Ladies and gentlemen, good day, and welcome to the Anand Rathi Wealth Limited Q1 FY 2024 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. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Feroze Azeez, Deputy CEO. Thank you, and over to you, sir.
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 and Research, Vishal Sanghavi, the Head of Investor Relations, and SGA, which is our investor relations advisors. During the Q1 FY 2024, our total revenue grew by about 34% year-on-year to an amount of INR 178 crores. The PAT also grew by about 34% to about INR 53 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 INR 43,413 crores.
This growth was, of course, driven by the cumulative part of every constituent of our team. Our flagship private wealth business, AUM, grew by about 31% year-on-year, which stood at INR 42,246 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 three 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 re- retention capabilities.
Our client retention is less than 1%, in terms of AUM loss for Q1 FY 2024, 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 Chetan to take us, on the digital wealth and the OFA vertical, a brief update
Our digital wealth vertical is a fintech extension of the company's reposition for the mass affluent segment. It registered a growth in AUM of 43% year-on-year to INR 1,167 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 INR 1 lakh crore plus. We firmly believe that the wealth management sector holds immense potential. This motivates us to remain committed to our vision of providing high-quality solutions that fulfill our clients' objectives.
Thank you very much. Now I hand it over to our Group CFO, Jugalji, to take you all through the financial performance of the company.
Thanks, Chetan and Ferozebhai. 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 INR 178 crores, as against INR 134 crores during the same period last year, registering a growth of 34% YOY. Our profit before tax for the quarter stood at INR 71 crores, as against INR 53 crore during the same period last year, registering a growth of 34% YOY. Profit before tax margin stood at 39.7% in Q1 FY 2024. PAT for the quarter stood at a healthy INR 53 crores, as against INR 40 crores during the same period last year, registering a growth of 34% YOY.
Annualized return on equity for Q1 FY 2024, which is ROE, stood healthy at 43.2%. Earnings per share for Q1 FY 2024 stood at INR 12.8 per share. Coming to the private wealth vertical. For Q1 FY 2024, our flagship private wealth vertical revenue grew by 32% YOY, which stood at INR 171 crores, while trail revenue grew by 17% year-on-year, which stood at INR 50 crores. Profit before tax for Q1 FY 2024 stood at INR 70 crores, registering a growth of 33% year-on-year, while PBT margin stood at 40.9%. PAT for Q1 FY 2024 stood at INR 52 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'll be an immense opportunity for professional wealth solution provider 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.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use answers while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question is from the line of Lalit Deo from Equirus Securities. Please go ahead.
Yeah. Hi, sir. Good afternoon. Congratulations on a good set of numbers. On the revenue side, we have seen a sharp increase in the MLD revenues. Could you just give us the primary issuance or the secondary issuance which we have done during the quarter, as well as, how much is from this third party as well?
Jugalji, can you give?
Yeah, yeah.
Thanks, Lalit. Thanks, Lalit. See, the gross issuance of the MLD for the Q1 was INR 1,396 crore. Out of that, about INR 143 crore was from third party. What is important to note here is that the net issuance. See that as of now, we are at a situation every year because of the past issuances in MLD, our outstanding, our MLD portfolio, that is stand at a healthy INR 12,000 crore. As you know that the average tenure of the MLD, which is about 4 years, what we will see is that, say, INR 3,000-4,000 crore will be getting redeemed along with the accrual on those MLDs. As we know that about 70%-80% of the same gets redeployed.
Now this will become a regular phenomenon, that there will be gross issuances, which will be around INR 1,000 to, in between INR 1,000-INR 1,500 crore rupees every quarter. If you look at the net issuance, that was still INR 358 crore rupees only, which is compared with INR 239 crore rupees in Q1 FY 2023. As far as concerned with the MLD breakup, as I said, that 10% of the gross issuance is going to the external agencies. If I compare with the net issuances, that will be like INR 143 crore rupees goes to the external, and the remaining of 358- 143, so that is about INR 215 crore rupees will be to our system concern.
Got it. Like this INR 1,400 crores is primary issuance or like it includes both primary as well as secondary?
It's the primary issuance.
Like what will be the secondary issuance during the quarter?
See, secondary issuance is not issuance. Secondary is basically there is a trading volume. Okay?
Yes.
That was like about INR 254 crore, which was the secondary transaction, which compared with INR 359 crore in Q1 FY 2023.
Sure, sir. Just one thing I'll ask one more question. Last quarter, we did about, like, INR 1,000 crore of, like, primary issuance, and then there was this budget announcement. Now we have seen a sharp jump during this quarter, like about 40% increase. Is it like a one-time impact or like, is it a structural change in the investors, where, like, people are coming, investors are coming from the listed MLD space to the unlisted MLD space?
Lalit, if you recall, I have, like, while answering the question, I said that we have got an AUM of about INR 12,000 crore in structured product. Okay. Say about INR 3,000 crore of the face value, along with the approval component, which varies from 40%-60%, that gets redeemed, that is going to be redeemed every year. Whatever redemption which is taking place, even without doing any extra, putting any extra efforts, about 80% of the money that flows back into the structured product. Okay. This sort of issuance, which has happened in the Q1, that is more or less guaranteed.
In fact, it is marginally it will go up, reason being that the AUM, which is growing because of the market impact and the approval, in fact, the redemption as well as the renovation of these maturities, in terms of amount, it will marginally go up.
In terms of proportion to the overall AUM, it will slightly up.
Sure, sir. Actually, one more question was like, during the quarter, we have like, the revenue increase, great. Similar to that, like, employee expenses, which are mostly linked to revenues, have also increased. Is like any reason why we have seen a sharp increase in our other operating expenses also?
Let me take that. See, other operating expenses are like there are two things. One thing is that the in Q1 FY 2023, there was definitely the COVID impact. All the traveling, conveyances, those were restricted. But now gradually in FY 2022, FY 2023, you might have seen that there is a increase in traveling, business promotion, networking, as well as on the conveyance expenses. These are directly in commensurate with the increased activity and physical movement on the ground, that is why you are seeing that the non-operating expenses have moved up.
Sure, sir. Thank you, sir. I will come back and let you for the next question.
Okay. Okay. Thanks, Lalit.
Thank you. Our next question is from the line of Pallavi Deshpande from Sameeksha Capital. Please go ahead.
Sir, on the regulatory side, the changes that, you know, on the total expense side that, we are expected to see, what would be the steps we would be taking here? You know, what would be the kind of impact you expect on the commission side?
Pallavi, I think in the last earnings call also we discussed this. 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. The smaller schemes giving you more commission, like the 11 scheme model portfolio we had at an average assets of INR 13,000-15,000 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 INR 7,000 crores of average AUM, then I'll get 30% more.
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'd be very happy to know that Anand Rathi Wealth, let alone, let alone selling any product, which is an NFO for the last 11 years, we've not even approved one of them. That's point 1. As far as our understanding goes, the regulatory circular will go through huge amendments in the next form and fashion, if you heard the regulator say that. The impact of 3, 4% of revenue, which I was speaking about the last time around, doesn't seem to exist anymore.
Right, sir. What would be the average... you mentioned about the average AUM size being INR 13-INR 15 K, we've introduced some more new schemes, I understand. What would be the average AUM size now?
Yeah, it should be about INR 11 thousand, INR 12 thousand.
Okay.
We are always going to be running the business as per client's objectives. If a INR 500 crore scheme, if at all, to magnify the example, helps me meet my client objective, it will be a part. If a INR 50,000 crore scheme helps me meet my client objective, it will be, right? Revenues are never going to take precedence over our actions, irrespective of whatever pleasures we may ever have.
Right. Sir, my second question would be on the net inflows, if we could have the breakup between the what would have come from the existing clients and what would have been from the new clients?
We look at net flows, not, well, you may have this number. 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 a million-dollar plus, we don't force the client to start with half a million dollars. We say: If you have INR 50 lakhs, start up, start with us, merit will help us penetrate into your wallet.
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 it's obvious that you will give me the money, which I deserve. so that's why it's T-30 ratio. The clients who come in every single month are my potential clients, which is INR 1 million plus kind of balance sheets other than the homes they live in. So that's where comes the snowballing effect of this business after it reaches an inflection point. These 8,700 families are filtered on the basis of their segment. Some short-term investor or an investor who doesn't fit the bill in terms of size, we don't even onboard them.
Right, sir. Thank you so much. I'll come back and discuss.
Thank you, Pallavi, for your question.
Thank you. A reminder to all participants, you may press star and one to ask a question. Our next question is from the line of Bhavin Pandey from Athena Investments. Please go ahead.
Hey, congratulations on wonderful set of numbers. I hope I'm audible.
Yes, Bhavin bhai, you are.
Sure. Yeah, sure. I just wanted to understand how are we sort of, you know, trying to push this business.
... sales perspective, and how many private bankers would we be, you know, looking to add every year over a period of next five years?
Very, very valid and a good question, sir. Firstly, what we look at is client RM additions is one of the verticals which people can extrapolate on an Excel sheet reasonably easily by hiring and putting in some capital behind that strategy. We expand our RM fraternity on the confidence of the preparedness of the leadership bandwidth. Okay? All my 100 crore plus RMs are qualified leader potential. 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. That means 140 people mentoring 3- 4, which is a span of control, implies close to about 500 relationship managers in the former, in the constraints of leadership.
Leadership is no more a constraint any further. Second is, how many people have a cultural fit into the organization of client centricity? That's why we internally currently train 296 apprentices, who are called account managers, who get promoted. These are the two important fuels to my RM force. Having said which, where could we head? We are gonna always expand in a calibrated fashion because we have to make sure that the brand promise of uncomplicated and client centricity is actually delivered. 308, I wouldn't be surprised it gets to those 500 RM kind of numbers over the next two years or three years, to be more realistic.
Okay. you know, like, the given, phenomenal number of families we have, so our emphasis would be more on increasing wallet share of existing customers, as you mentioned, that, you know, some client starts with, say, around INR 5 million and wants to go up to, INR 15 million, would be a balanced approach between adding more families and increasing the wallet share.
All the 4 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. Having said which, I don't think we are at some phenomenal numbers in terms of client family. We may be happy at 8,700, but we still, any report will tell you there are 8 lakh to 10 lakh HNI families, so we're just 1%. I think we are scratching the surface, so we don't pat ourselves too much on the back in terms of covered the HNI fraternity currently, but I'm sure there's an exponential increase potential possible.
If I have 308 private relationship managers who are at 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. To answer your pointed question, we are nowhere close to having quenched our thirst in terms of new client acquisition. 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. As we build credibility with these 8,700, and credibility doesn't come without time.
Time is one very, very important build, 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 three years. That means, they would have seen us for three years. That's a very important mutually exclusive variable, and our aspiration is to get to 200 net client families added per month on month, in the near future. Coming to the net, mobilization from the wallet share penetration, I think, that any time a client finishes three years, and 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 INR 5 crores, but you have INR 5 crores. You are at INR 2. I have done my bit. Can you please be generous to do your bit?" Those conversations are very positive conversations because you've already shown him three years of risk-adjusted return, which is best in class.
Okay. Okay.
Does that answer, sir?
Yeah, definitely. Perfect. Thank you so much. All the best for quarters and year ahead. I'll just get back into the queue.
Thank you.
Thank you. Before we take the next question, a reminder to all participants that you may press star and one to ask a question. Our next question is from the line of Nisar Parik from Native Capital. Please go ahead.
Hi, thank you for taking the question. A couple of questions. The first one is on the structured products for MLD. You know, that is like 29% of AUMs. Out of that, what percentage is to our sister entity? You know, so to that extent, does that pose like, does that pose any risk or any of that sort, just in terms of it being to sister entity?
Yes, Mr. Parikh, right, sir?
Yes.
Mr. Parik, the optical. A reasonable portion of that is by a sister entity. Whatever be the ratios, I'm sure Jugal Ji will be very equipped to answer a second decimal in terms of proportions. The risk which you see optically itself is the risk mitigant. Okay? 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. We were the first few to eliminate two structured product issuers, which were a part of our recommendation in 2016, 2017, 2018, much before they ran into trouble.
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, much before several portfolios were able to sell their bonds as well. 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. 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 arm's length pricing, which I'm sure some of you may be wondering if that's true.
Got it. I understand. If I could follow up, right? When customers, you know, 30% of the AUM, is that so significant? Are, like, are customers asking you to maybe diversify more? Is this more of a pull thing, or is this a push thing, when you know you allocate 30% to MLD?
I can tell you I've met a few thousand clients because all of us are relationship managers first. I manage about eight, nine clients myself. My biggest trouble is, he says, "Why not 40%?" Because there is, there is understanding of what we do, so we do only things which we really, really, really understand, second decimal. 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 state, and that's how it has been for the past 4 years. When we started issuance in December 2012, now we have credibility in terms of having matured.
1,300 ISIN 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 three sigma event also keeps them in the positive on a 3-to-5-year basis. Okay, after having built that kind of credibility with 1,500 still to mature and 1,300 having matured, because every Tuesday we have a trade of the same product thousands of time. We have two, three 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. It's very surprising to other friends and 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.
Got it. Sorry, last question on this, but the sister entity that you have is basically a NBFC, right? It which is into lending, right, if I'm understanding it correctly?
Correct. It is a mix of... I'm sure, if you download the balance sheet, it'll give you a second decimal allocation. It's lending, not integrated lending, lot of money is in debt instruments to make sure that the money is safe.
The second part of the question was on digital, right? How are we using digital and is digital, you know, at all, do you think in the wealth management space, a direct digital or a digital app can be a significant channel? How are we using digital to, you know, kind of tap into some of the young professional salaried people who might reach or are reaching the million-dollar milestone?
See, if you look at India, of course, digital wealth is household savings. We have just done a study. It's INR 67,000,000 crore. 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 INR 670 lakh household saving. 10 years back, it was only INR 270 lakh. 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 some 10%, 7%. Having said which, of course, if the savings rates are so good, the young professionals will have more money than they can actually spend.
Digital, 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 INR 10 lakhs, it's INR 10,000. I'm sure that's a 15-day salary of my client, a client's driver. I can't do ethical advice without a digital reach. We are at the stage of experimenting, and today there is proof of concept. There is no cash burn. A value unlocking will take its time. We see this as a huge potential, and a peripheral, important business.
It also helps us keep our ears and eyes on the ground or the paradigm shift, which the technology brings about every couple of years. Having said which, it's a chicken and egg story. The max fluent or the affluent does not get great distribution till he's HNI, and if you get great distribution, it becomes an HNI. It's a chicken and egg story we are trying to solve. At this stage, we don't hatch our eggs before that. 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. Got it. Thank you so much. Thank you, and all the best.
Thank you. Ladies and gentlemen, a reminder to all participants, you may press star 1 to ask a question. I repeat, ladies and gentlemen, you may press star 1 to ask a question. Our next question is from the line of Harsh Kotari from Kotari Investments. Please go ahead.
Hi. Actually, my question is on, you know, the MF equity and debt revenue and the employee cost, slide number 29. When we see those numbers, you know, as a company, it's a third-largest distributor of mutual funds. But if I look at the cost of distributing mutual funds and the employee cost, you know, the employee cost exceeds the revenue from MF distribution. Do you intend to make ultimately MF at a standalone level as a business profitable, including if there was some regulatory risk pertaining to these structured products?
Hello, Mr. Harsh, right?
Yes.
If I got your name right?
Yes.
See, It's apples and oranges if you compare the cost and the revenue.
Correct.
Why? I'll tell you, because the costs have a provision of the bonus or the remuneration of the structured products sale as well. If you say that the RM does not do structured product sale, what would his bonuses be? My provision will come down. If I was just in the business of mutual fund distribution, would I still be making profit? The answer is a big yes. You are seeing the cost as a proportion of mutual fund revenues, which is on a Sunday, I make INR 58, 60 lakhs, which is my trail revenue. Even when there's Independence Day, I'm going to get my INR 60 lakhs, INR 58, 60 lakhs, which is my trail. I probably, I'm just giving you more about the numbers.
My cost has the cost as a proportion of a bonus or the share of the RM for the structured product business as well. Did I articulate it well enough?
Yes. Yes. Do you see yourself moving to the RIA model going forward?
We are very clear, from day one, 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. If I have to go RIA, I have to say to the client that only mutual funds I will give advice or distribution on. RIA, I'm going to earn from that client, that supplier, the manufacturer, right? We are not in the business of RIA. We have stuck to distribution. There have been 5 changes in my competitor's business models over the last 10 years. We have not had any change.
Why don't we have this change? 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 2016. 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 years, 3 years. 3 years later, the regulator will tell you this. 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?
We already knew, into June 2016, 2022, we released a paper saying that this MLD taxation of listed is no motivation for somebody to buy. Don't buy it will change in the next few budgets. We gave that in writing because it was very clear. 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. That's our strategy, regulatory strategy.
Regulatory will always give us a push on the positive side, because back or not, I also want to be as client-centric or little more client-centric than the regulator wants me to be.
The, I mean, the product that these MLDs remain tax-free or they, I mean, not tax-free, but they are still taxed at 10%, the new insurances, or they are now taxed at income, slab rating?
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 security.
Okay.
Debt securities need to be capital protected.
Mm-hmm, mm-hmm.
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 one out of 2,700 products was a capital protected, listed, rated instrument.
Okay.
Right? If you are not capital protected, we could have used the word MLD, but now we can't use the word MLD. We are not in the distribution of MLD whatsoever. Now that there is a definition to MLD, which is two conditions, it needs to be a debt security, it needs to have market linkage. Debt securities definition in four 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. I'm not into MLD distribution. With this new definition, I have never been. Nuvama, which is another entity we procure structure products from, has a- rated paper, which is MLD, but we have not procured one from our other company, supplier as well.
Thank you so much for the clarity on this. Thank you so much.
Thank you, sir.
Thank you. A reminder to all participants, you may press star and one to ask a question. Our next question is from the line of Pallavi Deshpande from Sameeksha Capital. Please go ahead.
Right, sir. Thank you for taking my question. Just going back to your, you know, what we were discussing on the regulator rethinking this expense ratio. Just, I think, you mentioned that, you know, with the changes, changed one would see a big... I mean, you don't see any impact at all when the changes come through with the new regulations. Just wanted your thoughts, you know, on, you know, how do you see them, you know, toning down by 50% or, you know, how, how do you see it playing out?
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've 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 savings account and current account balances, don't hold me to this statement, but, yeah, are greater than the equity mutual fund AUM of INR 21 lakh crore.
If INR 670 lakh crore is the household saving and equity mutual fund is INR 21 lakh crore, which is close to 4% or little over that or little somewhere thereabout, or 3%-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%. 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 INR 0.50, INR 0.70 by bypassing the distributor. 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 NFO. I didn't do small schemes for the reason of commission. If you look at those seven 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. 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. If, 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, you have to judge for yourself 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, "Aap toh mar gaye." Right? 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?
Yes, sir. That was very helpful. Just nice, refreshing. Thank you so much.
Thank you, madam.
Thank you. Our next question is from the line of Sudeep Duggal, who is an investor. Please go ahead.
Hi, thanks for giving me the opportunity. 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? A connected question to it is that, If I understand correctly, MLDs have a higher yield as compared to mutual funds. In the past, we've had this strategy that, going forward, the proportion of mutual funds will be increasing. Some idea as to what are the yields on these two products and how are the yields going up? Thank you.
Thank you, Sudeep, sir. I'll answer these, and if I miss out any of your points, please highlight again because you have asked very interesting questions. There is something called perception, there's something called reality, let me put some numbers on the table. Yield as a word has to always be per annum, right? 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 3 paisa more per annum for the structured product issued. 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. If I go a full trail model, my RM's energy drops, which drops my revenue.
To answer your pointed question, Sudeep, sir, the yields in the order of magnitude, yields are computed on market value per annum. If I do the same method of computation, if as an RM, Feroze allocated INR 100 of his client in mutual fund, INR 100 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. 1,300 products matured have had in the order of magnitude equal yield to mutual fund. That's point one. Point two 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 module 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, char hai, sir. 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 one portfolio statistically tested, enough back tested, front tested, using a simulator like Monte Carlo, and give him one portfolio. To answer your point of 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?
Yes, sir. Thank you so much. That was very helpful. Thank you.
Thank you. 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.
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, Vishal Sanghavi, or our investor relation advisor, which is SGA. We will try answering all your questions to our best ability. Thank you to supporters and shareholders, whoever are. Thank you. Have a wonderful week.
Thank you.
Thank you, Jugal Ji.
Thank you. Thanks, Firozbhai. Thanks, Chetan.
Thank you.
Thanks, Zico. Bye.
Thank you. On behalf of RBL Wealth Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.