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UTI Asset Management Company Ltd
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Ladies and gentlemen, good day, and welcome to the UTI Asset Management Company Limited Q1 FY '21 Earnings Conference Call. From the management, we have with us Mr. team Imtaiyazur Rahman, CEO and Managing Director; Mr. Surojit Saha, Chief Financial Officer; Mr. Vinay Lakhotia, Head Operations; and Mr. Sandeep Samsi, Head, Investor Relations and Corporate Communications. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded. Before we begin, I would like to mention that some of the statements made in today's discussion may be forward-looking in nature and may involve risks and uncertainties. Please note the disclaimer mentioning these risks and uncertainties are on the disclaimer slide of the investor presentation that has been shared earlier. I now hand the conference over to Mr. Imtaiyazur Rahman for opening remarks. Over to you, sir.
Thank you very much, and good afternoon, everyone. Thank you for joining us today to discuss our operational and financial performance for the first quarter of financial year '23-‘24. I'm confident, you must have gone through our press release and investor presentation available on our website as well as the risk side of the all stock exchanges. The quarter witnessed [ optimism ] across the global markets with the forecast improving for the current year 2023, the Indian economy, which has simply became the fifth largest economy in the world, surpassing United Kingdom has been receiving recognition globally for the growth and resilience. Trends in Indian capital market, were direct beneficiary of the growth story of our economy. The benchmark indices were driven by the active participation of the domestic as well as foreign institution investors and the matching enthusiasm of the retail investors. This was evident in the increase in number of demat accounts in the country, hitting a 13-month high in June 2023 at INR 12.05 crores of which INR 23.6 lakh crores were added in the month of June itself. The Indian mutual our industry has grown over twice its size in the last 5 years from INR 22.86 lakh crore in June 2018 to INR 44.39 lakh crore in June 2023. The AUM to GDP ratio for India, though comparatively less as compared to the developed economies has reached 16% to the GDP and is well on the path of growing further. It's clearly indicates that Indian mutual fund industry is on the growth trajectory. Investor awareness program, including the "mutual fund sahi hai" campaign, ease of access to technology used for investing economic growth, rising household saving and broader geographical reach of the mutual fund product and the positive driver for the development of the sector in the coming decade. Trend, the total asset under management of UTI group, registered a growth of about 16.8% over the corresponding quarter of the previous year and it stood at INR 16.13 lakh crores as on 30 June, 2023. The domestic mutual fund business witnessed a growth of 10.6% on a year-on-year basis. In the quarter the average AUM as on 30 June, 2023 was recorded at INR 2.48 lakh crores. We have reorganized our sales team and structured further and deepening our reach in the beyond 30 cities to leverage on the opportunities present in these markets. In line with this, we are -- we have plans to open 29 new offices and 6 resident offices during the fiscal year ‘23-‘24. This quarter, UTI has launched 5 funds, including the UTI S&P BSE Housing Index fund, taking into account the fundamental need for Indian to live in a better home. We have also launched the UTI Nifty 50 Index Fund, to provide exposure to the Nifty 50 companies with equal weight. We have also launched UTI Silver ETF, UTI FOF and UTI Nifty 500 value index fund during this quarter. We will continue to launch a new thematic fund as and when the right opportunity arises. I would like to inform you that Mr. Srivatsa Desikamani, with his knowledge and expertise in asset management area has joined the Board of UTI AMC as a non-executive nominee director in the June 2023. And yesterday, at the AGM his appointment was confirmed. Friends, we are fully committed to grow all our line of business, including alternatives, pensions and offshore funds. In this direction, we are foraying into European market with -- European market to Paris office as well as in the United States. I would like to report you that I have with me Mr. Surojit Saha, the CFO of UTI AMC; Mr. Vinay Lakhotia, Head of Operations; and CFO [indiscernible], along with Mr. Sandeep Samsi. Now I hand over to Mr. Sandeep Santi, Head of Investor Relations and Marketing. We will update you with UTI mutual fund performance for the quarter. Over to you, Sandeep. Thank you.
Thank you, sir. I will first take you through UTI Mutual Fund's performance during the first quarter and for the full year ended FY '24. I am pleased to inform you that the total assets under management for UTI Group registered a growth of about 16.8% over the corresponding quarter of previous year and stood at INR 16.13 lakh crores as on 30 June 2023. For UTI mutual fund, the quarterly average AUM as of 30 June 2023, stood at INR 2.48 lakh crores, up by 10.6% year-on-year. Our equity quarterly average AUM for the quarter ended June ‘23 stood at INR 72,811 crores, rising by approximately 9.2% as compared to the quarter ended June 2023 -- June 2022, sorry. With passive investment gaining traction, we have witnessed a growth of 35.6% in the quarterly average AUM for the index and ETF, taking it to INR 88,431 crores for the first quarter. UTI was able to capture market share of 8.1% of the gross sales of the industry during the first quarter. UTI Mutual Fund recorded a net sales of INR 10,152 crores for quarter one of FY '24. ETF and index funds net flows stood at INR 3,496 crores. UTI added 1.3 lakh folios, taking up the number of life folios to INR 1.21 crores as on 30 June 2023 from INR 1.20 crores as on 30 June 2022. Our SIP payments witnessed a growth of 40.1% over the corresponding quarter of last year, reaching to INR 34,920 crores as of June 2023 from INR 17,788 crores as of June 2022. During the quarter, our number of SIP accounts rose by 20,000, taking the number of live SIP folios to 25.16 lakh as of June 2023. The SIP inflow for the quarter stood at INR 1,652 crores with SIP gross inflows for UTI within witnessed a year-on-year growth of 6.6% with the average ticket size being INR 3,142 for the month of June 2023. Coming to the contribution from B-30 cities, 22% of our monthly average AUM for June 2023 came from B-30 cities, while the industry average stood at 17% in terms of the B-30 monthly average AUM, 108 out of our 166 PFCs are in the B-30 locations. Now I come to UTI AMC's financials. During the first quarter, the company posted a consolidated net profit of INR 234 crores, recording a growth of 172% quarter-on-quarter and 154% year-on-year. The consolidated revenue for the first quarter stood at INR 468 crores, up by 56% quarter-on-quarter and 60% year-on-year. For UTI AMC stand-alone, the PAT of UTI AMC stand-alone for quarter 1 of FY '24 is INR 165 crores, reflecting a growth of 68% quarter-on-quarter and a 67% growth on a year-on-year basis. For UTI Retirement Solutions Limited, we are happy to inform you that our 100% owned subsidiary UTI retirement solution has recorded a growth of approximately 27% year-on-year in its AUM reaching INR 2.58 lakh crores in quarter 1 of FY '24 and manages 26.57% of the industry's AUM. The PAT of UTI RSL is at INR 12.5 crores, an increase of 17% compared to the corresponding quarter last year. On UTI International Limited, UTI International Limited, which represents our international business interest has an AUM of INR 21,772 crores as of 30 June 2023. Our international clients are across more than 35 countries, and they are primarily institutions, pensions, insurance, banks and asset managers. One of our flagship funds, the India Dynamic Equity Fund, IDEC, which is domiciled in Ireland has an AUM of USD 973 million. UTI International, [indiscernible], Responsible India Fund, which is an ESG compliant India fund has an AUM of USD 82 million. UTI India innovation fund, which was launched last year has an AUM of USD 22.4 million. On UTI Alternatives Private Limited, UTI Alternatives Private Limited has recently been renamed from the former name of UTI Capital Private Limited and has a total AUM of INR 1,784 crores. It has a well-defined ESG policy and strategy. It currently manages the following active debt fund; UTI Structured Debt Opportunities Fund, which is known as UTI H-DOC I, which was launched in 2017 August and closed in May 2019 and has an AUM of INR 132 crores. Currently, the fund is in exit mode and has returned 1.1x of the capital investment. UTI H-DOC II, which was launched in September 2020 has an AUM of INR 507 crores and the fund is currently in fundraising as well as investing state. UTI Multi Opportunities Fund 1, which launched in March 2022 as an AUM of INR 763 crores, and the fund is currently in investment stage. UTI H-DOC III, which was done in September ‘22 has an AUM of INR 383 crores, and the fund is currently in fundraising as well as investing stage. We have also launched the UTI Real Estate Opportunities Fund I, which is currently in fundraising stage, with pre-commitment of INR 110 crores. I would now request Managing Director and CEO for his concluding remarks. Thank you.
Thank you, Sandeep, for sharing operation and financial highlights for the first quarter of the financial ‘23-‘24. With this, I would like to open the floor for Q&A. Over to you. Thank you.
Thank you. [Operator Instructions] The first question is from the line of Madhukar Ladha from Nuvama Wealth Management.
First, on equity assets, our growth continues to be subpar. So if I look at year-over-year quarterly average AUM growth, that's just about 1.7% -- so why is this struggling? I think some of the competition is doing much better and they're losing market share. So some color on that will be helpful. Second, are other expenses have shot up in this quarter on a year-over-year basis I know that there is some expectation for increase in expenses in this year. Could you give us some sense of what the full year number could be and whether there is any [indiscernible] in our guidance or there? And third, sir, your other income has also shot up this quarter. So I wanted to get a sense of what the drivers are over there. Yes. These are my 3 questions. Thank you.
Sandeep?
Yes. Thank you, Madhukar, for your question. As we have been mentioning in our previous quarterly calls also, we have been facing some headwinds in the performance of our flagship equity fund. It is important to mention here that historically, this fund has performed very well and has seen very good traction from our distribution partners. As the growth strategy followed by this fund has not done well over the last 1, 1.5 years, we have faced challenges on the sales front on this one. However, we are optimistic that once the fund sees improvement in the traction with the revival of performance, we should be able to do better. So the challenge has been on the growth strategy that the fund was following. And we hope that going forward, there will be improvement.
Madhukar, we are taking this particular issue very seriously, we are continuously reviewing our both sales strategy, our investment strategy. And I'm quite confident this particular fund, which is having some challenges is being managed by a very reputed and experienced fund manager Ajay Tyagi and therefore, I'm fully confident that it will turn out. However, our other -- some other strategies in the equity schemes are doing well. And I'm sure this will add a value to our investors. Now I will request Surojit to take the other 2 questions of yours.
Yes. Madhukar, in respect of other expenses, if you see on a quarter-on-quarter, it has come down from quarter-on-quarter from INR 72 crores, it has come down to INR 61 crores. But on a year-on-year basis, it has gone up from INR 49 crores to INR 61 crores. The reason of the increase is mainly because of the IT initiatives, which is around INR 4.5 crores for which there will be -- benefit will be across the financial year. And also in respect of the CSR and some legal and strategic expenses. But what you should consider is that you are asking about the run rate, it should be around INR 60 crores to INR 61 crores per quarter. And the other question was in respect of other income. I don't know other income has been flagged, but where you're seeing other income there is a jump because if you go year-on-year, it has come down from 13%, if you see the investor presentation, 13% was because of the foreign exchange gains. And this year, it's very flat.
So I -- I mean the treasury income, right? There some mark-to-market.
Yes. mark-to-market, it has gone up substantially.
Yes. That's what I mean -- by other income I mean that.
No, it is up substantially because you know one is because of the international business, we have a seed capital because of which last quarter also, the M2M was in a negative. So that itself has gone up from INR 269 crores to INR 301 crores on an NAV basis. So overall, our M2M gain is INR 174 crores, and which I think we have given it in the investor presentation also the details.
Thank you. We have the next question from the line of Prayesh Jain from Motilal Oswal Financial Services.
Just a couple of questions. Firstly, on the equity net inflows, if you look, we have a negative number this quarter. So are the redemptions kind of picking up? And is there -- apart from the fund performance issue that you cited about the equity market share, is there a pickup in terms of redemptions because of the higher market levels that we are seeing. That is question number one. Secondly, even with regards to the SIP monthly run rate, that is in flattish trajectory rather than for the industry, it has been trending at a significantly higher level, there has been month-on-month growth. But we have not seen that kind of replicated for us. So what are the issues that you are facing there? And how do we plan to kind of resurrect our market share there?
As I mentioned earlier, that one of the flagship funds where the maximum SIPs were also coming was impacted due to the fund's performance issues. Also, over a period of time, people who have invested, say, 5 years, 10 years back, looking at the market value, they will be redeeming their amount because they will consider whatever goals they might have set, there will be some natural redemption. And generally, if you see in the month of April, the SIP numbers come down for the industry also and for us because people end their SIPs in March and new SIPs get started in the month of April, May. So these are the 2 factors. As I mentioned, fund performance impacting our inflows. Secondly, natural redemptions, which will happen because of the market levels currently, which they are, and SIPs which get renewed. And if you see, again, in the month of May, June, our SIP numbers have come back to the earlier one because April, there was a dip, but May, June has been better.
And your question was because of the market is more on side. Do we expect more redemptions? And answer is no. We are not expecting the accelerated redemptions because of the market.
And just one more question on the alternate side. What are our thoughts about the growing the alternate assets in terms of future? And what kind of profitability or revenue contribution we can expect from alternate business?
Yes. UTI alternative Private Limited. This is a new name formally which was named as UTI Capital Private Limited, has certain plans like UTI alternatives aims to be a multi-asset manager of alternate assets. Currently, UTI Alternatives are managing high performing credit funds and a multi-asset fund -- and it has already launched a real estate credit fund this month. It has filed with SEBI two new funds and investment-grade performing credit and distressed credit fund. Once the strategies are launched, UTI alternatives will be present across the entire spectrum of risk alternatives. And UTI alternative is also in the process of evaluating and finalizing the equity strategies. So this financial year, we hope to break even. And maybe from next year, it will be a profitable subsidiary for us.
And we are building this particular business. We have built a very strong team, and we'll continue to invest in this particular business. We are also planning to have an office in the gift city, and this is the business where we have fully capitalized the company. We have allocated the good resources for this particular company, financial resources as well. And we are -- we will continue to invest in this line of business. That will give us a significant growth in the years to come.
The next question is from the line of Lalit Deo from Equirus Securities.
Sir, just 2 questions. So firstly, like as you have alluded that due to fund performance [indiscernible] are getting impacted. So are we seeing any kind of pressure from the distributor side also where our points are going into like the bottom left of the recommended list. Are you seeing anything as of now? And if you say, what are the possible steps which we are taking?
We're are not witnessing any pressure from the distributors. Our products are on the platforms of all distributors in the bank. And as you know, we are now live with our new NFO, UTI balance Advantage Fund, and all distributors, all MFB's initial distributors, including banks are distributing our products. So we have no challenges as far as our distributor is concerned. And this is a temporary fund issue headwind. We are quite confident that you -- some of the schemes are doing pretty well. And therefore, we are quite confident that this particular phase will also pass. And -- but there's no pressure from the distributor side at all.
And so like a second question was on the employee [indiscernible] side this quarter, it has remained broadly flat. So going ahead, do we expect similar kind of a number on a run-rate basis? Or like do we expect some improvement over there?
No. I feel the expenses run rate is, if you see the Q4 '23 and Q1 '24, it's almost flat at 106, and we feel this will be the run rate for this financial year.
Thank you. The next question is from the line of Aditya from Securities Investment Management Company.
If you could help us understand reason for sequential improvement in yields in the domestic [indiscernible] business, considering the addition of new flows, which are lower -- with a lower margins and the equity mix also remaining flat sequentially. So what is the reason for the improvement in yields on a Q-o-Q basis?
So it's primarily because of the AUM has grown up because of the mark-to-market appreciation. But if you see the equity yield actually flattish at around 35 basis points only. There has been just 1 basis point improvement in the equity yield because of the mark-to-market component. Otherwise, it is flattish on a quarter-on-quarter basis on the sequential Q1.
So according to my calculation, the yield have seen an increase of around 1 to 1.5 basis points. But the equity mix has remained same around 45% to 45.5%. So on the new mix, which would have come in, in this quarter would have [ lower ] margin than the old book. So there should have been some moderation in Q-o-Q basis?
So I'm saying on the overall book year yield that actually only improved marginally by 1 basis point from 72% to 73% on the equity side.
Okay. And sir, there has been a sharp open yield in the UTI International sequentially, so have you taken any price cuts over there to arrest the drop in flows, which we have seen in the earlier quarters?
Yes. Yes, basically, it's a drop in flow. But if you see overall, 1 or 2 funds have matured like this Phoenix Fund and all, but there has been a good flow in UTI Dynamic Equity Fund for the last 3 months, like from 31.03.23, the AUM was around INR 7,000 crores. It has increased to INR 7,900 crores and there was an inflow of INR 976 crores. So overall, if you see, our revenue is in the range of INR 31 crores to INR 32 crores. So Overall, our revenue has not come down. But yes, we expect UTI Dynamic Equity Fund to have -- to claw back to their original around INR 10,000 crore fund. And there's a lot of traction in the market. So we hope our revenues will definitely increase in UTI International.
Sir, that to rephrase my question. So if we look at the AUM of UTI International, in March ‘23 was INR 21,700 crores. And the same is INR 21,720 crores. The AUM is flat on a Q-o-Q basis. But if I look at the revenue, it has seen a drop from 31 crores to 21 crores. It means that there is a drop in yield. Also, I just wanted to understand if you have taken any price cuts over there? Because we are seeing a loss of flows in the subsidiary. So I just wanted to understand, have you taken any price cuts to arrest this drop in flows?
No, there is no price cut, but UTI India's Sovereign bond, UTI India Strategic Opportunities Fund, UTI India Strategic Opportunities Fund II. These are all funds have been launched, where the fees received is much less compared to the equity fund. So that is why you are seeing a drop in the yield. But maybe over the years with the UTI Dynamic Equity Fund and other equity fund, we are seeing a lot of traction if the money comes, the yield will be much better.
Got it. the employee count has seen an increase of around 110 sequential. So firstly, why there is such an increase in the employee count was expected to moderate due to retirement of employees? And will this increase in employees due to higher employee costs going forward?
No. Employee cost has not implied number first of all. What is the number?
So it has increased from 1377 last quarter to 1491 in this quarter.
We have appointed -- we have recruited 108 management trainees that we do every year process because there is a lot of attritions and the retirements coming up. And therefore, that is the reason we appointed 108 new management trainees. As I mentioned to you in my initial remarks, we have a plan to office 29 new UFP's branch offices and as well as 6 reverent offices. In order to be ready, we need to have the people to serve the -- our branch offices. And therefore, we have appointed, I repeat 108 new management trainees to be future ready. But that is a low cost and it will not affect at all our increase in any implied cost. Because over the years, we will see the serious retirements this year, and that will be able to compensate this cost -- or offset this cost with the entire -- benefit.
Okay. And what was the ESOP cost for this quarter? And what would be ESOP cost for the remaining quarters?
Yes, for ‘23, ‘24 the total ESOP cost is around INR 16 crores and ‘22, ‘23 it was around INR 20.77 crores.
This quarter, INR 4 crores. INR 4 crores is ESOP cost. This quarter, it will continue, unless we decide to issue the fresh ESOP.
And sir, if you can break up our employee costs in terms of variable or performance if we go to an intent and the fixed pay.
We have taken the INR 45 crores yearly variable pay. Rest is all the fixed pay. So for accordingly to be a proportion to the extent of INR 11.25 crores for this particular quarter. Balance is -- so for the full year, we have considered INR 45 crores. Depending upon the performance, we will decide at the year-end. But this is our guidance, the INR 45 crores is a variable pay and rest is the fixed pay.
And what was the variable pay for last year?
Last year was similar INR 45 crores.
55 crores. Okay. So we are seeing a reduction in the variable cost.
INR 45 crores.
INR 45 crores is on a stand-alone basis, what Sir is telling like. And if you take other subsidiaries, it was around INR 58 crores altogether as a --.
On consol basis of INR 58 crores. This year, with a similar report on the consol basis and as well as on a stand-alone basis.
Okay. So the variable pay is going to be similar for last year and this year.
That's correct.
The next question is from the line of Dipanjan Ghosh from Citi.
A few questions from my side. First, you mentioned that you expect the other expense run rate to remain flattish at around INR 60 crores to INR 61 crores. Now on the other side, you also mentioned that you're going to open up some new branches, expand B-30 -- you plan to also grow the UTI International business, and you have some planned NFOs, one of which is already going on. So on this backdrop, what gives you confidence to retain the other expense rendered at current levels? Because I would assume that NFO spend and all are not factored in 1Q, other expense number. My second question is, I think, reputation of what was asked earlier in the call on the yield part. You mentioned that the equity yields have increased by 1 bps from to 73 from 72. Another question is whenever there's a mark-to-market jump, normally because of the slab-wise pricing, one should see some amount of compression in yields and not expansion. So is there any mix change within screens or something in the churn where maybe some high payout portfolio exited? I mean what really is going on there? Just wanted to get some color on that. Lastly, to data keeping question, if you can give the gross equity sales number for the quarter?
So first question, I will take regarding the other expenses. FY '22, '23, if you see the overall expenses was around INR 238 crores, INR 240 crores, which has a run rate of around INR 60 crores last year also. And if you remember in the last quarter, we had some strategic annual needs for which there was expenses because of which if you see the Q4 other expenses on a very higher side. And we have factored the other -- this 29 office opening costs and all we have factored and we expect it to be in the range of INR 60 crores to INR 61 crores run-rate.
Vinay on yield?
On yield. So on the yield part, because of the mark-to-market component, the older AUM share to the overall fee number has actually increased -- while they have been the net sales number has been negative for the equity fund for this quarter. Because of that, there is not much compression on the equity yield because of the fresh inflow. So because of the mark-to-market component, the older AUM has contributed a slightly higher fees, and that's why it marginally improved by around 1 basis point.
Sure. Just one follow-up on this. Can you kind of quantify the difference between your fresh equity yields versus blended equity yields on the book or give some color on what is the differential today.
As of now, the total AUM is yield on the overall equity and hybrid put together is around 76, 77 basis points. And for the fresh inflows, is actually the ratios are defined depending on our arrangement with the distributor. And as I stated earlier, it varies from 50% to 80% of distributable expense ratio. So can't define a state number on that. It depends on our channel mix. If the money coming from an individual financial adviser or is coming from a distributor or from a private or a foreign bank. So -- but the ratio between the manufacturer and the distributor is roughly in the range of around 50% to 80%.
Sure. And if you can just quantify the gross equity sales for the quarter?
Gross equity sales number just --Equity and hybrid put together is close to around INR 2,344 crores.
Sir, if you can just chip in one small question. You give your AUM mix breakup across channels on the equity and hybrid business. Can you give some color of that on a flow basis? And maybe just give a trajectory of how it has been shaping, let's say, for the past 3, 4 quarters on a flow basis rather than on a stock basis?
Yes. Dipanjan, we don't have that data. The data on the AM is shared, but we don't have that data. So maybe offline, we can take this question.
The next question is from the line of Aman Shah from Jeetay Investments.
Sir, few questions from my side. One is the yield has stabilized in Q1. What will be your outlook for this year on the yield part aggregate means.
So aggregate yield might see a slight compression of a basis point or 2, primarily because of 2 factors because of the growth in the ETF business, plus we have launched a new NFOs as well which is going on UTI balanced Advantage Fund. And obviously, the new fresh improved under the equity fund will have some impact on the overall equity in AUM yield. So on a -- for the next 2 or 3 quarters, there might be a compression or a basis point or 2 on the overall equity -- non the overall number.
And what would be the share of older AUM now?
Older AUM we have indicated earlier, close to around 20% of the AUM remainder on the older AUM. But again, very difficult to quantify in terms of that because there is a substantial AUM where the trail commission is very low, 20%, I'm saying is where the trail commission is quite negligible. But since the earlier on the upfront commissions are being prevent, if I say anything AUM which is more than 5 years old, it's very difficult to quantify. But AUM the trail commission is low or very negligible, that is close to around 20%.
Okay. Sir, on the international side, we have seen there have been investment expenditures in this year, Q1 was INR 31 crores total expenditure compared to INR 17 crores last quarter of last year. So -- and like top line being at INR 29 crores or that is operational loans. How should we see the P&L of UTI International look like?
The international expenses are in the range of around INR 30 crores. The figure which you said INR 70 crores, INR 17 crores, that was because there was a foreign exchange gain was there. And as for the international book, it was accounted over the that there was a INR 11 crore gain. That's why that figure was 17 crores. Otherwise, generally, the expenses of per quarter of UTI International is in the range of INR 29 crores to INR 30 crores.
But this company at the year-end will be profitable in this quarter itself, the Q2, it will be profitable. The initial cost was there because in the first, we signed a lot of new agreements -- and we paid a lot of legal fees. Therefore, it was a marginal loss was there. But on the year or next quarter, it will be profitable. Overall, profit will come, it is a profitable company.
Okay. How should we see like -- top line should be INR 32 crores to INR 34 crores quarterly.
Yes I'll just give you our UTI International has plans to grow the distribution for the innovation fund, which was concentrated portfolio of the mid-cap small cap disruptive business. Innovation Fund is about finding the companies, leveraging on technology across sectors. And we will distribute this in Europe and Asia to start with. And we also plan to expand the reach for the India G-sec ETF, which is listed in the Euronext Amsterdam by reaching out to the European institutional investors. And the decline in the China's weight in MSCI Emerging Market Index has opened up many South Asian markets increasing the Indian exposure through our flagship IDF fund. From a long-term perspective, many clients are wanting to go over with on India versus its weight in MSCI, given the current geopolicy, India is finding a lot of favor with the global [indiscernible] -only investors. Our IDF fund will capitalize on this given its long-term orientation. In the Middle East, distribution of our balanced fund remains robust among the NRI community. Balance fund as a concept is popular with the Indian expects, and we are promoting this fund in the Middle East. So we are expecting a lot of traction in the UTI International business. And as sir said, this is on a growing path, and we'll have a profitable quarter in the following period.
Sure. Sir, lastly is just the cash that we have on books now INR 3500 crores and a good part is also there in the stand-alone the major partition stand-alone balance sheet. What is our outlook on cash distributions?
We have -- we are seriously looking into the cash element, but we have no plan at this particular point of time to distribute the cash. We may need this for our future business development.
The next question is from the line of Mohit from BOB Capital.
My first question is that if a district associates, the bulk declined from 210 last quarter to 188. What would be the reason for that?
See, we look at the partners that we have, the district associates across the country, and we keep on renewing and working with them on a year-on-year basis. So some of the agreements which people retire over a period of time, and those have not been renewed. So that said, we are seeing a dip in the number of district associates on a year-on-year basis. Our endeavor is to appoint new district associates wherever we find that there is potential at a district level or at the block level so that they can further UTI's business interest.
And wherever we see appropriate, we are substituting with our branch people, which we call UTI financial center.
Now, coming again to the net flows, you said that performance was initially led to outflows. But if I look at last 2 quarters, there was a net outflow, like this quarter, it was INR 15 billion and earlier quarter [indiscernible]. So are we confident that in financial year '24, we would be able to turn this outflow in the net inflows like we have seen that for years as well. We are getting substantial equity inflows, are we confident that we'll be having a good performance this year?
We are working with all channel partners. We are very aggressively marketing and distributing our products. We are quite confident that our net sales will be -- we will put all our best efforts to ensure that our net sales is positive in equity.
We have the next question from the line of Bhuvnesh Garg from Investec Capital.
Sir, you mentioned earlier that your market share in SIP decline because of most of your SIPs were in flagship funds. So in that regard, I just want to understand that any specific plan you have to diversify your AUM across the funds or to increase the base of your SIPs so that is not dependent on one fund or something.
Yes. So as Mr. Rahman also mentioned that we have a number of other funds, which are doing quite well. And we are positioning these funds to our distribution partners as well as through banks and other distributors to take the fund flows forward. So we are quite confident, as Mr. Rahman also mentioned just in the previous question that this should help us to revive our SIP sales in these funds. But the current fund itself, flexi fund, whichever is the right opportunity for the investors to invest now to capture the market and the benefit which will come, once the scheme starts right performing better.
And sir, on inflows, any particular target we have in our mind for the year or any particular target we have for our alternate business, what kind of inflows we are targeting for the year?
Yes. If you see the AUM is already in a rising trend, and we have lines in plans, which I have already told in my last speech, like it has already launched a Real Estate Credit Fund this month and it has filed to say 2 new funds and investment grade performing credit and distressed credit fund. And so UTI Alternatives is now present almost entire spectrum of credit alternatives, and they are also in the process of evaluating and finalizing the equity strategies. So the business is doing very well, and we have built up the team also. So we expect maybe in the range of 2,500 to 3,000 moving in the future period.
We have the next question from the line of Rahil Shah from Crown Capital.
Just on the overall consolidated AUM growth and margins, if you could share some outlook for the year, that would great?
Yes. Overall, I think if you see our investment group AUM grown from INR 16.13 lakh crore and vis-a-vis year-on-year, it was INR 13.81 lakh crores. And on 31.03.23 it was INR 15.55 lakh crores. So is a rising trend of around 4%. So there is a continuous effort in all the sectors of our business, whether it's UTI Retirement, whether it's UTI Alternative Fund other it is UTI International, PMS. So we are driving our business. Our AUM has been continuously improving in all the spectrum of our business.
And on the margin side, sir?
Yes. Overall, margins will continuously increase because it also depends on the mix, which we'll be getting, whether it's an equity business and alternative also, if I remember, they are planning to -- they're in the process of evaluating the equity strategies, which will give a better return. And UTI International, the yields have come down, I have said, because we have got some of the debt funds. But with the equity funds now performing and there's a lot of traction, we expect the overall yield of the group will be increasing.
The next question is from the line of Abhijeet Sakhare from Kotak Securities.
Sir, we -- as per the annual report, we have about 350-odd people who are still part of the union or part of the old compensation structure. So if you could just remind us again in terms of what is your sense of the retirement pipeline? And what does it mean for our overall staff expense growth over the next 2 to 3 years?
The -- over the next 3, 4 years, most of the people will be retiring. We have not done any fresh recruitment in this particular grade for last 20 years. And the expense will be on the range which we have shared with you. We are not anticipating any growth or any significant growth in the implied expenses. Rather, we will get the benefit of the retirement over the period of time.
Okay. Any numerical guidance that you may want to share?
I've already shared that we are having a run rate of around INR 106 crores is –
No, benefit requirement -- if you want a specific number, we are not ready now. You can take off-line with Sandeep.
Got it, sir. But most of these savings should come to the bottom line, right?
Of course.
Like I mean that parallelly, we've been investing in other parts of the business. But now that you've already been doing that for a few quarters. So incrementally over the next 2, 3 years, all the savings should flow to the bottom line.
[indiscernible] because all our 3 companies are fully capitalized. UTI Retirement Solution fully capitalized, International fully capitalized and UTI Alternative also reasonably capitalized. So therefore, we don't expect the capitalization in those companies. And therefore, all the benefits will go towards the P&L.
Will now take the last question from the line of Prayesh Jain from Motilal Oswal Financial Services.
Just a question on the industry side and also on the EPFO book. So one is that out of the total ETF AUM of the industry, how much is coming from EPFO -- and how much of that share is for UTI? Second is on your EPFO, which EPFO AUM that sits in your PMS. How much is that? And what are the kind of yields on both these pieces.
So of the total ETF business, which is part of the mutual fund business, EPFO contribution is close to around 75% to 80%. The EPFO, which is there in the PMS business is notably on the fixed income side, not on the equity side. Equity side comes under the mutual fund business. There the things is very, very negligible. On the equity side, the fee for EPFO close to around 3.5 to 4 basis points.
And the 75% to 80% what you have mentioned, that is true for the industry also, right, ETFs, share of EPFO in ETFs.
Let me share with you the 25% -- 25% yield come to UTI. 75% allocation used to go to SG&A.
For any further queries, ladies and gentlemen, you may contact Adfactors PR or the UTI Asset Management Investor Relations team. I would now like to hand the conference over to Mr. Imtaiyazur Rahman for closing comments. Over to you, sir.
Thank you very much for attending this call, and thank you very much for asking questions, and we have attempted our best to clarify it to you. In case you need any further information and the clarifications. You may contact my colleague or our partner Adfactor, and we're more than happy to share those information with you within the -- as per the guidance of the LODR, whatever the possible for us, we will be in a portion to share with you. And thank you very much once again for joining this call.
Thank you. On behalf of UTI Asset Management, that concludes this conference. Thank you for joining us. You may now disconnect your lines.