Nippon Life India Asset Management Limited (NAMINDIA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Nippon Life India Asset Management Limited Q4 FY '24 Earnings Conference Call hosted by Batlivala & Karani Securities India Private Limited. [Operator Instructions] 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, Bharwin. Good evening, ladies and gentlemen. On behalf of Batlivala & Karani Securities, I welcome you all to the Q4 FY 2024 Earnings Conference Call of Nippon Life India Asset Management Limited. We have with us Mr. Sundeep Sikka, Executive Director and CEO, along with the top management team of Nippon Life India Asset Management. I would now like to hand the conference over to Mr. Sikka for his opening remarks. Over to you, sir.

Thank you. Good evening, and welcome to our Q4 FY earnings conference call. We have with us Chief Business Officer, Saugata Chatterjee; Interim Chief Financial Officer, Amol Bilagi; Chief Distribution Officer, Arpan Saha; Head of ETF, Arun Sundaresan; Head of AIF, Ashish Chugani; Deputy Head of AIF, Aashwin Dugal; and Mitsui-san, Nominee of Nippon Life Japan. Our detailed investor presentation and press release have been uploaded on the exchanges as well as on our website. I would like to share some comments on the recent industry trends and our performance prior to addressing your questions. I'd like to start by mentioning that in FY '24, NAM India has achieved its highest ever operating profit at INR 9.58 billion, up 26% year-on-year as well as profit after tax at INR 11.07 billion, up 53% year-on-year. Further, in Q4 FY '24, NAM India has achieved its highest ever quarterly operating profit of INR 2.82 billion as well as PAT of INR 3.43 billion. Further, as stated previously as well, our equity net sales and SIP shares remains well above the equity AUM owing to the consistent efforts of the business teams. We also continue to focus on diversification with specific focus on fixed income, alternate business and offshore business. Beginning with the markets. Equity markets in Q4 FY '24 showed a more moderate performance as compared to the prior quarters. Net peak moved up by 3% quarter-on-quarter while Nifty mid-cap and small-cap indices rose by 2% and 4%, respectively. RBI held the repo rate steady at 6.5%, while retaining a G-Sec moderated by 11 basis points year-on-year to 7.06%. Coming to the data on MF industry. Industry quarterly average AUM grew by 10% quarter-on-quarter and 34% year-on-year in Q4 FY '24 to INR 54.1 trillion. Strong momentum in equity segment sustained as the share of equity in the overall AUM continued to increase, ending at 58% for Q4 FY '24, up from 52%. Now moving to the industry inflows. The equity category, excluding index and arbitrage witnessed a gross inflow of INR 1.94 trillion and a net flow of INR 798 billion. Both gross and inflows were higher on a quarter-on-quarter basis. Strong inflows were witnessed across sectoral, thematic, multi-asset class, asset allocation funds and large and mid-cap funds, while inflows in small and mid-cap funds were lower sequentially. Investments via SIP route further increased with the SIP contribution for the quarter increased -- quarter being INR 573 billion, up 37% year-on-year and 11% quarter-on-quarter. Monthly SIP flows in March 2024 stood at INR 193 billion, which was another all-time high. SIP folios increased by 10% quarter-on-quarter to INR 84 million. The fixed income category, debt and liquid witnessed a net outflow of INR 464 billion in a seasonally weak quarter. The ETF quarter -- ETF category had a net inflow of INR 196 billion. At the end of the quarter, unique investors in mutual fund industry increased to INR 44.6 million, that is an increase of 20% year-on-year, while the industry folios increased to INR 177.9 million. Now moving to our business performance. We closed the quarter with total assets under management of INR 5.24 trillion. This includes mutual funds, managed accounts and offshore business. Our mutual fund quarterly AUM grew 14% quarter-on-quarter and 47% year-on-year to reach INR 4.31 trillion. We have had the highest increase in quarterly average AUM market share, both quarter-on-quarter at 30 basis points and year-on-year at 73 basis points amongst all AMCs. Further, on a year-on-year basis, we have been the fastest-growing AMC within this top 10 players. I would now like to share a few highlights for the quarter. Starting with market share. Our market share increased 30 basis points quarter-on-quarter to 7.97%, with a market share increase across all asset categories. This is the fourth consecutive quarter of market share increase that we have witnessed. Our equity market share also continues to improve. It increased to 6.76%, of which there was a 9 basis point improvement in Q4 and 58 basis point improvement in FY '24. Throughout the course of FY '24, we moved up 2 positions to fourth in terms of total equity mutual fund area, excluding arbitrage. The share of equity AUM in our overall AUM continued to increase and stood at 49.2% in Q4, up from 48.6% in Q3. Performance of most of our equity schemes remain strong, and this is -- and this, along with our strong distribution network, digital capability and strong risk management helped us to deliver a near double-digit market share in net sales in equity and hybrid segment in Q4 FY '24. On the segmental front, for individual AUM, which consists of retail and HNI AUM saw further market share improvement. Individual AUM grew 10% quarter-on-quarter to INR 2,578 billion. Market share increased 8 basis points quarter-on-quarter to 7.74%. Our corporate AUM grew 16% quarter-on-quarter to INR 1,842 billion. We have also started to regain wallet share with large institutional clients, and this has led to the increase in the share improvement of 70 basis point quarter-on-quarter to 8.49%. This is our highest market share gain in the Corporate segment since June 2020. Our B-30 AUM grew 9% quarter-on-quarter to INR 862 billion, which keeps us amongst the fastest-growing large AMCs in B-30 locations. Our market share improved 6 basis points quarter-on-quarter. This segment forms 20% of our AUM versus 18% for the industry. We continue to have large base in the mutual fund industry, with 16.5 million unique investors. We are humbled to have 1 in 3 mutual fund investors in India who invest with us. I would now like to touch upon some important aspects on our systematic book. I'm happy to share there has been a continued uptick in our systematic flows over last 11 quarters, which has led to an increase in market share. Our incremental SIP flows in the quarter -- we had a market share of above 15%. SIP market share increased by 305 basis points over March '23 to March '24, ending with a market share of 9.1%. Our monthly systematic book rose by 11% to INR 23.3 billion for March 2024 over December 2023. This resulted in an annualized book of INR 280 billion. On a year-on-year basis, the monthly systematic book grew by 109% over March 2023 when it was INR 11.2 billion as against 35% growth for the industry. The number of systematic transactions for the quarter increased 19% quarter-on-quarter to roughly INR 18.1 million. 62% of SIP AUM has continued for over 5 years versus 28% for the industry. Moving on briefly to the ETF segment. We continue to be one of the largest ETF players with an AUM of INR 1,115 billion and a market share of 16.7%, which increased by 135 basis points quarter-on-quarter. Our gold ETF remains the biggest ETF in the industry. Our share in the industry ETF folios is 60%. We have 61% share of ETF volume on NSE and BSE. Our ETF average daily volumes across key funds remain higher than the rest of the industry. During the quarter, we launched 2 new products to further strengthen our passive office, namely Nippon India Nifty Bank Index Fund and Nippon India Nifty IT Index Fund. Moving to our distribution franchise. Building a robust digital strategy has been a strong focus for NAM India. We are leveraging the ever-changing digital horizon to stay relevant and in line with the growing consumer expectations. Our digital focus has enabled -- sorry, the engraved digital focus that we have built at Nippon India Mutual Fund has enabled to continuously enhance our digital aspirations, be future-ready and yet provide lucid online experience for our investors and franchises. Digital purchase transactions rose to 6.6 million in FY '24, up 100% year-on-year. We have witnessed close to 40% increase in quarter 4 FY '24 compared to Q3 FY '24. The digital channel has contributed 60% to the total new purchase transaction in FY '24. Our physical distribution base is well diversified with a wide presence in 263 locations across the country. We have over 1,400 distributors in total and roughly added 3,400 distributors for the quarter. Now I would like to briefly update you on our subsidiaries, namely AIF and Singapore subsidiary. Starting off with the AIF. As mentioned in the past, AIF continues to be an important focus area for NAM India. Under Nippon India AIF, we offer category 2 and category 3 alternative investment funds and have a total commitment of INR 61.9 billion across various schemes. The company has started broadening its focus across asset classes and strategies. Towards this end, we have recently launched a performing credit AIF and long only small-cap equity AIF. Fund raising is currently underway and both have undertaken their initial closing. During the quarter, we have undertaken the first closing of a Tech/VC AIF. Nippon India Digital Innovation AIF Scheme 2A. A direct venture capital fund targeting investments in early growth stage startups. Also, our Tech/VC fund or fund launch in 2020 is in advanced stage of deployment with nearly 80% of the commitment raise have been deployed across 12 Tech and VC funds. On the offshore front, we witnessed good inflow in the quarter from various international geographies, and we remain positive that this trend will continue in the future. We will remain focused on fundraising from international markets and are looking at business opportunities with subsidiaries, associates and larger network of Nippon Life growth. Nippon Life Japan remains committed in supporting NAM India for international operations. We continue to see interest for India from conventional markets like Europe, Middle East, Japan and from unconventional markets as LatAm, Thailand and Korea. Now on our financial performance. For Q4 FY '24 revenue stood at INR 4.68 billion, up 34% year-on-year and 11% quarter-on-quarter. Other income stood at INR 0.92 billion, up 132% year-on-year and down 14% quarter-on-quarter. Operating profit stood at INR 2.82 billion, up 41% year-on-year and 12% quarter-on-quarter. Profit after tax stood at INR 3.43 billion, an increase of 73% year-on-year and 21% quarter-on-quarter. On a full year basis for FY '24, operating profit grew by 26% year-on-year to an INR 9.58 billion, and the profit after tax grew by 53% year-on-year to INR 11.07 billion. As mentioned in the past, we have a stated dividend policy to distribute 60% to 90% of our profits to our shareholders. For FY '24, the Board of Directors have declared a dividend payout of INR 16.5 per share, that is 99% of net profits. This includes the proposed final dividend of INR 11 per share. Overall, FY '24 has been a strong year for the MF industry and more so for our company. We look forward to FY '24 and hope to achieve another positive performance. With this, I would like to conclude my remarks and open the floor for questions.

[Operator Instructions] We have the first question from the line of Lalit Deo from Equirus Securities.

Congratulations on a good set of numbers. The first question was on -- in this quarter with the strong growth on the AUM side. So we have seen some reduction in yields. So could you give us a broad segment -- like segment-wise yield breakup and also the reason for lower tax rates during the quarter?

Lalit, I'll request my colleague Amol to answer this question, please.

Thanks, Sundeep. So on the yield side, Lalit, we have seen a 1% decline on quarter-on-quarter on the yields. And -- sorry, 1 basis point quarter-on-quarter decline in yields. So if you exclude the ETFs, the blended decline has been marginal at 0.5 basis point quarter-on-quarter. And for the segment-wise yields. For equity, the yield stands at 63 basis points. On debt, we would be around 25 basis points. On liquid in the range of 10 to 12 basis points. And on ETF, it would be around 15 basis points.

Yes. So on the tax front, tax benefit?

Yes. On the tax front [indiscernible] for the quarter, primarily due to a movement of some of the investments on the short term to long term, which has resulted in the reduction of tax rates. And also, there has been a reversal of provision for previous years post the completion of a tax assessment. So these are the 2 factors which have affected the lower tax rates for the quarter.

Okay. And this ETF, 15 basis points includes your gold ETF also? And then newer money which is coming on ETF gold side as well?

Yes.

Sure. And this quarter, we have done really well on the employee expenses side and there was some marginal increase on the other expense. So going ahead for FY '25 and FY '26, what will be -- what is the outlook on the expenses side?

Okay. So on the expenses side, very difficult to predict, but probably it should be in the range of 8% to 10%, excluding the ESOP cost on -- for the fresh stock granted. So it should be in the range of 8% to 10%.

And any new plans for ESOP side on this?

Yes. So during -- so today, the Board has approved a grant of some ESOPs. And the potential insight of that cost would be around -- over a period of 4 years, it would be around in the range of INR 85 crores to INR 90 crores.

The next question is from the line of Madhukar Ladha from Nuvama Wealth.

Congratulations on a good set of numbers. So two questions actually. First, on the ESOP cost that you just mentioned of about INR 85 crores, INR 90 crores over a 4-year period. Can you give me a split over the next 4 years? Second, admin and other OpEx has seen a sharp jump both on a year-over-year and on a Q-o-Q basis. So what is happening over there? And similarly, even in the fee and commission expenses. So some sense on what the normalized run rate of them would be, that will be helpful? And third, even our other income this quarter, we didn't have any big movement in equity, so the indices have been fairly sort of just about a 2.8% move in the -- on the Nifty and the yields have also been fairly stable. So what has driven such a strong performance even on the other income, some color there would be helpful?

Yes. So on the ESOP cost, we are expecting about 49% to 50% of the cost should come in the first year of the next financial year, basically, in this financial year, and that will taper down over the next 3 financial years. In terms of admin expenses [indiscernible] out of the incremental cost quarter-on-quarter about 30% to 35% cost will be one-off expenses and the rest will be a normal course of business on account of marketing that -- market and IT spend that we are doing. On the fee and commission part, this is directly linked to the business. So our alternate -- and the PMS business is directly linked to the business of that. So as the revenue grows, it also result in the increase in the brokerage cost. And the last question was on the other income. So other income is purely mark-to-market. There is no one-offs or nothing to add on that.

[Operator Instructions] the next question is from the line of Prayesh Jain from Motilal Oswal.

Congratulations on a good set of numbers. Sir, firstly, if you look at your expense ratios to basis points of AUM, that has come out pretty strong and pretty healthy in this quarter and this fiscal. How should we think about this from a, say, 2- to 3-year standpoint as basis points of AUM, how would the trajectory be in terms of spending and which element of the business are we really investing into kind of see any elevated expenses?

So Prayesh, I think -- broadly from our perspective, I think as we have mentioned in the past, expenses overall, I think we -- going forward, you will see, and we've been saying in past also more operating leverage. As the AUMs grow, I think the expenses -- we do not expect a significant increase in expenses broadly. The only area where we will keep investing is going to be digital. We are investing -- we'll be investing substantially in digital and the brand. And these are the only 2 areas. The other area that you may see us investing will be in the alternate business which is [indiscernible] where I think we remain open to acquiring new skill sets wherever acquired. So that again will be more on the human capital side.

Okay. And sir, just as you alluded to the alternate piece. How do you see this business getting up to, say, in the next 3-year timeframe, what AUM aspirations you would have for this segment?

Prayesh, I think -- I mean it will be difficult to put a number for AUM. But aspirationally, I think our intent is that today, about 95% of the revenue of the overall company comes from mutual fund. How do we keep reducing that? And that will help by increasing the overall business coming from AIF and offshore. So we do not want to -- I think -- overall, I think as we've been talking for this in these quarterly calls, whether in mutual fund or AIF, we do not want to target AUM. Our focus will remain on profitability.

And sir, on offshore piece, how do you -- where are we in terms of different geographies? And what is the scale up that we can expect? Are we in advance stages in any of the geographies to launch new products? Where are we in that sense?

In offshore, let me admit while we have seen a very strong performance on the mutual fund side, a lot of new things happening on AIF. Offshore has taken a little more time than we thought. But I think there's a lot of work that is happening. And we believe over the next 2, 3 years, you will see some positive things because there are a lot of offshore many times it becomes a binary, its 0, 1. It takes more time. From a geographies point of view. Needless to say, we'll continue highly focusing on our home base, which is Japan, trying to get more Japanese money into India. I mean that will be our main focus area, given the new fund that we ventured about the AIF protect fund, I think the primary -- the majority of the [ MPs ] that we are talking to are from Japan. So Japan will remain as one of our focus areas. But other than that, I think India continues to track money from various markets. I think we've seen some money coming from LatAm this quarter. And overall, our AUM -- offshore AUM grew 52% in this financial year.

Okay. And last question, out of the current SIP run rate, how much would be, say, via the non-Nippon digital route? So in a way, a sourced not from Nippon's website, but from outside. How much of the SIPs would be coming from that?

While I'll request my colleague Arpan to take this question, but I'll just [indiscernible] (00:27:30), we do not want to differentiate between what is coming from our side and others, because I think the idea is we want to create an ecosystem for the investor to have a digital -- good digital experience with us. But having said that, Arpan, if you could please take this.

Yes, sure. So the way we look at our digital over here at Nippon is that when we work with our partners, we have integrations in play. And what happens with the integrations is we always understand what is the platform of choice that the consumer wants to buy on, right? So we have the storefront philosophy, where we ensure that if our consumer is going to say x, Nippon product should be available on the storefront versus if the customer comes on our website, anyway, he's getting all the Nippon products. So it's a proper 360-embedded philosophy where we believe that there is no single reason why a consumer would want to come to our website or would want to go to an integrated partner. It is all connected.

[Operator Instructions] We have the next question from the line of Swarnabha Mukherjee from B&K Securities.

So three questions from my side. First of all, just wanted to understand that the restrictions that we have put in terms of the SIPs and the STPs for the small-cap fund towards the end of March. So would we see -- for Q1 going ahead, would we see any kind of change in dynamics in terms of the SIP flow considering that particular fund would have been attracting considerable amount of flows? So I wanted to understand from that point of view, how should we think about going ahead on our overall SIP flow book? That is the first one. Second is in terms of the competitive intensity in the industry, how are we seeing the payout levels? And do we -- are we -- in order to garner business, are we -- would we require to payout a little bit more to the distributors? How -- if you could share what the current -- what are you seeing in the landscape right now? And if you could also give some color on where would be the flow yield vis-a-vis the stock yield, particularly in the growth oriented segment? And thirdly, also given that we have been focusing on the HNI segment and that in this particular segment, the distribution happens through slightly larger distributions in several distributors in several cases. Can that also have an impact on our overall realizations as we go through them? So these three questions, sir.

So I think I'll request Saugata Chatterjee to take the first question on restrict on the small cap. And I think on competitive advantage, and I'll come back to that after that.

Yes. So on the small-cap piece, though we are putting restrictions and twice we have brought in restrictions now. The good part is in the past and even after the second limit introduction, our SIP inflows have primarily been in the less than INR 10,000 bracket perpetually, wherein 75% to 80% of our SIP investors do come in that space. And hence, after introduction of the new limit also, we haven't seen any sizable reduction in our flows, which is what has been our strength historically whenever we have built this SIP book in our system, especially in the small-cap fund, it has been in the smaller ticket space. And on the other side, we are also actively now, like we had mentioned in the previous calls, we are seeing sizable inflows in our other schemes like the multi cap fund, large-cap fund, we have the value fund. There are multiple funds, wherein we are getting now good inflows, which is sort of derisking our tilt towards small cap. And I think going forward, this will be the way we will plan our business on the SIP side.

The second one, I think the competitive pressure coming because of new AMCs doing higher brokerages and all. I think the way we see it, I think, as stated in the past, our focus remains on profitable growth. We do not want to get into any price war. I think we will be -- we are very clear that I think for us, overall AUM, while it is important, but profitable AUM is more critical. And that's exactly the reason to also mix it with the second question. We'll continue focusing on retail part even more, while HNI market share continues to grow for us, but retail, we believe is more sticky and more profitable and more difficult to build and also remains more sticky. To the extent, I think since we talked about the small-cap fund earlier as they say. So you'll be happy to know I think while there have been restrictions on small-cap fund across the industry, and also for the month of March, I agree over March industry saw an outflow of about INR 4,000 crores. But while we are 25% of the industry size, what the outflow that we saw was in the 2% of the industry because we are very, very highly retail and the top 10 investors in our small-cap fund constitute less than 1%. So the retail adds stickiness and profitability. And our focus will remain to execute -- to go the difficult way of building business, which is retail, small ticket size, more sticky and more profitable from a long-term point of view.

Right. Sir, any indication on the flow versus stock realization, so what we seeing right now?

So we do not disclose this data, but you can safely assume that the yields on the stock will be higher compared to the flows.

Yes, yes. Understood sir, just -- I mean, I think that has been the trend over the last few quarters. Just wanted to understand that has the delta kind of -- how the delta has moved, has it kind of widened or narrowed, if you could at least tell us?

See, for us, as Sundeep mentioned that we want to be on a profitable side of business. So probably, we have not increased the payouts as such. So our yields on the new business has remained constant, okay? And as mentioned last quarter also, we have rationalized our distribution costs in one of our larger schemes. And this would help us in maintaining our margins on the new cost, at least.

Just to add, if you see the behavior of our net sales, which is what we articulated in the opening speech. We have a much healthier net sales than the industry. And hence, our old assets are still intact, which is giving us better margins always.

Understood. Sir, just last one quick question. When you mentioned about the HNI segment in your disclosures. Is that on the basis of how [ MP ] defines the HNI segment?

Yes, very much, 2 lakh plus.

We have the next question from the line of Shreya Shivani from CLSA.

Congratulations on a good set of numbers. Most of my questions have been answered. I just wanted a clarity that on the staff cost, did you mention that if the major increase that has happened next year onwards will be on account of ESOPs and not really any addition to the staff count, right? I should assume the staff count to remain at the 1,000 level for the next foreseeable future? Or will there be some additions on that side as well?

Yes, I think your understanding is correct. I think broadly the staff -- number of staff will not increase substantially. I think other than the fact that in our subsidiaries, we may add someone move to grow our business to invest on acquiring certain skill sets. But broadly, your understanding is correct. And the overall mutual business in total 1,000 plus, that number will not change substantially.

Got it. And just also on the admin cost, is there anything -- the pickup for the last 2 years has been strong on this cost. Is this in line with the growth in business? Or was there anything incremental that has happened?

Amol here. So on the -- just going back on that employee cost. So there would be a normal increment that you would see in the employee cost. So that would be there. On the admin cost, probably the net run rate will continue, and this is mainly due to the investment that we are making in our digital assets. And probably, we may add some branches in this financial year, but that would not have a major impact on our overall...

Because it will be the smaller cities and towns. We are already in 263 locations. So the smaller cities and towns, the cost will not be high.

The next question is from the line of Lalit Deo from Equirus Securities.

Just one question. So like what will be the ESOP cost for this year and in this quarter as well?

Are you talking about ESOP cost?

Yes, yes. What was the ESOP cost for FY '24 and still as in quarter 4?

Yes, it should be -- so what I mentioned, the cost -- expected cost of the ESOP for over the period is going be in the range of INR 85 crores to INR 90 crores. Of that 50% of the cost would come in this financial year.

That one is in FY '23. I was asking for FY '24, like in the current year cost?

So in FY '24, the ESOP cost would be around INR 7 crores.

The next question is from the line of Madhukar Ladha from Nuvama Wealth.

Can you comment a little bit about our flow market share, how that has been? Q2 was very strong. Q3, there was a little bit of moderation. So Q4, I wanted to just get a sense of whether that is sustaining or not? And you just mentioned the ESOP cost number for this year. Can you just repeat that actually?

So yes, on the flow side, Madhukar, Q3 and Q4 continues to be in the similar range. So from an equity net sales point of view, we are in the double-digit space still. And like we had mentioned earlier, and as Sundeep did mention, small cap, large cap, these are certain categories where we have been able to continue to have higher double-digit net sales. And when you take the entire year into aggregate, we also conclude the year with a high double-digit net sales market share for the full year.

Great. Congratulations again. And on the ESOP cost number for FY '24, can you repeat that?

Just to clarify, all these net sales what we mentioned is ex of arbitrage.

So Madhukar, on the ESOP costs, there are 2, 3 things that probably need to consider. First is that we have come up with ESOP grant after 3 years of period, 3 years. So the last ESOP which we saw was in 2021. So that's why the ESOP cost for FY '24 was only INR 7 crores. However, this year it would be substantially higher given that there is a fresh grant that is happening. And also, this would help us in retaining the talent and that would help us in that -- in ensuring the fixed cost, because it does not increase beyond a certain limit.

[Operator Instructions] We have the next question from the line of Ronak Singy, an individual investor.

Congratulations for achieving this highest operating profit this year. So my first question is that given the increased marketing spend in that attracting the revenue generation alongside with your growing investment in maintaining the database and all in the artificial intelligence space to analyze the investment ratio, I would really appreciate if you could provide a breakdown of the SIP contributions by each group, young versus old generation? Because I'm interested in understanding the percentage of SIP contributions coming from the young investors versus the old investors since this marketing campaign is being targeted towards the younger generation mostly.

Ronak, I think we -- if I could understand -- your voice is a little faint, but I would like to just share with you a lot of things that you mentioned we are using internally whether artificial intelligence, demographic features and how to market to our investors. And I think one of the reasons for our strong sales our digital presence is that, because that cannot happen manually. So we have been using a lot of these tools internally. And to the earlier question, which was asked by one of the -- I think the earlier questions where I think -- the future investments, I think this is an area we'll continue investing in future also. We do not give breakup of the age, background of this of all our investors and SIPs in the presentation, but I want to share with you, we use it for business, for sure.

Okay. So my next question will be, sir, since you said the number of staff have been increased, but I can see a slight reduction in the employee expense cost on Q-on-Q basis. So is it due to outsourcing?

So it is mainly due to the PLI provision that we keep on doing on quarter-on-quarter basis. So that could be the reason for that.

Reversal of provision.

Pardon sir, I cannot hear you.

So we keep on reviewing our performance incentive quarter-on-quarter and based on the numbers, we keep on adjusting the provision. So the downside could be because of that.

Sir, pardon, can you please repeat, I think your voice isn't audible.

Sorry to interrupt, sir. Ronak, you have a bad connection. The line for you is not very clear. May I request you to please use the handset while you're speaking.

Okay. Okay, sure. Just -- I just want to clarify that what provision you're talking about because of the reduction in the employee expense cost basis?

So this is basically the performance incentive or the bonus that we give out to the employees. So this we keep on doing -- reviewing quarter-on-quarter basis. And based on the management estimate, we keep on adjusting for that. So the decline in quarter-on-quarter is due to that reason.

The next question comes from the line of Bhavin Pande from Athena Investments.

Congratulations on a great set of numbers. Just a follow-up, I wanted to understand what sort of growth are we looking at both in the MF space and in terms of -- alternate space as well in terms of any numbers, if you could give out in terms of AUM growth?

Bhavin, I think we would not like to comment on the future growth. I think we believe we are in a sunrise industry. The industry will continue doing well. I think our -- as a management team, we believe our job is to continue to execute, and our focus will be on profitable growth. So I think I do not want to -- I think, because it will be unfair to put numbers at this point of time because ultimately, this business is also cyclical because of the capital markets. A lot of things keep changing. And the purpose -- the reason of saying this is because I think it will be good for future, we should be conscious of the fact that market cycles also have an impact mark-to-market revenue, everything that we do has. So this year, the business has been good, there has been a very strong tailwind of the markets. And I think we've been -- and we've executed well. So we will continue focusing on our execution and focus on profitable growth.

Okay. And secondly, in terms of product offerings, is there anything on cards, both -- especially on the MF side sort of to maybe offer more products and larger mix category?

So from our production point of view, we have a very good production at this point of time. We do not see ourselves, as you have seen over the last 3, 4 years, we have not been coming out with NFOs. We believe I think to focus on our existing schemes and scaling them up. Having said that, in the passage, we will continue launching a few things, which we believe can help the investors from a long-term point of view, but pure active mutual fund. I think our focus would be to scale up and capitalize on the great fund performance and a track record that we have and build on the existing schemes.

We have no further questions, ladies and gentlemen. I would now like to hand the conference over to the management for closing comments. Over to you, sir.

Yes, thank you for coming for the call.

Thank you. On behalf of Batlivala and Karani Securities, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.