There have been a number of new AMCs which were launched over the last few years - many of whom have struggled to get to reasonable scale.  How do you plan to tackle this challenge and build scale?

There are really three key ingredients to a successful fund house - brand, distribution and performance. Axis Bank brings us the first two while the team we have across investments, sales and operations will aim to ensure that over a period of time, we deliver performance that will delight our investors.

Secondly we see a distinct shift in preference towards Indian bank sponsored mutual funds. Given that Axis Bank is a household name across the country, Axis Mutual Fund is well positioned across retail as well as institutional businesses to tap into the opportunity.

What is the minimum scale, in your view, that is required today for an AMC to turn profitable?

In a fiercely competitive and consolidated market, given that the top 10 players control about 75% of AuM, we believe that to be a serious player one must be a part of the top 10 club. It is our ambition to be among the top 10 players in the next 5 years.

AMC deals now seem to be happening at fairly reasonable valuations.  Do you have plans to grow inorganically or purely organically?

Yes, we are open to inorganic growth. However, the fit — especially from an investment philosophy perspective, should be right. If any target player complements our capabilities, we will certainly look at buying, but at the right price.

What are your product roll-out plans over the next 12 months?

We plan to have a basket of seven to eight equity schemes over the next 12 to 18 months.

Currently, we have lined up six products — both in equity and debt categories and we plan to complete our product suite by launching schemes in hybrid and arbitrage categories as well.

Two of our debt schemes - Axis Liquid Fund and Axis Treasury Advantage Fund were launched in October 2009. We launched our first equity scheme on November 11, 2009.  The other products that have been lined up for launch are the Axis Dynamic Bond Fund, Axis Short-Term Fund and Axis Tax Saver Fund.

Right now, we are in the process of building capabilities to start new product categories that cater to the needs of specific customers. Our endeavor is to launch products that are easily understandable to investors.

Can you take us through your sales & distribution network?  How many branches do you have now, what will it be in 12 months?  How many distributors have you empanelled now, what will it be in 12 months?  What is the strength of your sales team, what will it be in 12 months?

We are building a retail franchise that caters to the entire spectrum of the distribution fraternity. We are already operating out of 51 branches and expect that number to cross 80 locations by March 2010.

Today, we have an automatic empanelment process that has helped us reach out to 12,000 IFAs. The team strength is 123 which is expected to touch 175 by March end.

During our ongoing Axis Equity Fund NFO we have reached out to over 450 cities for collections, by far amongst the largest by any AMC till date. In fact we have had collections coming in from over 300 cities.

Over the next 3 years, what percentage of your assets do you expect to mobilize from Axis Bank and how much will third party distribution contribute?

Our stated objective is to maintain a ratio of 70:30 between third-party distributors and Axis Bank. Over time we expect to receive 30% of our AUM from Axis Bank.

Industry statistics suggest that the top 10 AMCs seem to be gaining market share at the expense of the others.  Do you expect this polarization to continue?  What is driving this trend?  How do you plan to compete in this environment?

As I said earlier the big players are getting bigger and we do believe that this will continue. This is a scale business and from a fund flow perspective, size attracts fresh inflows. This trend is being driven by a distinct shift in preference towards Indian names and within that too, bank sponsored names.

Over the next 3 years, which distribution segment do you think is likely to grow the fastest and why?

One of the best parts of the Indian distribution business is that each segment contributes roughly 33% thereby making it one of the most well diversified businesses in the world. We think that each segment will continue to grow and expand the markets. Given the fact that penetration levels continue to be low, the opportunity is tremendous across all channels.

What can your distributors expect from Axis AMC? Are there any initiatives in terms of distributor training that you intend to execute?

There are three main components to the AMC business - brand, distribution and performance. Axis Bank per se gets us the brand and distribution. Over time our performance and process will show results as well. With all three aspects in place we plan to build our business as a top 7 player. From a distributor’s perspective, they can expect a player that brings in a solid brand with effective reach delivering value for their investors. Very few players in the business manage to get all three aspects right and we think Axis AMC has the capability to deliver on these 3 parameters. 

Personally speaking, you represent a growing tribe of CIOs who have transitioned to the CEO role.  What are the key challenges you face in making this transition? There was a long held notion in the industry that the CEO must have a strong sales orientation.  Would it be fair to say that in the emerging environment, fund performance would play a bigger role in success than distribution strength?

At the end of the day we are in the investment management business and hence delivering quality long term performance whilst managing risk is a key imperative. If this is missing, no amount of brand and distribution will help. As CEO (instead of CIO), I have to take a more holistic view of the business. This means striking a healthy balance between risk management, investment management and sales growth. I am not suggesting that these are opposite poles. All three need to be achieved and in the right way for us to build a successful and long term business.

Having said that a strong sales force that can add value to channel partners is important to grow the business. One also cannot underestimate the criticality of the operations and customer service teams that manage operational risk and at the same time enhance customer satisfaction. For example our operations team has simplified transacting for investors by creating the “Easycall” facility. This feature helps the investor by simplifying his investment process as well as the channel partner by reducing the time to process his transaction.

Meet the team that’s going to take Axis Mutual Fund into the big league :