WF: 2009 has been a difficult year for the distribution fraternity even as market posted a sharp recovery and MF industry AuMs scaled a new high of Rs. 8 lakh crores. How have you positioned your business since the entry load ban in Aug 09?

V.Krishnan: Equities ( direct ) have taken the centre stage. But, this is mainly because of the rally in the market. Our focus on MF, particularly Equity Funds, continues. We firmly believe, equity as an asset class has become inevitable for a retail investor for a long term wealth creation & we can not think of a better route than MF for investing in equities.

WF: What proportion of your revenues in the last quarter (Oct-Dec 09) came from mutual funds? What was the peak contribution of mutual funds to your overall revenues? Which are the products that today contribute the highest towards your overall revenues?

V.Krishnan: Obviously, the share of MF in our revenues has come down to a third of what it was earlier. But, since October 09 , we are noticing reasonable improvement in volume and number of transactions. For us, Equities generates maximum revenue followed by Life Insurance, Fixed Income , Mutual Funds & Tax related services.

WF: What are the biggest challenges in getting investors to buy equity funds? What can be done to reverse the net outflows trend that equity funds have been witnessing in the past few months?

V.Krishnan: Investors are scared of equities after the crash during 2008 and on every opportunity they are getting out of it. Our biggest challenge in making them understand that equities are the best vehicle for wealth creation in the long run. Eneough awareness need to be created on this on a consistent basis, so that, investors are not unduly worried on every rise and fall of stock market.

WF:Why are NFOs not attracting large retail participation - are investors wary of markets or are distributors focussing on alternative products?

V.Krishnan: NFOs are still getting money if there is some speciality in the product. Only "me too" kind of NFOs are not getting any big response.

WF:There are reports of a number of small distributors and IFAs getting out of MF distribution due to the new pricing environment. Do you see this impacting retail penetration of MFs? Do you think the stock exchange platforms can now substitute small IFAs and ensure similar or even better reach?

V.Krishnan: Retail penetration will get affected if IFAs are going out of the system, particularly in smaller locations. As for as Stock Exchange platform is concerned, theoretically it brings lot of reach. But, how serious a Stock Broker is going to be, in promoting MF, is to be seen.

WF:Some observers believe that flows from Tier II and Tier III cities have more or less vanished and that business is getting concentrated back into larger cities. Is that a trend you see in your business? How adversely has market penetration initiatives been impacted over 2009 and what can be done to enhance penetration into smaller towns in 2010?

V.Krishnan: Lack of business volume is more of general in nature irrespective of whether it is a Metro City or a Tier II or III. As for as 2009, it was more of a year of consolidation and not many penetration initiatives were taken by the distribution houses. Going forward, the new Stock Exchange route has come mainly with an objective of penetration into smaller locations, which need to be tried and tested.

WF:Will you be using the stock exchange platforms for your MF business?

V.Krishnan: We will. We are a member of NSE thru' our wholly owned subsidiary "Integrated Securities Ltd.," and we will activate MFs very soon.

But, we notice one major issue which requires immediate attention in the MFSS system. We (Stock Broker ) have to take the entire risk on behalf of the investor as we do not have any control on the Units as they are alloted to the investor's DP account directly. This issue need to be sorted out.

WF: Do you see the move to ban distributor NOCs as a positive or a negative development?

V.Krishnan: We feel, it is better to address this issue at a macro level. All of us are aware, only a miniscule percentage of household savings comes to MF. So, the best way to grow is to expand the customer base by bringing new investors into the system and thereby increase the volume. This will kill issues like poaching of investors, NOCs etc., etc., automatically.

WF: What do you see as the key trends in 2010 for the distribution business?

V.Krishnan: Focus should be on the customer rather than on any of the products. Distributor need to understand the overall requirement of the customer and take care of him in total. A mere distribution of products may not work well in the coming days.

WF:What are your plans for 2010 in terms of product portfolio, new services, client segments etc?

V.Krishnan: As usual, we will continue to concentrate retail investors. Major focus will be on adding new investors. Our product basket is almost complete with Fixed Income, MF, DP, Equities, Life Insurance, PAN & IT related services.We will continue to act as a "Total Financial Solutions Provider" for retail investors without compromising on our motto of "Absolute Integrity to Investors".

WF: In terms of equity AuM, at present, roughly 40% is contributed by banks, 20% by national distributors and 40% by IFAs and regional distributors. In 3 years time, how do you see this pie changing and what can drive this change?

V.Krishnan: We can expect business getting consolidated to established & serious players with a good network and track record. With the arrival of no entry load, new pricing norms & Stock Exchange platform, some of the smaller players may lose interest. Going forward every segment will have more or less an equal market share.

WF: What would be your key messages to your AMC partners as you begin a new year?

V.Krishnan: Very happy and prosperous new year for all of us !!!!!