ECONOMIC OVERVIEW
Global Economy
The year 2023 was characterised by resilient growth, the end of rate hikes and slowing but still above-target inflation. The world economy grew at a pace of 3.2% and IMF projects the same pace of growth to continue for the next two years.
Among the major economies, the US led the way, growing at a robust 2.5%, which has allowed the Fed to remain patient and wait for inflation to return to 2%. The Euro Area grew a tepid 0.4%. On the other hand, Chinese GDP growth rebounded to a still subdued pace of 5.2%, while India led the pack with March, 24 GDP growth pegged at 8.2%. The past year has seen consistent growth upgrades for world GDP in general and US and India in particular, as the global economy has proved resilient to the impact of higher interest rates. Major central banks like the ECB and the BoC have started their rate-cutting cycles as they intend to reduce the degree of restrictiveness of their monetary policies, as inflation has fallen considerably, leading to a rise in the real interest rates. The Fed remains on hold as Q1 FY24 inflation came in above expectations and is looking for greater confidence that inflation is sustainably towards 2%. Looking forward, it appears that the risk of recession has fallen, and that the world economy has been able to withstand higher interest rates. Resilient labour markets and robust income growth, active industrial policy, stable oil and food prices and higher fiscal deficits have cushioned economic activity. A slowdown in inflation will allow rate cuts to begin in earnest globally, but rates are likely to settle well above the ultra-low levels witnessed in the aftermath of the GFC.
Indian economy
The Indian economy grew by a strong 8.2% in FY24, marking the third straight year of strong growth, after growing by 7.0% in FY23 and 9.2% in FY22. This growth was boosted by the strong performance of the manufacturing and construction sectors, supported by capital formation and financial services The RBI has forecasted that the Indian economy will grow by 7.2% in FY25, compared to the pre-Covid 10 year CAGR of 6.6%. However, the post-Covid recovery has not been uniform so far, with private consumption and trade, hospitality, transportation and communication services underperforming. On a longer-term basis, we believe that India is on the cusp of a private capex cycle. We also see consumption, which has underperformed recently, to pick up momentum as the post-Covid recovery trickles down. Consumption is also expected to get a boost from monsoon rainfall, which is expected to be good and the new government is likely to channel its energy towards boosting rural demand and focusing more on alleviating distress down the income pyramid. Inflation declined in FY24, ending the year at 4.85%, with an average inflation rate of 5.36%, compared to an average rate of 6.66% in FY23. This decline was led by the steady decrease in core inflation, which touched a record low of 3.27% by March, even as food inflation remained high due to poor rainfall in 2023. Overall inflation is expected to decline further in FY25, based on the likely decrease in food inflation if monsoon turns out to be good, as forecasted by the Indian Meteorological Department. The RBIs forecast for inflation in FY25 is 4.5%. Indias external account continued to be resilient, boosted by strong performance of the services sector, decline in merchandise imports, healthy inflows in remittances and strong capital inflows. Indias Balance of Payments account posted a surplus of US$ 38.5 Billion in 2023, with a current account deficit at a benign US$ 32.4 Billion (0.9% of GDP) and a capital account surplus of a strong US$ 71.3 Billion. RBI utilised the strong BoP surplus to boost its forex reserves which rose to US$ 645 Billion. INR was very stable throughout the year, depreciating by only 1.4% against the US$ and exhibiting one of the lowest volatilities among floating currencies. A stable currency and benign external account are expected to give confidence to foreign investors. The Government of India continued with fiscal consolidation in FY24 and the fiscal deficit for the year ended at 5.6% of GDP, compared to the budgeted 5.8%, and against 6.4% in FY23. The quality of governments fiscal account is also good with high allocation towards capital expenditures, lower subsidy payments and higher tax collection. The governments fiscal roadmap suggests continued commitment towards fiscal consolidation, with budgeted fiscal deficit of 5.1% of GDP in FY25 in the interim budget, and less than 4.5% in FY26. The RBI maintained status quo throughout the year keeping policy rate at 6.5% and a stance of ‘withdrawal of accommodation, while keeping its eye on the inflation target of 4%. Indias economic outlook for FY25 remains healthy and according to IMF, India is likely to remain the fastest growing major economy in the world. Given the healthy growth outlook and continued commitment towards fiscal consolidation, S&P has raised Indias ratings outlook to ‘positive, raising hopes for a rating upgrade within the next 24 months. Overall, we remain positive on the prospects of Indian economy in FY25.
Mutual Fund Industry Overview
In FY24, the mutual fund industry witnessed significant growth in assets under management (AUM) due to the positive impact of mark-to-market adjustments and substantial inflows into various equity schemes. Net equity sales of 3.3 Lakh Crore were recorded in FY24 through new fund offerings and existing funds. Within the existing equity and hybrid categories, sectoral/thematic, arbitrage funds, small cap funds and multi asset allocation funds schemes saw the highest net inflows.
• The Industrys Average Assets under Management (AAUM) for the quarter ended on 31st March, 2024 reached 54.11 Lakh Crore, recording a growth of 34% over the same period last year. The corresponding AAUM for the quarter ended 31st March, 2023 was 40.49 Lakh Crore.
• The Industrys Equity AAUM stood at 30.93 Lakh Crore for the quarter ended 31st March, 2024, up by 49% from the same period last year. Corresponding Equity AAUM for the quarter ended 31st March, 2023 was 20.75 Lakh Crore.
• The inflows to mutual funds via systematic investment plans (SIPs) have been on an upswing during the fiscal year 2024, rising from 14,276 Crore in March, 2023 to 19,271 Crore in March, 2024, reflecting a year-on-year jump of 35% in the financial year.
• As of 31st March, 2024, the total number of mutual fund investors stood at around 18.00 Crore compared to around 14.76 Crore on 31st March, 2023, reflecting a year-on-year increase of 22%.
• The individual investors Monthly Average AUM (MAAUM) surged to 33.31 Lakh Crore, growing by 43% year-on-year and contributing 61% of the total Monthly Average AUM.
• The mutual fund monthly average AUM for March, 2024 from B30 cities was at 9.83 Lakh Crore, which accounted for 18% of the total AUM.
COMPANY OVERVIEW
Company strategy
ABSLAMC is a leading investment manager, steadfastly working towards financial inclusion, deepening of the financial and development of the mutual funds industry. Our strategy remains rooted in our customer-first ethos and a commitment to serve our investors in the long term by providing holistic investment solutions and consistent investment performance. This commitment is supported by a robust risk management and governance framework, research-driven fund management, and the integration of technology to enhance service delivery. These principles have helped us expand our AUM size over the years and establish a strong customer base. They have enabled us to establish ourselves in the mutual fund space and will continue to guide us towards accelerated growth in the alternative asset space.
To build our scalable business and deliver long-term value to our customers and shareholders, we focus on:
• Scaling retail franchises and diversifying product offerings
- Create an ecosystem to support retail sales growth by leveraging the strength of multiple channels such as Virtual Relationship Manager (VRM), Emerging Market, Service to Sales, Direct Channel and Digital Sales.
- Grow and diversify our product offering using market research and innovation.
- Continue to build product portfolio by identifying pockets of product differentiation.
- Provide financial literacy to the existing and next generation of investors and distributors, contributing to overall financial inclusion in the country.
• Expanding geographic reach and strengthening multi- channel distribution network
- Continue to widen our geographic reach and investor folios by expanding our customer base in high potential and under-penetrated markets.
- Along with focus on Mutual Fund Distributors (MFDs), build scale in the National distributors and banking channel with a special attention on cooperative and PSU banks to leverage their extensive network.
- Build deeper engagement and loyalty with distributors and customers, to increase wallet share and ensure long term relationship.
• Leveraging digital platforms to deliver better service
- Leverage digital platforms to increase customer acquisition and enhance customer experience.
- Execute strategic tie-ups and exclusive partnerships with fintech and new-age tech distributors. Leverage API-based Plug-n-Play onboarding solutions for fintech partners and cooperative banks.
- Focus on leveraging digital capability to provide seamless accessibility and the right experience to our customers.
• Building alternate assets and passive business
- Focus on scaling our alternate assets business including Alternate Investment Fund (AIF) /Portfolio Management Services (PMS), Real Estate and Offshore offerings.
- Leverage our presence in GIFT City to launch new funds and expand our offerings.
- Focus on growing our passive business through strategic tie-ups with existing and new partners, and digital platforms.
- Emphasise on Smart Beta (alternate weighting) passive strategies through Exchange Traded Funds (ETFs), Fund of Funds (FoFs), and Index Funds.
PERFORMANCE OVERVIEW
The company achieved its highest ever profit in FY24, with a profit after tax of 780 Crore growing 31% year on year. Our Companys overall Quarterly Average Assets under Management (QAAUM) as on 31st March, 2024 stood at 3,45,837 Crore, a growth of 21% year-on-year. Mutual fund QAAUM as on 31st March, 2024 stood at 3,31,709 Crore growing by 21% year on year, with market share (excluding ETF) of 6.9%. Mutual fund Equity QAAUM as on 31st March, 2024 was 1,52,014 Crore growing by 31% year on year, with a market share of 4.9%. The equity mix improved to 46% of the mutual fund QAAUM as compared to 42% in the previous year.
Average Assets under Management (in Crore)
*Mutual Fund - Debt includes ETF
1
Fixed income include ETFGrowing SIP book
Systematic Investment Plans (SIPs) have become a preferred investment choice for retail investors. As a key player in the industry, we have undertaken initiatives to enhance traction in SIPs. Our Companys constant endeavour is to build our SIP book size and ensure customer stickiness while creating long-term value for investors. As a result of these efforts, our SIP and STP book reached 1,252 Crore in March, 2024, marking a 25% increase from 1,003 Crore in March, 2023.
1
Includes STPCustomer Acquisition
Customer acquisition continues to be a key focus area for our Company. We added approximately 11 Lakh new folios in FY24, bringing our total folios to 85.95 Lakh, as of 31st March, 2024.
Increasing Retail Franchise with a Focus on B30 Markets
Over the last few years, we have dedicated our efforts to expanding our retail franchise and growing our geographical presence across B30 cities. Our Company has expanded its pan-India presence to over 290 locations, with more than 80% located in B30 cities. Individual MAAUM in March, 2024 was 1,73,238 Crore, compared to 1,40,303 Crore in March, 2023 growing by 23% year-on-year. The Institutional MAAUM size was 1,57,178 Crore in March, 2024, up from 1,27,220 Crore in March, 2023, showing a growth of 24% year-on-year. The B30 MAAUM reached 57,816 Crore in March, 2024 compared to 44,846 Crore in March, 2023 growing by 29% year-on-year.
Multi-Channel Distribution Network Strategy
As part of our overall strategy, our company is focused on building the retail sales segment across T30 and B30 markets. We have been strengthening our multi-channel sales ecosystem and distribution network by integrating key levers of Direct Chanel, Emerging Markets, Virtual Relationship Manager, Service to Sales and Sampark. Our multi-channel market initiatives, aimed at deepening our presence, have yielded positive results.
• Direct Channel aims to provide personalised attention and tailored solutions to meet the unique needs and preferences of high-net-worth clients, targeting increase presence beyond Top 8 locations across India.
• Emerging Markets aim to tap into potential rural and emerging markets at an early stage to build growth. It also aims at deepening product awareness through continuous engagement drives for investors and distributors.
• Virtual Relationship Manager (VRM) enhances the new distributor experience through virtual assistance and guidance, focusing primarily on increasing activations, SIPs, and gross sales. It aims to upgrade Mutual Fund Distributors (MFDs) to high-potential business partners and integrate them into Retail Sales.
• Under Service to Sales, Service RMs effectively engage with investors and facilitate their investment decision. They identify opportunities for win back, retention and upselling.
• ‘Sampark, our Companys distribution expansion initiative, empanels and onboards new distributors. It follows a One-click, end-to-end digitally enabled distributor empanelment journey to make the process seamless.
Distribution Strength
In FY24, our company expanded its pan-India network of empanelled distributors to include 81,000+ KYD-compliant MFDs, 305+ national distributors, and 80+ banks. We continue to expand our distributor base and have empanelled 9,100+ new MFDs during the reporting period.
Scaling up the Passive and Alternate Assets Business
Passives
The passive product offering yielded positive results, with our Companys assets growing over 17 times from 1,692 Crore in March, 2021 to 28,902 Crore in March, 2024. We expanded our existing product suite to include 43 products. The customer base in this category has also grown to around 6,85,000 folios, increasing 7 times since March, 2021. Additionally, the company holds the top rank in the Index Debt category based on Average AUM for the quarter ending 31st March, 2024.
Passive AUM (in Cr)
1 Closing AUM for ETFs, Index funds & FoFs
Alternate Asset Business
On the alternative business front, to meet the growing needs of HNIs and family offices, our Company has strengthened the team to enhance PMS and AIF offerings in both equity and fixed income. Currently we offer over 13 products in PMS and AIF. We believe both equity and fixed Income AIF product offerings will further strengthen the Alternate Business vertical.
On the real estate front, the Aditya Birla Real Estate Credit Opportunities Fund (Cat II AIF) has been fully deployed across five investments and has successfully executed its first exit.
The Gift city operation has gained momentum with the launch of a few products to invest in the overseas market under the LRS scheme. Our Company has launched ABSL Global Emerging Equity Fund, which strategically feeds into the ARGA Emerging Market Equity Fund, enabling investors to access and benefit from emerging market opportunities.
QAAUM for the quarter ending 31st March, 2024
Risk Management
Our Company is dedicated to delivering consistent investment performance. This commitment is reinforced by our stable and highly experienced investment team, possessing vast industry knowledge and expertise.
We maintain a robust risk management framework that oversees firm-wide governance, risk and compliance. Our risk management systems and procedures exemplify our commitment to ethical and profitable operations, ensuring compliance with best practices, laws, rules, and regulations. The Risk function operates independently of the investment function. These measures are designed to prevent material misstatements or losses, safeguard assets, maintain accurate accounting records, ensure the reliability of financial information, and identify and manage business risks.
Compliance
Our compliance function monitors compliance with regulatory requirements laid down by the Securities and Exchange Board of India (SEBI) with respect to mutual fund, portfolio management services and alternative investment funds activities and other business activities permitted under Regulation 24(b) of SEBI (Mutual Funds) Regulations. Various internal policies and procedures ensure compliance with the regulatory requirements in relation to above businesses. To comply with applicable statutory requirements, the compliance team has established robust systems, policies and processes. There are set guidelines for personal dealings for AMC and Trustee Directors as well. The compliance team stays updated on new regulatory requirements and provides relevant functions with necessary guidance for implementation. Additionally, it reviews the status of implementation by coordinating with respective functions.
The compliance team not only monitors compliance status but also drafts and issues product offer documents, releases notices/addendums related to product documents, reviews marketing materials before dissemination, and ensures timely filing of various reports with the Board, regulators, and the concerned agencies.
IT and Digital
In a highly dynamic and competitive market, we believe that technology plays a central role in providing a seamless experience for our investors. It is integral to our business operations, encompassing client onboarding, online payments, transactions, fund administration, trading, accounting, client servicing, data analytics, and other functions. Within our IT function, we leverage digital assets to enhance operational efficiency and drive informed decision-making. Our data-driven approach enables us to analyse trends, identify opportunities, and optimise processes. Through advanced analytics, we gain valuable insights that guide strategic initiatives and improve overall performance.
Marketing
Last year, we intensified efforts to build our brand awareness and consideration by enhancing our brand salience through multiple marketing campaigns such as:
#AapkeSapnoKeSarthi – Our series of Digital Films which celebrated the untiring services of the Mutual Fund Distributors since the last 3 decades in fulfilling the aspirations of Investors. The 2 films that we released, not only won us an external jury award, but also won us the hearts and minds of our partners who were overwhelmed by the emotional chord these films touched.
#3in1 TohInvestmentDone Our 360-degree Investor Awareness campaign across TV, Outdoor, Digital, PR and BTL campaigns, endeavoured to create awareness in the public about Multi Asset Allocation Funds as a way to diversify ones portfolio exposure across asset classes like Equity, Debt and Commodities like Gold.
The Pathway to Indias Fast Track Growth Our NFO Campaign on TV, Digital, PR and BTL media to launch ABSL Transportation & Logistics Fund was much appreciated by our internal stakeholders and partners. This also marked our industry-first attempt at using an AI-generated Key Visual for the campaign which found acceptance from all.
#SIPscribe Our Marketing communication campaign across push channels and social media aimed at tapping the insight of the now very common practice of ‘subscribing to a variety of services. We juxtaposed this insight with the most essential subscription needed for creating long term wealth SIP; and crafted the coinage ‘SIPscribe to build a consumer-friendly term for higher consideration.
#SavingsKaUpgrade While Individual Investors have adopted MFs for Equity Market participation, only a niche segment of some evolved individuals have embraced Money Market & Debt Funds to optimise their Savings potential. In order to build awareness and consideration around this proposition, we curated a communication campaign, ‘SavingsKaUpgrade and ran a series of Digital & BTL Marketing initiatives to develop the conversation.
#Voyage2024 In the 10 th edition of our Annual Investment Conclave, Voyage 2024, we raised the bar in terms of Brand Visibility, Engagement and Experience through a phenomenal on-ground show amplified through TV and Digital media. With nearly 2500 guests from pan India including leading MF distributors, advisors, HNIs and influencers converging at Mumbai for this grand event; #Voyage2024 was trending at No. 3 spot on Twitter (X.com) on 28th Feb. The conclave was highly appreciated for the enriching thought leadership content by Market experts and the various engagements that made for a memorable experience.
Training and Investor Education
We have a dedicated team for investor education to increase awareness and understanding of our mutual funds. We believe in creating a community of well-informed, financially literate investors capable of making decisions with a comprehensive understanding of the potential investment risks and rewards. Our training modules appeal to a wide range of investors across various demographics of age, profession, gender, geographic location, and language. They have been designed to be sustainable, scalable, and successful in their objectives to reach, teach and actively engage with common investors. As on 31st March, 2024, we reached more than 11,42,000 people through 15,000+ training sessions.
Operations
The primary focus of our operations team is to execute all stages of the transaction process with minimal errors. The team aims to ensure prompt and efficient delivery of to our clients. We intend to manage our front-office and office operations efficiently to provide a high level of satisfaction. We have established process controls to ensure accuracy and speed in transaction processing, such as time stamping and bar-coding transactions, as well as the automated process of credit confirmation. The processes are documented and audited periodically. End-to-end processing of transactions, maintenance of data records and servicing are managed by our registrar and transfer agent, Computer Age Management Services Limited (CAMS).
Customer Service
Our companys commitment to excellence in customer service has been pivotal in enhancing the customer experience. With a robust customer service framework, we focus on optimising processes, leveraging technology and ensuring the highest standards of quality across all activities, thereby achieving our organisational strategic goals. Our service delivery model which includes our back office, branches & call centres have been refined to enhance customer experience by improving customer interaction and responsiveness leading to stronger client advocacy. We strive to empower our customers with real-time information and offer them a seamless investing experience through a host of value-added services and digital solutions.
Human Resources
As of 31st March, 2024, we had 1279 permanent employees. We have always aspired to be an organisation that attracts, retains, and provides a canvas for talent to operate, learn, and grow. Our focus remains on creating a work environment that welcomes diversity, nurtures a culture grounded in our core values, and offers opportunities based on meritocracy for individuals to build and advance their careers in alignment with their aspirations.
We are committed to fostering a happy, vibrant, and engaging workplace, continuously reinforcing the importance of health and well-being through comprehensive wellness programs and initiatives. Our offerings include regular health assessments and health management programs aimed at ensuring every employee prioritises their health and wellness. These initiatives not only enhance efficiency and productivity but also contribute to the overall well-being of our employees.
Our learning interventions are designed to empower employees to excel at work. We employ a blend of people-centric, classroom-based, digital, app-based, and virtual training platforms to maximise impact. Our AI-enabled learning app provides personalised content tailored to meet individual needs, offering the flexibility to learn anytime, anywhere. Our -e-learning platform hosts a plethora of relevant courses, videos, and webinars, all leveraged by our employees to enhance their skills and knowledge.
To further support our workforce, we provide access to Coursera for all employees, offering self-learning opportunities across a vast range of topics. Additionally, we offer tuition reimbursement and support for professional courses, enabling our employees to pursue further education and professional development. Regular compliance courses are also mandated to ensure adherence to regulatory requirements.
Building a strong, future-ready talent pool and a robust leadership succession pipeline is a top priority. We focus on identifying and developing high-potential employees, steering towards holistic and comprehensive development interventions. Our recognition of talent is reflected in our efforts to strengthen structures and assign higher responsibilities to internal talent.
Additionally, we emphasise the health and safety of our employees through regular fire audits and adherence to safety protocols, ensuring a secure and compliant workplace. In summary, our comprehensive approach to employee development, health, and safety ensures that our workforce is equipped, engaged, and well-cared-for, driving both individual and organisational success.
FINANCIAL PERFORMANCE
Statement of Profit & Loss Account
(I in Crore)
| Particulars | Financial Year | Change | |
| FY24 | FY23 | y-o-y | |
| Revenue from Operations | 1,353 | 1,227 | 10% |
| Employee Benefits Expense | 321 | 277 | 16% |
| Fees and Commission Expense | 35 | 23 | 53% |
| Depreciation and Amortisation | 34 | 34 | 1% |
| Other Expenses1 | 242 | 225 | 7% |
| Total Expenses | 632 | 560 | 13% |
| Operating Profit | 721 | 667 | 8% |
| Other Income | 287 | 127 | 126% |
| Profit Before Tax | 1,008 | 794 | 27% |
| Tax Expense | 228 | 198 | 15% |
| Net Income | 780 | 596 | 31% |
1
Other expense include finance costBalance Sheet
(I in Crore)
| Particulars | As at | |
| 31st March, 2024 | 31st March, 2023 | |
| Share Capital | 144.05 | 144 |
| Other Equity | 3,025 | 2,373 |
| Total Equity | 3,169 | 2,517 |
| Financial Liabilities | 203 | 147 |
| Non-financial Liabilities | 130 | 124 |
| Total Equity & Liabilities | 3,502 | 2,788 |
| Investments | 3,122 | 2,359 |
| Other Financial Assets | 140 | 211 |
| Non-financial Assets | 240 | 218 |
| Total Assets | 3,502 | 2,788 |
CAUTIONARY STATEMENT
The statements in the Boards Report and the Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be ‘forward-looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. The Company is not obliged to publicly amend, modify or revise any forward-looking statements, based on any subsequent development information or events or otherwise.
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