The Hindu Business Line : `Our focus will be on entry, exit advice'

WITH over 1.5 lakh investors, Birla Sun Life distribution Company Ltd has reached the critical mass in terms of customer base and is now on an expansion drive.

Mr Sanjiv Roy, Chief Executive Officer, Birla Sun Life Distribution Services, talked to Business Line about the mutual fund industry and his company.

You are looking to expand operations. What are the specific areas of expansion that you are looking at currently?

Expansion has got many meanings and implications. We have broken down our plans to understand how best to approach the future.

We see this coming broadly under four heads - focus on the bottomline, topline, acquisitions and approaching new markets.

According to our plan, the direct client business is very important. We have over 1.5 lakh direct clients; it is quite a large number. We are analysing these investors to find out how many of them fall in various investment brackets.

The idea is then to push these investors up to the next bracket. So if someone has a portfolio of Rs 1 lakh with us for this year, the next year this investor should be in the Rs 1.5 lakh bracket and so on. We will do this through continuously engaging in value-adding communication with these investors.

We also have about 1,500 channel partners. We would like to expand that number. We have floated something called a Klub 20, 20 per cent of our channel partners who do 80 per cent business.

We want to bring more and more partners into the Klub 20 initiative. We also provide a lot of infrastructure and other support to individual resellers.

Mutual fund distributors have been in the news lately, primarily because of the service tax tussle. Is there a resolution in sight?

Distributors have borne the service tax for the last year. Unfortunately, the Association of Mutual Funds in India (AMFI) took an isolated view on this.

For this year and the future, we are very clear that distributors will not be bearing the burden of this tax.

Equity funds have already started increasing the loads to the investor, so that they can compensate us for the service tax.

But the largest business is in debt and liquid funds and there have been no initiatives by the asset management companies (AMC) on the service tax component. Ultimately, this would have to be borne by the investor.

If the AMCs are afraid of losing the investors, then let them bear this tax. The distributor should be nowhere in the picture as far as service tax is concerned. Insurance industry has made it so seamless and clear, why are mutual funds hesitating?

What is your outlook for the next year? What products are going to be "hot" for your customers?

There have been a lot of "entry" days the last two months; the markets have been very volatile. Important thing for investors to know is when to disinvest. That's the focus of our advice.

We tell retail investors to plan their finances and at the outset decide what kind of returns they want.

The minute you meet the investment objective, make a rational decision. If the going is good and you want to stay in the game for a while longer, remove the capital and invest your earnings.

The beauty of the game is in knowing when to get out. We will focus on delivering the right "entry" and "exit" advice to our investors.

The markets would be volatile, but if your investments are in line with your objective and time-frame, there's nothing to worry about.