Challenging times see exit of MF honchos

When Jaideep Bhattacharya put in his papers as chief marketing officer at UTI Asset Management Company (AMC) early this month, there were whispers in the industry that he was being made a scapegoat for the dwindling assets of India’s oldest fund house.

Bhattacharya joined the list of several high-profile exits from the mutual fund industry in recent months, which include Arindam Ghosh, chief executive officer (CEO) of Mirae Asset; Piyush Surana, CEO of Daiwa Mutual Fund and Rajan Krishnan, CEO of Baroda Pioneer.

Top executives of the sector are under fire. The asset management business is going through one of its toughest phases. Stringent regulations, changes in business models, poor market conditions and investor apathy towards equities have put tremendous pressure on executives to deliver.

“Gone are the days when asset management reached break-even points in three to five years. Now, it is almost like the insurance business, with gestation period rising to eight to 10 years,” says a former CEO of a fund, who quit his job early this year. Promoters need to give time, he says.

“There are no quick-fix solutions to this crisis. It takes time, as India is a complex market. But if promoters do not understand the reality and want their undesirable expectations fulfiled, one cannot help,” he adds. He declined to be named.

Independent analysts agree. "These executives did a phenomenal job but if one is not able to keep up with the expectations of sponsors and do not come with the desired results, changes keep happening at senior levels," says a senior executive of a fund tracking firm, who did not wish to be named, given the sensitivity of the story.

“No doubt, these are difficult times for the industry and growth is not seen, as markets are not supportive and pace of penetration is low. But I believe the worst is behind and the situation will change, sooner or later,” he further explains.

Last year, Sanjay Sinha had left L&T Mutual Fund in September to start his own financial advisory firm, Citrus Advisors, while Vijayan Krishnamurthy moved out from IDBI Mutual Fund in May.

During 2011-12, the average assets under management of the industry declined a little over five per cent to Rs 6,64,792 crore as on March-end, 2012. There are 44 India-based mutual funds.