Shriram Group to revive defunct mutual fund business

MUMBAI: In sharp contrast to moves made by asset management firms such as Fidelity Mutual Fund to exit India, the Chennai-based conglomerate Shriram Group has decided to revive its defunct mutual fund business. Shriram AMC, the only listed asset management company in India, will launch new products in the next six months targeting the retail investor. The AMC business is planning to launch products which would offer gold and balanced funds.

"Mutual funds and a bank are the only two businesses missing from our pie, and since we had the licence for a mutual fund, we decided to revive it," said Akhilesh Kumar Singh, the newly-appointed CEO of Shriram AMC. Singh was appointed CEO on February 14, in place of R Sundararajan, who'll continue on the board. The board also approved a plan to launch new schemes.

Shriram AMC had four mutual products way back in the 90s which the company decided to eventually wind up due to lack of interest. However, the company soon came under pressure from market regulator Sebi either to render the licence or restart operations.

Shriram AMC is part of the Rs 30,000-crore Shriram Group which started some 30 years ago as a chit fund, but later branched out into commercial vehicle financing and insurance, among other ventures.

The move comes at a time, when the overcrowded mutual fund industry has seen a significant dip in its profit margin. Of the 28 mutual fund companies, only four reported profit this year and the industry's gross profit has nearly halved to 406 crore for the financial year versus 743 crore in the previous fiscal, Value Research data shows. Industry sources say one of the biggest worries for the MF industry is the declining participation from institutional and retail investors.