IS THE MUTUAL FUND BUSINESS VIABLE IN INDIA?

The noise around Fidelitys possible exit has centred around the unviability of the mutual fund business in India. We took a look at the profit figures of 39 asset management companies
(AMCs) whose profitability numbers Value Research (a mutual fund tracking firm) shared with us. A little less than half, 17 were in the black in the fiscal 2010-11. Six of the 22 fund
houses in the red are less than three years old and could turn the corner in the next few years. Margins in the fund business have been under pressure, but that has not prevented net
profits of R1,108 crore from accruing to these 17 firms. The combined loss of 22 AMC stands at R559 crore. Of these 17 firms, only two were foreign fund houses; rest were either Indian
fund houses or predominantly Indian. This doesnt include Goldman Sachs Asset Management Co. Ltd because it acquired Benchmark Asset Management Co. Ltd, an Indian fund house,
last year. The average age of AMCs that made profits was 17 years with the oldest being UTI AMC Ltd (around 41 years) and the youngest being Quantum Asset Management Co. Ltd
(around six years). Among fund houses that made a loss last year was LIC Nomura Mutual Fund Asset Management Co. Ltd, a 19-year-old fund house. Fidelity Fund Management Ltd,
that will complete seven years this March, posted a loss of R62.39 crore last year; the second largest loss among all the loss-making AMCs.
Reliance Capital Asset Management Ltd
HDFC Asset Management Co. Ltd
UTI Asset Management Co. Ltd
Franklin Templeton Asset Management (India) Pvt. Ltd
Birla Sun Life Asset Management Co. Ltd
SBI Funds Management Pvt. Ltd
ICICI Prudential Asset Management Co. Ltd
DSP BlackRock Investment Managers Pvt. Ltd
ING Investment Management (India) Pvt. Ltd
Tata Asset Management Ltd
Sundaram Asset Management Co. Ltd
Deutsche Asset Management (India) Pvt. Ltd
Kotak Mahindra Asset Management Co. Ltd
Canara Robeco Asset Management Co. Ltd
Quantam Asset Management Co. Pvt. Ltd
Goldman Sachs Asset Management (India) Pvt. Ltd
Taurus Asset Management Co. Ltd
82,306
88,628
57,817
35,642
60,377
41,552
69,368
30,565
1,069
21,473
14,775
13,314
29,738
7,356
173
4,349
4,600
Oct 95
Jan 94
Oct 71
Nov 93
Feb 95
Nov 90
Sep 94
Apr 97
May 99
Jun 94
Mar 97
Jan 03
Dec 98
Jan 93
Feb 06
Dec 01
Jan 94
Fund house Net profit 2010-11
( R cr)
AUM*
( R cr)
Inception
date**
Age of the fund
house (in years)
16.58
18.35
40.93
18.52
17.25
21.56
17.68
15.06
12.94
17.93
15.14
9.22
13.36
19.36
6.09
10.32
18.35
Edelweiss Asset Management Ltd
Sahara Asset Management Co. Pvt. Ltd
Principal Pnb Asset Management Co. Pvt. Ltd
IDFC Asset Management Co. Pvt. Ltd
J.M. Financial Asset Management Pvt. Ltd
Mirae Asset Global Investments (India) Pvt. Ltd
HSBC Asset Management (India) Pvt. Ltd
Peerless Funds Management Co. Ltd
Morgan Stanley Investment Management Pvt. Ltd
Baroda Pioneer Asset Management Co. Ltd
Daiwa Asset Management (India) Pvt. Ltd
AIG Global Asset Management Co. (India) Pvt. Ltd
JPMorgan Asset Management (India) Pvt. Ltd
BNP Paribas Asset Management India Pvt. Ltd
IDBI Asset Management Ltd
Bharti AXA Investment Managers Pvt. Ltd
Pramerica Asset Managers Pvt. Ltd
L&T Investment Management Ltd
Religare Asset Management Co. Pvt. Ltd
LIC Nomura Mutual Fund Asset Management Co. Ltd
FIL Fund Management Pvt. Ltd
Axis Asset Management Co. Ltd
-1.23
-2.53
-2.58
-2.81
-6.00
-8.01
-8.20
-10.72
-14.78
-15.38
-18.17
-18.37
-21.73
-24.46
-26.52
-33.27
-36.80
-39.58
-50.20
-59.14
-62.39
-96.05
576
473
3,942
26,476
6,915
423
4,897
4,390
2,086
4,582
858
718
6,759
4,805
6,102
161
2,084
4,616
11,814
6,223
8,797
8,598
Sep 08
Mar 97
Mar 96
Jul 00
Dec 94
Mar 08
Dec 02
Feb 10
Jan 94
Mar 96
Jul 09
May 07
May 07
Sep 04
May 10
Jul 08
Aug 10
Mar 97
Nov 06
Feb 93
Apr 05
Dec 09
3.47
15.14
16.16
11.76
17.42
3.98
9.31
2.03
18.35
16.16
2.63
4.83
4.83
7.53
1.78
3.64
1.53
15.14
5.33
19.28
6.94
2.20
R558.93 cr
Total net loss
R1,16,732 cr
AUM
R5,63,102 cr
AUM
R1,108.01 cr
Total net profit
261.27
242.18
137.50
96.95
84.54
78.85
71.83
46.90
22.22
17.14
13.36
11.44
10.62
6.11
4.94
2.11
0.04
Source: Value Research
*Asset under
management
(latest available)
**Date of launch
of first fund
Fund house Net profit 2010-11
( R cr)
AUM*
( R cr)
Inception
date**
Age of the fund
house (in years)
By Monika Halan & Kayezad E. Adajania