Nippon Life India Asset Management Ltd

Dear Shareholders,

It is my pleasure to write this note on behalf of the entire team at NAM India. I am pleased to present the Annual Report for FY25, highlighting our progress and outlining our vision going forward.

The global economy continues to navigate a complex landscape, with estimated growth of 3.0-3.5% in 2024 amidst persistent inflation, tight financial conditions, and geopolitical uncertainties. Advanced economies, including the US and Eurozone, are experiencing a slowdown, while emerging markets remain the key drivers of growth.

India and China are set to lead global expansion, supported by resilient domestic demand. Inflation is gradually easing, with global headline inflation expected to decline from 5.7% in 2024 to 4.3% in 2025.

Growth for the Indian economy moderated to 6.5% in FY25, after three successive years of strong growth (an average of 8%+). This was all in the backdrop of a tight monetary policy, fiscal consolidation and an increase in geo-political uncertainties. That being said, the Indian economy is still projected to have among the fastest growth rates among both developed and emerging economies over the next two years as per the International Monetary Fund. With a focus on infrastructure, digital transformation, and manufacturing, India is well-positioned for long-term growth. However, challenges such as global market volatility, ongoing tariff wars, trade disruptions, and climate risks necessitate prudent macroeconomic management.

In FY25, Indian equity markets delivered a moderate performance with a 5% YoY growth in the NIFTY, as compared to a 29% growth in FY24. Growth in the NIFTY Mid and Small Cap indices too was moderate at 8% YoY and 5% YoY, respectively as compared to 56%/63% growth in FY24. The Repo Rate was cut by 25 bps to 6.25% after remaining flat in the prior year, while the 10 Year G-Sec yield moderated by 47 basis points YoY (as compared to a decrease of 26 basis points in the prior year).

The Indian mutual fund industry has demonstrated robust growth, reflecting increased investor confidence and a shift towards financial assets.

The Industry's Assets Under Management increased by 25% to 5 67.4 Lakh Crore in FY25 (on a QAAUM basis). This high growth was aided by strong inflows, particularly systematic inflows in equity schemes. Over a five-year period, the Mutual Fund Industry has grown at a CAGR of ~20% and even if this growth rate halves, we are well on our way to achieve Industry AUM of 5 100 Lakh Crore by FY30.

At ~5 25,900 Crore, March 2025's Industry SIP flow increased 35% YoY. This SIP flow has grown at a 25% CAGR over the past eight years, across various market conditions. This trend highlights the growing preference for disciplined, long-term investment strategies among retail investors. Total SIP folios increased by 20% YoY in March 2025 to 10.1 Crore and total SIP AUM increased by 25% YoY to 5 13.3 Lakh Crore. The Industry added 96.6 lakh unique investors in FY25 to reach a total of 5.42 Crore investors. This represented a CAGR of 21% over the previous five years. With nearly 60% of India's population in the working-age bracket and a digital infrastructure that enables reach and responsiveness, the long-term growth outlook for the industry remains strong propelled by SIP flows and Industry efforts to communicate that 'SIP Sahi Hai' i.e. SIP is the right way to invest.

FY25 was another year of strong delivery across key metrics. NAM India had a record year in terms of profitability, achieving its highest ever Operating Profit at 5 1,404 Crore (up 47% YoY) as well as Profit After Tax at 5 1,286 Crore (up 16% YoY). We are proposing to distribute 91% of our standalone profits to our shareholders, once again exceeding our stated dividend policy to distribute 60%-90% of our profits.

Our mutual fund QAAUM grew at 29% YoY to 5 5.57 Lakh Crore as we maintained our position as the fourth-largest AMC. This made us the fastest growing AMC among the top-10 largest AMCs for the second year in succession and also saw our market share increase by 30 bps to 8.26%. Over a two-year span, our market share increased by 103 bps, which was the highest increase in market share among the entire Industry. Equity mutual fund QAAUM grew 31% YoY and market share improved by 10 bps YoY to 6.86%, aided by strong scheme performance, our distribution capabilities - both physical and digital, and strong risk management practices.

It is important to underscore that the strong performance in the year has been aided by the strong foundations that we have put in place over the years, including focus on people and processes.

Our comprehensive product suite includes equity, debt, liquid funds, ETFs, commodities, real estate, and VC funds and this enables us to serve a wide range of investors including individuals (retail and HNI) as well as institutions. Our unique investor base grew by 26% YoY to 2.08 Crore (ahead of Industry growth), leading to an increase in unique investor market share to >38%. We are humbled to have over 1 in 3 investors in the mutual fund industry invest with us, as we continue to have the largest investor base in the industry. Total folios as of FY25 stood at 3.25 Crore, up by 82 lakh folios over FY24.

Systematic flows in the year grew by an impressive 72% to Rs. 36,187 Crore and Systematic AUM rose by 31% over the year to reach Rs. 1.30 Lakh Crore. Our annualised systematic book stood at 38,200 Crore as of March 2025. Our SIP AUM continues to demonstrate higher stickiness versus the industry. 54% of our SIP AUM has continued for over 5 years vis-a-vis 30% for the industry. Given our focus on the retail investor segment right from the get-go, we also have a higher proportion of equity AUM (45%+) derived from our systematic AUM versus the Industry. Given that systematic flows are more resilient than flows via lumpsum, this forms a strong foundation for future growth.

We also maintain our dominant position in the Passive space. Our passive AUM crossed the milestone of Rs. 1.50 Lakh Crore in the year and ETF QAAUM stood at Rs. 1.54 Lakh Crore, with a market share of ~19.1% (up by ~240 bps in the year). Our share in the industry's ETF folios remained strong at 53% and we continued to account for a majority volume share of 53%+ in the ETF segment.

Apart from the mutual fund business, we also continue to focus on the AIF and Offshore businesses both of which showcased positive performance in FY25 with a combined revenue growth of 30%.

We will also continue to play an important role in strengthening the financial relationship between India and Japan. This would involve a two-way flow of capital and includes the enhanced access to India markets that we have enabled to Japanese investors via GIFT City. Further, we continue to evaluate newer business lines, whether organic or inorganic (similar to our acquisition of Goldman Sachs' ETF business). Specialised Investment Fund is one such opportunity for future growth. To facilitate this we have made a senior Industry hire and plan to roll out products in due course.

Our digital transformation gained further momentum this year, not only enhancing reach but reimagining how investors and distributors interact with us. By harnessing the power of digital innovation and executing a well-crafted strategy, we breached an inflection point, achieving accelerated growth, enhanced efficiency, and a distinct, competitive edge. Our best-in-class digital assets, strong digital distribution framework and efficient campaign management strategies reinforce our leadership in the online space. We witnessed impressive growth of more than two-fold in digital transactions in FY25, clocking 14.4 million transactions (Lumpsum + new SIPs).

At the heart of our performance is a deeply engaged team. In FY25, NAM India recorded one of the lowest investor complaint rates in the industry, just 40 per million folios, versus an average of 73 for the other AMCs in the top five. This is an outcome of a culture that emphasises accountability, excellence, and responsiveness. We were honoured to be included in the Kincentric Best Employer Club 2024 and were also proud recipients of the Global Employee Choice Award 2024 by WEMatter, affirming our position as an employer of choice in the Indian financial services ecosystem. I would like to express my appreciation to each of our 1,165 employees for their individual and collective contributions in driving our success.

We at NAM India, take our role a responsible corporate citizen very seriously. In-line with this, we continue to integrate ESG principles across our investment, governance, and operational practices in alignment with the UN Sustainable Development Goals (SDGs). Further, we became a United Nations Principles for Responsible Investment (UN-PRI) signatory in June 2021, demonstrating our commitment to responsible investment and sustainability while trying to align practices towards global standards with enhanced transparency.

In FY25, we invested 19 Crore in CSR initiatives, focused on high-impact areas of healthcare, education and skill development, rural development, environmental sustainability, and support for India's armed forces. These programmes have touched thousands of lives, and we remain committed to building greater transparency, impact tracking, and stakeholder engagement. We also remain committed to empowering our retail investors and safeguarding the interest of minority shareholders through our Stewardship Code.

The Indian economy is expected to grow at 6.3-6.5% in FY26, despite increasing downside risk to global growth due to tariff uncertainty and trade policies. This is expected to be driven by private consumption and government spending led capital expenditure push. A dovish monetary policy, lower crude prices and a moderate inflation outlook are also likely to support growth. Equity market outlook remains positive overall; however it could take a few quarters to earnings growth to accelerate. On the debt front, policy rate easing seems to be largely complete as of June 2025.

At NAM India, we remain committed to expanding our retail investor base, while focusing on smaller cities and towns. This aids us in furthering financial inclusion in society, while providing residents in these locations much-needed investment access. We will also continue to play our part in financialization of savings and wealth creation in India, as we work towards the Prime Minister's vision of an Atmanirbhar' and 'Viksit' Bharat (self-reliant and developed India). As NAM India completes ~30 years in the Industry, we look forward to the next phase with a sense of optimism. We will look to build on our strengths - including our people, our diversified distribution base, our large granular retail investor base, our presence

in smaller cities and towns and leadership in the passive category as we look to continue to create meaningful impact for all our stakeholders. This is reflected in our Annual Report Theme for the year - 'Rooted in strength. Growing with purpose.'

Given the low level of Mutual Fund penetration in India (only ~4% of India's population invests), there exists a vast growth opportunity going forward.

This will be further amplified as India continues down its path to become the third largest economy in the world, which will see a gradual increase in Per Capita Income for the population (currently at only ~USD 2,500). These factors should aid sustained growth for the Mutual Fund Industry in years to come. Within the Industry however, execution will likely be the deciding factor in terms of which AMCs can capture a disproportionate share of the growth. We at NAM India will endeavour to continue our strong execution as we look to add newer and newer investors to our existing large base. I remain optimistic about the future growth of our Company with continued focus on processes and risk management.

In conclusion, I want to reaffirm that the NAM India team is resolutely dedicated to delivering value to all our stakeholders i.e. investors, shareholders, employees, partners, and the broader community.

ED & CEO.