Nippon Life India Asset Management Ltd (NSE: NAM-INDIA) Q3 2025 Earnings Call dated Jan. 23, 2025
Corporate Participants:
Sundeep Sikka — Executive Director and Chief Executive Officer
Parag Joglekar — Chief Financial Officer
Saugata Chatterjee — Chief Business Officer
Analysts:
Jignesh Shial — Analyst
Swarnabh Mukherjee — Analyst
Prayesh Jain — Analyst
Madhukar Ladha — Analyst
Mohit Mangal — Analyst
Manas Agrawal — Analyst
Abhijeet Sakhare — Analyst
Shreya Shivani — Analyst
Yashodhan Nerurkar — Analyst
Ankit Bihani — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to Nippon Life Asset Management Q3 FY ’25 Earnings Conference Call, hosted by InCred Equities. [Operator Instructions] And there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions]
I now hand the conference over to Mr. Jignesh Shial from InCred Equities. Thank you, and over to you, sir.
Jignesh Shial — Analyst
Yeah. Thanks, Mano, and good evening, everyone. On behalf of InCred Equities, I welcome all to Nippon Life India Asset Management Q3 FY ’24 earnings conference call. We have along with us Mr. Sundeep Sikka, Executive Director and CEO; and the senior management team of Nippon Life India Asset Management. We are thankful to the management for allowing us this opportunity.
I would now like to hand it over to Mr. Sundeep Sikka, Executive Director and CEO of Nippon Life India Asset Management for his opening remarks. Over to you, sir.
Sundeep Sikka — Executive Director and Chief Executive Officer
Thanks, Jignesh. Good evening, and welcome to our Q3 FY ’25 earnings conference call. We have with us our Chief Financial Officer, Parag Joglekar; Chief Business Officer, Saugata Chatterjee; Deputy Chief Financial Officer, Amol Bilagi; Chief Digital Officer, Arpanarghya Saha; Head ETF, Arun Sundaresan; Head AIF, Ashish Chugani; Deputy Head AIF, Aashwin Dugal; and Shin Matsui-San, nominee of Nippon Life Japan.
I would first like to share key highlights of our performance in the quarter. And post that, I will hand it over to Parag to speak in greater detail on the recent industry trends as well as our performance, post which we will move to question-and-answers.
Coming to the key highlights, I would like to start by mentioning that as of Q3 FY ’25, NAM India was the fastest-growing AMCs amongst the top AMCs on YTD basis as well as one year two year period. This has led to a continued increase in our overall AUM and equity AUM market-share. Further, our equity sales market-share and market-share remains well-above the equity AUM market-share. We achieved a high single-digit market share in terms of equity net sales, while our SIP market-share moved to double-digits in this quarter. Further, NAM India has achieved its highest-ever quarterly operating profit at INR3.76 billion.
I would also like to share Nippon Life India Asset Management Limited has set-up a branch in City and has taken a fund management entity license to manage the funds. The first GIP fund, Nippon Large Cap fund GIP was launched in Jan 2025. The Fund will invest in our existing large-cap mutual fund, which has long and proven track-record. More fund launches are in pipeline and will likely happen later during the calendar year. Lastly, to conclude my comments, I would like to state that we will endeavor to continue our journey of profitable growth going-forward, including scaling up of non-mutual fund businesses.
Now, I would like to hand over the call to Parag for further details on the industry and our performance.
Parag Joglekar — Chief Financial Officer
Thank you, Sundeep, and good evening to everybody. Let me start-off with market remarks on the markets. So equity markets in Q3 FY ’25 witnessed a drop from prior quarter levels. The declined by 8.4% quarter-on-quarter while the mid-cap and small-cap indices declined by 5.2% and 3.6% respectively. RBI held the repo rate steady at 6.5%, while the 10-year GC yield increased marginally by one basis quarter-on-quarter to 6.76%. Coming to data on the mutual fund industry quarterly average AUM grew by 3.6% quarter-on-quarter and 39% year-on-year in Q3 FY ’25 to INR68.6 trillion. The share of equity in overall AUM remained relatively flat quarter-on-quarter, ending at 60.8% for the Q3 FY ’25.
Now moving to the industry flows. The equity category, excluding Index Fund and arbitrage fund, witnessed a gross inflow of INR2.53 trillion and net inflow of INR1.39 trillion. Gross inflow were lower quarter-on-quarter. However, net inflows were higher for a six successive quarter. Categories with the highest inflows where sectoral thematic funds, multi-cap and clinical cap funds.
Moving on to SIP investments via the SIP route further increased with the SIP contribution for the quarter being INR771 billion, up 49% Y-o-Y and 8% Q-on-Q. Monthly SIB flows in December 2024 stood at INR265 billion, which was another all-time high. The fixed-income category witnessed a net inflow of INR438 billion, which was lower on quarter-on-quarter basis. The ETF category had a net inflow of INR143 billion. At the end-of-the quarter, unit investors in the mutual fund industry increased to INR52.6 million, that is an increase of 25% Y-o-Y.
Now moving to our business performance. We closed the quarter with total assets under management of INR6.56 trillion. This includes mutual funds, managed accounts and offshore funds. Our mutual fund quarterly average AUM grew 3.8% quarter-on-quarter and 51% year-on-year to reach INR5.7 trillion. We had the highest increase in quarterly average AUM market-share on year-on-year basis among all agencies.
I would now like to share a few key highlights for the quarter. Starting with the share — with the market-share, our market-share increased 1 basis quarter-on-quarter and 63 basis year-on-year to 8.31%. This is the seventh successive quarter of the market-share increase that we have witnessed. Our equity market-share also continues to improve. It increased by three basis quarter-on-quarter and 31 basis year-on-year to 6.99%. This is our highest equity market-share post December 2020.
The share of equity AUM in our overall AUM was flat quarter-on-quarter at 51.1% for the quarter three FY ’25. We achieved the highest single-digit market-share in sales in the equity plus hybrid segment in Q3 FY ’25. However, excluding NFO, our market-share would be in double-digits. We continue to have the largest base of mutual fund industry with 20 million unique investors, we are humbled to have over one in three mutual fund investors invest with us.
I would also like to touch upon some of the important aspects of our systematic. I’m happy to share that there has been a continued uptick in our systematic lows over the last 14 quarters, which has led to an increase in-market share. SIP market-share increased by 12 basis to 10% over September 2024 to December 2024. This also represents an increase of 396 basis over March 2023 when our market-share — SIG market-share was 6%. Our monthly systematic book rose by 7% quarter-on-quarter and 60% year-on-year to INR33.6 billion for December 2024. This resulted in an annualized systematic book of INR404 billion.
Moving on briefly to the ETF segment, we continue to be one of the largest ETF players with AUM of INR1.5 trillion and a market-share of 18.14%, which has increased by 278 basis year-on-year. Our share in the industry’s ETFs use is 55%. We also have a 55% share of ETF volumes on NAC and BSE. Our ETF average dairy volumes across key funds remain far higher than the rest of the industry. To further augment our passive offering, we launched two new products in the index fund category in the quarter, namely the Nippon India Reality Index One and Nippon India Auto Index One.
Moving on to the franchise, digital purchase transactions rose to INR4.08 million in Q3 FY ’25, up 141% year-on-year. Digital business contributed 73% of the total new purchase transactions in Q3 FY ’25. We are excited to announce groundbreaking feature on our mutual fund Android app, voice integration aimed at making investment easier, including empowering for all. This feature has been thoughtfully designed to enable seamless transactions through voice command the power of conversational commerce to redefine how the investor interacts. With this innovation, every investor, including differently abled individuals can experience independence and ease in managing their investments.
Now I would like to briefly update on our subsidiaries, namely AIF and Singapore subsidiaries. Starting off with AI, under Nikan India Air, we offer category 2 and Category 3 AI and have a total commitment of INR69.8 billion across various teams. Fundraising in current — fundraising is currently underway for our listed equity AI, performing credit AI and direct funds. Fund deployment across all the strategic strategy was robust in Q3 FY ’25 with five active investments in performing credits and full deployment in our tech VC acquire.
The team has been strengthened across the function, which positions us well for the future. On the offshore front, we continued to witness good equity inflows in the quarter from various incremental geographies. Offshore AUM grew 34% year-on-year to INR167 billion with our UC equity fund reaching an AUM of million. We continue to expand our footprint in the Japanese institutional space in contention with Asset Management Japan. A new offering in the India mid-cap and small-cap space, which has been our focus in the domestic market has now been made available to international investors, providing additional option for the investor to invest into Indian equity. We continue to work with Asset Management in Japan on this new offering and the market in its — in the Japanese retail space.
Now on to our financial performance. For Q3 FY ’25, revenue stood at INR5.88 billion, up 39% year-on-year and 3% quarter-on-quarter. Other income stood at INR10.15 billion, down 86% year-on-year and 87% quarter-on-quarter. Movement in other income was on account of mark-to-market impact on the investment book and was impacted by adverse capital market movement during the quarter. Operating expenses stood at INR2.12 billion, up 23% year-on-year and 3% quarter-on-quarter. Excluding impact of ESOP, operating expenses grew 70% year-on-year for Q3 and 19% year-on-year for Nine-Month FY ’25, driven mainly by investment in talent, non-MS business and technology infrastructure.
Operating profit stood at INR3.76 billion, up 50% year-on-year and 3% quarter-on-quarter. Profit-after-tax to — tax stood at INR2.95 billion, up 4% year-on-year and down 18% quarter-on-quarter. For Nine-Month FY ’25, operating profit grew by 55% Y-o-Y. Profit-after-tax grew by 29% Y-o-Y. We would also like to mention that we have rationalized distribution costs for existing AUM in our large-cap and multi-cap in the quarter, which have a combined AUM of approximately INR760 million billion while also moving to a proportionate sharing model on these schemes going-forward. We will continue evaluating opportunity for similar rationalizers in other scheme as well.
With this, I would like to conclude my remarks and open the floor for questions.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] We have a first question from the line of Swarnabh Mukherjee from B&K Securities. Please go ahead.
Swarnabh Mukherjee
Yeah, hi, sir. Thank you for the opportunity and congrats on a great set of numbers. Two questions from my side. Firstly, wanted to understand in this first few days of this quarter, how are you seeing in terms of flows panning out in your organization? Is there any kind of pressure coming because of the market performance? So just wanted to understand how the flows are panning out. Of course, in December, we have seen that the SIP flow numbers are very steady for you guys. It has in fact increased quarter-on-quarter, but wanted to get the color for January. So sir, that would be my first question.
Second is, if you could elaborate a little bit on the rationalization that you have done, the proportional sharing, how — how it has the impact on the yields for the equity segment? And should we — when exactly in the quarter you have done that and should we expect some favorable impact on the yields in the coming quarter as well?
And thirdly, sir, in terms of the other expenses, so just wanted to understand that given the market movement and maybe near-term the equity even growth might not be like what we have seen in the earlier quarters. How should we read the other expenses number going-forward? Should we be planning to curtail on our variable expenses? So these are my three questions. And also if you could also share the yields of the different asset classes, that would be very helpful.
Sundeep Sikka
Sure, so thank you for the question. I will take the other expenses question first and then I will hand it over to Saugata for the third question. So other expenses, there is slightly increased mainly due to the investment which we have done in technology and our AIF business. So that has slightly taken off the other expenses. But our endeavor is to keep the overall expenses ex of ESOP in the range of around 15% to 16% to 17% range only. That is our endeavor over going-forward and futuristic also. So that is — that is the one.
And on the yield question, the equity yield in the range of around 57 basis, the ET yield is in the range of around 25 basis. Liquid remained more or less 10 to 12 basis flattish. ETF is 15 basis and the blended yield is 37 basis.
Swarnabh Mukherjee
Yeah, understood, sir. Thanks.
Parag Joglekar
On the flow side, you know, at least the early trends in the month of January does not indicate any sort of distortion. We are more or less at par with the Q2 December numbers, but we’ll wait-and-see how it goes, how the behavior of the SIP and the investors come in as we go-ahead from here on because these trends are quite volatile. So — but initial trends do not indicate any major shift of flows from a December comparison.
Saugata Chatterjee
I think only thing I’d like to also add is that I think whenever we have seen in past markets are volatile, it is the H&I flows which had to slow-down. The retail and ships, I think they continue to add stability. So we do not expect unless an it is a very prolonged 12 to 18 months kind of a volatility continues from here, we do not expect the retail ship flows to slow-down.
Sundeep Sikka
And, Swarnabh, on the rationalization question you asked. So yeah, we have recently done in the end-of-the almost last end-of-the quarter. So the impact may not be seen in the current quarter. There will be some going-forward, but on the overall AUM, it will be very flattish on. And going-forward, it will help us to certain extent streamline. That is the only thing I can comment.
Swarnabh Mukherjee
So the proportional sharing method, would that imply that it will allow you to consistently pass-on the reduction in on the back-book going forwards?
Sundeep Sikka
Yes, your understanding is correct.
Swarnabh Mukherjee
So does that mean that should the equity yield dilution that we have seen so-far would be at a lower level than what we have seen like maybe remaining in this mid-50s kind of number even if the AUM growth is there, would that be a fair estimation?
Sundeep Sikka
I think we won’t like be able to give the number, but as we said directionally that’s the objective of the proportionate sharing.
Swarnabh Mukherjee
Right, sir. Understood. Very helpful. Thank you so much and all the best.
Operator
Thank you. We have our next question from the line of Prayesh Jain from Motilal Oswal. Please go ahead.
Prayesh Jain
Yeah, hi. Sir, just on this extending the point on the adjustments that you’ve done to the commissions. And so why did these two schemes and why not some of the other large schemes like a small-cap, probably it has one of the largest AUMs. So why not on that as well or do you think that probably going down the road, you would start doing it for the entire space. Is there any initial signs where the distributors are kind of are raised some concerns around it and whether the entire industry is kind of moving towards it.
Sundeep Sikka
I think I’ll — I think I will take the second part of your question. I will not be able to comment on the behalf of the industry because as mentioned many times in past, every company shareholders have a different objective. I think from our point of performatively profitable growth is the key. That is number-one. To your question, why ski may, why not B? I think it’s not that in the way you should see small-cap has already been done. A large-cap has been done, multi-gap has been available now both between all the three schemes put together, the average AUM is about 45% to 50%. So I think directionally, I think you will understand which we are putting.
Prayesh Jain
Got that. Sir, second question was on the ship closures and you know, the run-rate that people have been and media has been alluding to the number of closures going up significantly in the past couple of months. Whether that is a — that is reflective of the kind of growth you saw three years ago when we — there is like some growth of one kind of started their mutual fund operations and started scaling up. Is that kind of closure that’s happening or what is the kind of trajectory we could be seeing here now?
Saugata Chatterjee
So, I think the SIP trends, we have already the industry trends. Industry has seen a higher percentage of discontinuation in the month of December, which is around 70s in the mid 70s. But you know what happens, these are again cyclical stuff. We’ll have to keep seeing like Sundeep mentioned, we have seen in the past the SIP customer of the past and in the last two, three years are more resilient. Hopefully, these percentages may not be the norm as we go-ahead. In our case, we are percentage discontinuation is much lesser than the industry numbers. So which again shows that if we have been able to get a more retail customer, more fragmented customer, that’s our business model. We have better retention in our SIP book. We’ll have to wait-and-see how it goes, but trends don’t show that we will be — you know, our SIB behavior should be much better than the industry behavior.
Sundeep Sikka
But the past trends, whenever there’s been volatility tells us, higher the ticket size of, I mean, they are the ones they get, more retail you are, the better it is ticket.
Prayesh Jain
Okay. Okay. Got that. And the other bit and the last question is on the international business. Any thoughts that you can share as to what is your three-year kind of targets or any aspirations in terms of AUM size and revenue potential out of that business that can accrue to the company?
Sundeep Sikka
I think as we have mentioned in past also, I think while the focus for the company has been to raise more offshore money. But last four, five years, it was important for us to consolidate our position on the mutual fund side and that was where a lot of energies report. With the mutual fund business doing well now and I think market-share increasing, at this part-time, we are working closely with Nippon Life Japan, Asset Management, Japan and other associate companies of Nippo Life across the globe. It will be difficult for us to give a number. But I think all I can say is I think at this point of time we are more foster than ever before because a lot of funds are getting launched, a lot of dialogues are on. And I think you will as and when we have more numbers to the board, we’ll keep coming to you. But directionally we are — we see seem to be extra — you can expect more positive flows coming into an addition to the top-line and bottom-line.
Prayesh Jain
Great. Thank you so much. That’s help. All the best.
Operator
Thank you. We have our next question from the line of Madhukar Ladha from Nuvama Wealth Management. Please go ahead.
Madhukar Ladha
Hi, thank you for taking my question. So most of my questions have been answered. I just have one question on the other income. So we’ve seen a very sharp drop-in other income. But when I look at your exposure to equities, so that’s — that’s much lower. So for example, it’s at about INR500 crores of a total book of INR3,300 crores. So can you give a little bit of color on the breakup of this mark-to-market movement, how much of it is equity and debt if you have that split?
Parag Joglekar
So Madhukar, I will give you the broader picture. So basically, we have our alternate asset business also where we have to put money in the field capital of the schemes which we have launched, which is mainly in category 3, which are all equity schemes. And there they invest in listed equity. So there we have seen a lot of movement because there is the majority money goes in equity. And in the NAM side, whatever seed capital requirement which we have to do, which we have done, which has some impact or due to mark-to-market losses on the equity in the market.
Madhukar Ladha
Okay, but this is largely only driven by equity?
Parag Joglekar
Yeah.
Sundeep Sikka
And it is getting the in the consolidated.
Parag Joglekar
Yes.
Madhukar Ladha
Understood. Understood. Got it. All the best.
Operator
Thank you. We have our next question from the line of Mohit Mangal from Centrum Broking. Please go ahead.
Mohit Mangal
Yeah, am I audible?
Operator
Yes, sir.
Mohit Mangal
Yeah, thanks for the opportunity. First thing, I wanted to ask in terms of the total number of branches, while we are seeing your competition opening little lot more branches. I think we are not very keen on that side in terms of expansion. So just wanted to know your thoughts in terms of next 10 to 12 months are you intending to expand?
Sundeep Sikka
So from our perspective, I don’t think you’ll see us opening substantial number of branches. There could be — even if it is, it could be very — it will not be like the competition. I think we believe I think in increasing the efficiency of the existing branches, we already have a big — one of the largest networks. And we believe leveraging technology to get more efficiency from both — both physically as well as online and offline part of our business. So I think that we will not — we do not intend to open multiple branches.
Mohit Mangal
Okay. Got it. And in terms of the product pipeline, I mean, you told we have been launched couple of the things in the passive side. Now say going next two to 3/4, do you have any product pipeline.
Sundeep Sikka
So we’ll continue launching some as I mean, as mentioned in last few quarterly calls, we will continue launching few schemes in our passive business. Having said that, we have taken an internal view that we will not be launching any active meta where broadly the strategy of the company will be to keep launching funds, have them build-up a track-record and gradually that business come. We believe NFOs distract the — distract the company and impact the overall flows, which are much more stable. So we continue focusing on ongoing sales. The only new launches that you will see will be in assets. And even if there is a scope for us to launch a in Active, we will not like to go for a better NFO.
Mohit Mangal
All right. Got it. Just one clarification that we continue to maintain double-digit market-share in the equity and hybrid right scheme in the flow segment?
Sundeep Sikka
Yeah.
Mohit Mangal
All right. Thank you and wish you all the best. Thank you.
Sundeep Sikka
Thanks.
Operator
Thank you. We have our next question from the line of Manas Agrawal from Sanford C. Bernstein. Please go ahead.
Manas Agrawal
Hi, can you hear me?
Sundeep Sikka
Yeah.
Manas Agrawal
Yeah. I had two questions. One is, can you help us understand what is the management fee or expense ratio for the gift feeder fund. What I want to understand is pricing better at a consol level for the entity if money comes in from this route?
Parag Joglekar
So broadly because it’s going to be feeding into the existing fund and I don’t think so it’s going to be for the pricing, it’s more to do with the volumes I think it gives an access to international investors to invest. So a certain set of investors who could not invest or it was not easy for them to invest, they will have an access to large-cap fund, but the pricing of the underlying the same.
Manas Agrawal
Underlying the same. Okay, understood. The other thing I wanted to understand is this year industry flows from mainly households into active equity is trending 2x of previous year. So now a lot of this is lump-sum, I understand. But how should one think about growth in flows from here because markets have also cooled down? Wanted some understanding on that how you are thinking or how the industry would think about it.
Sundeep Sikka
So I wish I had the answer for that, cannot predict future how things will be. But I think from our point-of-view, what we — the way we see it is, I think over the last five years, you are seeing a very strong focus on. We strongly believe lung sum will always get impacted whenever the markets are volatile to the extent our SIMP market-share has gone up from 5% to 10% in last 24 months going and is moving up faster. So which gives us a cushion even if the markets were to slow-down or the incremental flows were to slow-down. So from our point-of-view, it will be no qualitative growth. We will not be worried too much about lump-sum, but for sure, we are a part of the industry. If markets turn volatile or negative, there definitely reflects the sentiment and there could be a slowdown compared to where the flows have been coming down.
Manas Agrawal
Understood. Thank you, sir.
Operator
Thank you. We have our next question from the line of Abhijeet Sakhare from Kotak Securities. Please go ahead.
Abhijeet Sakhare
Hi, good evening. The first question is again coming back to the commission cuts. Is it possible to give an indication of what would be the basis-point impact on the opening book for these two schemes starting 3Q — sorry, starting 4Q?
Sundeep Sikka
So Abhijeet, so it’s very difficult to specifically mention on that, but the idea is to overall the slowdown in the overall yield will — should have some reduction. That is that is the ideal because we keep on getting new flows and this AUM keep on growing. So it is difficult to venture on it. But overall basis will be very small because the overall impact will be not much on the overall equity yields. So, Abhijeet, what it shows is the direction of the company which we have had in which direction we are going.
Abhijeet Sakhare
Got it. So the way to look at it would be that because these schemes are gathering lot of flows, so instead of the usual decline in yields, you would probably target the yields to remain flat over the next few quarters.
Sundeep Sikka
So is basically to slow-down the pace of the fall in yield basically, that is the whole idea.
Abhijeet Sakhare
Got it, got it. And then again, sorry, sticking to the same point. So now you have kind of cut commissions on large-cap, small and multi-cap, right, like these would be the three largest schemes for you. And then your initial remarks, you mentioned that you would sort of look at continuing some of these measures going ahead. So would you look at these same set of schemes because I think any commission cuts elsewhere probably would not have similar impact rates.
Parag Joglekar
I think the team continues evaluating depending on the market conditions, situations and the environment. So I think it will be difficult to give us an answer. But directionally, we will keep rationalizing and be conscious of that the forthfall is arrested.
Abhijeet Sakhare
Got it. And second question was if it’s possible to give the number for ESOP costs in 3Q?
Parag Joglekar
Yes, so it’s already been mentioned also. So the ESOP cost for Q3 — sorry. ESOP for Q3 was around INR30 — sorry, not this INR11 crores. Nine months is INR31 odd crores.
Abhijeet Sakhare
Got it. Got it. And sir, your guidance on opex, you stripped out ESOP, right? So just wanted to ensure if there is anything to look-forward to over the next 12 months that could move the overall OpEx line beyond that 17% number you mentioned.
Sundeep Sikka
I don’t see any anything specific. But obviously, as I mentioned earlier that we will keep on investing in technology and other things and we will keep on investing in our alternate business and other subsidiaries. So that we will keep on doing. There is nothing specific we can see.
Abhijeet Sakhare
Got it. Thank you so much.
Operator
Thank you. We have our next question from the line of Madhukar Ladha from Nuvama Wealth Management. Please go ahead.
Madhukar Ladha
Hi, thank you for taking my question again. So just coming back to the distributor commission rationalization. So 50% of the AUM has been done. Now do you envisage that the other 50% will also be sort of — you will also be taking measures on that over the next few quarters? Could you give some outlook on that?. Yeah, that’s the only thing. Thanks.
Sundeep Sikka
So, I mean at this point of time, we may not have specifics to share, but whether the reduction will continue in the existing schemes or we will extend it to all other schemes. I think that’s as I mentioned earlier, we’ll continue evaluating. But I think the guidance that we are giving is the directional approaches that I think we’ll try to arrest the downfall that was there in the.
Madhukar Ladha
Understood. Thank you, sir.
Operator
Thank you. We have our next question from the line of Prayesh Jain from Motilal Oswal. Please go-ahead.
Prayesh Jain
Yeah, hi. Thank you for the opportunity again. MR. Sir, cash balance, we were at around INR4,300 odd crores at the end of June. Now we are at around INR30300 crores. It’s primarily dividend, right?
Parag Joglekar
So it’s sort of two factors. One is as you rightly mentioned dividend and another is that we have invested in our corporate office space. So that is — these are two reasons why there is a dropping the initial assets.
Prayesh Jain
Okay. And just another clarification there, when you say the AIF steel funds and all this is sitting in other assets, right? The breakup that you have given on the contribution of financial — contribution from financial assets, the steel funds of AIF that you would have invested, that would be sitting in other assets category?
Parag Joglekar
Yeah, you’re right. Yeah.
Prayesh Jain
So that is sitting there in other assets, right?
Parag Joglekar
Yeah, yeah.
Prayesh Jain
Okay, got that. Thank you.
Operator
Thank you. We have our next question from the line of Shreya Shivani from CLSA. Please go ahead.
Shreya Shivani
Yeah, thank you for the opportunity. I have — my question is on the offshore business. So just wanted to understand if you could help us understand this book usually is not volatile, like usually picks a pace and continues. I mean, maybe here and there I can see a decline. This time — sequentially, there’s been a decline. So just trying to understand what exactly plays out in terms of book declining at this pace. I get that you’ve given the mix between managed and advisory, but even there can be — there is a slight bit of decline. Just want to understand what happens in this business that it can change directions at this stage.
Parag Joglekar
So I think the movement in the asset that you’re looking at is mainly due to mark-to-market majorly, okay with assets.
Shreya Shivani
Okay. So this may not be reflective of lack of — like not reflective of redemptions, more to do with mark-to-market, right, or not. But there can be like higher redemptions also that can come through if my understanding is correct.
Saugata Chatterjee
Nobody can predict reduction, but I think at this point of time, we for the results that you declared not see any reduction.
Shreya Shivani
Okay, got it. Yeah, that’s useful. Thank you so much.
Operator
Thank you. [Operator Instructions] The next question is from the line of Yashodhan Nerurkar from Ionic Wealth. Please go ahead.
Yashodhan Nerurkar
Yeah, hi. Thank you so much for taking the — giving me the opportunity to ask a question. So the first question that I had was on the ETF business. So we have seen a sharp scale-up from say FY 2018 levels to 2024 as a percentage of the total AUM has gone up to somewhere around, 26% 27% and if I consider — I mean, amongst the passes, the retentions are higher than liquid funds as well. So what plans do you have in terms of scaling this part of the business as well? Because as I see it has got a tremendous potential, you already have significant head-start in terms of the volumes, in terms of the market-share. So how do you see this business, how lucrative is it for you? And like what do you see the growth for this business?
Sundeep Sikka
So I think, yeah. And I think broadly you’re right. I think we have at start, I think we were one of the early ones to invest into this business. And we clearly believe both active and passive will continue to grow. There are different set of investors that are who will continue investing in active and passive. Our objective is to have the client in the center that the — whatever decision investor wants to do, he wants to come to active or passive, we try to offer the best both to them. Coming to future, I think we remain very, very optimistic about the passive business and the pace at is growing, I think clearly, it’s already demonstrated in the numbers.
About our future plans, I think we clearly, as mentioned earlier, we may launch certainly new schemes. But one good thing about this business is, if you look at globally also this business, normally, I mean the top two, three players continue commanding higher market-share because of liquidity, lower tracking error and various other parameters. Unlike mutual funds, typically where an investor will invest in five to six different schemes because in ETFL passage, underline is same, I think we do not overdiversify. So I think we believe we’ll continue building on the head-start that we have and continue building our products soon. At this point of time, we have 48 passive products. We may launch a couple of more but this business is all about scale and I think from a more than basis-points we believe this kind of AUM that we have and the basis-point that we are earning it is now adding substantially to our bottom-line.
Yashodhan Nerurkar
All right, perfect. That’s helpful. And another question that I had was on the SIP discontinuations that you have faced. You already said that the participations are lower than the industry. But I mean, is there any efforts taken from your end to minimize the discontinuations or the cancellations because I’m sure there will be people who will be pausing at least for a month or two. So is there any initiatives from your end that you might be reaching out to the investors and trying to somehow make sure the cancellations don’t go through.
Sundeep Sikka
I think let me answer it in this in two-ways. I think first, I think definitely there is ongoing effort from the company. Yeah, by reaching out, I think we have basically created within the portfolio while we have roughly about INR3 crores for four years. I think we have — we’ve micro, I think we try to segment investors into different categories artificial intelligence and data is used and a different kind of handholding, centralized is done, the kind of creative that has done that is one part. But I’ll go step-back a little. I think it’s more — it’s not about what we do after I think we require the investor. I think quality of sourcing the basically that is a very important thing. If you’re trying to get investors which are more — I mean, like I mentioned earlier, more H&I, I think they typically are little more volatile and but when we sourcing we lower the ticket size, getting a smaller citizen towns, we have seen have these assets are more stable and they do not discontinue when the markets are volatile. So it’s a mix of both the things, both sourcing also as well as continuous efforts under digital team.
Yashodhan Nerurkar
Right, all right. And just last question that I had on was total AUM. So if I consider just the equity AUM, roughly half of it has contributed three to 14, the larger one. And you said that you don’t want to launch any newer schemes and your focus remains towards scaling the existing months. But I mean, most of the schemes that are there in equity, they are still below say INR10,000 crore, INR500 crores of a year. So what — I mean, how do you intend to scale those up and what are your plans about these?
Sundeep Sikka
So I think you’re right, couple of schemes up around 10,000. I think it’s — we do not want to aggressively push any particular scheme against that we have stayed away. I think it’s — we have seen in the industry, the themetic funds have been getting a lot of allocations. I think we do not want to push funds where we do not believe. I think we believe majority of the investors should be in the products, large-caps, small-cap, mid-cap, that is in themetic fund. So I think we are in no hurry to scale-up the schemes because some of the schemes have been — these are niche schemes with the funds and all. We’ll let the advisers and the investors take the call. But from a perspective, what mentioned, we will not launch schemes. And please read the schemes as NFOs. If we may continue adding schemes, but we do not want to launch LFOs, which we believe the assets are not sticky, right?
Yashodhan Nerurkar
So basically it’s going to be an approach where any investor — so you have all the options open to any investor that he chooses the right option for him, he can go towards it. So that’s the kind of thought process that you have towards that.
Sundeep Sikka
Yeah.
Yashodhan Nerurkar
Got it, got it. All right. Thank you. Thank you so much for that.
Operator
Thank you. We have our next question from the line of Ankit Bihani from Nomura. Please go ahead.
Ankit Bihani
Yeah, hi, congrats on a good set of numbers. So my question is on the performance of the two top equity schemes that you have, small and multicap, which has seen a slight softness in performance over the six to nine months. So are you seeing any slowdown of inflows into these schemes given that mutual fund distributed while pushing the scheme, I think recent performance maybe a six month or a one-year performance becomes a selling point for them.
Sundeep Sikka
Yeah. So Ankit, I’ll take this question. See what happens, it is a method like Sandeep was mentioning, what is our method of getting equity assets in our company has always been retailed, has always been explaining to the distributor that you should look at three year, five-year, if not longer performance. The — even if the six months — nine months performance has slightly dipped, it the three year, five years makes sense. So I think it’s continuous education, communication, telling them about the processes what we have built-in this company. I think that’s what probably is helping us to keep retain the flows and moving the direction of the distraction from near-term performance to long-term performance.
Ankit Bihani
And so what you mean to say is the flows are resilient and lease. You have not seen any slowdown.
Sundeep Sikka
Yeah, I think broadly, I think your understanding is current. I think one more thing I’d like to mention, this is not only about our schemes. I think what we have seen is the distributors and the investors have matured a lot. They understand equities. Six, nine months is nothing. I mean always had this, not in fixed-income. No, I don’t think so. They react to it the way they used to react more five years back or 10 years back. So I think it is not only for us, I think going-forward, you’ll see schemes which have a long-term track-record. Even if there is a blip for six months, one year, I think you will not see the kind of reaction what you should see in past, because investors are also understanding and appreciating in equity has to be a long-term view and three to five years is what needs to be looked at not six months of one year.
Ankit Bihani
Thank you.
Operator
Thank you. As there are no follow-up questions, I now hand the conference over to Mr. Jignesh Shial for closing comments. Over to you, sir.
Jignesh Shial
Yeah, hi. Thank you. Thank you everyone on behalf of, I would like to once again thank the management. Yeah, thank you for joining the call. [Operator Closing Remarks]