Annual Report: 2024
The Directors' Report of SBI Funds Management Ltd. presents the 32nd Annual Report with audited accounts for the year ended March 31, 2024.
Financial Highlights: The company's financial performance is summarized on a standalone and consolidated basis. Total income stood at ₹3,42,517 lakh and ₹3,42,608 lakh on standalone and consolidated basis respectively for 2023-24. Profit before tax was ₹2,67,603 lakh and ₹267,362 lakh respectively. The profit for the period was ₹206,295 lakh and ₹207,278 lakh, respectively. An interim dividend of ₹4 per equity share was declared. A sum of ₹500 lakh was transferred to General Reserves.
Capital Structure: 26,15,829 shares of ₹1 face value were allotted to employees through the Employees Stock Options Scheme. The total paid-up equity share value was ₹5,063.40 Lakh. The company's net worth increased to ₹6,75,690 lakh on a standalone basis.
Subsidiaries: SBI Funds Management (International) Private Limited, a wholly-owned subsidiary in Mauritius, provides investment management services. It declared a dividend of ₹415.33 Lakh. SBI Funds International (IFSC) Limited was incorporated in GIFT City - Gandhinagar on February 7, 2024, and its license approval is in process.
Associate Company: The company holds a 20% stake in SBI Pension Funds Private Limited.
Market Environment 2023-24: The report provides an overview of the global and Indian macro environments. Global concerns included synchronized rate hikes and inflation, while the Indian macro backdrop proved less hostile than initially anticipated. Real GDP grew by 8.2% in 9M FY24, driven by investment and manufacturing. A potential risk involves the single deflation method potentially exaggerating GDP growth. The report anticipates India's real growth to be a respectable 6.5% in FY25. Government capex growth is expected to moderate. The RBI is currently confronting cross currents on inflation, and is expected to continue to use rates and liquidity to manage growth-inflation dynamics. The report expects CPI inflation to glide towards 4%, but weather and crude oil are biggest risks.
Outlook: The report presents outlook for equity and fixed income. Indian equities had a good year with strong broad-based gains. However, broader markets have not kept pace with the Nifty. The median return of the top 250 small cap companies by market cap was just 3.8% versus Nifty's 10.9% rise. The deterioration in breadth ultimately culminated in the Nifty Midcap150 and the Nifty Smallcap250 indices peaking in early Feb and subsequently correcting 8% and 14% respectively. Staying bottom-up and sticking to quality and sustainable growth should work. In fixed income, with the announced market borrowings for FY25 being lower than market estimates and the continuing strong demand witnessed in recent past, the near-term outlook remains non-disruptive from a market perspective. The shape of the curve will be affected by the internals of the borrowing calendar of both center and states along with global factors like the USD & brent affecting Indian bonds and rates. Markets are entering the new fiscal with an air of confidence with most participants constructive on rates. Money market assets continue to provide adequate value and inflation adjusted carry for short holding period investments.
Mutual Fund Industry Regulatory Developments: SEBI has introduced several measures related to investment payments, Execution Only Platforms (EOP), Environmental, Social and Governance (ESG) investing and related disclosures, resources for Trustees of Mutual Funds, Corporate Debt Market Development Fund (CDMDF), and Online Resolution of Disputes. The regulations impact sponsor requirements, trustee responsibilities, and investment guidelines.
Portfolio Management Services - Regulatory Developments: Portfolio Managers are required to perform annual audit of firm-level performance data.
Alternative Investment Funds - Regulatory Developments: Schemes of AIFs will have an option of 'Direct Plan' for investors. The Corporate Debt Market Development Fund (CDMDF), launching liquidation scheme, valuation procedures, investment conditions, governance mechanisms and disclosure requirements. ❖ SEBI has mandated that AIFs are required to carry out valuation of securities as per Mutual Fund Regulations.
Business Performance During The Year: SBI Mutual Fund (SBI MF) grew by 27.4% in average AUM terms year-on-year in FY24. Profit after Tax (PAT) of SBIFM has increased from ₹1,331 Crores in FY 2023 to ₹2,063 Crores in FY 2024, an absolute growth of 55%. SBI MF was the first mutual fund house to cross an Asset Under Management (AUM) of ₹ 9 Lakh Crores.
Digital Initiatives: Digital assets were refreshed, with new features and targeted campaigns via WhatsApp, email, and app notifications. Project Sangam was launched, enhancing user experience. New GSIP, ESOA, ADMIN, ONLINESBIMF, GIFT City, and CDMDF portals were launched.
Future Plans: Focus on business development, new products (thematic and passive), increasing network of branches, building blocks (Passives, thematic, Alternatives, Offshore & Gift City), and digital tools.
Liquidation and Distribution of Assets: SBI Funds Management Limited was appointed by the Supreme Court of India to undertake the liquidation and distribution of assets of six schemes of Franklin Templeton Mutual Fund. The total disbursements made by SBIFML to FT unitholders is ₹ 27,509 crores.
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