87% of our revenue comes from Mutual Fund Industry: Anuj Kumar, CEO, CAMS
Anuj Kumar, Chief Executive Officer, Computer Age Management Services Limited (CAMS), talks about the future growth strategy, Growth expectations and fees charging mechanism, during an exclusive chat with Zee Business Executive Editor Swati Khandelwal,
Anuj Kumar, Chief Executive Officer, Computer Age Management Services Limited (CAMS), talks about the future growth strategy, Growth expectations and fees charging mechanism, during an exclusive chat with Swati Khandelwal, Zee Business. Edited Excerpts:
Q: First of all, congratulations on the great listing. Tell us what's your strategy for growth in the coming years? You are already the market leader with a 70 per cent market share. How do you plan to increase the revenues and margin?
A: As you know, CAMS has been a mutual fund RTA for the last 25 years and a market leader for past 15-20 years with more than 50 per cent market share. Our growth is tightly coupled with the mutual fund industry and when the assets of the mutual fund grow then our revenue also grows with them. Around 87 per cent of our revenue comes from the mutual fund industry. The mutual fund assets have grown at a compounded rate of 18 per cent in the last five years. Debt and liquidity, the two assets classes have returned to the same level where they were before the pandemic occurred. Equity depends on selling and selling is back up to 60-70 per cent to the previous level. Nowadays people can make transactions from website and Apps and can also see the curated list of the funds, thus can easily take decisions. So, the market should return with their help. An asset is the biggest metric of mutual funds. When equity class will return to it then I think that our growth and mutual fund assets growth will reach the level where they were before the pandemic.
Q: What is the expected growth in the next two years from this business?
A: If we talk only about the AUM, then as I told that in the last five years it has grown at a compounded rate of 18 per cent. IF you have a look at the research, particularly the research of CRISIL, then it is predicting that the growth will stay between 16-17 per cent in the next five years. Our revenue grows along with a handicap, so if those assets grow at 17 per cent than our revenue will also grow by 12-13 per cent. This trend has been quite evident in the last several years. Thus, the mutual fund market has been accepted as an asset class in India and selling process has expanded a lot and as I have said that assets have reached to the same level even after the pandemic in the two asset classes. Gradually as restoration happens, we expect that we can expect a high teen growth for assets as well as the old-growth of CAMS.
Q: There is a concern regarding your fee-charging as the AUM grows your fees goes down. What impact it will have on your margins and what is your outlook on margins?
A: Let me tell you how the fees grow. If the asset is growing at 18 per cent then the fees are growing at 13 per cent because we provide a 5 per cent advantage to the clients as they are scaling. Their business is scaling that is why they get an advantage under a telescopic fees structure.
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It is a 100 per cent outsourced market because CAMS has had a partnership approach with asset managers. We eat off the same plate therefore we consume that TR together. We work with a partnership approach and have never worked with a price-setting approach.
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