Anand Rathi Wealth Ltd

NSE:ANANDRATHI

Earnings Call Transcript 2024-Q1

[Operator]

Ladies and gentlemen, good day and welcome to the Anand Rathi Wealth Limited Q1 FY '24 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions]Please note that this conference is being recorded. I now hand the conference over to Mr. Feroze Azeez, Deputy CEO. Thank you and all to you, sir.

[Feroze Azeez, executive]

Thank you, sir. Good afternoon, everyone, and thank you for joining the earnings call for the quarter ended 30th June 2023. Along with me, I have Mr. Jugal Mantri, the Group CFO; Mr. Rajesh Bhutara, the CFO of the company; Mr. Chethan Shenoy, the Director and Head of Product & Research; Vishal Sanghavi, the Head of Investor Relations; and SGA, which is our Investor Relations advisors.During the Q1 FY '24, our total revenue grew by about 34% year on year to an amount of INR178 crores, and the PAT also grew by about 34% to about INR53 crores. Our strong performance was further fueled by the robust growth in the assets under management, which witnessed 32% year on year increase and reached a number of INR43,413 crores. This growth was, of course, driven by the cumulative effort of every constituent of our team. Our flagship private wealth business AUM grew by about 31% year on year, which stood at INR42,246 crores. Additionally, we continue to expand our client base, adding 395 client families during the quarter. We have now reached 8,700 satisfied client families, out of which 62% are with us for more than 3 years and account for 80% of our AUM.At Anand Rathi Wealth, our core belief has always been centered around offering uncomplicated, standardized, and well-researched wealth solutions to our clients. This philosophy has not only enabled us to consistently achieve the desired risk-adjusted return, but also enhance our client retention capabilities. Our client retention is less than 1% in terms of AUM loss for Q1 FY '24, which speaks of value which we add to our clients. In terms of relationship managers, we have successfully added about 37 new relationship managers on a net basis in the last 12 months. Our total RMs as on 30th June 2023 stood at 308.With this brief overview, I will now request Chethan to take us on the digital wealth and the OFA vertical a brief [ overview of the ] business verticals. Chethan, over to you.

[Chethan Shenoy, executive]

Thanks. Our digital wealth vertical is a fintech extension of the company's preposition for the mass affluent segment. It registered a growth in AUM of 43% year on year to INR1,167 crores, while the number of clients grew by 7% year on year to 4,305 clients. OFA business is a strategic extension of capturing wealth management landscape to service retail clients through mutual fund distributors by using our technology platform. As on 30th June 2023, OFA has 5,688 mutual fund distributors associated and has assets under management on the platform of INR1,00,000 crores plus. We firmly believe that the wealth management sector holds immense potential, and this motivates us to remain committed to our vision of providing high-quality solutions that fulfill our clients' objective.Thank you very much, and now I hand it over to our Group CFO, Jugalji, to take you all through the financial performance of the company.

[Jugal Mantri, executive]

Thanks, Chethan and Feroze bhai. Good afternoon, everyone. It's my pleasure to present you all with the key financial numbers. Our consolidated revenue for the quarter ended 30th June 2023 stood at INR178 crores, as against INR134 crores during the same period last year, registering a growth of 34% YoY. Our profit before tax for the quarter stood at INR71 crores, as against INR53 crores during the same period last year, registering a growth of 34% YoY. Profit before tax margin stood at 39.7% in Q1 FY '24. PAT for the quarter stood at a healthy INR53 crores, as against INR40 crores during the same period last year, registering a growth of 34% YoY. Annualized return on equity for Q1 FY '24, which is ROE,stood healthy at 43.2%, and earnings per share for Q1 FY '24 stood at INR12.8 per share.Coming to the private wealth vertical. For Q1 FY '24, our flagship private wealth vertical revenue grew by 32% YoY, which stood at INR171 crores, while trail revenue grew by 17% year-over-year, which stood at INR50 crores. Profit before tax for Q1 FY '24 stood at INR70 crores, registering a growth of 33% year-over-year, while PBT margin stood at 40.9%. PAT for Q1 FY '24 stood at INR52 crores, registering a growth of 33% year-on-year, while PAT margin stood at 30.7%.I would like to emphasize that as the Indian economy continues to expand and progress, coupled with a growing number of millionaires and billionaires in the country, we believe there will be an immense opportunities for professional wealth solution providers in the country, and we at Anand Rathi are poised to grab this opportunity.With this, we will now open the floor for question and answer. Thank you.

[Operator]

[Operator Instructions] Our first question is from Lalit Deo from Equirus Securities.

[Lalit Deo, analyst]

Congratulations on a good set of numbers. So first question would be on the revenue side we have seen a sharp increase in the MLD revenues. So could you just give us the primary issuance of the secondary issuance that we have done during the quarter as well as how much is from the third party as well.

[Feroze Azeez, executive]

Jugalji, can you give a specific example?

[Jugal Mantri, executive]

Lalit, see, the gross issuance of the MLD for the Q1 was INR1,396 crores. Out of that, about INR143 crores was from third party. But what is important to note here is that the net issuance, as of now we are at a situation every year because of the past issuances in MLD, our MLD portfolio that stand at a healthy INR12,000 crores. And as you know that the average tenure of the MLD, which is about 4 years, what we will see is that, say, INR3,000 crores to INR4,000 crores will be getting redeemed along with the accrual on those MLDs. And as we know that about 70% to 80% of the same gets redeployed, so now this will become a regular phenomena that there will be gross issuances, which will be in between INR1,000 crores to INR1,500 crores every quarter. But if you look at the net issuance, that was still INR358 crores only, which is compared with INR239 crores in Q1 FY '23.And as far as concerned with the MLD breakup, as I said, that [indiscernible] of the gross issuance is going to the external agencies. But if I compare with the net issuances that will be INR143 crores goes to the external and the remaining of INR358 crores minus INR143 crores, so that is about INR215 crores will be to our sister concern.

[Lalit Deo, analyst]

Sure, sir. So in this INR1,400 crores it is primary issuance or it includes both primary as well as secondary?

[Jugal Mantri, executive]

It's primary issuance.

[Lalit Deo, analyst]

Sir, what will be the secondary issuance during the quarter?

[Jugal Mantri, executive]

See, secondary issuance is not issuance. Secondary is basically there is a trading volume, okay? And that was about INR254 crores, which was the secondary transaction which compared with the INR359 crores in Q1 FY '23.

[Lalit Deo, analyst]

Sir, just wanted to ask one more question there. Last quarter we did about INR1,000 crores primary issuance, and then there was this budget announcement. So now we have seen a sharp jump during this fortnight, over 40% increase. So is it a onetime impact or this is a structural change in the investors where people are coming -- investors are coming from the listed MLD space to the unlisted MLD space?

[Jugal Mantri, executive]

Lalit, if you recall, while answering the question I said that we have got an AUM of about INR12,000 crores in structured product, okay? And say about INR3,000 crores of the face value along with the accrual component which varies from 40% to 60%, that gets redeemed, that is going to be redeemed every year. And whatever redemption which is taking place, even without putting any extra efforts, about 80% of the money that flows back into the structured product, okay? So this sort of issuance which has happened in the Q1 that is more or less guaranteed. In fact, marginally it will go up, reason being that the AUM, which is growing because of the market impact and the accrual in fact the redemption as well as the renovation of these maturities in terms of amount, it will marginally go up. But in terms of proportion to the overall AUM, it will slightly [ drop ].

[Lalit Deo, analyst]

Sure, sir. And sir, one more question was, sir, during the quarter we have always -- the revenue increase was [indiscernible]. Similar to that [indiscernible] revenues have also increased. But any reason why we have seen a sharp increases in our other operating expenses also?

[Jugal Mantri, executive]

Let me take that. See, other operating expenses are directly -- there are 2 things: 1 thing is that in Q1 FY '23 there was definitely the COVID impact, all the travelling, conveyances those were restricted, but now gradually in FY '22-'23 you might have seen that there is an increase in travelling, business promotion, networking, as well as on the conveyance expenses. So these are directly in commensurate with the increased activity and physical movement on the ground and that is why you have seen that the nonoperating expenses have moved up.

[Operator]

Our next question is from the line of Pallavi Deshpande from Sameeksha Capital.

[Pallavi Deshpande, analyst]

Sir, on the regulatory side, the changes on the total expense side that we are expected to see, what would be the steps we would be taking here and what would be the impact you expect on the commissions then?

[Feroze Azeez, executive]

Pallavi, I think in the last earnings call also we discussed this. So firstly, as you would be aware, Anand Rathi Wealth Limited has not used any of the generosities on the commission front, be it the B30, be it the NFO, or [ liberalness ] because of the AUM not getting established and the smaller schemes giving you more commission like the 11 scheme model portfolio we had at an average assets of INR13,000 crores, INR15,000 crores was the average assets under management for the 11 schemes. I very well knew as a company that if I take 11 schemes with INR7,000 crores of average AUM, then I'll get INR0.30 more. So point 1 I'm making is the impact of any client-centric circular would have minimal effects on somebody who's already been client centric and you would be very happy to know that Anand Rathi Wealth, let alone selling any product which is an NFO for the last 11 years, we've not even approved 1 of them. That's point 1. So as far as our understanding goes, the regulatory circular will go through huge amendments in the next form and fashion if you've heard the regulators say that, so the impact of 3%, 4% of revenue, which I was speaking about the last time around, doesn't seem to exist anymore.

[Pallavi Deshpande, analyst]

Sir, you mentioned about the average AUM size being INR13,000 crores to INR15,000 crores, but we've introduced some more new schemes, I understand. So what would be the average AUM size now?

[Feroze Azeez, executive]

Yes, it should be about INR11,000 crores, INR12,000 crores. See, we are always going to be running the business as per clients' objective. If a INR500 crores scheme, if at all to magnify the example, helps me meet my client objective, it will be a part. If a INR50,000 crores scheme helps me meet my client objective, it will be, right? So revenues are never going to take precedence over our actions, irrespective of whatever pressures we may ever have.

[Pallavi Deshpande, analyst]

And sir, my second question would be on the net inflows, if we could have the breakup between what would have come from the existing clients and what would have been from the new client?

[Feroze Azeez, executive]

We look at net flows not -- Jugal, you may have this number. So net flows we focus on, if you look at it from a perspective of new clients, I would say about 30% comes from the new clients. 70% comes from existing clients. We as a wealth outfit have this clear display of confidence in action by not forcing a client to start big with us. In spite of our segment, which is dear to us, which is $1 million-plus, we don't force the client to start with $0.5 million. We say if you have INR50,00,000 startup, start with us, and merit will help us penetrate into your wallet. So the share of new money from clients when they begin is not going to be big because I don't put pressure on them saying that [Foreign Language] it's obvious that he would give me the money which I deserve. So that's why it's 70:30 ratio. But the clients who come in, in a single month, are my potential clients, which is $1 million plus balance sheets other than the homes they live. So that's where comes the snowballing effect of this business after it reaches an inflection point. So these 8,700 families are filtered on the basis of their segment and some short-term investor or investor who doesn't fit the bill in terms of size, we don't even onboard them.

[Operator]

[Operator Instructions] Our next question is from the line of Bhavin Pande from Athena Investments.

[Bhavin Pande, analyst]

Congratulations on a wonderful set of numbers. I hope I'm audible.

[Feroze Azeez, executive]

Yes, Bhavin bhai, you are.

[Bhavin Pande, analyst]

Sure. I just wanted to understand how are we trying to push this business from sales perspective and how many [ bankers ] would we be looking to add every year over a period of next 5 years?

[Feroze Azeez, executive]

Very valid and a good question, sir. Firstly, what we look at is RM addition is 1 of the verticals which people can extrapolate on an Excel sheet reasonably easy by hiring and putting in some capital behind that strategy. So we expand our RM fraternity on the confidence of the preparedness of the leadership bandwidth, okay? All my INR100 crores plus RMs are qualified leader potential. So to answer your pointed question, today we have 135, 140 RMs who have the capacity to mentor 3 to 4 people, so that's the leadership capacity given, so that means 140 people mentoring 3 to 4, which is a span of control, implies close to about 500 Relationship Managers in the constraint of leadership, so leadership is no more constrained any further.Second is how many people have a cultural fit into the organization of client centricity, so that's why we internally currently train 296 apprentices who are called account managers who get promoted. So these are the 2 important fuels to my RM force. So having said which way could we head, we are going to always expand in a calibrated fashion because we have to make sure that the brand promise of uncomplicated and client centricity is actually delivered. So 308, I wouldn't be surprised it gets to those 500 RM numbers over the next couple of years or 3 years to be more realistic.

[Bhavin Pande, analyst]

Okay. And given the phenomenal number of families we have. So our emphasis would be more on increasing wallet share of existing customers as you mentioned that you have some clients start with a figure of INR5 million and wants to go up to let's say INR50 million, or would it be a balanced approach between adding more families and increasing the wallet share?

[Feroze Azeez, executive]

See, all the four growth engines have immense mutually-exclusive potential to contribute to our long-term very, very dear-to-heart objective of 20%, 25% [ track ] growth for years and decades to come. So having said which, I don't think we are at some phenomenal numbers in terms of client families. We may be happy at 8,700 but we still -- any report will tell you, there are 8,00,000 to 10,00,000 HNI families, so we're just 1%. So I think we're scratching the surface, so we don't pat ourselves too much on the back in terms of covered HNI fraternity currently. But I'm sure there's an exponential increase potential possible. So if I have 308 private relationship managers, least 80% of them are not at full capacity, I'm not very pleased if I don't in the next 1 year, 1.5 years, acquire 200 families on a net basis because it's 0.6 per relationship manager is our internal target.So to answer your pointed question, we are nowhere close to having quenched our thirst in terms of new client acquisition because the universe is so large and every 8,500 families have at least 5, 10 HNI friends who deserve to be our clients and we deserve to be their distributors. And as we build credibility with these 8,700, and credibility doesn't come without time. Time is 1 very, very important credibility builder, be it as a listed company, be it as an advisor or a distributor. The good part is we have 80%, 70% -- 67%, 70% of our clients having finished 3 years. That means they would have seen us for 3 years. So that's a very important mutually-exclusive variable. And our aspiration is to get to 200 net client families added per month month-on-month in the near future.Coming to the net mobilizations from the wallet share penetration, I think that anytime a client finishes 3 years, and if we have delivered him a risk-adjusted return of 12%, 13% on a beta of 0.5 on NIFTY, we go have this conversation with him, sir, I didn't force you to start with INR5 crores, but you have INR5 crores. You are at INR2 crores. I have done my bit. Can you please be generous to do your bit? And those conversations are very positive conversations because you have already shown him 3 years of risk-adjusted return which is best in class. Does this answer, sir?

[Bhavin Pande, analyst]

Yes, definitely. Perfect. All the best for quarters and years ahead.

[Operator]

[Operator Instructions] Our next question is from the line of Naysar Parikh from Native Capital.

[Naysar Parikh, analyst]

Couple of questions. The first 1 is on the structured products or MLD. That is 29% of AUMs. Out of that, what percentages do our sister entity -- and so to that extent, does that pose any risk or any of that sort just in terms of it being to sister entity?

[Feroze Azeez, executive]

Yes, Mr. Parikh, right, sir?

[Naysar Parikh, analyst]

Yes.

[Feroze Azeez, executive]

Mr. Parikh, the optical -- of course, a reasonable portion of that is by our sister entity, whatever be the ratios, I'm sure Jugalji will be very equipped to answer in 2nd decimal in terms of proportions. The risk which you see optically itself is the risk mitigant, okay? So when I don't have another entity which I'm very comfortable with, even if there's a gun on my head, I'm not going to distribute that product for the revenue. So we were the first few to eliminate 2 structured product issuers, which were a part of our recommendation in 2016, '17, '18, much before they ran into trouble. And because of our credit risk evaluation team where they see very mathematically which ones are at risk, we were able to pull the plug much before, several portfolios were able to sell their bonds as well.So to answer your pointed question, a large portion of that is in the sister concern. Of course, we have Nuvama because we were comfortable after the ownership change, and that's another offering which we have. But the larger portion is in the sister concern. And the pricings which we get from Nuvama are better than the sister concern, okay? The same product gives me more revenues if issued by Nuvama and that's the great part to put evidence to the transfer pricing or arms' length pricing, which I'm sure some of you may be wondering if that's true.

[Naysar Parikh, analyst]

Understand. If I could follow up. When a customer is 30% of the AUM and that's significant, so are customers asking you to maybe diversify more? Is this more of a pull thing or is this a push thing when you allocate 30% to MLD.

[Feroze Azeez, executive]

I can tell you I've met a few thousand clients because all of us are relationship managers first, so I manage about 8, 9 clients myself. My biggest trouble is, he says, why not 40%, okay? Because there is understanding of what we do, so we do only things which we really, really, really understand 2nd decimal. So to answer your question is it a push or a pull, it's push for the client for it to not -- why is it not 40%. That's the current status. And that's how it has been for the first 4 years, of course, when we started issuance in December 2012. Now we have credibility in terms of having matured 1,300 ISINs have matured, and 15.3% is the IRR of those 1,300 ISINs with a standard deviation of 4.3% on the outcome. That means a 3-sigma event also keeps them in the positive on a 3- to 5-year basis, okay? So after having built that credibility with 1,500 still too mature and 1,300 having matured, because every Tuesday we have a trade of the same product thousandth time. So we have 2, 3 products. We don't innovate till the client needs it. We don't innovate just to make sure that we have interesting conversations with clients. So it's very surprising to other friends in the industry saying that how are you able to sell the same product 1,000 times and keep the interest alive? That's because our jobs are not to make wealth management interesting. Our job is to make the wealth.

[Naysar Parikh, analyst]

Got it. And sorry, last question on this, but the sister entity that you have is basically a NBFC, right? It is into lending, right, if I'm understanding it correctly.

[Feroze Azeez, executive]

Correct. It is a mix of -- and I'm sure if you download the balance sheet, it'll give you a second decimal allocation. It's lending, not such aggressive lending, and a lot of money is in debt instruments to make sure that the money is safe.

[Naysar Parikh, analyst]

And the second part of the question was on digital. How are we using digital and is digital at all do you think in the wealth management space direct to digital or a digital app can be a significant channel? And how are we using digital to tap into some of the young professional salaried people who might reach or are reaching the $1 million milestone?

[Feroze Azeez, executive]

See, if you look at India, of course, digital wealth is -- household savings, we've just done a study, it's INR67,000,000 crores. Of course, please read this with some degree of 10%, 15% tolerance, because we have taken RBI data and all that data to see that we have INR67,000,000 crores household saving. 10 years back it was only INR27,000,000 crores. So Indians are saving phenomenally, but they're investing wrongly. We also computed India's return for the last 10 years, of course, back of the envelope. It is sub 10%, 7%. So having said which, of course, if the savings rates are so good, the young professionals will have more money than they can actually spend, so digitally delivering that is the only way to give ethical advice to those guys, because you can't afford to make an RM reach there and still not sell them an insurance policy. Because if I have a human interaction, then my revenues can't be 1%. If my revenue is 1% on INR10,00,000, it's INR10,000. I'm sure that's a 15-day salary of my client's driver. So I can't do ethical advice without a digital reach.So we are at the stage of experimenting and today there is proof of concept. There is no cash burn. Value unlocking will take its time. But do we see this as a huge potential and a peripheral important business, yes, and it also helps us keep our ears and eyes on the ground on the paradigm shift which is technology brings about every couple of years. Having said which, it's a chicken and egg story. The mass affluent or the affluent does not get great distribution till he is HNI, and if he gets great distribution he becomes an HNI. So it's a chicken and egg story we're trying to solve. So at this stage, we don't hatch our eggs before that. So we think that it has a huge potential of value unlocking for our business and proof of concept and no cash burn is evidence to that.

[Operator]

[Operator Instructions] Our next question is from the line of Harsh Kothari from Kothari Investments.

[Harsh Kothari, analyst]

Actually my question is on the MF equity and debt revenue and the employee cost, Slide #29, so when we see those numbers, as a company, it's the third largest distributor of mutual funds, but if I look at the cost of distributing mutual funds and the employee cost, the employee cost exceeds the revenue from MF distribution. So do you intend to make ultimately MF at a standalone level as a business profitable, including if there was some regulatory risk pertaining to the structured products?

[Feroze Azeez, executive]

Mr. Harsh, right, if I got your name right.

[Harsh Kothari, analyst]

Yes.

[Feroze Azeez, executive]

See, it's apples and oranges if you compare the cost and the revenue.

[Harsh Kothari, analyst]

Correct.

[Feroze Azeez, executive]

Why? I'll tell you so. Because the cost have a provision of the bonus or the remuneration of the structured product sale as well. So if you say that the RM does not do structured product sale, what would his bonuses be, my provision will come down. So if I was just in the business of mutual fund distribution, would I still be making profit? The answer is a big yes. Because you're seeing the cost as a proportion of mutual fund revenues, which is on a Sunday I make INR5,800,000, INR6,000,000, which is my trail revenue even when there's Independence Day, I'm going to get my INR5,800,000, INR6,000,000, which is my trail. I'm just giving you [ mota-moti ] numbers. But my cost has the cost as a proportion of a bonus or the share of the RM for the structured product businesses. Did I articulate it well enough?

[Harsh Kothari, analyst]

Yes. And do you see yourself moving to the RIA model going forward?

[Feroze Azeez, executive]

We are very clear from day 1, 2013 is when RIA came into existence. RIA is to our mind not practically possible in India. That's our take because all products -- wealth management portfolios do not just have mutual funds. They have private equity, they have [ AI ] funds, they have insurance policies. None of them have a direct -- several of them don't have the direct option. So if I have to go RIA, I have to say to the client that only mutual funds I will give advice or distribution on. So RIA [Foreign Language]. So I'm going to earn from that supplier -- the manufacturer, right?So we are not in the business of RIA. We have stuck to distribution. There have been 5 changes in my competitors' business models over the last 10 years. We have not had any change. Why don't we have this change? Because we look at what is the regulatory need. We don't look at the print. We look at the essence of the regulator, essence of the regulator in 2017 when they removed -- or 2018, they removed upfront commission, we did that in February 2006. We wrote to all our AMC partners saying that we don't want upfront because it was writing on the wall that it is 1 year, 2 year, 3 year -- 3 year later, the regulator will tell you this. Because if you look at the essence of what they want from a regulatory standpoint, regulatory changes will help you, like the MLD taxation change helped us. Why, because we already knew in June 2022, we released a paper saying that this MLD taxation of listed is no motivation for somebody to buy. Don't buy it. It will change in the next few budgets. We gave that in writing because it was very clear.So point I'm trying to make is, our regulatory strategy is not to look at what comes as a circular. Read between the lines of what does the regulator want? Regulator does not want mis-selling, so no NFOs. It does not want people to change their addresses and take a B30 commission, which some of them would have done. So that's our strategy, regulatory strategy, regulator will always give us a push on the positive side because [ believe it ] or not, I also want to be as client centric or little more client centric than the regulator wants me to be.

[Harsh Kothari, analyst]

And the product -- these MLDs remain tax free -- not tax free, but they are still taxed at 10%, the new issuance or they are now taxed at income slabs?

[Feroze Azeez, executive]

See, firstly, MLD didn't have a clear definition. Now whatever products we are issuing are not qualified to be called MLD because MLDs are debt securities. Debt securities need to be capital protected, okay? It was reiterated in the latest media interaction of the regulator. Debt securities have to be capital protected. Fortunately for our foresight, not even 1 out of 2,700 products was a capital-protected listed rated instrument, right? So, if you are not capital protected, we could have used the word MLD, but now we can't use the word MLD, so we are not in the distribution of MLD whatsoever now that there is a definition to MLD, which is 2 conditions: it needs to be a debt security; it needs to have market linkage. Debt securities definition in 4 different circulars SEBI has very categorically said it, the latest being 2021 August 13th circular, which says very clearly that if you don't have principal promised in full at maturity, you are not a debt security. So I'm not into MLD distribution. With this new definition, I have never been. Nuvama, which is another entity we procure structured products from, has a rated paper which is MLD, but we have not procured 1 from other company supplier as well.

[Operator]

[Operator Instructions] Our next question is from the line of Pallavi Deshpande from Sameeksha Capital.

[Pallavi Deshpande, analyst]

So just going back to the earlier what we were discussing on is the regulator rethinking this expense ratio. So I think you already mentioned that the change one would see -- you don't see any impact at all when the changes come through with the new regulations. Just wanted your thoughts on do you see toning down by 50% or how do you see it playing out?

[Feroze Azeez, executive]

So if you look at it, our trail commission of a most active mutual fund is about 1.1 or 1.15 post GST, okay? The circular had 7 points. In fact, I had done a call way back in February with a few analysts, and I'm sure some of you would have got an invite, to take you through all these 6, 7 points. The regulator now understands that India's saving account and current account balances, don't hold me to this statement, but yes, are greater than the equity mutual fund AUM of INR2,100,000 crores. So if INR67,000,000 crores is the household saving and equity mutual fund is INR2,100,000 crores, which is close to 4% or little over that or little somewhere thereabouts of 3% to 4%, we have a long, long way to go in terms of mutual funds getting its space in one's portfolio to the extent of 20%, 30%, 40%.So I don't think the regulator wants to squeeze it below 1% because there is also an alternative of direct to a client where he can save that INR0.50, INR0.70 by bypassing the distributor. So I don't think 1% is at a challenge. If I used all the generosities available and brought my trail commissions to 1.4, 1.5, if I've not got something, what can be taken away. That's why a B30 has not had any impact on me. NFO also paying on a certain way is also not impacting me because I didn't do anything. I didn't do small schemes for the reason of commission. So if you look at those 7 points and read that first discussion paper which came in October, November to the industry and the latest circular, which was given as a draft paper, now, of course, that has been deferred from the draft paper. I personally believe from what I have read between the lines, the impact is negligible.Even if you look at how this business will run, as a professional, we can only assure you that we will apply full might to handle adversities. As a professional, we can never tell you there will be no adversities, but you have to judge for yourselves that the last 10 adversities, the last 5 adversities, how has the company dealt with them. In a positive fashion with an open mind and using all the intellect and energy, or with a negative mind saying [Foreign Language], right? So I will tell you that I can only assure you as a professional representing the rest of the group, of course, not I as in Feroze, that we will do our professional best to handle adversities. Adversities will come. The quantums of adversities we have seen in the past have proved that we know how to handle adversities to a certain extent, and we'll still do our professional best. Does that answer, madam.

[Pallavi Deshpande, analyst]

Yes, sir. That was very helpful. Just a nice refresher.

[Operator]

Our next question is from the line of [ Sudeep Duggal ] who's an investor.

[Unknown Analyst]

Actually I'm relatively new to the business, so I have a couple of questions. The first is that could you please explain the reason as in why our average yields are going up? And the connected question to it is that, if I understand correctly, MLDs have higher yields as compared to mutual funds. But in the past we've had this strategy that going forward, the proportion of mutual funds will be increasing. So some idea as to what are the yields on these 2 products and how are the yields going up?

[Feroze Azeez, executive]

Thank you, [ Sudeep sir ]. I'll answer these. And if I miss out any of your points, please highlight again because you have had very interesting questions. There is something called perception. There's something called reality. So let me put some numbers on the table. Yield, as a word, has to always be per annum, right? So post facto, when we looked at our 1,300 maturities, on a like-to-like basis of computation between mutual fund and the structured product, my yield was INR0.03 more per annum for the structured product issuances. So in the order of magnitude, both these products give me the same yield. Do I account it sooner or later is an accounting issue for the energy of my RM. My RM needs enthusiasm to work every day. So if I go a full trail model, my RM's energy drops, which drops my revenue. So to answer your pointed question, [ Sudeep sir ], the yield -- in the order of magnitude, yields are computed on market value per annum in a mutual fund.If I do the same method of computation if as an RM, Feroze allocated INR100 of his client in mutual funds, INR100 in a structured product, and at maturity computed how much did I earn more as a Feroze for his revenue under his belt, you would see hardly any difference. So 1,300 products matured have had, in the order of magnitude, equal yield to mutual fund. That's point 1.Point 2 is that going forward these proportions will not change my revenue mix because the proportion changes are bottom up. If the client has a 14% strategy need, we have a model portfolio which is 14%, 13%, 12% and 11%. We try and fit all our clients into these four. Even if they like the uniqueness, we tell them [Foreign Language], we can't have 8,700 best portfolios. That's an oxymoron. You can't have 8,700 best portfolios. You tell me the risk-return objective, I will make 1 portfolio statistically tested enough, back-tested, front-tested, using a simulator like Monte Carlo and give him 1 portfolio. So to answer your pointed question, the yields in the order of magnitude are identical if not -- and 1,300 products is a reasonable sample set out of the 2,700. Statistically 30 products itself is called a significant sample and 1,300 is significantly more than that. Does it answer, [ Sudeep sir ]? Or I missed out answering something?

[Unknown Analyst]

Yes, sir. That was very helpful.

[Operator]

That was the last question of our question-and-answer session. I would now like to hand the conference over to the management for closing comments.

[Feroze Azeez, executive]

Thank you all for joining the call. We hope we have addressed all your queries. If any further information is required, please feel free to reach out to our CFO, Mr. Rajesh Bhutara; Investor Relations Head, Vishalji Sanghavi, or our Investor Relations advisor which is SGA. And we will try answering all your questions to our best ability and thank you to supports as shareholders, whoever are. Thank you. Have a wonderful week.

[Operator]

Thank you.

[Feroze Azeez, executive]

Thank you, Jugalji.

[Jugal Mantri, executive]

Thank you. Thanks, Feroze bhai, thanks Chethan, and thanks [indiscernible]. Bye.

[Operator]

Thank you. On behalf of Anand Rathi Wealth Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.