarkar (DIN: 01260274), Mr. Parag Shah (DIN: 00374944) and Ms. Roshni Nadar Malhotra (DIN: 02346621), Independent Directors, were appointed at the AGM of the members held on July 16, 2019, to hold office for a term of 5 consecutive years not liable to retire by rotation, on the Board of your Company. Thus, the current term of Mr. Kaji, Mr. Purandare and Mr. Bhandarkar as Independent Directors of the Company ends on October 30, 2023 and of Mr. Shah and Ms. Nadar as Independent Directors of the Company ends on January 21, 2024 and April 26, 2024, respectively.

Considering their skills, background, experience, integrity, knowledge, expertise and contributions made over last four years as Independent Directors of the Company and on the basis of their performance evaluation, the Board believes that their continued association as Independent Directors would be of immense benefit to the Company. Accordingly, the Board of Directors of the Company based on the recommendation of the Nomination & Remuneration Committee, re-appointed all the aforementioned directors as Independent Directors of the Company for a second term of five (5) consecutive years commencing from the end of their first tenure respectively subject to the approval of members through special resolutions at the ensuing AGM.

In compliance with the provisions of Regulation 17(1A) of the Listing Regulations, the approval of the members by special resolution is also sought for re-appointing Mr. Kaji, who would be attaining the age of 75 years during his second term of appointment as an Independent Director.

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 Directorâs database as prescribed under the Act. Further, in terms of Rule 6(4) of the Companies (Appointment and Qualification of Directors) Rules, 2014, one Independent Director has passed the Online Proficiency Self-Assessment test conducted by Indian Institute of Corporate Affairs (IICA) and the other four Independent Directors were not required to appear for the said test as required by IICA as they fulfil the criteria stipulated under Rule 6(4) of the Companies (Appointment and Qualification of Directors) Rules, 2014.

In the opinion of the Board, the Independent Directors fulfil the conditions specified under the Act, 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, as amended, Mr. Navneet Munot, Managing Director & CEO, Mr. Naozad Sirwalla, ChiefFinancial Officer and Ms. Sylvia Furtado, Company Secretary are the Key Managerial Personnel of the Company.

Number of meetings of the Board

During the FY 2022-23, 5 (five) 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

Nomination & Remuneration Policy

Issue of Employee Stock Options

In line with the practice of incentivizing the employees through issue of stock options, your Company, pursuant to approval granted by the Shareholders of the Company at the AGM held on July 23, 2020, has formulated Employees Stock Option Scheme - 2020 (ESOS - 2020). During the year, the Nomination & Remuneration Committee (NRC) of Board of Directors at its meeting held on July 21, 2022 has granted 50,000 stock options representing 50,000 equity shares of H 5/- each to the eligible employees of your Company as determined by the NRC, under ESOS - 2020 at grant price of H 1,921.70 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 various employee stock option schemes viz. Employee Stock Option Scheme(s) 2015 - Series I & III 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 SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 ("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 ofthe ESOP Regulations from the Secretarial Auditor 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 Act read with the Companies (Audit and Auditors) Rules, 2014, M/s. B S R & Co. LLP, Chartered Accountants (ICAI FRN: 101248W/W-100022) were re-appointed as the Statutory Auditors of your Company for a period of 5 continuous years i.e. from the conclusion of 23^rd AGM till the conclusion of 28^th AGM ofthe Company.

The Auditor''s Report on the financial statements of the Company for the financial year ended March 31, 2023 forms part of the Annual Report.

Secretarial Auditor

Pursuant to the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company has appointed M/s. Bhandari & Associates, Company Secretaries to conduct the Secretarial Audit of your Company for the FY 2022-23. The Secretarial Audit Report is annexed herewith as Annexure I to this report.

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

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

Internal Auditors

M/s. Deloitte Touche Tohmatsu India LLP, were appointed as Internal Auditors of your Company for the financial year 2022-23.

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 investment and operational areas of the business and minimise their impact through necessary control on your Company. The framework is designed to identify risks, assess their likelihood and impact, ensure the review of mitigation measures and requires reporting on a regular basis. The Risk Management Committee and Audit Committee of the Board of Directors at their meetings periodically reviews the functioning of the ERM.

The Company has a strong Cyber Risk Management framework wherein cyber risk and mitigation controls are monitored by 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, SEBI guidelines and ISO 27001:2013. The Company maintains robust cyber security posture to protect the confidentiality and integrity of data.

SEBI vide its circular no. SEBI/HO/IMD/IMD-1DOF2/P/ CIR/2021/630 dated September 27, 2021, revised Risk Management Framework (RMF) for mutual funds. As per the said SEBI circular, HDFC Mutual Fund have adopted a Risk Management Framework with effect from April 1, 2022. As part of the framework, Risk Management function has incorporated policies, procedures, roles & responsibilities of the management, the Board of the Company and the Board of HDFC Trustee Company Ltd. The Board of your Company has approved the Risk Management framework, revised few policies in line with the said SEBI circular and has implemented risk measures outlined in the said circular. The terms of reference of the Risk Management Committee has been enhanced in line with requirements of the said SEBI circular as its main function is to oversee the risks associated with the business of mutual fund at the enterprise level, regulatory, compliance, operation and other functions of Company.

Adequacy of Internal Controls

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

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.

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 to be undertaken, expenditure to be incurred and to monitor the performance of the CSR activities undertaken by the Company. During the year the CSR Committeewasrenamedas''Environmental,Social&Governance and Corporate Social Responsibility (ESG & CSR) Committee''. Pursuant to which the ESG & CSR Committee will now in addition

to reviewing and overseeing the CSR activities of the Company will also oversee the development and implementation of the Company''s Environmental, Social & Governance framework.

The ESG & 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 Board of Directors and the ESG & 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, is set out at Annexure II to this report.

During the year, the Company has fully spent the required amount towards CSR activities.

The composition of the ESG & 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-profile/csr.

Particulars of contracts or arrangements with Related Parties

During the year Company, your Company has entered into transactions with related parties as defined under Section 2(76) of the Act read with Companies (Specification of Definitions Details) Rules, 2014, SEBI Listing Regulations 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 Policy ensures proper approval and reporting 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/ corporate-governance/code-policy.

During the year, there was no material transaction with any related parties as per the Related Party Transactions Policy ofthe Company and or any other related party transaction entered into by the Company that requires 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 or 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 Act read together with the Companies (Acceptance of Deposits) Rules, 2014.

Unclaimed Dividend on Shares

As at March 31, 2023, unclaimed dividend amounting to I 69,82,410/- which has not been claimed by shareholders of the Company and is lying in the respective Unpaid Dividend Accounts of the Company.

Your Company has disclosed the statement containing the names, last known addresses of those shareholders whose dividend is unpaid on the Companyâs website at www.hdfcfund.com.

Annual Return

Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return as on the financial year ended March 31, 2023 is placed on the Companyâs 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 Act, read with the Companies (Accounts) Rules, 2014 is stated as below:

(a) Conservation of energy and technology absorption

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

â¢ Foreign exchange (earnings): I 3.31 Crore (previous year: I 9.59 Crore)

â¢ Foreign exchange (expenditure): I 10.06 Crore (previous year: I 14.88 Crore)

Particulars of Employees

As on March 31, 2023, your Company has 1281 employees and for the previous year, your Company had 1,187 employees.

Other Disclosures

â¢ There was no change in the nature of the business of the Company.

â¢ There was no revision in the financial statements of the Company.

â¢ During the year, there was no receipt of any remuneration or commission by the Managing Director & CEO of the Company from its Holding Company and Subsidiary Company.

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

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

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

â¢ 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 forms part of this report.

Directors'' Responsibility Statement

In accordance with the provisions of Section 134(5) of the Act 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, 2023 and of the profit of the Company for year ended on that date;

(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 Act.

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 Membersâ 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 received no complaint 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 2022-23 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 abrdn Investment Management Limited (Formerly Standard Life Investments Limited), promoters ofyour Company.

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

May 30, 2023 (DIN: 00009078)

CIN: L65991MH1999PLC123027 Registered Office:

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

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

Mar 31, 2022

Your Directors have pleasure in presenting the Twenty-third Annual Report together with the Audited Accounts of your Company for the financial year ended March 31, 2022.

Financial Results

The financial performance of your Company for the financial year ended March 31, 2022 is summarized as below:

('' in Crore)
FINANCIAL RESULTS	For the year ended March 31, 2022	Fortheyear ended March 31,2021
Profit before Tax	1,855.29	1,748.95
Less: Provision for Tax (Net of Deferred Tax)	462.16	423.19
Profit after Tax	1,393.13	1,325.76
Add / (Less): Other Comprehensive Income (Net of Tax)	0.49	(0.69)
Total Comprehensive Income (A)	1,393.62	1,325.07
Balance of Retained earnings carried forward from previous year	3,862.63	3,133.52
Less: Equity Dividend Paid for earlier year	724.43	595.96
Total(B)	3,138.20	2,537.56
Balance of Retained Earnings Carried to Balance Sheet (A B)	4,531.82	3,862.63

For the year ended March 31, 2022, your Company posted a net profit of '' 1,393.13 Crore as against '' 1,325.76 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 during the year under review.

Dividend

Your Directors recommend payment of dividend of '' 42/- per equity share (840%) of face value of '' 5/- each for the financial year ended March 31, 2022 as against '' 34/- (680%) 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, 2022 is 64.30%.

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 of the Company. The Dividend Distribution Policy of the Company is placed on the Companyâs website at https:// www.hdfcfund.com/about-us/governance/codes-policies in terms of Regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulationsâ).

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

Management Discussion and Analysis Report and the Report of the Directors on Corporate Governance form part of this report.

Further, pursuant to Regulation 34(2)(f) of the Listing Regulations, instead of publishing a Business Responsibility Report, the Company has voluntarily published the Business Responsibility and Sustainability Report for the financial year ended March 31, 2022, which also forms a part of the 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, 2022, please refer to the Statement of Changes in Equity included in the financial statements.

Capital Structure

During the year, your Company issued and allotted 3,24,350 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 '' 1,06,47,71,010/- represented by 21,29,54,202 equity shares of '' 5/- each as on April 1, 2021 to '' 1,06,63,92,760/- represented by 21,32,78,552 equity shares of '' 5/- each as on March 31, 2022.

During the year under review, the Company has not issued any:

a) shares with differential rights as to dividend, voting or otherwise.

b) sweat equity shares.

Review of Operations

Assets under Management (AUM)* of HDFC Mutual Fund ("HDFC MF") at the close of FY 21-22 was '' 4.08 Lakh Crore as against an AUM of '' 3.95 Lakh Crore at the close of FY 20-21, an increase of 3%. The Annual Average AUM grew by 14% to '' 4.37 Lakh Crore. HDFC MF is one of Indiaâs largest mutual funds in terms of total AUM with a market share of 10.8% based on closing AUM. It is also one of the largest mutual funds in terms of actively managed equity-oriented funds, with a market share of 11.3%. The actively managed equity-oriented AUM at the close of FY 21-22 was '' 2.00 Lakh Crore as against '' 1.65 Lakh Crore at the close of FY 20-21, an increase of 21%. The actively managed equity-oriented annual average AUM constituted 43.2% of the total annual average AUM and increased by 28% to '' 1.89 Lakh Crore.

Your Company managed 99 Lakh live accounts as on March 31, 2022, predominantly those of individual (retail) unitholders. The Individual monthly average AUM as a percent of total monthly average AUM as of March 2022 was 62.4% as against 57.6% as of March 2021. 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 228 ISCs as on March 31, 2022. 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 investor servicing network of your Company. Your Company services unitholders and over 75,000 empanelled distributors in over 200 cities pan India.

Your Company is one of the most preferred choices for individual investors, with a market share in assets from individual investors at 12.5%. Of the 3.37 Crore unique investors in mutual funds in India (as identified by PAN), we enjoy trust of 58 Lakh investors, a market penetration of 17%. Your Companyâs 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 '' 12,970 Crore through systematic transactions from April 2021 to March 2022. These monthly flows provide a strong and stable "order bookâ, provide predictable flows, with 86% 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, 2022, the aggregate assets under these services were at '' 9,215 Crore.

All our operations for first 6 months of the financial year continued to work remotely using the existing infrastructure in place. We have successfully continued with

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. Effective October 2021, employees attended office pursuant to the issuance of Covid notifications from State and Central Government.

Schemes Launched

Following new schemes were launched during the financial year -

1. HDFC Asset Allocator Fund of Funds

2. HDFC Banking & Financial Services Fund

3. HDFC Nifty 50 Equal Weight Index Fund

4. HDFC Developed World Indexes Fund of Funds

5. HDFC Nifty Next 50 Index Fund

6. HDFC Multi-Cap Fund

7. HDFC Nifty 100 Index Fund

8. HDFC Nifty 100 Equal Weight Index Fund

9. HDFC FMPs - Series 46

Fundamental Attributes Changed

During the year, changes in fundamental attributes of the select schemes*, where enabling provisions for creation of Segregated Portfolio in case of a Credit Event were introduced, and were announced through addendum dated September 16, 2021.

*HDFC Banking and PSU Debt Fund, HDFC Corporate Bond Fund, HDFC Credit Risk Debt Fund, HDFC Dynamic Debt Fund, HDFC Floating Rate Debt Fund, HDFC Income Fund, HDFC Low Duration Fund, HDFC Medium Term Debt Fund, HDFC Short Term Debt Fund, HDFC Ultra Short Term Fund, HDFC Liquid Fund, HDFC Money Market Fund.

The mergers of following schemes were also announced:

1) HDFC Long Term Advantage Fund, HDFC EOF - II - 1126D May 2017 and HDFC EOF - II - 1100D June 2017 (1) into HDFC Large and MidCap Fund and creation of segregated portfolio in HDFC Large and MidCap Fund vide notice cum addendum dated December 9, 2021 and

2) HDFC FMP 1265D October 2018 (1), HDFC FMP 1246D November 2018 (1), HDFC FMP 1127D March 2019 (1), HDFC FMP 1120D March 2019 (1), HDFC FMP 1118D March 2019 (1) and HDFC FMP 1100D April 2019 (1) into HDFC Corporate Bond Fund, vide notice cum addendum dated March 15, 2022.

* For details on Mutual Fund AUM, refer pages 6 and 7.

Directors and Key Managerial Personnel Non-Executive Directors

During the year, Mr. James Aird (DIN: 01057384), NonExecutive Director of the Company, director nominated by abrdn Investment Management Limited (formerly Standard Life Investments Limited) (AIML), one of the Promoters of the Company, has resigned as Director of the Company with effect from close of business hours of October 25, 2021 pursuant to withdrawal of his nomination by AIML consequent to reduction of shareholding in your company by AIML.

The Board places on record its appreciation for the valuable contribution provided by Mr. James Aird at the Board/ Committee meetings and to the Senior Management of the Company during his long association as a Non-Executive Director of the Company.

During the year, the members at their 22^nd Annual General Meeting ("AGM") of the Company had appointed Mr. Rushad Abadan (DIN: 08035538) as a Non-Executive NonIndependent Director on the Board of Directors of the Company, liable to retire by rotation.

In accordance with the provisions of Section 152 of the Companies Act, 2013 ("the Act") and the Articles of Association of the Company, Mr. Deepak S. Parekh (DIN: 00009078), Director, is liable to retire by rotation at the ensuing AGM and being eligible has offered himself for re-appointment.

Mr. Deepak S. Parekh, Chairman and Non-Executive Director of the Company having attained the prescribed age limit of 75 years, Special Resolution is proposed in accordance with Regulation 17(1A) of Listing Regulations. The members at their 20^th AGM of the Company had approved the continuation of directorship of Mr. Parekh beyond 75 years of age by passing a Special Resolution.

Necessary proposal for his re-appointment has 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 his re-appointment as a Non-Executive Director of your Company.

Executive Director

During the year, the members at their 22^nd AGM of the Company had appointed Mr. Navneet Munot (DIN: 05247228) as the Managing Director & Chief Executive Officer (CEO) of the Company for a period effective from February 16, 2021 up to June 30, 2024.

Further, during the year, there was no receipt of any remuneration or commission by the Managing Director & CEO of the Company from the holding company.

Independent Directors

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 Act and 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. Further, in terms Rule 6(4) of the Companies (Appointment and Qualification of Directors) Rules, 2014, out of six Independent Directors of the Company as on March 31, 2022, two Independent Directors have passed the Online Proficiency Self-Assessment Test conducted by Indian Institute of Corporate Affairs (IICA) and four Independent Directors were not required to appear for Online Proficiency Self-Assessment Test as required by IICA.

In the opinion of the Board, the Independent Directors fulfill the conditions specified under the Act the Rules made thereunder and 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 Act.

Further, Mr. Shashi Kant Sharma (DIN: 03281847), Independent Director, has resigned as Director of the Company with effect from April 11, 2022 as he was not in a position to devote adequate time to the affairs of the Company due to his pre-occupation elsewhere.

The Board places on record its appreciation for the contribution made by Mr. Sharma during his association with the Company.

Key Managerial Personnel

In accordance with the provisions of Sections 2(51) and 203 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, Mr. Navneet Munot, Managing Director & CEO, Mr. Naozad Sirwalla, Chief Financial Officer and Ms. Sylvia Furtado, Company Secretary are the Key Managerial Personnel (KMP) of the Company.

During the year under review, Mr. Piyush Surana, Chief Financial Officer and KMP of the Company resigned with effect from close of business hours of January 31, 2022. Mr. Naozad Sirwalla, was appointed as the Chief Financial Officer and KMP of the Company with effect from February 1, 2022.

Number of Meetings of the Board

During the FY 21-22, 6 (six) 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

Nomination & Remuneration Policy

In terms of the requirements under the Act and 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. Further, during the year, Nomination & Remuneration Policy was amended to include reference of the Skin in the Game Policy prepared pursuant to SEBI circulars issued on alignment of interest of Key Employees of Asset Management Companies with the Unitholders of the Mutual Fund Schemes. The said 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 incentivizing the employees through issue of stock options, your Company, pursuant to approval granted by the Shareholders of the Company at the AGM held on July 23, 2020, has formulated Employees Stock Option Scheme - 2020 (ESOS - 2020) in terms of SEBI (Share Based Employee Benefits) Regulations, 2014. During the year, the Nomination & Remuneration Committee (NRC) of Board of Directors at its meeting held on January 24, 2022 has granted 1,82,000 stock options representing 1,82,000 equity shares of '' 5/- each to the eligible employees of your Company as determined by the NRC, under ESOS - 2020 at grant price of '' 2,369.40 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.

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 Secretarial Auditor 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

M/s. B S R & Co. LLP, Chartered Accountants (ICAI FRN: 101248W / W-100022) were appointed as the Statutory Auditors of your Company to hold office from the conclusion of 18^th AGM till the conclusion of the ensuing AGM.

M/s. B S R & Co. LLP, Chartered Accountants, will be completing their first term of five consecutive years as the statutory auditors of the company at the conclusion of this 23^rd AGM of the Company.

Pursuant to Section 139(2) of the Act, the Company can appoint an auditors firm for a second term of five consecutive years.

M/s. B S R & Co. LLP, have consented to the said re-appointment, and confirmed that their re-appointment, if made, would be within the limits specified under the Act. They have further confirmed that they are not disqualified to be re-appointed as statutory auditor in terms of the provisions of the Act read with rules made thereunder.

The Board is of the opinion that continuation of M/s. B S R & Co. LLP, as Statutory Auditors will be in the best interests of the Company and therefore, has recommended the members to consider their re-appointment as Statutory Auditors of your Company, for a term of five years, from the conclusion of the ensuing 23^rd AGM, till the conclusion of 28^th AGM of the Company.

Secretarial Auditor

Pursuant to the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company has appointed M/s. Bhandari & Associates, Company Secretaries to conduct the Secretarial Audit of your Company for the FY 21-22. The Secretarial Audit Report is annexed herewith as Annexure I to this report.

There were no qualifications, reservations 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 Act.

Internal Auditors

M/s. Deloitte Touche Tohmatsu India LLP, were appointed as Internal Auditors of your Company for the financial year 2021-22.

Corporate Social Responsibility

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

The CSR Committee comprises Mr. Deepak S. 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 areas of promoting education and health care including preventive health care. The Company also undertakes CSR activities in the areas of promoting sports, environment sustainability and eradicating malnutrition. These activities are in accordance with the Schedule VII to the Act.

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 II to this report.

The amount remaining unspent under Section 135(5) of the Act 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 Act and such amount shall be spent by your Company in pursuance of its obligation within the approved timelines.

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/governance/codes-policies.

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 Act read with Companies (Specification of Definitions Details) Rules, 2014, Listing Regulations 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.

During the year the Company has revised its Related Party Transactions Policy to bring it in line with the amendments made by SEBI in Listing Regulations. The said Policy is effective

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 Company has a strong Cyber Risk Management framework wherein cyber risk and mitigation controls are monitored by 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, SEBI guidelines and ISO 27001:2013. The Company has developed its digital infrastructure to enhance the Mutual Fund investors'' interface with the Company. The Company maintains robust cyber security posture to protect the confidentiality and integrity of data.

During the year, SEBI vide its circular no. SEBI/HO/IMD/IMD-1 DOF2/P/CIR/2021/630 dated September 27, 2021, revised Risk Management Framework (RMF) for mutual funds. As per the said SEBI circular, all the mutual funds including HDFC Mutual Fund will have to adopt a Risk Management Framework which shall provide for set of principles or standards, inter-alia, comprising policies, procedures, risk management functions and roles & responsibilities of the management, the Board of AMC and the Board of Trustees. The new RMF shall be effective April 1, 2022. The Board of your Company has approved the Risk Management framework, revised few policies in line with the said SEBI circular and is geared to implement risk measures outlined in the said circular. The terms of reference of the Risk Management Committee has been enhanced in line with requirements of the said SEBI circular as its main function is to oversee the risks associated with the business of mutual fund at the enterprise level, regulatory, compliance, operation and other functions of Company.

Adequacy of Internal Controls

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

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.

from April 1, 2022. The Policy ensures proper approval and reporting of the concerned transactions between the Company and related parties.

The policy on Related Party Transactions is placed on the Companyâs 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 requires 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 or Investments

Details of loans, guarantees and investments, if any, covered under the provisions of Section 186 of the Act 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 Act read together with the Companies (Acceptance of Deposits) Rules, 2014.

Unclaimed Dividend on Shares

As at March 31, 2022, unclaimed dividend amounting to '' 50,62,919/- which has not been claimed by shareholders of the Company, is lying in the respective Unpaid Dividend Accounts of the Company.

Your Company has disclosed the statement containing the names, last known addresses of those shareholders where the dividend is unpaid on the Companyâs website at www.hdfcfund.com.

Annual Return

Pursuant to Section 92(3) read with Section 134(3)(a) of the Act the Annual Return as on the financial year ended March 31, 2022 is placed on the Companyâs 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

Act read with the Companies (Accounts) Rules, 2014 is stated as below:

(a) Conservation of energy and technology absorption

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

â¢ Foreign exchange (earnings): '' 9.59 Crore (previous year: '' 10.34 Crore)

â¢ Foreign exchange (expenditure): '' 14.88 Crore (previous year: '' 15.35 Crore)

Particulars of Employees

As on March 31, 2022, your Company has 1,187 employees and for the previous year, your Company had 1,254 employees.

In accordance with the provisions of Rule 5(2) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and particulars ofthe 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 Act the Directorsâ 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.

Other Disclosures

â¢ There was no change in the nature of the business of the Company.

â¢ There was no revision in the financial statements of the Company.

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

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

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

â¢ 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.

compliance with the spirit and provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

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 2021-22 and the date of this Report.

Acknowledgements

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, 2022 (DIN: 00009078)

CIN: L65991MH1999PLC123027 Registered Office:

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

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

Directors'' Responsibility Statement

In accordance with the provisions of Section 134(5) of the Act 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, 2022 and of the profit of the Company for year ended on that date;

(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 Act.

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 Membersâ 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 received one complaint pertaining to sexual harassment and the same was disposed of within the prescribed timeline in

Mar 31, 2021

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 Companyâs 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 Regulationsâ).

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 Indiaâs 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 Companyâs 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 21^st December 2020, 22^nd December 2020 & 13^th 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 12^th 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 21^st 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. Barveâs 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 Barveâs 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 21^st 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.

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

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 Companyâs 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 Regulationsâ). 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 ("Schemesâ) 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 18^th AGM till the conclusion of 23^rd 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.

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 Ministerâs 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 itâs 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 Companyâs 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 armsâ 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 Companyâs 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 Companyâs 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 Companyâs 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

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

â¢ 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 Directorsâ 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

â¢ There was no change in the nature of the business of the Company.

â¢ There was no revision in the financial statements of the Company.

â¢ 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.

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

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

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

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

â¢ 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.

â¢ 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 Membersâ 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", 2^nd Floor, H. T. Parekh Marg 165 - 166, Backbay Reclamation, Churchgate Mumbai - 400 020.

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

Mar 31, 2019

To the Members

The Directors have pleasure in presenting the Twentieth Annual Report together with the 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 is summarised as below:

Rs.(in Crore)

Financial Results	For the year ended March 31, 2019	For the year ended March 31, 2018
Profit before Tax	1,374.70	1,058.23
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	1,567.67	1,333.96
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	2,190.37	1,567.67

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

For the year ended March 31, 2019, your Company posted a net profit of Rs. 930.60 Crore as against Rs. 711.29 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 the 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 during the year under review.

Dividend

Interim Dividend

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

Final Dividend

Your Directors recommend payment of final dividend for the financial year ended March 31, 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 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 athttps://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 and Report of the Directors on Corporate Governance

In accordance with the SEBI Listing Regulations, the Management Discussion and Analysis Report 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 the financial year 2018-19.

Initial Public Offering (IPO)

The Board of Directors of your Company is pleased to inform that during the year under review, your Company has completed its highly successful Initial Public Offer (IPO) and received 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-up equity share capital of your Company. The equity shares of your Company are listed on the National 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 General Meeting of the Company held on April 18, 2018, your Company issued and allotted 14,33,600 equity shares of the Company of Rs. 5/- each at an issue price of Rs. 1050/- per equity share aggregating to Rs. 1,50,52,80,000/by way of a private placement in accordance with Sections 62(1)(c), 42 and other applicable provisions, if any, of the Companies Act, 2013 including the Rules framed thereunder.

Proceeds from the Private placement issue:

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

Allotment of Equity Shares under Employee Stock Option Schemes

During the year, your Company issued and allotted 5,84,410 equity shares of Rs. 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 Rs. 1,05,27,76,000/- divided into 21,05,55,200 equity shares of Rs. 5/- each as on April 01, 2018 to Rs. 1,06,28,66,050/- divided into 21,25,73,210 equity shares of Rs. 5/- each as on March 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 of financial year 2018-19 was Rs. 3,43,938 Crore as against an AuM of Rs. 2,91,985 Crore at the close of financial year 2017-18, an increase of 18%. HDFC MF is Indiaâs largest mutual fund in terms of total AuM with a market share of 14.5%. It is also the largest mutual fund in terms of actively managed equity-oriented funds, with a market share of 16.2%. The actively managed equity-oriented AuM of HDFC MF at the close of financial year 2018-19 was Rs. 1,64,263 Crore as against Rs. 1,44,925 Crore at the close of financial year 2017-18, an increase of 13%.

Your Company managed 91 lakh live accounts as on March 31, 2019, predominantly those of individual (retail) unitholders. The Individual monthly average AUM as a percent of total monthly average AUM as of March 2019 was 63.0% as against 62.2% as of March 2018. 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. As on March 31, 2019, your Company has 210 branches. ISCs of Computer Age Management Services Pvt. 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 investor-servicing network of your Company. Your Company services unitholders and over 75,000 empanelled distributors in approximately 200 cities pan India.

Your Company is the most preferred choice for retail investors, with the highest market share in assets from individual investors at 15.4%. Of the 1.93 Crore unique investors in mutual funds in India (as identified by PAN), we enjoy trust of 53 Lakh investors, a market share of 28%. Your Companyâs 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 Rs.1,182 Crore through systematic transactions in the month of March 2019. These monthly flows provide a strong and growing "order bookâ provide predictable flows, with 78.4% 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, 2019, the aggregate assets under these services were at Rs. 9,755 Crore.

New Scheme Launched Under HDFC Mutual Fund

The following open ended scheme was launched under HDFC MF during financial year 2018-19:

HDFC Ultra Short Term Fund

HDFC Ultra Short Term Fund ("the Scheme") was launched in the month of September 2018. The investment objective of the Scheme is to generate regular income through investments in Debt and Money Market Instruments while maintaining Macaulay duration of the portfolio between 3 months and 6 months. The Scheme aims to generate income through investments in a range of debt and money market instruments. The Scheme would endeavour to generate returns commensurate with low levels of interest rate risk. The Scheme shall endeavour to develop a well-diversified portfolio of debt (including Securitised debt) and money market instruments. The Scheme may also invest in the schemes of 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 the varying investment needs of investors.

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

In accordance with SEBI circular no. SEBI/HO/IMD/DF3/ CIR/P/2017/114 dated October 6, 2017 read with circular no. SEBI/HO/IMD/DF3/CIR/P/2017/126 dated December 04, 2017 on "Categorization and Rationalization of Mutual Fund Schemesâ, HDFC Trustee Company Limited, Trustee to the schemes of HDFC MF, categorized and rationalized the existing open ended schemes of HDFC MF by inter alia approving certain changes to certain schemes of HDFC MF. These proposed changes were carried out by implementing changes in the fundamental 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 with the Companies (Appointment and Qualification of Directors) Rules, 2014 and the Articles of Association 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 General Meeting (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 resume of these Directors and other related information have been detailed in the Notice convening the AGM of your Company. Your Directors recommend their re-appointment as Non-Executive Directors of your Company.

Mr. Deepak Parekh (DIN : 00009078), Non - Executive Director, would attain the age of 75 years on October 18, 2019 and he would be able to continue his directorship in the Company post the said date subject to the approval of members by way of a special resolution in terms of Regulation 17(1A) of SEBI Listing Regulations. Necessary proposal for 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), Independent Directors of the Company resigned, with effect from the close of business hours of October 31, 2018. The Board placed on record a vote of thanks and appreciation for the valuable contribution 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 (Additional Directors) of the Company for a term of 5 consecutive years effective October 31, 2018, subject 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 term of 5 consecutive years effective January 22, 2019 and April 27, 2019, respectively, subject to the approval of members at the ensuing AGM.

Pursuant to provisions of Sections 149, 150 and 152 of the Companies Act, 2013 read with the Companies (Appointment and Qualification of Directors) Rules, 2014, along with Schedule IV to the Companies Act, 2013, the following Independent Directors were appointed at the Extra Ordinary General Meeting of the members held on July 21, 2014, to hold office for a term of 5 consecutive years up to July 20, 2019, not liable to retire by rotation, on 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 Independent Director of the Company for a second term commencing from July 21, 2019 till November 29, 2019 based on the performance evaluation, subject to the approval of members through special resolution at the ensuing AGM.

The necessary resolutions for the appointment/ re-appointment of the above mentioned directors including their brief profiles and other related information have been included in 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 for being 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, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, Mr. Milind Barve, Managing Director, Mr. Piyush Surana, Chief Financial Officer and Ms. 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. Parag Shah and Ms. Roshni Nadar Malhotra, 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.

Mr. Humayun Dhanrajgir, Mr. P. M. Thampi and Mr. Rajeshwar Bajaaj, who resigned as Independent Directors of the Company w.e.f. October 31, 2018, had submitted declarations at 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 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.

Formal Annual Evaluation

Details on the formal annual evaluation of the performance of the Board, its committees and of individual directors 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 Companies Act, 2013 and SEBI Listing Regulations, your Company has put in place a Nomination & Remuneration Policy, inter-alia, detailing the directorâs 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 athttps://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 has in the past granted stock options to the employees under the various employee stock option schemes formulated from time to time.

Your Company has formulated Employee Stock Option Scheme(s) 2015- Series I & III and 2017- Series I & II ("Schemes") 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 SEBI (Share Based Employee Benefits) Regulations, 2014 ("ESOP Regulationsâ). However, the above Schemes, formulated prior to IPO by your Company, were aligned with the ESOP Regulations. The disclosures as required under the 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 Company will not make any fresh grant of stock options under these aforesaid Schemes. 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.

Further, the certificate required under Regulation 13 of the ESOP Regulations from the Statutory Auditors of the Company that the above Schemes have been implemented in accordance 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 financial statements 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 has prepared its financial statements in accordance with previous GAAP.

Accordingly, your Company has prepared financial statements which comply with Ind AS applicable for the year ended on March 31, 2019, together with the comparative period data as at and for the year ended March 31, 2018, as described in the significant accounting policies. In preparing these financial statements, your Companyâs opening balance sheet was prepared as at April 01, 2017 (your Companyâs date of transition to Ind AS). Note no. 39 under the notes to the financial statements, explains the principal adjustments made by the Company in restating its Previous GAAP financial statements, including the Balance Sheet as at April 01, 2017 and the financial statements as at and for the year ended March 31, 2018.

Auditors and Auditors'' 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 18^th AGM till the conclusion of 23^rd AGM, 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 by Ministry of Corporate Affairs, the appointment of 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 has appointed M/s. Bhandari & Associates, Company Secretaries to conduct the Secretarial Audit of your Company for the financial year 2018-19. The Secretarial Audit Report is annexed herewith as Annexure II to this report.

The aforesaid 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 2018-19.

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 and this framework incorporates the systematic application of policies, procedures and checks 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 progress and functioning of the ERM.

The primary business of your Company is to manage the schemes of 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 reviews the progress of risk management practices pertaining to HDFC Mutual Fund.

Adequacy of Internal Controls

Your Company has internal control systems which commensurate with the size and complexity of its operations. 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 was 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 of Directors to approve activities to be undertaken, expenditure to be incurred and to monitor the performance of the CSR activities undertaken by 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 are in the areas of promoting preventive health care, promoting sports and promoting education. These activities are broadly in accordance with the Schedule VII to the Companies Act, 2013.

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, is set out at Annexure III to this report.

The contents of the CSR Policy as well as the CSR activities undertaken by the Company are available on the Company''s website athttps://www.hdfcfund.com/ about-us/corporate/csr.

Particulars of Contracts or Arrangements with Related Parties

The Related Party Transactions Policy of the Company ensures proper approval and reporting of the concerned transactions between the Company and related parties. The policy 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 the Related Party Transactions Policy of the Company and all the related party transactions entered into by the Company were in the ordinary course of business and on an armâs length basis, 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 or 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, 2019, dividend amounting to Rs. 312/- had not been claimed by shareholders of the Company. Your Company has transferred this amount of dividend to HDFC AMC Ltd.

- Unpaid Interim Dividend A/c 2018-19. Your Company will disclose a statement containing the names, last known addresses and the unpaid dividend to be paid to each shareholder 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 were transferred to the Unclaimed Suspense Account.

During the year under review, 13 claims were received by Karvy Fintech Pvt. Ltd, your Companyâs Registrar & Share Transfer Agent, to transfer 205 shares held in unclaimed suspense share account and after thorough verification, all the 205 shares have been transferred to the respective shareholders.

There were no shares lying in the Unclaimed Suspense Account (IPO) as on March 31, 2019. Disclosure required under Regulation 39 read with Part F of Schedule V of SEBI Listing Regulations, is provided in the Report of Directors on Corporate Governance, which forms part of this report .

Extract of Annual Return

As per the provisions of Companies Act, 2013, the details forming part of the extract of the Annual Return (in the prescribed Form MGT-9) as on the financial year ended March 31, 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 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

(a) Conservation of energy and technology absorption-

(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 1,150 employees and for the previous year, your Company had 995 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 and of the aforesaid employees are set out in the annexure to this report. In terms of the provisions of Section 136(1) of the Companies Act, 2013, the Directorsâ 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.

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 your Company.

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

- 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 forms 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, 2019 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 regions 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 Membersâ 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.

On December04, 2018, vide a settlement order issued by SEBI, your Company, without admitting or denying the violations, settled proceedings in connection with quasi - judicial proceedings initiated in respect of certain alleged violations under SEBI (Mutual Funds) Regulations, 1996 and circulars and/or guidelines issued, for an amount of Rs. 3,78,56,498/-.

Vide the said settlement order, SEBI has stated that the quasi judicial proceedings have been disposed off.

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 2018-19 and the date of this Report.

Acknowledgements

The Directors take this opportunity to thank its investors, shareholders, 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 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 26, 2019 (DIN: 00009078)

CIN: L65991MH1999PLC123027

REGISTERED OFFICE:

"HDFC House", 2^nd Floor, H. T. Parekh Marg,

165 - 166, Backbay Reclamation, Churchgate,

Mumbai - 400 020.

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

Mar 31, 2018

Directorsâ Report

TO THE MEMBERS

The Directors have pleasure in presenting the Nineteenth Annual Report together with the Audited Accounts of the Company for the financial year ended March 31, 2018.

Financial Performance

The financial performance of the Company for the financial year ended March 31, 2018 is summarized as below:

Financial Results

Particulars For the year ended For the year ended March 31, 2018 March 31, 2017 (Rs, in Crore) (Rs, in Crore)
Profit before Tax	1,062.52	799.80
Provision for Tax (Net of Deferred Tax)	340.90	249.55
Profit after Tax	721.62	550.25
Balance brought forward from previous year	1,239.81	1,023.26
Profit available for appropriation	1,961.43	1,573.51
General Reserve	72.16	55.02
Capital Redemption Reserve	â	-
Buy-back of Equity Shares	â	-
Tax on Buyback of Equity Shares	â	-
Interim Equity Dividend Paid	336.89	231.54
Tax on Interim Equity Dividend Paid	68.58	47.14
Proposed Equity Dividend	â	-
Tax on Proposed Equity Dividend	â	-
Balance carried to Balance Sheet	1,483.80	1,239.81

For the year ended March 31, 2018, your Company posted a net profit of Rs, 721.62 crores as against Rs, 550.25 crores in the previous year. Appropriations from the net profit have been effected as per the summary given above.

Your Company did not have any subsidiary or an associate company or a joint venture company during the year 2017-18.

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 2017-18 and the date of this Report.

Dividend

Your Directors had declared and paid an interim dividend during the financial year ended March 31, 2018 of Rs, 16/- per equity share (320%) of face value of Rs, 5/- each in the month of March 2018 involving a total outflow of Rs, 405.47 crores (including dividend distribution tax of Rs, 68.58 crores) and the same is recommended to be declared as final dividend for the financial year ended March 31, 2018. An interim dividend of Rs, 92 /- (920%) per equity share of face value of Rs, 10/- each was declared and paid to its shareholders for previous financial year 2016-17.

Transfer to General Reserves

A sum of Rs, 72.16 crores has been transferred to the General Reserves of the Company.

Capital Structure

During the year, your Company issued and allotted 11,52,500 equity shares of Rs, 10/- each of the Company to eligible employees on exercise of options granted under Employee Stock Option Schemes of the Company.

The authorized share capital of the Company was increased from Rs, 80 crores divided into 3 crores equity shares of Rs, 10/- each and 5 crores preference shares of Rs, 10/- each to Rs, 350 crores divided into 30 crores equity shares of Rs, 10/- each and 5 crores preference shares of Rs, 10/each by creating additional 27 crores equity shares of Rs, 10/- each. Your Board of Directors recommended issue of Bonus shares in the ratio of 3:1 i.e 3 new equity shares for every one equity share held and sub-division of equity shares of Rs, 10/- each into two equity shares of Rs, 5/- each which was approved by the Shareholders at an extra-ordinary general meeting held on February 6, 2018. Accordingly, bonus shares were allotted to the members who held the equity shares on the Record Date i.e., February 5, 2018 by capitalization of balance in the free reserves amounting to Rs, 78.96 crores. Further, the equity shares of face value of Rs, 10/- each were sub-divided into two equity shares of face value of Rs, 5/- each by way of corporate action to the shareholders who held the shares on the Record Date i.e., February 13, 2018.

Consequently the issued, subscribed and paid-up equity share capital has increased from Rs, 26.31 crores divided into 2,63,19,400 equity shares of Rs, 10/- each to Rs, 1,05,27,76,000/divided into 21,05,55,200 equity shares of Rs, 5/- each.

At the end of the year, the issued, subscribed and paid - up capital of your Company stood at Rs, 1,05,27,76,000/- comprising of 21,05,55,200 equity shares of Rs, 5/- each.

Your Board of Directors at its meeting held on March 8, 2018 have accorded in-principle approval for issue of up to 16,00,000 equity shares of face value of Rs, 5/- each of the Company for cash consideration aggregating up to Rs, 210 crores by way of a private placement in accordance with the provisions of Sections 23, 42 and 62(1)(c) of the Companies Act, 2013 read with Rule 13 of the Companies (Share Capital and Debentures) Rules, 2014.

Initial Public Offering

During the year under review, the Board of Directors of your Company approved taking steps to initiate the process for an Initial Public Offering (IPO) of the Company by way of an offer for sale by Housing Development Finance Corporation Limited (HDFC Ltd) and Standard Life Investments Limited (SLI) in one or more tranches such that the post dilution shareholding of HDFC Ltd is at 50.01% and SLI at 24.99%. This is subject to relevant regulatory and other approvals, as applicable. Accordingly, your Company has filed Draft Red Herring Prospectus with Securities and Exchange Board of India on March 15, 2018. The Company is presently awaiting / will require approvals from SEBI and other regulatory authorities.

Alteration of Articles of Association

During the year, the shareholders at their meeting held on March 9, 2018 adopted a new set of Articles of Association (comprising of âPart Aâ and âPart Bâ) pursuant to the proposed Initial Public Offering. Up to the date of listing of the Company''s equity shares on a recognized stock exchange in India, Part A shall prevail over Part B in the event of any inconsistency, contradiction, conflict or overlap between Part A and Part B (subject to applicable laws), and Part A shall automatically terminate and cease to have any force and effect on and from the date of listing of the Company''s equity shares on a recognized stock exchange in India, without requiring any further action by the Company or its shareholders.

Review of Operations

Your Directors are pleased to report that:

The Average Assets under Management (AAuM) of HDFC Mutual Fund (HDFC MF) during the financial year 2017-18 were Rs, 2,78,016.87 crore as against an AAuM of Rs, 2,16,151.01 crore during the financial year 2016-2017, representing an increase of over 28%. HDFC MF ranks as one of the largest fund houses in India.

The total number of accounts managed by HDFC MF is around 80.96 lakh as on March 31, 2018. 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. As on March 31, 2018, your Company has 210 ISCs. ISCs of Computer Age Management Services Pvt. Ltd. (CAMS), the Registrar and Transfer Agent of HDFC MF, are Official Points of Acceptance for transactions of HDFC MF Schemes. These offices (237 as on March 31, 2018) supplement the investor-servicing network of your Company. With these offices, your Company services investors in approximately 200 cities pan India.

Your Company provides Discretionary and Non-Discretionary Portfolio Management services to High Net worth Individuals and Corporate(s) on a segregated basis while Advisory services are provided to Institutional Investors and Corporate(s). As on March 31, 2018, the aggregate assets under investment management / advisory services under Portfolio Management Services were at Rs, 1,844 crore.

Your Company has successfully undertaken Investment and Advisory services mandates during the financial year 2017-18 pursuant to approval received from Securities and Exchange Board of India (SEBI) with respect to undertaking Investment and Advisory services under Regulation 24(b) of the SEBI (Mutual Fund) Regulations, 1996. As on March 31, 2018, the aggregate assets under investment management / advisory services under this was Rs, 5099 crore.

New Scheme Launched Under HDFC Mutual Fund

In order to offer more investment options to investors, the following Schemes were launched under HDFC MF during financial year 2017-18:

HDFC Equity Opportunities Fund -Series II (Two Plans)

The two plans of the close-ended equity scheme with maturity of over 3 years were launched in the months of May and June of 2018. The plans follow a strategy to benefit from the overall economic recovery by investing in a diversified portfolio of equity stocks, while also taking exposure to NIFTY 50 put options to limit downside, if any, from the equity markets.

The two plan mobilized assets of Rs, 1,134 crores and Rs, 721 crores respectively, in the NFO.

HDFC Housing Opportunities Fund

- Series I

In the month of November 2018, HDFC Housing Opportunities Fund -Series 1 (1140 days) was launched, a first of its kind close-ended thematic equity scheme, focusing on equities of companies in housing and its allied business activities. The fund invests a minimum of 80% in equities and upto 20% in debt and money market instruments.

The fund aims to benefit from the expected growth in housing and allied businesses owing to the government push towards affordable housing that is likely to impact a host of sectors / industries thereby providing an investment opportunity. The NFO mobilized assets of Rs, 3,389 crores. In addition to the above, HDFC MF has launched various Schemes under Fixed Maturity Plans Series 38 and Series 39.

HDFC MF did not launch any open ended mutual fund during the year the focus was on growing the existing funds. HDFC MF would continue to be selective when it comes to launching of new fund offerings.

As at March 31, 2018, HDFC MF offered 133 schemes across asset classes to meet the varying investment needs of investors.

Change in fundamental attributes and Merger

During the year, the two plans under HDFC Children''s Gift Fund -Investment Plan (equity oriented) and Savings Plan (debt oriented) were merged. The rationale for the merger has been the lack of investor interest in the Savings Plan since its inception.

Awards and Accolades

Your Directors are pleased to inform that the Schemes / Fund Managers of HDFC MF received the following awards during the year 2017-18:

- HDFC Small Cap Fund ad (Potential comes in all sizes) has won a Gold in the Banking and Finance category at Magzimise Awards;

- HDFC Short Term Opportunities Fund has won the award in the Short-Term Bond Fund category -Morningstar Fund Awards 2018;

- HDFC Mutual Fund has been adjudged Winner in the Equity Fund House Category - 2017 in the Outlook Money Awards 2017;

- HDFC Balanced Fund has won Thomson Reuters Lipper India 2017 Fund Awards;

- Mr. Chirag Setalvad has been chosen in the 10 Best Fund Managers 2017 - ET Wealth & Morningstar ranking;

- Mr. Anil Bamboli has been bestowed âBusiness Standard Awards 2016: Best Fund Manager - Debt â.

Directors and Key Managerial

Personnel

Directors

During the year, Mr. Milind Barve was re-appointed as Managing Director of the Company, not liable to retire by rotation, for a period of 3 (three) years commencing from November 1, 2017 up to October 31, 2020.

In accordance with the Companies Act, 2013 and the Articles of Association of the Company, Mr. James Aird and Mr. Keki Mistry, Directors, are liable to retire by rotation at the ensuing Annual General Meeting (AGM) pursuant to the provisions of Section 152 of the Companies Act, 2013 read with the Companies (Appointment and Qualification of Directors) Rules, 2014 and the Articles of Association of your Company and being eligible have offered themselves for reappointment.

Necessary proposals for their reappointment have been placed for your approval at the ensuing AGM. The brief resume of these Directors and other related information 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.

During the year, Dr. Deepak Phatak, Director, attracted disqualification under Section 164 (2) in respect of directorship held in another company. The said company has rectified the default by availing the benefit under Condo nation of Delay Scheme -2018 by Ministry of Corporate Affairs. Accordingly, none of the Directors of the Company are disqualified for being appointed as directors as specified in Section 164 of the Companies Act, 2013.

Key Managerial Personnel

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

Independent Directors

Pursuant to provisions of Section 149, 150 and 152 of the Companies Act, 2013 read with Companies (Appointment and Qualification of Directors) Rules, 2014, along with Schedule IV of the Companies Act, 2013 (including any statutory modification(s) or re-enactment thereof for the time being in force) and shareholders'' approval at Fifteenth Annual General Meeting, the following Independent Directors hold office for a term of five consecutive years up to July 20, 2019, not liable to retire by rotation, on the Board of Directors of your Company:

1. Mr. Hoshang Billimoria

2. Mr. Humayun Dhanrajgir

3. Mr. P.M. Thampi

4. Dr. Deepak Phatak

5. Mr. Rajeshwar Bajaaj

6. Mr. Vijay Merchant

Declaration of Independence

In accordance with the provisions of Section 134(3)(d) of the Companies Act, 2013, Mr. Hoshang Billimoria, Mr. Humayun Dhanrajgir, Mr. P.M. Thampi, Dr. Deepak Phatak, Mr. Rajeshwar Bajaaj and Mr. Vijay Merchant, Independent Directors, have submitted declarations stating that they meet the criteria of independence as per the provisions of the Companies Act, 2013.

Formal Annual Evaluation of Boardâs Performance

Duringthe year, the Board, based on the recommendation of the Nomination & Remuneration Committee, laid down the criteria for evaluation of the performance of Directors, Chairman of the Company, the Board and its Committees. As a part of this evaluation exercise, views/feedback was sought from Directors through a structured questionnaire. Each Board member evaluated various aspects of Board''s structure, understanding of roles and responsibilities, Board''s functioning, quality and transparency of Board''s discussion, performance of Committee Members and Directors and quality/timeliness of information flow to the Board. Peer assessment of Directors also formed part of the questionnaire. The responses received from the Directors were reviewed at a meeting of Independent Directors, Nomination & Remuneration Committee and the Board, in compliance with the requirements of the Companies Act, 2013. The Directors were satisfied with the evaluation results, which reflected the overall engagement of the Board and its Committees with the Management of the Company and the process/flow of information was found satisfactory. There were no material adverse observations or conclusion, consequent to such evaluation and review.

Corporate Governance:

Board Meetings

During the financial year 2017-18,

10 (ten) meetings of the Board of Directors of your Company were held on April 28, 2017; May 26, 2017; July 21, 2017; August 11, 2017; October 13, 2017; November 30, 2017; January 19, 2018; February 5, 2018; February 28, 2018 and March 8, 2018.

The meetings of the Board of Directors are held at your Company''s registered office in Mumbai.

Committee Meetings Audit Committee

The Audit Committee has been constituted and functions in accordance with the provisions of Section 177 of the Companies Act, 2013. The Company Secretary acts as the secretary to the Committee. The Audit Committee met 5 (five) times during the financial year 2017-18 on April 28, 2017; May 26, 2017; July 21, 2017; October 13, 2017 and January 17, 2018. The terms of reference of the Committee were also modified during the year.

The composition of the Committee along with the details of the meetings held and attended by the members of the Committee during the financial year 2017-18 is detailed below:

Sr.	Name of the	Meeting details
No.	Director	Held	Attended
1	Mr. Hoshang Billimoria (Chairman)	5	5
2	Mr. Humayun Dhanrajgir	5	3
3	Mr. James Aird	5	2
4	Mr. Keki Mistry	5	5
5	Mr. P. M. Thampi	5	5
6	Mr. Vijay Merchant*	5	0

* Mr. Vijay Merchant was inducted as a member of the Committee with effect from February 28, 2018.

The details pertaining to attendance of each Director at the meetings of the Board of Directors held during the financial year 2017-18 is mentioned below:

Sr. No.	Name of the Director	Nature of Directorship	Number of Board Meetings Attended
1	Mr. Deepak S. Parekh	Non-Executive Chairman	9
2	Mr. Norman Keith Skeoch	Non-Executive Director	5
3	Mr. James Aird	Non-Executive Director	5
4	Ms. Renu Sud Karnad	Non-Executive Director	10
5	Mr. Keki Mistry	Non-Executive Director	10
6	Mr. Humayun Dhanrajgir	Independent Director	8
7	Mr. Hoshang Billimoria	Independent Director	8
8	Mr. P. M. Thampi	Independent Director	6
9	Dr. Deepak B. Phatak	Independent Director	7
10	Mr. Vijay Merchant	Independent Director	10
11	Mr. Rajeshwar R. Bajaaj	Independent Director	9
12	Mr. Milind Barve	Managing Director	10

Nomination & Remuneration Committee

The Nomination & Remuneration Committee comprises of following members - Mr. P. M. Thampi (Chairman), Mr. Hoshang Billimoria, Mr. Humayun Dhanrajgir and Mr. Vijay Merchant. The Company Secretary acts as the secretary to the Committee. The Committee met 5 (five) times during the financial year 2017-18 on April 13, 2017; June 20, 2017; July 28, 2017; October 13, 2017 and January 17, 2018. The terms of reference of the Committee were also modified during the year. The details of the meetings held and attended by the members of the Committee during the financial year 2017-18 is detailed below:

Sr.	Name of the	Meeting details
No.	Director	Held	Attended
1	Mr. P.M. Thampi (Chairman)	5	5
2	Mr. Hoshang Billimoria	5	4
3	Mr. Humayun Dhanrajgir	5	3
4	Mr. Vijay Merchant*	5	2

* Mr. Vijay Merchant was inducted as a member of the Committee with effect from July 21, 2017.

Corporate Social Responsibility Committee

The Corporate Social Responsibility Committee comprises of following members - Mr. Deepak Parekh (Chairman), Mr. Milind Barve and Mr. Vijay Merchant. The Committee did not meet during the financial year 2017-18. The matters were considered by the Committee by way of circular resolutions during the year.

Stakeholders Relationship Committee (erstwhile Customer Services Committee)

During the year, your Board approved change in nomenclature of the

Customer Services Committee to Stakeholders Relationship Committee with effect from February 28, 2018 and also revised its terms of reference. As on March 31, 2018, the Committee comprises of following members

- Ms. Renu Karnad (Chairman), Mr. Deepak Parekh, Mr. James Aird, Mr. Humayun Dhanrajgir, Mr. P M Thampi, Mr. Rajeshwar R. Bajaaj, Dr. Deepak Phatak and Mr. Vijay Merchant.

Independent Directors Meeting

In accordance with the provisions of Schedule IV (Code for Independent Directors) of the Companies Act, 2013, the Independent Directors of the Company met once during the year 2017-18 without the attendance of Non-Independent Directors and members of the Management.

Nomination & Remuneration Policy

In terms of the requirements under Companies Act, 2013, your Company has put in place a Nomination & Remuneration Policy, which details the Director''s appointment, remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under subsection (3) of section 178. The salient aspects covered in the Policy have been outlined in Annexure I to this report. The remuneration paid to the Directors, Key Managerial Personnel and senior management is as per the Nomination & Remuneration Policy of your Company.

Issue of Employee Stock Options

In line with the practice of incentivizing the employees through issue of stock options, the Company has in the past granted stock options to the employees under the various employee stock option schemes formulated from time to time.

Your Company has formulated 2 series of Employee Stock Option Schemes (ESOS) under ESOS 2017 during the year for the purpose of administering the issue of stock options to the eligible Employees of the Company. In line with the disclosure requirements under the Companies Act 2013, the various components of the Schemes, including options granted during the financial year 2017-18, are set out in Annexure II to this report. 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 not issued equity shares with differential rights as to dividend, voting or otherwise.

Voting Rights not Exercised Directly by Employees - Not applicable

Auditors and Auditorâs Report

Statutory Auditors

In terms of Section 139 of the Companies Act, 2013 read with 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 18^th Annual General Meeting till the conclusion of 23^rd Annual General Meeting, subject to ratification by the members at every Annual General Meeting of the Company.

Accordingly, the appointment of M/s. B S R & Co. LLP, Chartered Accountants, as Statutory Auditors of the Company for the financial year 2018-19, is placed for ratification by the members of the Company at the 19^th Annual General Meeting. In this regard, the Company has received a confirmation from Statutory Auditor regarding their eligibility.

The Audit Committee and the Board of Directors recommend the ratification of appointment of M/s B S R & Co. LLP, Chartered Accountants, as the Auditors of your Company.

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 has appointed M/s. Bhandari & Associates, Company Secretaries to conduct the Secretarial Audit of your Company for the financial year 2017

18. The Secretarial Audit Report is annexed herewith as Annexure III to this report.

There were no qualifications, reservation or adverse comments or disclaimer made by the Statutory Auditors of the Company, M/s. B S R & Co. LLP and Secretarial Auditor of the Company, M/s. Bhandari & Associates, in their audit reports. The aforesaid 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, Chartered Accountants were appointed as Internal Auditors of your Company for the financial year 2017-18.

Risk Management Policy

Your Company has put in place an Enterprise Risk Management (ERM) framework to identify, assess, monitor and mitigate various business risks. The Risk Management Policy of your Company, reviewed by the Audit Committee and approved by the Board, provides for the ERM framework which incorporates the systematic application of policies, procedures and checks to identify potential risks in the operational areas of the business and minimize 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 your Company at its meetings periodically reviews the progress and functioning of the ERM.

The primary business of your Company is to manage the schemes of the HDFC MF which requires specialized 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 reviews the progress of risk management practices pertaining to the Mutual Fund.

Adequacy Of Internal Controls

The internal audit system of your Company and other control mechanisms have been devised to promote reliable financial reporting, safeguarding of assets and prevention and detection of frauds and errors. This framework provides adequate internal controls with reference to financial statements, commensurate with the business and the operations of the Company. 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 Financial Control Systems within your Company.

Corporate Social Responsibility

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

The Corporate Social Responsibility 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 Corporate Social Responsibility (CSR) activities through a variety of effective programs. Some of the thrust areas which your Company has identified to undertake CSR activities are in the areas of promoting preventive health care, promoting sports and promoting education. These activities are broadly in accordance with the Schedule VII of the Companies Act, 2013.

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, is set out at Annexure IV to this report.

The contents of the CSR Policy as well as the CSR activities undertaken by the Company are available on the Company''s website.

Particulars of Contracts or Arrangements With Related Party

During the year 2017-18, 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, which were in the ordinary course of business and on arms'' length basis and in accordance with the provisions of the Companies Act, 2013, Rules issued there under.

Since all related party transactions entered into by the Company were not material in nature and were in the ordinary course of business and on an arm''s length basis, Form AOC-2 is not applicable to the Company.

The details of related party disclosures form part of the notes to the financial statements provided in this annual report.

Particulars of Loans, Guarantees or Investments

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

Deposits

During the year 2017-18, 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.

Extract of Annual Return

The details forming part of the extract of the annual return as on the financial year ended on March 31, 2018 is appended as Annexure V.

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

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 -

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

- Foreign exchange (earnings): Rs, 14.09 crores (previous year: Rs, 45.23 crores)

- Foreign exchange (expenditure): Rs, 145.61 crores (previous year: Rs, 102.01 crores) (including Equity Dividend)

Particulars of Employees

As on March 31, 2018, your Company has 995 employees and for the previous year, your Company had 819 employees.

Directorsâ 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 judgments 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,

2018 and of the profit of the Company for year ended on that date;

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

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

Your Company is in compliance with the provisions of the applicable secretarial standards.

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 and also lays down the guidelines for identification, reporting and prevention of undesired behavior. 5 (five) Internal Committees (IC) were constituted in accordance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 with women employees constituting a majority and an external member. The Policy, IC Members'' details and the Penal consequences of violating the Act/ policy are displayed at all offices and on the Intranet. Compliance to the provisions of this Act has been made a ''Term of Employment / Engagement''. The IC Members are trained and made aware of their roles and responsibilities. Regular staff 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, tribunals impacting the going concern status of the company and its operations in future.

Acknowledgements

The Directors acknowledge the valuable assistance, support and guidance given by the Securities and Exchange Board of India, Association of Mutual Funds of India, Reserve Bank of India, bankers, distributors, key partners, Investor Service Centres and other service providers. The Directors would like to convey their gratitude to Housing Development Finance Corporation Limited and Standard Life Investments Limited and look forward to their continued support.

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

Chairman

(DIN: 00009078)

MUMBAI April 16, 2018

CIN No.: U65991MH1999PLC123027

Registered Office:

âHDFC Houseâ,

2^nd Floor, H. T. Parekh Marg 165 - 166,

Backbay Reclamation,

Churchgate, Mumbai - 400 020

Tel.: 022 - 6631 6333,

Fax: 022 â 66580203

Mar 31, 2017

TO THE MEMBERS

The Directors have pleasure in presenting the Eighteenth Annual Report together with the Audited Accounts of the Company for the financial year ended March 31, 2017.

Financial Performance

The financial performance of the Company for the financial year ended March 31, 2017 is summarized as below:

Financial Results

Particulars	For the year ended March 31, 2017 (Rs. in Crore)		For the year ended March 31, 2016 (Rs. in Crore)
Profit before Tax		799.80	708.25
Provision for Tax (Net of Deferred Tax)		249.55	230.37
Profit after Tax		550.25	477.88
Balance brought forward from previous year		1,023.26	937.12
Profit available for appropriation		1,573.51	1,415.00
General Reserve		55.02	47.79
Capital Redemption Reserve		â	0.79
Buy-back of Equity Shares		â	63.21
Tax on Buyback of Equity Shares		â	37.65
Interim Equity Dividend Paid		231.54	201.31
Tax on Interim Equity Dividend Paid		47.14	40.98
Proposed Equity Dividend		â	â
Tax on Proposed Equity Dividend		â
Balance carried to Balance Sheet		1,239.81	1.023.26

For the year ended March 31, 2017, your Company posted a net profit of Rs. 550.25 crores as against f 477.88 crores in the previous year. Appropriations from the net profit have been effected as per the summary given above.

The net worth of the Company as on March 31,2017 stood atRs. 1,416.90 crs as against f 1,144.35 crs as on March 31, 2016.

Your Company did not have any subsidiary or an associate company or a joi nt ventu re com pa ny d u ri ng the year 2016-17.

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 2016-17 and the date of this Report.

Dividend

Your Directors had declared and paid interim dividend during the financial year ended March 31,2017 of Rs. 92/-(2015-16: Rs. 80/-) per equity share (920%) of face value of Rs. 10/- each in the month of March 2017 involving a total outflow of Rs. 278.67 crores (including dividend distribution tax of Rs. 47.13 crores) and the same is recommended to be declared as final dividend for the financial year ended March 31, 2017.

Transfer to General Reserves

A sum of Rs. 55.02 crores has been transferred to the General Reserves of the Company.

Capital Structure

During the year, your Company issued and allotted 2,700 equity shares of the Company to eligible employees on exercise of options granted under Employee Stock Option Schemes of the Company. At the end of the year, the issued, subscribed and paid - up capital of your Company stood at Rs. 25,16,69,000 comprising of 2,51,66,900 equity shares of Rs.10/-each.

Review of Operations

Your Directors are pleased to report that:

The Average Assets under Management (AAuM) for the Mutual Fund during the financial year 201617 was RS.2,16,151.01 crore as against an AAuM of Rs. 1,72,643.19 crore duringthe financial year 2015-2016, representing an increase of over 25%. HDFC Mutual Fund (HDFCMF) ranks as one of the largest fund houses in India.

The total number of accounts managed by HDFCMF is around 61.92 lakhs as on March 31, 2017. 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. As on March 31,2017, your Company has 165 ISCs. ISCs of Computer Age Management Services Pvt. Ltd. (CAMS), the Registrar and Transfer Agent of HDFCMF are Official Points of Acceptance for transactions of HDFCMFSchemes. These offices (222 as on March 31, 2017) supplement the investor-servicing network of your Company. With these offices, your Company services investors in almost 200 cities pan India.

Your Company provides Discretionary and Non-Discretionary Portfolio Management services to High Networth Individuals and Corporate(s) on a segregated basis while Advisory services are provided to Institutional Investors and Corporate(s). As on March 31,2017, the aggregate assets under investment management / advisory services under Portfolio Management Services were at Rs. 1574.68 crore.

Your Company has successfully undertaken Investment and Advisory services mandates during the financial year 2016-17 pursuant to approval received from Securities and Exchange Board of India (SEBI) with respect to undertaking Investment and Advisory services under Regulation 24(b) of the SEBI (Mutual Fund) Regulations, 1996.

New Scheme Launched Under HDFC Mutual Fund

In order to offer more investment options to investors, your Company has launched the following Schemes under HDFC MF during financial year 2016-17:

HDFC Dual Advantage Fund â Series II & III: It is a close ended income scheme. The fund aims to provide investors with stable debt returns and a small component of equity returns thereby attempting to give higher risk adjusted returns over the tenure of the scheme. Your Company has launched 1 plan under Series II & 3 plans under Series III having tenures between 3 to 3.5 years. Cumulatively these funds have mobilised Rs. 412 crore. Upon maturity, each plan shall be automatically terminated and amount due shall be returned to its investors.

HDFC Charity Fund for Cancer Cure:

Six years ago, to commemorate Companyâs 10^th anniversary, HDFC Debt Fund for Cancer Cure (HDFCC), a 3 year close ended income scheme was launched in association with Indian Cancer Society (ICS), a Public Charitable Trust and Indiaâs oldest anti-cancer NGO established in 1951, to fight cancer. Enthused by its success, on its maturity, it was followed up with a second scheme in 2014 (HDFCC 2014) with the same attributes to continue the work done.

In pursuit of its objective, HDFCC & HDFCC2014 on behalf of its investors together with direct donation by your Company has donated roughly RS.60 crore to ICS. The donation has made an invaluable difference in the lives of over 3,000 cancer patients from 28 states across the country. This has been done through 16 partner hospitals across the country, affiliated to this program managed by ICS. Encouraged by the success of the program, third Cancer Cure dedicated Fund called HDFC Charity Fund for Cancer Cure was launched during the year. The intent remains to generate stable returns and donate the dividends earned on investment to ICS. The scheme has two plans in this scheme viz - Arbitrage Plan & Debt Plan.

Your Company had aggressively positioned this product with a successful marketing campaign âThereâs No Better Investment Than Saving A Lifeâ. During the NFO the fund collected over Rs. 300 crore across the two plans from nearly 5,000 Corporate & Retail Investors.

HDFC Fixed Maturity Plans: These are close ended income schemes. They automatically mature at the end of the tenure. Your Company has launched 20 plans during the year with mobilisation of Rs. 3,650 crore.

As on 31^stMarch, 2017, your Company has a portfolio of 202 schemes under various categories such as Equity, Debt, Exchange Traded Funds, Fixed Maturity Plans and Interval Funds.

Awards and Accolades

Your Directors are pleased to inform that Fund Managers of HDFC Mutual Fund received the following awards during the year 2016-17:

- Mr. Chirag Setalvad has been awarded No 7 Fund Manager in the 10 Best Fund Managers 2016 - ET Wealth & Morningstar ranking.

- Mr. Anil Bamboli has been bestowed âBusiness Standard Awards: Best Fund Manager - Debtâ for 2016.

Directors and Key Managerial Personnel

Directors

In accordance with the Companies Act, 2013 and the Articles of Association of the Company, Mr. Deepak Parekh and Ms. Renu Karnad, Directors, are liable to retire by rotation at the ensuing Annual General Meeting (AGM) pursuant to the provisions of Section 152 of the Companies Act, 2013 read with the Companies (Appointment and Qualification of Directors) Rules, 2014 and the Articles of Association of your Company 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 resume of these Directors and other related information 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.

None of the Directors of the Company are disqualified for being appointed as Directors as specified in Section 164 of the Companies Act, 2013.

Key Managerial Personnel (KMP)

In accordance with the provisions of Section 2(51) and 203 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, Mr. Milind Barve, Managing Director, Mr. Piyush Surana, Chief Financial Officer and Ms. Sylvia Furtado, Company Secretary are the Key Managerial Personnel (KMP) of the Company.

Independent Directors

Pursuant to provisions of Section 149,150 and 152 of the Companies Act, 2013 read with Companies (Appointment and Qualification of Directors) Rules, 2014, along with Schedule IV of the Companies Act, 2013 (including any statutory modification(s) or re-enactment thereof for the time being in force) and shareholdersâ approval at Fifteenth Annual General Meeting the following Independent Directors hold office for a term of five consecutive years up to July 20, 2019, not liable to retire by rotation, on the Board of Directors of your Company:

1. Mr. Hoshang Billimoria

2. Mr. Humayun Dhanrajgir

3. Mr. P.M. Thampi

4. Dr. Deepak Phatak

5. Mr. Rajeshwar Bajaaj

6. Mr. Vijay Merchant

Declaration of Independence

Formal Annual Evaluation of Boardâs Performance

During the year, the Board, based on the recommendation of the Nomination & Remuneration Committee and taking into consideration the informal guidance issued by Securities Exchange Board of India (SEBI) on the subject, laid down the criteria for evaluation of the performance of Directors, Chairman of the Company, the Board and its Committees. As a part of this evaluation exercise, views/feedback was sought from Directors through a structured questionnaire. Each Board member evaluated various aspects of Boardâs structure, understanding of roles and responsibilities, Boardâs functioning, quality and transparency of Boardâs discussion, performance of Committee Members and Directors and quality/timeliness of information flow to the Board. Peer assessment of Directors also formed part of the questionnaire. The responses received from the Directors were reviewed at a meeting of Independent Directors, Nomination & Remuneration Committee and the Board, in compliance with the requirements of the Companies Act, 2013. The Directors were satisfied with the evaluation results, which reflected the overall engagement of the Board and its Committees with the Management of the Company and the process/flow of information was found satisfactory.

Corporate Governance:

Board Meetings

During the financial year 2016-17, six (6) meetings of the Board of Directors of the Company were held - on April 19, 2016; May 27, 2016; July 19, 2016; October 18, 2016; December 12, 2016 and January 18, 2017.

The meetings of the Board of Directors are held at the Companyâs registered office in Mumbai.

The details pertaining to attendance of each Director at the meetings of the Board of Directors held duringthe financial year 2016-17 is mentioned below:

Sr. No.	Name of the Director	Nature of Directorship	Number of Board Meetings Attended
1	Mr. Deepak S. Parekh	Non-Executive Chairman	6
2	Mr. Norman Keith Skeoch	Non-Executive Director	2
3	Mr. James Aird	Non-Executive Director	4
4	Ms. Renu Sud Karnad	Non-Executive Director	4
5	Mr. Keki Mistry	Non-Executive Director	6
6	Mr. Humayun Dhanrajgir	Independent Director	4
7	Mr. Hoshang Billimoria	Independent Director	6
8	Mr. P. M. Thampi	Independent Director	4
9	Dr. Deepak B. Phatak	Independent Director	6
10	Mr. Vijay Merchant	Independent Director	6
11	Mr. Rajeshwar R. Bajaaj	Independent Director	6
12	Mr. Milind Barve	Managing Director	6

Committee Meetings Audit Committee

The Audit Committee has been constituted and functions in accordance with the provisions of Section 177 of the Companies Act, 2013. The Company Secretary acts as the secretary to the Committee. The Audit Committee met six (6) times during the financial year 2016-17 on April 19, 2016; May 27, 2016; July 19,2016; October 18,2016; January 18, 2017 and March 16, 2017. The composition of the Committee along with the details of the meetings held and attended by the members of the Committee during the financial year 2016-17 is detailed below:

Sr.	Name of the	Meeting details
No.	Director	Held	Attended
1	Mr. Hoshang Billimoria (Chairman)	6	6
2	Mr. Humayun Dhanrajgir	6	4
3	Mr. James Aird	6	4
4	Mr. Keki Mistry	6	6
5	Mr. P.M. Thampi	6	5

Nomination & Remuneration Committee

The Nomination & Remuneration Committee comprises following members - Mr. P. M. Thampi (Chairman), Mr. Hoshang Billimoria and Mr. Humayun Dhanrajgir. The Company Secretary acts as the secretary to the Committee. The Committee met three (3) times during the financial year 2016-17 on April 11, 2016; June 22,2016 and March 16, 2017.

The details of the meetings held and attended by the members of the Committee during the financial year 2016-17 is detailed below:

Sr. No.	Name of the Director	Meeting details
Sr. No.	Name of the Director	Held	Attended
1	Mr. P. M. Thampi (Chairman)	3	2
2	Mr. Humayun Dhanrajgir	3	3
3	Mr. Hoshang Billimoria	3	2

Corporate Social Responsibility Committee

The Corporate Social Responsibility Committee comprises following members - Mr. Deepak Parekh (Chairman), Mr. Milind Barve and Mr. Vijay Merchant. The Committee met three (3) times duringthe financial year 2016-17 on April 11, 2016, February 18, 2017 and March 16, 2017. The meetings were attended by all the members of the Committee.

Independent Directors Meeting

In accordance with the provisions of Schedule IV (Code for Independent Directors) of the Companies Act, 2013, the Independent Directors of the Company met once during the year 2016-17 without the attendance of Non-Independent Directors and members of the Management.

Nomination & Remuneration Policy

The Nomination & Remuneration Policy of the Company was adopted on January 15, 2015, which details the Directorâs appointment, remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under sub-section (3) of section 178. The said Policy was amended by the Board at its meeting held on April 28, 2017. The salient aspects covered in the Policy have been outlined in Annexure I to this report. The remuneration paid to the Directors, Key Managerial Personnel and senior management is as per the Nomination & Remuneration Policy of your Company.

Issue of Employee Stock Options

In line with the practice of incentivising the employees through issue of stock options, the Company has in the past granted stock options to the employees under the various employee stock option schemes formulated from time to time.

Your Company has formulated 2series of Employee Stock Option Schemes (ESOS) under ESOS 2015 during the year for the purpose of administering the issue of stock options to the eligible Employees of the Company. In line with the disclosure requirements under the Companies Act 2013, the various components of the Schemes, including options granted during the financial year 2016-17, are set out in Annexure II to this report. 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 not issued equity shares with differential rights as to dividend, voting or otherwise.

Voting Rights Not Exercised Directly By Employees - Not applicable

Auditors and Auditorâs Report

Statutory Auditors

In view of the mandatory requirement for rotation of auditors in terms of Section 139 of the Companies Act, 2013, M/s. Haribhakti & Co., LLP will retire as Statutory Auditor of the Company at the conclusion of the ensuing Annual General Meeting.

The Board of Directors places on record its appreciation for the services rendered by M/s. Haribhakti & Co. LLP as the Statutory Auditors of the Company.

It is proposed to appoint M/s. B S R & Co. LLP, Chartered Accountants (ICAI FRN: 101248W/ W-100022) as the new Statutory Auditors of your Company. M/s. B S R & Co. LLP, Chartered Accountants are proposed to be appointed for a period of 5 continuous years i.e from the conclusion of 18^th Annual General Meeting till the conclusion of 23^rd Annual General Meeting. M/s B S R & Co. LLP have confirmed that their appointment, if made, would be within the limits prescribed under Section 141 of the Companies Act, 2013 and rules made thereunder. The Audit Committee and the Board of Directors recommend the appointment of M/s B S R & Co. LLP, Chartered Accountants, as the Auditors of your Company from the conclusion of 18^th Annual General Meeting till the conclusion of 23^rd Annual General Meeting, subject to ratification at every Annual General Meeting.

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 has appointed M/s. Bhandari & Associates, Company Secretaries to conduct the Secretarial Audit of your Company for the financial year 2016-17. The Secretarial Audit Report is annexed herewith as Annexure III to this report.

There were no qualifications, reservation or adverse comments or disclaimer made by the Statutory Auditors of the Company, M/s. Haribhakti & Co., LLP and Secretarial Auditor of the Company, M/s. Bhandari & Associates, in their audit reports.

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

Risk Management Policy

Your Company has put in place an Enterprise Risk Management (ERM) framework to identify, assess, monitor and mitigate various business risks. The Risk Management Policy of your Company, reviewed by the Audit Committee and approved by the Board, provides for the ERM framework which incorporates the systematic application of policies, procedures and checks to identify potential risks with respect to business, legal, etc. and minimize their impact on your Company. The framework is designed to identify potential risks, assess their likely impact, ensure review of mitigation measures and requires reporting on a regular basis. The Audit Committee of your Company at its meetings periodically reviews the progress and functioning of the ERM.

The primary business of your Company is to manage the schemes of the HDFC Mutual Fund which requires specialized 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 reviews the progress of the implementation with regards to risk management practices pertaining to Mutual Fund.

Adequacy of Internal Controls

Corporate Social Responsibility

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

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, is set out at Annexure IV to this report.

The contents of the CSR Policy as well as the CSR activities undertaken by the Company are available on the Companyâs website.

Particulars of Contracts or Arrangements With Related Party

During the year 2016-17, 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, which were in the ordinary course of business and on armsâ length basis and in accordance with the provisions of the Companies Act, 2013, Rules issued thereunder.

Since all related party transactions entered into by the company were not material in nature and were in the ordinary course of business and on an armâs length basis, Form A0C-2 is not applicable to the Company.

The details of related party disclosures form part of the notes to the financial statements provided in this annual report.

Particulars of Loans, Guarantees or Investments

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

Deposits

During the year 2016-17, 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.

Extract of Annual Return

The details forming part of the extract of the annual return as on the financial year ended on March 31,2017 is appended as Annexure V.

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

(a) Since the Company does not carry out any manufacturing activities, particulars required to be disclosed with respect 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 not applicable.

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

- Foreign exchange (earnings): Rs. 45.23 crores (previous year: Rs. 0.88 crores)

- Foreign exchange (expenditure): Rs. 102.01 crores (previous year: Rs. 88.26 crores) (including Equity Dividend)

Particulars of Employees

As on March 31,2017, your Company has 819 employees and for the previous year, your Company had 663 employees.

Directorsâ 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;

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

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

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 and also lays down the guidelines for identification, reportingand prevention of undesired behaviour. 5 (five) Internal Committees (1C) were constituted in accordance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 with women employees constitutinga majority and an external member. The Policy, 1C Membersâ details and the Penal consequences of violating the Act/ policy are displayed at all offices and on the Intranet. Compliance to the provisions of this Act has been made a âTerm of Employment / Engagementâ. The 1C Members are trained and made aware of their roles and responsibilities. Regular staff awareness sessions are conducted to generate awareness about the policy, reporting mechanism and prevention of Sexual Harassment at the workplace. During the year, the 1C 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, tribunals impacting the going concern status of the company and its operations in future.

Acknowledgements

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

Chairman

(DIN: 00009078)

MUMBAI

April 28, 2017

CIN No.: U65991MH1999PLC123027

Registered Office:

âHDFC Houseâ, 2^nd Floor, H. T. Parekh Marg

165 -166, Backbay Reclamation,

Churchgate, Mumbai - 400 020

Tel.: 022 - 66316333, Fax: 022 - 66580203

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