Top AMCs rake in more profits despite hard times

India's top asset management companies (AMCs) have continued to remain profitable, no matter whether mutual fund investors made money or not in the tough market conditions. Rather, top players have posted growth in their profitability during financial year 2011-12.

Reliance Mutual Fund, despite losing its top slot to HDFC MF during the year, continued to remain the most profitable asset manager in the industry, with Rs 276 crore as net profit in FY12, a growth of 5.6 per cent against Rs 261 crore in the previous financial year. HDFC MF, the country’s largest fund house, grew faster to Rs 269 crore, growth of 11 per cent compared with Rs 242 crore in FY11.

ICICI AMC, the third largest fund house, grew the fastest in terms of profitability, at 22.5 per cent to Rs 88 crore against Rs 72 crore earlier. However, Birla Sun Life AMC’s profit declined a big 30 per cent in FY12. The numbers of UTI AMC were not available.

TOP FIVE AMCS PROFITS IN FY12              (Rs crore)
Company	2010-'11	2011-'12	Chg (%)
Reliance AMC	261.27	276	5.63
HDFC AMC	242.18	269.14	11.13
ICICI Pru AMC	71.83	88	22.51
Birla Sun Life AMC	84.54	59	-30.22
UTI AMC	138	NA	NA
Source : Asset Management Companies & Value Research

Sundeep Sikka, chief executive officer (CEO), Reliance AMC, says, “The biggest factor which helped us increase our profits is our focus on retail customers from a long-term perspective. Though acquisition of retail is expensive, in the long term it becomes profitable. It’s an annuity business and our commitment to investors is for the long term.”

The top five control 54 per cent of the industry’s assets (there were 44 fund houses managing an average assets under management (AUM) of Rs 6,64,792 crore as on March 31). These players reported rise in profits in a year that saw erosion of a little over five per cent of the industry’s AUM, while equity AUM dipped 6.7 per cent.

According to Dhirendra Kumar, CEO of fund tracker firm Value Research, “The mutual fund business is a low capital one. Once a fund house reaches the threshold, it keeps making profits. And, the more the equity assets, it will kick up the profits of AMCs.”