The combined profits of the asset management industry in India grew 20% in fiscal 2012 to 682.4 crore. Although that looks like a good number, it’s still way off the peak of 975 crore reached in fiscal 2010. The top five fund houses in terms of assets under management accounted for 123% of the combined profit. In other words, a lot of firms—nearly half the 40-odd fund houses—are showing losses. Of course, one could argue that the quality of profits weren’t that good in fiscal 2010 since they were mainly led by new fund offers. Regulations have now changed. But the bottom line is that scale matters in this industry and in times such as these, brand power, performance and reach are the only ways to profitability

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