Ladies, and gentlemen, good day and welcome to the Nippon Life India Asset Management Q4 FY 2023 Conference Call hosted by Batlivala & Karani Securities India Private Limited. 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 the conference call, please signal an operator by pressing star then zero on a touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Swarnabha Mukherjee from Batlivala & Karani Securities India Private Limited. Thank you, and over to you, sir. Thank you, Vikko. Good morning, everyone. On behalf of Batliwala and Karani Securities, I welcome you all to Nippon Life India Asset Management Limited Q4 FY 2023 earnings conference call. We have along with us Mr. Sundeep Sikka, Executive Director and CEO, along with the top management team of Nippon Life India Asset Management. I would like to hand over to Mr. Sikka for his opening co-remarks. Over to you, sir. Thanks. Good morning and welcome to our Q4 FY 2023 earnings conference call. We have with us our CFO- This call is now being recorded. Co-Business Officer, Saugata Chatterjee, Co-Business Officer, Aashwin Dugal, Chief Digital Officer, Arpanarghya Saha, Head of Product Management and Investor Relations, Arun Sundaresan, and Ryuji San from the of Nippon Life Japan. Our detailed presentation and press release have been uploaded on the exchanges as well on our website. I would like to break my comments into three parts. One, industry overview. Two, our performance. Three, way forward. Since this is only the financial year-end, most of the commentary would be for the whole year. For the fiscal year, equity markets were volatile and ended the year almost flat with S&P BSE Sensex returning 0.7%. Small cap returned -7%. There was an increase of 250 basis points, where repo rates while the 10-year G-sec went up by 50 basis points. Despite the mixed overall outlook in the beginning of the year, the subsequent lackluster market returns, the asset management industry maintaining its growth momentum driven by increasing financialization, higher awareness and improved access to mutual fund products across the length and breadth of the country. The industry AUM grew by 5.5% in the year and is currently at INR 40.51 lakh crores, a historic high. The equity category, including index and excluding arbitrage funds, witnessed a gross inflow of INR 5.70 lakh crores, a net inflow of INR 2.52 lakh crores. Investor interest for investing through systematic investment plans was very high, with the SIP contribution for the year being at INR 1.56 lakh crores, 25% higher than last year. The monthly SIPs touched an all-time high of 14,276 crores per month, while the SIP folios were at 63.6 million risen by 20%. Debt funds on the other hand, witnessed an outflow of nearly INR 1.5 lakh crores on the back of rising interest rates. ETF flows were healthy at nearly 60,000 crores of net flows during the year. The consistent expansion of investor base and growth in the AUM driven by SIP and ETF flows indicate investors' interest in the industry's superior capability to fulfill their diverse set of financial products. Growing financial awareness, differentiated and transparent product suite and innovative digital strategies are expected to be the key driver for industry growth in future as well. At Nippon India Mutual Fund, our priority is to be future ready and capture this long-term opportunity. As on March 31st, 2023, NAM India's assets under management were INR 3,62,981 crore, that is $42.2 billion. This includes mutual funds, managed accounts and offshore funds. For the quarter ending March 31st, 2023, our mutual fund average assets were at INR 2,93,159. This is a flat Q1 quarter-over-quarter and an increase of 3.5% year-over-year. In the previous meetings, I emphasized on our equity market share. I'm happy to share with you our equity market share, excluding ETF, has been stable for last three quarters and is currently at 6.19%. Share of equity assets rose to 44% of our total assets compared to 42% last year. We added INR 9.6 lakh folios in this segment. With our strong on ground presence and healthy management performance, we hope to increase our equity market share in coming days. At Nippon India Mutual Fund, our core remains on investors' interest. We added 2.6 million folios in the year and continue to have the largest base in the mutual fund industry at 30.5 billion investors. We have one of the largest retail assets in the industry at INR 85,261 crore. The retail assets contribute 29% of Nippon India's AUM compared to industry average of 25%. Our B30 AUM is at INR 55,680 crore, which has increased by 16.4% year-on-year. This segment formed 19% of the Nippon India Mutual Fund's AUM compared to industry average of 17%. Individual AUM that is a mix of retail and HNI is at INR 162,000 crore, an increase of 17% year-on-year. This segment contributes 56% of the Nippon India Mutual Fund AUM. One of the areas of improvement, as I have highlighted in the previous calls, has been our market share in HNI category. I'm happy to inform you that our HNI AUM increased from INR 77,289 crores, up by INR 15,500 crores, which is 25% up year-on-year, and our market share increased by 66 basis points. Systematic flows are a stable and a key driver for industry's long-term equity flows. I'm happy to share that over the last few quarters, Nippon India Mutual Fund has seen strong growth in systematic investment flows, and this has led to a sequential increase in folios and value market share. Our systematic book grows by 52% year-on-year to INR 1,115 crores. This increase deserved in an annualized systematic book of INR 13,380 crores. 60% of our SIP AUM has continued for over five years compared to 24% for the industry. In volatile markets, folios with lower ticket size have demonstrated longer vintage and better stickiness. 15% of our SIP folios have continued for more than five years, against an industry average of 11%. At Nippon India Mutual Fund, we offer best-in-suite of products in the passive category. With strong growth in industry with passive, our ETF ecosystem is already in place and far ahead of its peers in terms of investor base and mind share. We continue to be the largest ETF player with an AUM of INR 70,000 crores, with a market share of 13.74%. Gold ETF is the biggest fund in the category, and within this period, even single fund we are the largest in the industry. Our share in industry ETF folios is 61%. We have 70% share of ETF volume on both NSE and BSE. Our ETF's daily daily volumes across key funds remain far higher than the rest of the industry. Under Nippon India AIF, we offer Category 2 and Category 3 alternate investment funds and have a commitment of INR 5,615 crore across various schemes. Our digital-centric strategy is the one of the keystones for sustainable growth and profitability. Amongst various digital initiatives such as Kartify, which we took to enhance our partners and investor experience, we have rolled out Nippon India Mutual Fund WhatsApp channel, a real-time comprehensive transaction and service suite for our investors. Business Easy 2.0 app is aimed in driving more meaningful engagement, retention and growth through advisories, detailed analytics and spot insights. Digital purchase transactions rose to INR 33 lakh, up from INR 30 lakh last year. Digital channels contribute 57% of our new purchase transactions. While I talked about digital infrastructure at Nippon India Mutual Fund, we have a well-diversified physical distribution base, a wide presence through 270 locations across the country. We have 91,000 distributors on panel with us. The MFD base rose to over 9,800 with an addition of 6,700 distributors during the year. On the financial performance. For the quarter ended March 31st, 2023, profit after tax is INR 1.98 billion, an increase of 13% year-on-year. The operating profit is at INR 1.99 billion, which is flat year-on-year. In the past, the company has followed a consistent dividend policy, we have followed the last year's dividend payout, which was 96% of PAT ratio. This year the ratio has gone to 100% of PAT for the current financial year. Over the last nine financial years, Nippon India has distributed a cumulative dividend of INR 41 billion. As we grow organically through our physical and online channels, we remain open to evaluate investments and strategic opportunities that add to the profitability and complement our existing businesses, and ultimately in the interest of the minority shareholders. As a signatory to UN PRI, we are integrating ESG aspects to the various areas of planning, operations, fund management and risk governance. Our goal is to encourage higher adoption of ESG principles within the asset management industry. As a responsible investment manager, we are building a resilient portfolio that will not only provide sustainable return to our investors, but will also have a positive environmental and social impact. We will also seek apt and relevant disclosures on ESG matters from our investee companies. To sum up, I would like to reiterate, at Nippon India investor centricity remains the key theme. We strive to deliver superior experience and sustainable returns to our investors and in the process add value to our stakeholders. Our endeavor is to provide sustained, profitable growth in the coming quarters. We do hope that the interest rates varied globally and domestically, will be closer to peaking out, if not already peaked out. This may be a positive scenario for capital market investments, both equity and fixed income asset classes, and will encourage further mutual fund investments. With these comments, we are happy to take your questions. Thank you very much. We will 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 will wait for a moment while the question queue assembles. Our first question is from the line of Mohit Surana From CLSA. Please go ahead. Yeah. Hi, good morning, sir. Just one question from my side. When we look at your equity scheme performance, it's, you know, Nippon India Mutual Fund has done quite well across top categories. We have not seen that being reflected in market share. As you said, market share remains flattish. Any thoughts on, you know, when the improved scheme performance starts to show up in higher market share? Thanks, Mohit. I think the way I would like to see it, typically good performance, I think, there is always going to be a lag in performance, you know, I mean, the inflows. From our perspective, I'd like to give you two data points, I think, which will help you to understand. I think first, I think because our focus is highly on retail, I think our systematic flows have already increased 50% in the year and, from almost INR 650 crore have gone to stretching about INR 1,100 crore on a monthly basis. All this will have a lag effect, I think, for the incremental net inflows into the company. Also, while I think the... If you were to look at it, while throughout the year it was, the market share was flat. If the last one, two quarters, the net sale numbers are higher than the market share. Both these, I think, indicate, I think in the coming quarters, I think slowly and steadily the market share will keep increasing. Good. Thank you, sir. Thank you. Our next question is from the line of Prayesh Jain with Motilal Oswal. Please go ahead. Yeah. Hi, good evening. Sorry. Good morning, everyone. Firstly, on the yields front, I know the sequential decline is just because of product mix or, is there anything else that you would like to highlight out there? Prayesh, I'll request Prateek to take that question, please. Prayesh, you know, in terms of the sequential quarters, I think the yields are more or less flat. But in terms of the overall, if you look at the full year, it has moved down from 44 basis point to 42 basis point on the ETF side. Which is typically we have been mentioning that it is because of the three factors which you have said in the past about the replacement of, you know, old asset by new assets. You know, the cost of acquisition of the newer assets is higher as compared to the older assets. Third is the increase in sizes. However, the pace of this decline, you know, which used to be higher earlier, has come down for two reasons. One, of course, you know, we are seeing a lesser churn now, given, we now, we believe the performance is, our equity performance has been good, and also the bulk of the replacement has already happened. The other thing is that, you know, we have also seen the competitive, competitiveness or in you know, the payout ratios to the distributors has now moderated what used to be in the last years, you know, with the slew of NFOs, et cetera. That has also moderated and therefore, you know, we have been able to contain this decline, and that is where we see ourselves continuing. That's all from my side. Okay. From a, you know, like in the past I think we have kind of alluded to the churn as, you know, strong impact in the equity is the 1 or 2 basis points on annual basis. Do you think that is still there or we should assume that that is kind of, you know, gone away and now, you know, it should be, it's, you know, much lesser and it should be more of a, an impact of the increase in AUM size rather than anything else? No. As we said, you know, again, Prayesh that, you know, there will be a marginal decline which keep happening. However, if you look at, you know, the debt yield, you know, that will see some kind of an uplift because, you know, the net return to the investors have gone up, you know, from what was about 4.5%, you know, overall returns on the shorter duration funds to about 6.5% this year. Obviously, there is a, you know, a flexibility for us to charge marginally higher and therefore you will see that, you know, the yield improvement on the fixed income side. Okay. Got that. Just continuing on the debt part, what you mentioned, you know, how do you read the impact of the taxation, that was levied by the Government of India? Do you see that there is an opportunity in a certain hybrid category where the equity portion could be between 35%-65%? How do you see the overall debt, kind of flows moving through, in terms of, you know, the near term? I'll, what I'll do is, you know, I'll ask my colleague Aashwin to answer that. On a, from a tax perspective, if you just ask me, you know, mutual funds still remain a superior product any other product market because of the flexibility and, you know, by which one could redeem and get their money back, and at the same time, it provides a higher return to the investor. The taxation is also at the end when the person is kind of redeeming it. Therefore, during the holding period, there is no taxation involved. There are a few things which from a tax arbitrage perspective there still remains. You know, I'll ask Aashwin, you know, to talk about how he sees flows from the investors. Hi, Haresh. This is Aashwin here. Thanks, Prateek. Largely, you know, the shorter end of the curve, you know, which is up to 1 year essentially, in our view will remain unaffected, okay, from flows. It is the value of the curve and beyond, which is your 3, 4 years and beyond, where we were seeing bulk of investments coming in from savers. Okay, there, I think, you know, there will be we'll be competing with some of the other savings products. I think taking a cue from what Prateek mentioned, there are 2 very essential features of, you know, debt mutual funds. One is diversification. With a very small ticket today, okay, the essential benefit of exposure into multiple debt instruments that can be derived from investment in a mutual fund, scheme, that continues to be a big benefit to investors. Number two, tax deferment, which Prateek mentioned. I think that is one unique benefit that only mutual funds, you know, provide. That over a long investment period for a retail or an individual investor can be very meaningful. I think some of these, you know, benefits will continue to be inherent to mutual funds. Any which ways, you know, the population of investors who were getting tax benefits, okay, was smaller, okay? I believe that, you know, once AMCs, you know, now focus on explaining the, these benefits of, you know, diversification and more importantly, tax deferment, I think over the next, in the medium term, I think we should continue to see large flows. Very, very confident of, you know, debt funds getting now longer term AUM than what they have got in the last three years. That, that's helpful. Just a question on the financials here. The employee cost is down sequentially and year-on-year basis both. What is this related to? And can you break down the full year expense in terms of ESOP and non-ESOP expenses? And what is the outlook for, say, next FY 2024? See, from our perspective, you know, we have not given any ESOP for the last two and a half years. And bulk of that has been, you know, accounted for because in terms of ESOP accounting, the cost is front loaded. For as far as the decline is concerned, both sequentially, it is because of the, you know, our expectation in terms of growth and profit. We have been continuing maintaining certain provision for the PLI, and that has somewhat moderated from what our expectations are, and therefore the numbers are slightly lower. I think from also, I think we'd like to highlight as a company we continue working on operational efficiency with a lot of digitalization that is happening at the back end. At the back end, we are clearly seeing advantage of that also playing out. Okay. Got it. Just last question. Any, you know, reason for the other income fall in this quarter? Because the yield had... Is there a yield impact or how? Yeah, this was purely the mark-to-market. We carry almost INR 2,200 crores of our net worth into our fixed income schemes. This was predominantly the mark-to-market on these schemes as on date. Sure. Note that. Thank you so much. All the best. Thank you. Thank you. Our next question is from the line of Lalit Deo with Equirus Securities. Please go ahead. Hi, sir. Good morning. Good morning, everyone. Aashwin, just two questions. Firstly, like we have seen a strong additions in the in our asset fund portfolios. Like how incrementally are we looking to do something in in terms of cross-sell to these existing investors to like where they can subscribe to our equity schemes also, we can see some bumps, probably some increase in market share also? Lalit, I think, you're right. I think our focus has been, I think, to acquire newer investors. We strongly believe, I think this long-term success of the industry or for any company will be, I think, if they're able to increase their investor base. I think it's by design, we are adding more and more investors and there is, I think at the back end, a lot of initiatives are being taken, using AI and various initiatives have been done to cross-sell and upsell different products. Sure. Secondly, the question on the yield side. Could you give us the segment by yield, like as on March 20 across, like on a book basis? You know, historically, we've not been sharing the, you know, the yields on a product basis. You know, in terms of the, as we've in the past maintained that, you know, the equity yields are in the range of, you know, close to about, you know, high 70s to, you know, early 80s. On the debt side, you know, it has been because the most part of the debt has been on the ultra short-term category. That has been around, you know, around 23-30 basis points, somewhere in that range. On the liquid it has been around, you know, close to about 15-20 basis points. This is where, you know, the overall yields have been. Like last quarter we highlighted that there we have seen some increase in yields in our tax save funds. Like how are those yields holding up? Do we see any other areas also to increase these yields gains? Let us keep evaluating wherever we can. I think wherever there's a scope, I think, I think it's, you have to juggle between I think where... how you are adding value to the investor. I think wherever we feel there is scope, we'll do that. I think so I think it will be very difficult to give a long-term projection how we'll go ahead, but wherever we see there's an opportunity, we just have to keep working on it. for this last data with you, can you give me the, like new SIP registrations number during the quarter? Sorry, how was that? You cannot hear me? The new SIP registrations which happened during the quarter. Lalit, we published this data about total systematic investments, not only SIP because this is also structural in nature. For the month of March, it was INR 1,115 crores and for the quarter, INR 3,200 crores. Mm-hmm. Yes, but in terms of folios, could you give it? Folios for the entire year we have added 26 lakh total folios. Out of that systematic investment plan is, yeah. I think it would be roughly if we are adding 1 lakh 20,000 approximately plus minus a little here there. You know, I think Arun can share the exact data with you. Yeah. I think it would be interestingly for the for the full year about INR 10 lakh to 12 lakh to 14 lakh kind of a number. Exact number I think Arun will get back to you. Yes. Thank you. Thank you. Before we take the next question, a reminder to all participants, to ask a question you may press star and one. Our next question is from the line of Mr. Swarnabha Mukherjee with Batlivala & Karani Securities India Private Limited. Please go ahead. Yeah, thank you. My first question is, understanding you. You've mentioned that yields are flattish sequentially, which is the case for the mutual fund business. If I look at it on a consolidated basis, we do see some amount of compression there. Just wanted to understand anything which has played out on maybe the managed account side, which is outside the mutual fund business, which has been very affected in this. I think broadly from our perspective, outside the mutual fund business there has not been much growth, you know. I think we saw some of our existing funds, they had to close down because I think we, they got matured and new fund launches got a little delayed. I think this is temporary in nature. I think we already have a certain new fund launches lined up. I think in the coming one or two years, again, you'll see that picking up. Okay. Okay. Got it. In terms of, you know, with me when we try to think about how it will play out, over the next two, three years, just wanted to understand, you know, how much of your old assets have already gotten churned into newer assets? Maybe if you can break up your current, say maybe equity side, the mix between assets older than three years and, you know, the newer assets. If you can give a ballpark number to better understand. No. almost about, you know, close to about, we only have about 30% of the old assets now, which are on the, you know, which are in the old pricing. The rest all has been churned, already have churned. The more than three year-old asset would be about the 30% of our total equity asset. Most of it, as Arun mentioned, is part of our SIP book, the continuing SIP book. We don't see much of a change happening at that end. Would it be fair to assume then that the realizations that we are making on the stock is now relatively closer to the flow levels right now, in terms of mix? Like, see, as I mentioned to you that look, the flows also depend on, you know, which category we are seeing the inflows. In certain categories, you know, our propensity to charge is slightly higher as compared to some of the other products. It is as we said, it is a function of competition or performance as well as the size of our scheme. You know, as Sundeep mentioned that, you know, we keep evaluating all the opportunities available in terms of, you know, transforming the growth as well as at the same time maximizing our revenue. Sure. Sure. Sir, last question, I wanted to ask on the gold ETF side. How have the flows been post this, you know, compression norms were announced for non-equity mutual funds and, what impact do you see on the DPs even further? Broadly, I think the way we have to see this is our gold continues. It has been the largest gold ETF in the country for about many years now. A lot of investors, different investors come, some come for a short-term tactical view, some for a long term with a different treasury. We don't. There is too early to say what will be the impact. Majority of the investors, I mean, who have been coming for short-term or less than three years, nothing changes for them. Overall, we clearly see both gold and silver. You know, gold and silver, more allocations coming into it. I think one more trend that we have seen is, you know, I think a lot of HNIs family offices, I think they keep taking tactical calls, you know, on gold and their silver. I think because of the volumes that we have, I think ours is one of the most preferred ETF. Well, thank you so much, sir. Thank you. Our next question is from the line of Sahej Mittal from HDFC Securities. Please go ahead. Hi, morning all, thanks for the opportunity. One question, which is on the market share. What seems to be the likely reason for diverging trends in SIP flows versus your lump sum flows? On SIP side, we are consistently seeing improved middle market share, but on the lump sum flows, there seems to be huge outflows. What seems to be the likely reason? I think it's very simple. I think for the organization, for us, I think we have always been very strong in retail. I think there was a period when the fund performance was not so strong. After the fund performance getting stronger, I think we have seen the SIP numbers, as you mentioned, have been strong. Last year we added, I think to answer one of the earlier question which had come. INR 19 lakh SIP during the year was the number. At that time the number was not available with us. That will definitely add value. You know, on a monthly basis, you know, if you're adding INR 1,000 crore. This is, technically speaking, now the annual SIP book is about INR 13,000 crore incremental inflows that will come into the company. As far as the, again, if you go back to last five, six calls, I think we have been saying that we have been relatively weak. We were weak on HNI, and now that is also increasing. I think we have seen a growth on HNI market share go up by 66 basis points. There has been an overall increase in AUM of 35% compared to the industry AUM of 11%. I think that it will be with a lag effect. I think nothing specific. I think once the basics are, the core is in place, I think it's all about execution. I think overall, we see, I think the trend that you have seen in SIPs which started a little earlier, you will start seeing in lump sums also. We remain positive with the next four to six quarters, you will see equity market share going up. Got it. Got it. That's all from my side. Thanks. Thanks a lot for this. Thank you. Our next question is from the line of Mr. Mohit from BOB Capital. Please go ahead. Thanks for the, yeah, thanks for the opportunity. Couple of questions. First, if I look at the SIP AUM, you know, it has declined sequentially from $583 billion to $580 billion. What explains that? I think it will mark to market, you know, nothing else. I think overall the numbers and the monthly numbers have been increasing. I think it would be just that, nothing else, you know. Both the number of count and the overall monthly registrations, number of new investors and, monthly inflow, all have been increasing. As I mentioned earlier, it's almost gone up by 50% in the last year. All right, perfect. Second is in terms of the dividend payout side. I think, you know, from the last two years we have been given, you know, more than 90%. I believe that, you know, it will moderate going further or do you intend to, you know, make it more than 90% consistently? This year we have gone for 100% almost, you know. As per our service dividend policy, anything between we 60%-100%. Depending on how the board evaluates going forward, decision will be taken. Broadly the thought process is we want to share the profits of the company with the shareholders, with the minority shareholders. We'll cannot give a futuristic thing. On the dividend policy and going by the past trends, we'll be similar to where we are today. All right. Then my last question is in terms of the tax, you know, if I look at the effective tax rate, it's around 17% for the quarter, primarily because of the deferred tax credit. Even if I look over the entire year, we had a deferred tax credit. I mean, prudent to assume that, you know, we'll take this deferred tax credit going forward or 25% tax rate is something that we can assume for the future? No. see Mohit, you know, we on our fixed fixed income investments, you know, we get the long-term benefit and as and when they turn long term. What we do when we invest with them and whatever gain is there, we provide on the basis of short-term rates till the time they become long term. The moment they become long term, you know, both on equity and fixed income, you know, we have to do the assessment of our, you know, tax calculation once again. However, even if we don't realize, you know, we have to do this adjustment and therefore you see the changes in the deferred tax. you know, significant part of our investments, you know, during the year has become turned long term. On that the tax liability has to be adjusted, based on the long-term tax rate, as compared to the short term. Therefore, you see in the fourth quarter, you know, there has been, you know, marginal lower provision for the taxation. What we expect, which is, there is a part of our income which comes from other income. We expect our, you know, effective tax rate to be somewhere around 22 to 23 basis, 23% as against 25%. All right, perfect. Thanks and wish you all the best. Thank you. Your question on the SIP numbers have gone down. If you see the slide number 29 of the presentation, actually the SIP book has grown from INR 45,000 crores to INR 50,000 crores. Maybe I think for further clarification, I think Arun will be in touch with you. Slide number 29 gives you that data. Thank you, sir. Our next question is from the line of Abhijeet Sakhare from Kotak. Please go ahead. Hi, good morning. Is it possible to share the net flow market share for last couple of years? Abhijeet, we do not, you know, disclose the net flow market share. However, you know, if you see in the last few quarters, you know, our decline as, you know, on the market share is, you know, more or less stabilized. We are seeing some positive, you know, inflows in terms of our net sales are higher than our existing market share. You will see in coming quarters we will be able to improve the trajectory. Okay. The flow market share is higher than the current AUM market share in recent period? That's right. Yeah. Okay. The second one was a broad color. If you can share any color on type of investors and channels that are bringing those investors between, let's say, the active equity versus the passive equity group that we have. I think, from the investor's point of view, as we mentioned, I think majority of our investors are retail. Even from the AUM point of view, while the industry has an average of 40%, institutional AUM, I think for us, I think retail is the dominant one, which is retail individual plus, an HNI, you know, that is one. Majority of the investors which are coming, you know, are the individual investors coming from across the country. I think we are, we continue because of our digital infrastructure. We are having nine purchase transactions per minute. I think these are a mix of digital-savvy investors as well as investors coming from small cities and towns. As far as the channel mix is concerned, I think we have not, the channel mix between active versus passive refers to say. In passive we have seen many investors are coming direct. Many or most investors are coming direct. Many of these are also family offices. In active majority, very high percentage still keep coming through IFAs and national distributors. Okay. Sorry. Are you also seeing on the passive side, are you also able to track if these new set of investors are first time investors in mutual funds or this is probably their second, third product on the mutual fund side, which is becoming a passive product? We won't be able to have that data, but our sense says many of the investors who are coming into ETF industry, I think they are first-time investors. That's again, like I said, I don't want to put, you know, because these are some of the new investors which are coming there. The fact that we have 70% of the market share in ETFs, and I think one out of three investors in Indian mutual fund industry is with us. The trend would be likely the first port of call for any new investor typically is Nippon, whether it's ETF or this, and then it graduates to the industry. Okay, got it. Thanks a lot. Thank you. A reminder to all participants, you may press star and 1 to ask a question. Our next question is from the line of Bhavya Sanghvi with Fortress Group. Please go ahead. Hello. Hi, sir. My question is on the non-mutual fund piece. I wanted to understand the business model, also get some flavor on the fees and the kind of margins that you make on managed AUM, which I think is reported at $673 billion. Could you just, you know, give us an idea about, you know, the traction and the size of opportunity in this space? How is it different from, you know, the mutual fund piece in terms of operating numbers? Thanks. I think broadly, I think we have already discussed a lot of the mutual fund business, and I think we clearly believe, I think as far as the mutual fund business is concerned, it is the scale of infrastructure and I think the execution capability that we have built up. I think we clearly believe we should grow in line or a little better than the industry going forward. I think from the non-mutual fund business, yes, this financial year has not been very good for us. I think it's a mix of multiple reasons. Like I said, some of our funds which were there, reached up into the close-ended funds when they matured. After that, I think also we went slow on our real estate offerings, two, three new funds which are getting launched got delayed. I think from our perspective, this opportunity is going to be divided in three parts: the domestic fundraising in the non-mutual fund, which is going to be both, A, real estate, B is going to be long-short funds. B is going to be the international funds, I think, which we are working closely with Nippon Life to see the opportunity get the investors into India from Japan. We already have three funds, two bond funds in Japan, one equity fund in Japan, two real estate funds in Japan. I think there is we are exploring how and what more we can do. There has been a little delay, and I should admit, I think this is something which has been a little slower than what we thought. There's a lot of work that is happening and in the coming quarters you will see a lot of traction. We are also, as we have been mentioning in past, we continue exploring opportunities to acquire inorganic opportunities. We also continue looking at acquiring skill sets that complement our existing businesses to start new product offers which we do not have at this point of time. The next three, four years as a company, there will be a high focus on AI non-mutual fund business. Sir, can you know, give us a sense on the yields that you would make on this kind of a business? Retentions on mutual fund business would be, or, you know, just a proportion would be, would it be double of, what you make on mutual funds and impact on the margins going ahead through this business? We need to break this up into two parts. One is there is a government business, which is the postal life business, which accounts for almost 60,000 crore of assets, where we make there is a very little margin of fees, I would say. That is because that is a government mandate. However, on the PMS, AIF and the offshore businesses, which accounts for almost the offshore business is close to about $1.8 billion and the, on the AIF side, the commitment which is about $800 odd million. There, I think what we make is on the AIF and PMS, our net retention is about close to about 100 basis points. On the offshore piece, you know, this would range about in between from 33 basis points to 67 basis points, depending on whether we are sub-advising or, you know, where we are managing. These are mostly institutional mandates, what we are currently running. On the retail side, on the offshore side also, we have, you know, net realization which is in excess of 100 basis points. Sir, $1.8 billion was for offshore business? Yeah. The yield. Right. Okay. Thank you, sir. Got it. Thank you. Our next question is from the line of Pritesh Chheda from Lucky Investment Managers. Please go ahead. Yeah. Sorry sir if this question is repetitive, but I just wanted to understand your directions on yields, especially in context of the last, you know, full year, whether for the industry as a whole as well, where we had multiple, challenges on yield, whether with respect to mix or NFOs. Any comment in terms of yield, direction? No. Frankly speaking, it will be difficult to, you know, tell about the industry. As we have been maintaining that look, we would like to continue to maintain the current levels, you know, going forward as well. Wherein, you know, our net yields, you know, are in the range of about 40-45 basis point. There we clearly see scope because in the past few years we have seen a sharp decline in our fixed income yields because of the lower net carry to the investors. However, now the carry is higher. I think we'll be able to, and as an industry we'll be able to improve our, you know, net realization on the fixed income side of it, and that will give us some kind of a fillip. On the other side, equity, you know, we'll continue to see some marginal decline going forward as well as, you know, because now this is linked to the size of the scheme as well as the old assets getting churned out. I think broadly, you know, our endeavor would be to maintain the, you know, current yields, which I think in the last year also we have said that, look, you know, the decline would be in the range of 2-3 basis point. While we do not give any kind of projections for the future, for the next coming years also, we would see that it would be in the similar range. My second question is, any comments on the competitive pressure on the NFO side, if any, in terms of easing or still remaining the same or, you know? You would have seen that, look, you know, typically NFOs, you know, are not being there. Also, the regulations are very clear that you can launch only one scheme in each category. Also, I think, you know, from a distributor perspective, you know, or the investor perspective, they have mostly realized that, look, you know, because most of the fund which they launched big bang in somewhere around in August of, 2021, you know, what had happened is that, you know, they went through a cycle where the return to the investors were not so positive. On the peak of the market when the funds were raised, you know, they have not given, you know, the expected returns. Therefore, both investors and distributors have learned this, and they have been, you know, investing into the more established and performing categories. We'll see, you know, investors chasing returns in the categories where performance of the fund house has been good. Even as a company, I think we will not be, I think, as a philosophy, don't want to come up with too many NFOs. As I said, last year we have not come up with any NFO. I think our focus will be to consolidate, to build scale, on back of good performance of our funds and scale them up. Do you have your presence in the multi-cap, which was the last category launch? Yeah, we have it. We have a multi-cap fund. Multi-cap fund. It's the we have one of the largest multi-cap fund in the industry as well. Okay. Thank you, Manish. Thank you. Our next question is from the line of Mr. Aniket from BMSPL. Please go ahead. Yeah. Good morning. I just wanted to ask a question regarding the. Mr. Aniket, we are unable to hear you. Hello. Am I audible? To speak. Hello? Yeah. Yeah, Aniket, please go ahead. Just be a little louder. Yeah. good morning. Thank you for the opportunity. My question was on the debt side and the regulations that come into place. Previously on the this call you said that you don't expect the Debt flows to, not much in the longer term, but, you know, a lot of independent consultants which deal in debt and equity affairs are telling us that the business on the debt side has, you know, dried up quite a bit from the first of April. Yes. What is your observation, you know, regarding this inflow going forward and how will it, you know, affect the numbers for the company? Yeah, hi, Aniket, this is Aashwin. I'll just explain what I said earlier. What I had explained earlier was that, you know, the change in regulations have been mainly for investments that would complete three years and beyond. What I said was, the shorter end of the debt curve, which is investments which are essentially one year, close to about one year, they will remain unaffected. If you see the April flows thus far, we have seen the flows have been close to about INR 60,000- odd crores at the industry level. Very similar to what we saw last year in, you know, same period. However, what I had mentioned was that at the longer end, we have some benefits that mutual funds enjoy of diversification and tax deferment, where we, as an industry, will have to make efforts to educate our stakeholders like investors and distributors to explain them in greater detail. What I mentioned was that in the medium to long term, we feel that on these premises and strengths, you know, some of these debt funds should be able to compete much better. That's our view on, you know, the longer end of the curve. Aniket, this is, you know, yet getting digested. This has come, you know, just about a month back. And also what you see immediately post the, you know, announcement, lot of debt flows happen in the longer term, you know, to go and catch up the, you know, the last minute, you know, tax breaks. There has been, you know, a good amount of money which has already got invested into longer term. Therefore, you know, the amount available with the investors may not be much. As, you know, Aashwin mentioned that, you know, we have some inherent, you know, as a mutual fund product, we have a lot of inherent advantages. I think it just, from a distributor or advisor whom you're talking about, they just need to go and talk this to their end investors. All right. All right. Thank you. Thank you this [inaudible]. Thank you. Our next question is from the line of Prayesh Jain from Motilal Oswal. Please go ahead. Yeah. Hi, thanks again. Just on this debt index fund, you know, that segment has really picked up, in the last one year. You know, where are we standing there, and how do you kind of see this, you know, impacting the yields in the debt segment or, what is our outlook on this segment? Hi, Prayesh. So on the roll down products that you're talking about, I think, yes, we have scaled up well in the recent past. But going forward, I think our focus will continue to be on active funds because we feel that in the longer run they are able to perform better. However, it's a, it's a growing category, and even though last year we were slightly late in entering that category, in the last three months we have scaled up there as well. In a nutshell, we'll focus on active funds, okay, but we will continue to be present in the passive debts segment as well. I'd just like to add one thing to it. Unlike equity, in debt, a lot of these passive funds were on the back backdrop of the tax advantage which was there. Actually the way we see is, focus will move in debt will move back to active funds. Organizations and companies which have a longer term track record of managing active and debt will benefit. With that said, we need to see how things play out, but our first reaction is it is not going to be because of the tax changes. It's going to be the AMCs which were highly dependent on roll down or passive strategies in fixed income, they may get impacted. The AMCs which have a long term track record on active in fixed income may not be as much impacted. Thank you. Our next question is from the line of Nilesh Jethani from Bank of India Mutual Fund. Please go ahead. Yeah. Hi. Good morning. Thanks for the opportunity. A few questions on the fees and commission and other expenses. Just wanted to understand with the impending issues with regard to TERs from various aspects, from GST, brokerages, et cetera. I wanted to understand your view with regards to fee and commission. Do we have any scope to squeeze this going forward? Similarly, on the other expense percentage of AUM, what direction can we give on that side considering most of the NFOs, et cetera, are already out. Next year, are we expecting any further NFOs and any direction on the other expenses on the overall AUM? See, you know, in terms of the fee and commission expenses, this is predominantly pertains to the our AIF business where, you know, we used to pay upfront and I believe, you know, there will be, there are regulations which will, you know, going forward, these would not be allowed. Most of this will be paid from the scheme as a trail. Therefore, you know, these, you know, the, this line item will not exist going forward. Also from, you know, in terms of the NFOs that Sundeep mentioned that look, as and when there is an opportunity to come out with a unique, product where we can give a differentiated return, you know, to the investors, we'll work it out. Otherwise, just for the sake of raising, capital, you know, we'll not be coming out with any kind of an NFOs. As regards the, you know, our overall other expenses, you know, those are in the range of about 17-18 basis points of our current AUM. As, you know, we expect to our AUM to grow much faster than the, you know, as our expense growth. Typically, our expense growth has been in the range of 6%-7%, and that is what we expect going forward as well in line with the inflation. If we increase our AUM, more than the, this, expense rate, then the operating leverage will come into play and you'll see, on a base basis, this will trend downwards. Got it, sir. Sir, my question on the pending impact from the GST and the brokerages, et cetera, to be included in TER. Any direction you can give us with regards to what could be our share or what industry could share and what could be, you know, reflected or passed on to the bottom line of the investor? These are, you know, these are certain things which we have also learned from the, you know, newspapers. I think, you know, these regulations are yet to come out, and we would refrain at this point of time on commenting on those. However, if you go by the past, whenever these changes have been come, you know, as, you know, our AMC has been most adaptable and flexible, we will pivot according to whatever regulation comes. You know, and, you know, we'll work out a business model, which is the most best for our, all our stakeholders. That was really helpful. Thank you so much. Thank you. Thank you. As there are no further questions from the participants, I now hand the conference over to Mr. Sundeep Sikka for closing remarks. I think, thank you everyone. Thank you for, I think, being there. I think. If there are any further queries, I think please be in touch with Arun. From our perspective, our focus remains on long-term profitable growth. Thank you very much. On behalf of Batlivala & Karani Securities, that concludes this conference. Thank you for joining us, you may now disconnect your lines.