Ladies and gentlemen, good day, and welcome to Anand Rathi Wealth Limited Q1 FY2025 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Feroze Azeez, Deputy CEO, Anand Rathi. Thank you, and over to you, sir. Thank you so much, and thank you so much everyone to join in. Good afternoon. I think, thank you for joining us for the earnings call for the first quarter of the financial year 2025. I'm joined by our CFO, Mr. Rajesh Bhutara, and Head Investor Relations, Mr. Vishal Sanghavi. Our consolidated total revenues for Q1 FY 2025 stood at about INR 245 crores compared to INR 178 crores Q1 FY 2024, registered a growth of 38%. Trade revenues stood at INR 89 crores and grew by about 70% year-on-year. Profit after tax was INR 73 crores, registering a growth again of 38% compared to INR 53 crores same quarter last year. The PAT margin was 29.9% as compared to 29.8% for Q1 FY 2024. The annualized return on equity for Q1 FY2025 stands at 42.8%. Total AUM grew by about 59% year-on-year to INR 69,018 crore as on thirtieth June 2024, as compared to 42,413 crore as on June 30, 2023. The total net flows during the Q1 FY2025 grew by 173% year-on-year to INR 3,364 crore for the quarter. Net inflows in equity mutual funds jumped 462% to 2,091 crore, and all our assets are under regular plan, whereas in industry is witnessing increased share of direct plan. This is a testimony for the deep trust and confidence our clients place in our value proposition. Our systematic and data-driven approach, along with the realistic understanding of client needs and risks, has been instrumental in achieving these numbers. Number of active client families increased by 90% year-on-year and crossed the milestone of the five digits, 10,000 client families. We've crossed that number. Our client attrition rate in terms of AUM last was 0.1% for Q1 FY 2025, as compared to 0.2% last year, reflecting our client-centric approach and a strong research-backed solution. On net basis, we have added 52 relationship managers in the last 12 months, bringing our total count to 360. We have successfully maintained our zero attrition of relationship managers for the straight Q4, which is significantly because of the culture created in the organization and the transparency between the company and its constituents. You would also note that in this Q4, zero regret attrition signifies one of the first few times in the financial services industry, a company of this size of relationship managers would have reported zero regret attrition for 12 successive months. So as a part of our... Yeah, so I will hand this over to Vishalji now, who is our Investor Relations Head, so that I can break the monotony. Vishalji, can you step in and take the group forward? Yeah. Thank Yeah. Thank you, Feroze bhai. Good afternoon, everyone. As a part of our endeavor to reward our shareholders, we successfully concluded the buyback program of INR 164.65 crores, which is excluding any charges and taxes. About Digital Wealth business, which is a B2B2C business, registered AUM growth of 48% year-on-year to INR 1,727 crores and revenue of INR 7 crores, a growth of 13% year-on-year. OFA business, which is a sales platform, has 6,064 mutual fund distributor as a subscriber at the end of the Q1 FY 2025. OFA business reported revenue of INR 1.84 crores, which is a growth of 18% year-on-year. Indian economy is on the strong footing, with the GDP expected to grow at 7.2% for current year, making it the fastest growing market globally. In this backdrop, Indian markets have witnessed new all-time highs, supported by strong performance of Indian companies. With this, we anticipate a noticeable increase in the number of high-net-worth individuals in the country, and thus creating a huge growth potential Digital Wealth business. With multiple growth drivers in place, we are confident that our company has the potential to grow by 20%-25% in the long term. Now, I request operator to start with the Q&A session. Thank you very much. We'll now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. Participants, you may press star and one to ask the question. The first question is from the line of Bhavin Pande from Athena Investments. Please go ahead. Hey, hi, good afternoon. Am I audible? ... Yes, Mr. Pande, you are very well. Perfect. Wonderful team. Congratulations on, you know, great set of numbers. It's such incredible Q6-Q7 of this amount of growth. It's amazing. Congrats on that! And first question on account of AUM mix, we could see that the debt NS mix has come down to 7% as compared to 11% last year. So if you could shed some light on that. Sure. Thank you, Pawan, sir, for your positive comment on our results, and I'll take the opportunity to highlight that this is our eleventh result. You would see that all our results have been above 23%-24% PAT growth year-on-year, and the worst one was 24%. The mean PAT growth has been 33, and the median PAT growth of these Q7 has been 34. So thank you so much for trusting us as shareholders. Now, coming to your pointed question, why is the debt proportion lower? There are two reasons for it. Because debt as an instrument for long-term monies, because we only try and get that money in, which is intergenerational wealth. More often than not, HNIs have intergenerational wealth. We do a very strong gatekeeping in terms of what assets we onboard to manage. So you would see very small debt proportions anyways, because I'm looking at 10-, 15-, 20-, 30-year kind of monies. If there's somebody who has short-term monies, we are repelled as a wealth manager from it. It's why you would see anyways Anand Rathi Wealth having smaller proportions in debt, because in 10-year monies, debt has very low relevance. Second point is the proportions, the differences, the relative change between 11 and 7 is reasonably attributed towards the fact that, there's mark-to-market more in equity and structured products, and we have been reasonably positive on equity markets from August 2020, and we were the only few wealth managers who've been positive for long-term monies, still sensitizing clients for 10, 12% corrections twice a year, which is the norm of the equity market. So mark-to-market differentials is one reason why structured products has come down to 24% and debt mutual funds has come down to 7% from 11%. I hope that answers. And we are not very bullish on debt, even if interest rates came down, the long end of the yield curve has not so elevated. So we are... The flat yield curve of Indian context is reasonably sustainable, and we don't see that debt will make too much capital appreciation either, even if repo rates were to be brought down, because the long end of the yield curve is still at 7%. The spread between 10-year G-Sec and repo rate is just about 0.5%. So, on the contrary to the street's belief that there's a lot of capital gain to be made in debt, but we think that people have not lost money is why they don't expect to make too much on the debt side, even if they go long end of the yield curve. Does it answer? Yeah. Perfect. Perfect, Feroze. It was pretty much concise. Secondly, Feroze, you know, we could see AUM and clients per RMs increasing. You know, we have added 28 RMs in this quarter, and I think 52 on a year-over-year basis. But, you know, in this wealth business, it's specifically known that, you know, turnaround time and sort of registration period for RMs is high and your OpEx goes up initially. So what do you think has led to this sort of, you know, productivity gains on per RM basis? Pawan, sir, there is a lot of factors. We think a little, dramatically different when it comes to number of RM counts, productivity, all that. We've had a, right or wrong, but a different thought process. So, one is productivity increases on account of we don't lose RMs, right? So the number of RMs who finish five years increases, so the average tenure of my RM group, who are my colleagues, goes up. You would not see... It's not. It's really seldom found that Q4, no RM attrition. RM is what everybody bids for. My competitors would bid for my RMs, would want to give them twice the salary, but they won't leave. So productivity increase only happens if you don't have a leaking bucket, either at a client side or an RM side. So that's one thing, which is the snowball effect. Of course, initially, you don't see that productivity increase. As with time, the lower attrition or nil attrition adds up significantly in a hockey stick kind of a recovery in terms of productivity, right? That's point one. Point two, what happens is, when you're a listed company, the credibility in the client's mind itself is higher, right? So there is a flywheel effect. If you're listed, you get business. If you get business, you do, your, your company does well. So the flywheel effect in a business of trust is the second, as now you've been listed for two and a half years as a company. So clients, a prospect you meet, it is relatively simpler because the brand building happens because of the listing status and vice versa. So that's second. So you're seeing that effect kick in. Third, is that we are using mathematics significantly more over the last three years to convince somebody. We are finding so many portfolios with different complex products, but the IRRs are 10%, 11% for the last 15 years. It is surprising the extent of complexity with lower IRR. So if you mathematically establish that you are operating at significantly more complexity to get an 11% IRR, I can... Well, I mean, in the industry, you will find hundreds of portfolios, if not thousands and lakhs, where you would see complex products, but if you take the transaction-wise IRR on an Excel sheet, you would see them sub-10 or 11 or 12. So, people are accepting uncomplicated lot more when you use mathematics. So that's why our net flows have gone up, because mathematics, most people can't deny. And on English, people can debate till the cows come home, but mathematics has more pointed solutions. So conviction transmission using mathematics is something which we learned about 2.5 years back, and that is actually adding up so. Sure. Wonderful, Feroze. And just one last question is, you know, you mentioned mathematics and all the metrics we have. I think few concalls back, we had mentioned that for the structured product to do well, we would require higher levels of interest rates and certain levels of vol. And my apologies if I'm incorrect in the technicals. So you could just shed some light on that? Wow! Firstly, I'm so impressed that you remember this. I'm so happy and thankful. Thank you that you, you're wanting to understand my business threadbare, which is great. So structured product requires high interest rates, at least the structured products we currently design. You would see that we don't innovate every quarter. So you got INR 3,360 crore without launching any NFO, without selling anything new. Same mundane conversation gets you INR 3,300 crore, then you have a business that has autopilot. So for structured products of the current design, which we've been doing for the last 10, 12 years, require higher interest rates. Higher interest rates by which I mean not those double-digit interest rates. The sister company, Anand Rathi Global Finance, has one of the lowest borrowing rates. But you need 7-8% kind of interest rates, which I think is sustainable. Like you rightly pointed out, you need a certain degree of volatility. So the implied volatility of Nifty in fact has shot up marginally, especially because of the election period. But I think, realizing a volatility of 16-17 on a daily standard deviation, is another mandate. So if both these ingredients are not there in the next 10 years, 5 years, then you design the structured product exactly opposite. So designing of structured products is like we simulate on different economic variables. What will be the product I will launch is already pre-decided. If 10 years later, if interest rates are at 4% and the vol realize this, then I would be buying calls in the product rather than selling puts, so, to express the bullishness. So to answer your pointed question, these are the absolute two ingredients needed for the current design of the two products, which we primarily do for the last 10 years and done 1,500 times each, both of these. If things were to change and if I get exactly opposite economic variables, like, lower vols on Nifty and lower interest rates, then you can actually become a buyer of the call, because your forward rates will be lower and your vols will be lower, so calls will become inexpensive, so the product will have a call spread as a design. Sorry, it gets a little technical. Yeah, I'm sure you've picked it up if you've picked up the last call's content as well, so. Wonderful. Great, great, Feroze. You know, thank you so much for great, concise answers, and all the best for time ahead. Thanks for your time and your confidence in us, sir. Thank you very much. Participants, you may press star and one to ask the question. Next question is from the line of Lalit Deo from Equirus Securities. Please go ahead. Yeah. Hi, good afternoon, sir, and congratulations on the set of numbers. So, sir, like, firstly, on just a data point question, like, during the quarter, like, what were the, like, the primary MLD issue, structured product issuances and the secondary issuances also? Sure, I can give you those numbers, but I'll have to rely on my wonderful colleagues, Rajesh Sir and Vishal Sahab. Sure, please. Can you just give the precise numbers, Vishal bhai? Yeah. Hi, Lalit. For the Q1 FY20 25, primary gross issuances was INR 1,735 crores. First, and secondaries? Secondary was near INR 400 crore. Okay. Like, sir, like in the last quarter, we mentioned that, like we will be doing this for portfolio allocation, a reallocation of the clients, where we would want to change the AUM mix from like 60% currently, where we have registered funds to about 50-55%. But now, again, with these strong markets, currently our overall AUM mix has been again tilting towards the mutual fund. So how are we looking ahead for the next full year in terms of the AUM mix? Yes, you like rightly identified, and I'm glad you again remembered the fact that I told that we will reallocate assets. And every year, we generally bring our new model portfolio of mutual funds, which has some changes, which is called zero-based bottom-up, if I had cash in my bank account. So mutual fund allocations have some minor changes. During the process of the minor change, we will also do the change between the asset allocation between structured products and equity mutual funds. So what can you expect? You can expect that, the movement of equity mutual funds to structured products, over the next nine months is gonna be one of the key areas of focus, because it's always good, to strategically reallocate between a plan A and a plan B, which is how we position both these products against each other, because the standard deviation of a structured product is significantly lower than equity mutual funds. So to answer your pointed question, you would see these proportions again attempt to change and, there will be a reallocation done. So you could see 28-30% by the end of the year again. And, I'm, I'm sure people would, and a lot of you as analysts and several of the industry colleagues would have asked that we have very low maturities this year. In spite of that, you will see very consistent growth is what was the claim, and I think the first quarter is a reasonable barometer for that concern to be assuaged. Sure, sir. And so just lastly, on this mutual fund AUM, so like this quarter, we have seen a good growth on the equity mutual fund AUM, but in terms of the revenues, that has been not reflected. So this could be basically broadly on account of the period and changes, right? So could you give us more color on how the average AUM is shaping up for us in the mutual fund? I think there has been an 80% or 70% increase in the revenue, trail revenue. Yeah, but on a sequential basis, I think the growth was lower, right, on that spread. I think... See, don't ever judge. See, all I'm saying is, numbers are numbers. If you have to understand my business, you have to go beyond numbers. Point one, I'm—we are running a business which manages people's hard-earned money. So quarter- on- quarter, seeing my numbers is not right according to me. Of course, I can only submit to the group, but group will do what they have to do. But if I were you, I would never see this business on a quarter-on-quarter basis. If you're managing... If I was selling iPhones or some phones, I'm okay to be measured on a quarter-on-quarter basis. Here it is hard-earned monies of people, so, I don't see quarter- on- quarter. I request you not to do. So point one. Point two, what on a trail revenue basis, we have, we have... There are two indications I want to reiterate from my previous calls. We have told you that we want to get to a 50/50 kind of a mix between trail and upfront, and that's our endeavor. When we put an indication in the public domain, we do our best to meet that. Otherwise, we don't sleep easy. So point one, what you can expect on this is the 50/50 ratio over a period of time, at least an honest, full intent of that. That's one thing which I would want to speak on the trail. Now coming to equity mutual funds. Equity mutual funds, I think everybody should take note. Everybody always told me there's a risk of direct, regular, passive, active. You would see a 460% growth in our equity net flows, and I don't give direct as an option to even one client if he offers us INR 2,000 crore to manage. We said, "No, I will not do. I will not sell my self-seat. I will add value and earn my 1%." In spite of that, you see 460% growth in equity mutual fund. How did that happen, right? And if you see the last full financial year, equity mutual funds, the net flow into equity mutual funds in the full year, and it's a saddening number for me, that the fact that if you remove the SIP purchase, the net flow was negative in equity mutual funds last year. Okay? It is not that there is a huge influx of money from HNI into mutual funds. Mutual funds are being directed towards more complex instruments. To answer your pointed question, revenue will set in. The revenue is a trail revenue. Average assets, average per day asset is also something which is so volatile because markets keep moving up and down. But I'm reiterating the fact that our aspiration, because we have put it on the table, it's now our effort, is behind getting it to 50/50 sooner than later. And I also told that we will get to 3%-4% of equity mutual fund market share in India. And that's our effort, and we shall do our best, with the grace of God, to make it happen. Yeah. Yeah, sir. Yeah, thank you, sir. Thank you, sir. Thank you very much. Participants, you may press star and one to ask a question. Next question is from Manav Vijay from Prodigy Investment Management. Please go ahead. Yeah. Am I audible? Yes, sir, you are. Sir, your voice is echoing. Can you speak through the handset, please? Yeah. Okay. Yeah, this is better? Yes. Thank you. Yeah. So thank you for the opportunity. So I had a question regarding the AUM allocation. So you said that your goal is to increase the portfolio allocation of structured products, right? However, and you also said that your long-term aspiration is to increase trail revenues to 50% total revenues, or get a 50/50 split between trail and upfront. So from what I understand, this would entail increasing the allocation towards mutual funds. So I was, I was just curious how it's possible to increase the share of trail revenues while simultaneously increasing the allocation towards structured products? It is possible because the proportion of structured products and equity mutual fund is also, is largely dependent on current assets, which you own INR 69,000 crore, which are assets under management. Trail revenue is also gonna be driven by the net flows. Now, if INR 3,300 crore, INR 3,000 crore of net flows happened, INR 2,100 crore has gone into equity. So the proportion is close to about 65% of the total net flow went into equity mutual funds. Are you with me, sir? So that's point one. Point two, these proportions of 24, 7, and 54 on these three product classes are also subject to mark-to-market. If you have to understand our business, it's a very, very simple business because we don't bring assets which we don't earn 1% on. So if I collect INR 1,000 crore per, per month, give or take, what will be my total assets, is what you have to try and project, and the revenue is gonna be 1.2%, PAT is gonna be 30% of that revenue. This is how a business we look at. So, to change the proportion, it is basically to make sure that the clients have reallocated and sold some mutual funds at market peaks, if at all. That's the signs of selling high and buying low. So, so that's why this proportion could change. But the net flow is also another variable, and mark-to-market is another variable.... So it is certainly possible to get to 50/50 over a period of time, not surgically, though, like you rightly pointed. Okay, thanks for that. And, so my second question was: I wanted some more clarity on what are all the factors that affect blended yield. So portfolio allocation is one, but what affects yields in mutual funds and structured products individually? I want to understand why yields have gone up over the last few years, and what are the possible factors that can be a upward or downward for yields going forward? Yields, which you see as a proportion of the total AUM, like 69,000, is not the only barometer, because if I have a yield divided by June thirtieth AUM, that's not—that's only one day's assessment. So coming to what is the yield dependent on? The primary products, equity mutual fund, we earn about 1.1% post GST in structured products. If you work backwards and calculate the yield I made on all mature structured products, you will see 1.16, 1.17% is the yield we earned on matured products. So the yield of both these primary products are very close to each other. On debt, we make about 38-40 basis points on debt funds. And other assets, we make little. That's raw material. So this is the yield composition of different asset classes, or product classes, which are there in the AUM. What does this yield depend on? The yield depends on, the size of a fund in the mutual fund. In structured products, you're generally starting at 1.15-1.2 yield. Yield is always calculated per annum on market value, average market value. So to answer your question, the yield pressures, to my mind, are very unlikely. 5, 7 basis points, 8 basis points here or there can keep swinging, but, that's our guess, and our yields have been retained for the last 5, 6 years. Okay, thank you. Thank you. Next question is from the line of Shivansh Sood from Dolat Capital. Please go ahead. Hi, am I audible? Yes, you are. Hi. So congratulations on a great result! So, I had a question, and, like, the company ROE has increased from, 35.9% in last quarter to 42.8%. So what are the specific factors that contributed to this significant improvement, and do you think this level is sustainable? Yeah. So, when you're making a PAT which is growing, and if you're giving your dividends away, if you're doing a buyback and stuff, as a matter of practice, our dividend policy permits us to give away 30%-50% of the PAT we've made. Since your reserves don't shoot up so much because it's a cash-generating business, and you don't want to hold up money, because we don't intend to splurge money on buying businesses or buying relationship managers at obscene prices from competition. You've given away, the denominator is kept in check, and that's one reason. The PAT growth and the denominator in check, the numerator increasing and the denominator not increasing is why the ROE is higher, to be mathematically correct. Second, are these levels sustainable? Yes, in our belief, definitely they're sustainable because you don't need capital, as much. It's not a plant and machinery kind of a business, so ROEs are possible to sustain at these levels or higher. Okay. Are there any plans currently in the company to expand internationally beyond the Dubai office? Yeah, we are looking at the opportunity in the GIFT City, which I think is a very, very, transparent and a good opportunity, especially in the last 2 days, RBI also said we made some changes in the LRS limits, to IFSC. So point one is, yes, we... Not from a location standpoint, the NRI business could be a very different ballgame over the next 5, 10 years, and that's a huge opportunity for a wealth management outfit like ours, for sure, which is India-centric and the kind of India popularity globally. When I go, meet some fund managers, which I do every June, for the last 6, 7 years, the kind of decibel for India has gone up dramatically. So, to answer your pointed question, we have not thought of it geographically. From an opportunity standpoint, NRI business, we are, we are going to be focusing on it, because the landscape and the kind of scale this can be built to is very different with the inclusion of GIFT City and the new, very, very correct and liberal regulatory framework. Okay. Lastly, I wanted to know, like, are there any initiatives being taken to further improve the revenue per client and AUM per RM metrics? Sorry, I couldn't hear you. If you could go again. Sorry. Are there any initiatives being taken to further improve the revenue per client and AUM per RM metrics? Revenue per client and revenue. So are there initiatives? Everything we do is for both these. So, so, if I, if I wake up in the morning, that's an initiative to do this precisely. But we don't see it as client, revenue per client. We don't like to see it like that. We don't even like to state it like that because it is assets. If I can manage 70, 80% or 90% of one's asset, as time grows, our clients give us more wallet because they realize that this is not lip service. So client's wallet is something we want to capture, not revenue. Revenue is an outcome. His money, we, we take immense pride when a 10-year-old client becomes a sole advisory client, in spite of competition wanting to distract him with discounts on mutual funds, with the most complex products. If a large client puts all his 100% of his money with us, that's how we look at it, not revenue per client. Of course, there could be a larger wallet resulting in larger revenue, but it's a, it's a perspective difference. Glass half full and half empty, right? But, yeah, both are causes and effect. Larger wallets implies larger revenue, so revenue is the cause, asset is the effect, which results in that cause. But we see the effect... we don't see the effect, we see the cause. That's one. Productivity per RM, that is a natural progression. See, we try and manage 50 clients per person. I'm also a relationship manager, so the most important thing, which I always try and highlight, is all of us are relationship managers, so we are able to understand what is happening today. I was not a relationship manager 10 years and then I teach somebody today. It's not contemporary. So, coming to the point of whether RM productivity will go up? Yes, because 50 clients is what an RM's capacity is to manage with one or two account managers, who are apprentice attached to him. So a group of three people or two people manage 50 clients. If the client, if the RM becomes big and this RM wants to improve efficiency, he gives away his smaller clients to his apprentice, makes them relationship managers. So like when I promoted my account manager, I gave away some small clients to her, and then she starts her life as a relationship manager. So it's a win, win, win. What are small clients for me become bread and butter for her. So client gets even better service. So the vicious cycle continues. Not, not a vicious cycle, it's a more negative connotation, but, the cycle of help continues. So, coming back to your question, can RM productivity go up with the same 50 clients? The answer is yes, because he gives away his deadweight. My deadweight is wins for her, when she starts her life. So that's how RM productivity is. So there's no saturation. So if an RM gets to 50 clients with INR 1,000 crore of assets, he can still go to INR 2,000 crore of assets with the same, with different 50 clients. I don't know whether I answered your question, but I attempted to. Thank you so much. Thank you. Next question is from the line of Dipanjan Ghosh from Citi. Please go ahead. Hi, good morning, sir. So a few questions from my side. First, you know, if you can give some color on the flows that come into your business, between existing clients versus new clients that you acquire. And how has the trend been, let's say, let's say over the past 12-18 months, compared to, let's say, years prior to that or across different cycles, where markets are good versus markets are, let's say, tepid? So how does the old existing money to new existing money really change during market cycles? Just wanted to get some color on that. Second, on your client acquisition strategy, if you can, you know, shed some color on, what will be your incremental client acquisition strategy in terms of... Obviously, the competitive landscape tends to be, you know, shaping up quite, aggressively. Most players are ramping up their engine, be it the foreign ones or even the domestic ones. Some of them plan to scale up. So how do you really kind of want to position yourself? Wanted to get some color on that. Lastly, two data keeping questions. If you could give your total employee base for the quarter and maybe, March 2024, and I missed the data on MLD issuances, if you can, kindly repeat that, that will be great. Thank you. Oh, that's a lot of questions. I'll try to remember them. So, point one, what was your first question? Sorry, go again, please. I remember the last one. The first was on the old to new money. Ah, that. I... Yeah. See, old to new money, if 3,300-odd crores came in, the clients who were not on the system on first of April, what proportions did those clients out of the 3,300 crores of net flow, how much did they give? You have to take this number with tolerance, unless Vishalji can give you a precise number. About 20-25% is from new clients. Because we don't force a client to start big. If the client has INR 10 crore, he's my prospect. If he has INR 4 crore, I don't want to go to him because I'll only earn INR 4 lakh a year, and then I can't give him ethical advice. I have to sell him insurance policies or some obscene upfront AIF. Coming back to the point, 20%-25% comes from new clients who didn't exist in that quarter beginning. That's the proportion. Okay? And because we tell the client, "If you have INR 10 crore, you start with INR 1 crore, I don't have a problem. You start with INR 1 crore, if I live up to what I'm talking, you will give me more assets anyway, because it's gonna be in your interest." Because in the wealth management industry, you can pick up so many portfolios of triple digit crores and measure the Sharpe ratio, which wealth management industry doesn't measure. Point three, point two, point one, some people have negative Sharpe ratios also, and they have INR 50 crore invested. So you just have to calculate the Sharpe ratio and show for them for the next last five years, and then it makes it. So coming back, 25% comes from new clients, and 75% of net flows or 80% of net flows comes from existing clients who were new for the last quarter, maybe. Because we don't force people to start big. Like, so many wealth management outfits have a rule saying that if you have INR 5 crore to start with, then I onboard you. So that I think, we think that... Yeah. So, so sorry, if I could just follow up. So does this, I mean, has this ratio changed in your experience? I mean, you've been in the industry for so long, so, does this ratio remain similar to what you said across, market cycles or equity market cycles? ...For a wealth management outfit like ours, it has remained largely static. If I was a broker, it would be very different. Because, I am not going to those new guys who've got money and they want to start. I'm going to a guy who has got invested with somebody else, and he has a complex life. I'm simplifying his life, right? You understand the business? Yeah. So if you look at the median age, you should see this NSE data, which just was released. I should just tell you, this is very interesting data, I'm sure. When you're looking at the age, the age bracket in the demat accounts has come down. The median has come down significantly. Now you have close to about. One second. I'll just tell you this. I'm just bringing your attention to this data. If I was a broker, it would be very useful information. One of very, the ratio would change. Less than 30 years of age, the number of broking accounts has moved up in the last 6 years from 22.9% to 40.1%. So younger people are starting business. So my proportions of new client pro, ratios have remained same. In broking, that will change, I would like to assume, because the younger guys are coming in because it's a full product. So the second question was on the client acquisition strategy. Obviously, you've been ramping up your RM engine, as in apprentices are getting promoted and so on. But in terms of new client acquisition, that is also, you know, going very strong. So what's the strategy out there? Because competitiveness will increase in this industry, is what I would expect over the next five years. Yes. So, see, if you look at it, if you see, because, my, our total 360 clients, 360 RMs, have 50 capacity, that's 18,000 clients. Correct? That's my capacity with the current plant and machinery. Okay, and I have a capacity of 7,000 more. With the same people, same colleagues of mine can handle 7,000 more families. If you forget it, forget that I have to acquire, I have to do branding, I have to do advertisements, I have to just go to these 10,000 guys and say: "Can I, can I meet five people in your society? Can I do an event for 10 people?" Those we call homogeneous groups, whom we address. So, so that's how it's been our acquisition strategy rather than picking up the phone and disturbing people at odd hours. Selling ourselves is one way of doing it. We are trying to reduce that proportion and go to a satisfied client, and now that there are so many clients above five years, and they know that risk-adjusted return mathematically is great with Anand Rathi Wealth. We go and tell them, "Sir, if you, if you go refer a restaurant or a movie to your friends, don't you think if something helped you in wealth management, should you not refer it to your five best friends?" And I think clients are being far more positive today with some credibility behind us now. So that's been the client acquisition strategy, and I think, when you tell the clients that, "I don't want to make cold calls to random people, can you just support and give me five names? Or, organize a small little tea party or a high tea for your friends, and I can come and talk." People are more welcoming than they used to about five years back. Sir, it would be fair to assume that basically the network referrals through your existing client machinery is the biggest, you know, sort of lead generation tool for you? Yes, absolutely. And I think every financial services firm would have this aspiration, word of mouth, right? But, if I told him that I made you 14% with 0.6 beta on Nifty, now do I deserve a reference after 10 years of delivering you 2% alpha on Nifty with 0.6 beta on Nifty? On your overall debt equity, then the client mathematically is forced to give me a reference- Got you. not because I want to go sell him an insurance policy. Sure. Sir, lastly, the two data keeping questions on the employee number for the quarter and March 2024, and also the MLD data, which you mentioned earlier. Yes, Vishal, sorry about that. Yeah, sure. So total employee count is 1,093. As on June. As on June thirtieth, two thousand twenty-four. Total gross inflows for the structured product and non-principal structured product is INR 1,735 crores. Okay. Can I get the employee number for the last quarter, March 20- March? 1016. 1016. Okay. Thank you and all the best. Thank you. Thank you, sir, for your question. Thank you very much. Next question is from line of Chinmay, Chinmay Nema from Prescient Capital. Please go ahead. Good afternoon, sir. Thank you for taking my question. Just some general questions around tech infrastructure. Could you talk about your strategy with respect to tech from a medium to long-term perspective? How are tech, in terms of onboarding and client monitoring, differs from the industry? And moreover, some general sense around what can be done with tech in this business in terms of client productivity, and to what extent this business is always going to be a high touch business? Some general sense around tech in this business. Sir, I missed your name. So sorry. My name is Chinmay. Chinmay. Thank you, Chinmay. Sorry, I missed it. Yeah, so tech, how we see tech is, tech in this business can only augment an RM and not replace an RM. That's our thought process or whatever is our understanding. It's not wishful thinking. Because, because this requires- client requires handholding during bad days. In good days, he can click a button and buy, but he sells it on the worst days, there is no RM. So we see technology as augmenting the RM, making him more powerful, rather than replacing him. That's one very important, thing which we very passionately feel with experience and client behavior, understanding client behavior. That's point one. Point two, the technology in this business, anybody if uses technology just for reporting and onboarding, I would see it will be ironical that the most important technological benefit, Anand Rathi is reaping, because 60%, 65% of our meetings till date are now on technology platforms. Before COVID, all the 100% of the meetings were physically done with clients. Now, the clients I manage, I have not visited their office for maybe 12 months, but done very efficient meetings 12 times in the last 12 months. So, RM productivity goes up significantly if you force the system to use technology to deliver advice, on Zooms and Teams and stuff. But quite a few times clients push back and say: "I want a physical meeting." So, we have been very clear, we will at least have two-thirds of the meetings on Zoom and Teams, unlike most other wealth management outfits have gone to physical in HNI business. So I think that, if some system can retain it, I think that will make it very powerful. And most of the numbers you see now have a large impact of the use of technology or the forceful use of technology, not going back to the physical mode of delivering advice. So that is... And, of course, technology in terms of generating advice, which is not used so much. We've been testing a lot of models using several mathematical formulas, which are there. There are five finance formulae which have won Nobel Prize. We're using technology to try and simulate those to get better risk-adjusted returns. So- Understood. Thank you. Thank you. Reminder to all the participants, you may press star and one to ask a question. Next question is from Sanadhya, individual investor. Please go ahead. Hi, sir. Sanadhya, your voice is breaking. Okay. Yeah. Is it clear now? Yes. Hi. Thank you for giving me an opportunity. First of all, great set of numbers. So I just wanted to understand how do we see the revenue potential going forward in terms of the AUM? So, will it totally be dependent on how does the market performs and how much we can grow the AUM? Or are we looking for other opportunities in other sectors other than this system? So, like, I have told in the previous calls, we're trying to build a financial services business, which is reasonably market agnostic. Okay? For you to check this claim, out of the Q11 where we have published results, you have to look at the worst Q3 from a market sentiment standpoint, and then see the corresponding result of our business. You would see stupendous growth when markets touched 15,300 and 15,400, twice or thrice in the last two years, which was the FY 2022 quarter, FY 2022 last quarter, and FY 2023 Q2, or Q1, when Ukraine war had happened. So point I'm trying to make is you would see consistent revenue growth during bad market sentiments. That's the aspiration. So far, God has been kind, we've been able to deliver that. Most people will take this with a pinch of salt, but that's as it may. So that's point one. Point two, our business model, like I always explained, it is reasonably simple. If I have INR 69,000 crore today, there is a growth embedded in it. If I deliver good return as a company for my client, then 10%-12% growth comes from God's gift by virtue of time. The three other variables, which is new RMs, new clients, existing RMs can manage 8,000, 7,000 more clients, that's my second lever of growth. The third lever of growth is existing client giving me new money. With these three levers of growth, plus the 10-12%, which is the growth in assets with the virtue of time and effort, if these four engines are put together, 20-25% growth is par for the course for the next 10-15 years, consistently. We are one of the few companies which have given a median growth of 33% for the Q11. So will we look at other revenue streams? The answer is no. If my client needs more product in his portfolio because of his risk-adjusted return, if he, if he want to improve the Jensen's alpha, if I want to improve the Sharpe ratio, if I need a PMS, an AIF, or whatever it be, if it helps my client meet a better objective, then is when new revenue lines will be added, not because shareholders want new revenue lines or the company wants new revenue lines. Fairly well. Yeah, good. Good. Good. Good. Okay. So, just to add on one question here: So do we see a runway for new clients additions within the range of INR 5 crore-INR 50 crore, or do we see shifting it to a different range, like, say, INR 10 crore-INR 100 crore now, looking at how the markets have performed in the past? Like, how do we see the base shifting with years? Yeah. Absolutely, sir. That's a very, very important and a good question, sir. Our segment has been INR 5-50 crore. When we onboard a client, we check whether he has total wealth of INR 5-50 crore. Okay? That's first step. So if he starts with INR 1 crore, but if he has INR 20 crore, great! You get him on board. That's the first check. Now, if you do well for the client, most of our clients, now we had 280 clients who have finished 10 years, and they had large monies then also, they automatically will go above INR 50 crore. But if you don't, if it doesn't give me even one penny, and if the money compounds at 15%, in 6 years a INR 10 crore client becomes more than INR 50 crore. So we have been trying, and we've also launched something called Anand Rathi Platinum client base, which is growing rapidly because our existing clients are giving us more wallet. So to answer your pointed question, will we still stick to the segment of INR 5 crore-INR 50 crore? The answer is a big yes. For the last 17 years, it has been consistently the same answer, INR 5 crore-INR 50 crore. Okay, way back from April 1, 2007, when Rakesh Rawal, who's the current CEO and who was the CEO then, has decided to keep that segment. So we'll always have that as the segment. But we have to also, being a wealth management outfit, passionate about clients' return, we have to learn the art of managing the adjacent higher segment. The adjacent higher segment is INR 50 crore plus, because if a INR 20 crore guy gets to INR 80 crore, I need to be able to do justice to that guy so that he can eternally stay with me and doesn't have to look outside. So does that answer, sir? Yeah, that's what I was... So we are doing efforts to maintain the level that the new clients or the existing clients which grow up to that level, we are maintaining them. Yeah. Absolutely. And- We have significantly larger clients than INR 50 crore also. One client of mine, whom I manage, has INR 800,000 crore also with us. That's great. That's great to hear. Yeah, just a last question, just a housekeeping one. So, you have INR 8 crore as other income this quarter, and INR 13 crore in the last quarter. What is the source of income, and is it on a continuous basis we should see? Vishalji, can you? Because I don't have these numbers on my screen. Rajeshji, other income- Yeah. Sanjay, can you ask your question please again? Hello? Yeah, yeah, yeah. yeah. You heard me? Yeah. May I ask you to repeat the question, please? Yeah. Yes, yes. So, you have INR 8 crore as other income in this quarter, and it was INR 13 crore in the last quarter. Yeah. What source of income is this? Do we see this as a continuous basis? Yeah. I just give you the number once again. So, the interest income is INR 6.87 crore. Mm-hmm. All is well. The small amount is the gain on sale of investments. Okay, okay, perfect. Thank you. Thank you. Next follow-up question is from the line of Bhavin Pande from Athena Investments. Please go ahead. Hey, thanks for the follow-up. Just, you know, on account of corporate actions, after the dividend and the buyback, could we expect some sort of split or bonus in the cards? Bhavin, sir, yes, we will surely consider, like, in our AGM also, somebody asked our chairman, and he rightly said that we will consider corporate action because, because we like to reward our shareholders. That's... I can't say more than this, but, yeah, I think, I think it is gonna be considered by the board. The line for the participant dropped. Next question is from the line of Owen from Tiger Assets. Please go ahead. Hello, am I audible? Yes, go ahead. So, yeah. Thank you. I would like to know how the wealth distribution scenario in the country, how the top- Sorry, your voice is breaking. Hello. Hello, I'm audible? Sir, can you come in a better reception area, please? Hello. Is it better now? Yeah, little better. Yeah. I would like to know about the wealth distribution scenario in the country, how the top of the pyramid is growing and, how would that be in next ten years? Yeah. Yeah. In our opinion, the number of HNI can very easily compound at 15%-17% over the next 10 years. Number of HNIs. The wealth effect with the current HNIs, which is about 8-9 lakh families, is also stupendously growing. So point one, I personally think that this number can quadruple in a decade. 8 lakh families can very easily become 32 lakh families, which are HNI, which is our segment, INR 5 crore-INR 50 crore, or INR 8 crore above. So HNI is defined as that family which has more than $1 million other than the home they live in. So that could easily quadruple in a decade in India. Second, the current 800,000 families' wealth can also compound at 20-25%, because if they are well-placed to grow 12-13% of their current, current wealth at 12-13%, they are adding at least 7-8% to their wealth with their savings. The savings rate of an HNI has gone up dramatically, in our opinion. So that's our experience. When we captured the savings potential of our current HNIs in a group of about 350-400, which I saw the data of, their savings potential is at least 5-7% of their current net worth. Okay. Yeah. And I would like to know, like, how is the middle and the bottom of the pyramid are growing, and how, how their wealth, would contribute to, equity markets in coming years? ... So, see, there's a paradigm shift in the thought process, of, Indian saver today. Mm. Okay. To answer your pointed question, sorry, there was some little disturbance in the network. So if you look at the wealth of Indian HNI, there is a paradigm shift in how we're seeing assets. The receptiveness of equity has gone up dramatically, point one. Point two, there is the newer generation or the next generation, whenever there is an inheritance or a transmission of wealth from one generation to another, which you see in your kind family, the next generation's affinity towards physical assets is dramatically down. So I personally think this INR 21,000 crore SIP number, which I had predicted about five years back, that it can be by March 2025, it will be INR 25,000 crore. That seems to be on the cards. That's point one. Point 2, the kind of influx the Indian capital market is gonna see from domestic money, I wouldn't be surprised if that grows significantly. Today, it's almost like a proportion of 50/50. The FII ownership could come down dramatically with individuals' participation. Currently, out of the INR 80,000,000 crore of savings, INR 80,000,000 crore of savings as per RBI data, of Indian households, 51%-52% is in financial assets. And only about 6.7% is in equity, both direct equity and equity mutual funds. Only 6.7% is there. That number should become 15%, which implies a great influx over months and years to come. So out of the INR 80,000,000 crore, today, only about INR 5,200,000 crore is there in equity, both individual ownership of stocks and equity mutual fund ownership. Thank you. Mohnish, I'll request you to come back. Yeah. Next follow-up question is from the line of Bhavin Pande from Athena Investments. Please go ahead. Hey, sorry, the line got disconnected. So of course, the first question was on the bonus or any of the corporate action that could be on card. And secondly, Feroze, in this year's annual report, and I think in the AGM, there's a snippet on ring fencing of portfolio and, you know, intergenerational transfer of wealth, which again is an extension of wealth creation, which would come about, you know, as the clients have made money and there's a call to be taken in terms of how this wealth is going, which again, you know, is driven by tax rates and government policy. So if you could just shed some light on the, of course, economics of that business and the market that exists, it would be of great help. I couldn't understand that too much. Bhavin, sir, you're speaking about transmission of wealth? Yeah, yeah. First question, of course, on the bonus issue. I'm sorry to sort of, you know, making you repeat that. And secondly, the ring fencing of portfolio and intergenerational wealth transfer as a service that you offer to our clients, right? Correct. Yes. So, yes. So let me... So like I'd already told, that, I think, bonus or splits could be seriously considered by our board. That's the only thing I can say. We did a buyback efficiently, finished that. But yeah, that board has to consider, but I think being a, it'll be considered on the merit basis. That's point one. Point two, coming to your, question of ring fencing of portfolios. See, most of, HNIs, have external potential liability on their personal wealth for some unforeseen events, so that ring fencing is very critical. And that, I think we've been promulgating for the last 14, 15 years, ever since 2009, 2010. So that business we don't charge money for, unlike most, lawyers and, and, wealth management outfits charge. But we don't charge for that because we think that that's a collateral minimum service you would give a client, because we want his interest to be protected and his liabilities to be protected. So that's one. The estate planning, we have done about 6,000 wills for families. We have tried to comprehensively make the learnings we've had in the last decade, and try and extrapolate those learnings, because India is a very complex game in terms of transmission of wealth. Some places, probate is needed, some place probate is not needed. The laws, as per religion are different, as per geographies are different, and as per asset is different. So it's a three-dimensional matrix to solve. So wealth management outfit like ours takes all the learnings it has had and makes a checklist of 10-12 items, which each of us, in fact, all of us on the call are mortal beings, and we have a finite life. We try and do that for free as well, because client interest is paramount. So we don't charge for these services because that itself becomes a deterrent for a person to do it. We used to charge way back, a decade back, and then we realized when you charge people for this service, they think you're wanting to do it just because you want the fee, rather than the... So we said we'll not be charged. So this is a collateral service you give without being charged. So will this keep happening? Yes, it happens. We push it extensively in spite of it not impacting the revenues whatsoever directly, but the client's affection towards us, expressed in the form of his wallet, is very, very strong. Feroze, that's really helpful, and you know, just I appreciate the exhaustive back and forth on the call and for all the information that you have provided. Thank you, and good luck again. Thank you for your questions, sir. Thank you very much. As there are no further questions, I'll now hand the conference back to Mr. Feroze Azeez for closing comments. So, thank you so much, everyone, to patiently sit through 1 hour and 6 minutes of the call. Point two, I think, if you have any further questions, please feel free to get in touch with Mr. Vishal Sanghavi, who's our Head of Investor Relations, and we would love to answer them. And thank you. Have a wonderful week, the residual week, and thank you so much. Thank you very much. Thank you. On behalf of Anand Rathi Wealth Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.