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Published on: Sept. 27, 2020, 12:58 p.m.
CAMS has domain expertise
  • Kumar: maintaining leadership position by continuously enhancing the scope of service offerings

By Lancelot Joseph. Executive Editor, Business India

Three decades ago in Chennai, Computer Age Management Services (CAMS) was founded by a first-generation entrepreneur. It took to the emerging niche service opportunity as a registrar and transfer (R&T) agent to the mutual funds in the mid-90s when Indian mutual fund industry (MF) opened up. Thereafter, the company’s evolution and growth over the last two-plus decades has been aligned to the growth of the MF industry, participating as a technology-enabled service provider and a catalyst. 

“Over the years, we have grown from an entrepreneurial venture to a completely professionally managed company with marquee shareholders such as Great Terrain Investment Ltd, NSE Investments Ltd and HDFC group owning the company,” says Anuj Kumar, CEO, CAMS, the technology-driven financial infrastructure and services provider to mutual funds and other financial institutions.

According to a Crisil report in August, 2020 titled, ‘Assessment of the Mutual Fund Registrar and Transfer Agents Industry in India,’ it is India’s largest R&T agent of mutual funds with an aggregate market share of approximately 70 per cent based on mutual fund average assets under management (AAUM) managed by their clients and serviced by them. 

Growing market share

Over the last five years, alone CAMS has grown the market share from approximately 61 per cent during March 2015 to approximately 69 per cent during March 2020, based on AAUM serviced, according to the Crisil report. The mutual fund clients include four of the five largest mutual funds as well as nine of the 15 largest mutual funds based on AAUM during July 2020, states the report.

“With the initiative of creating an end-to-end value chain of services, we have grown our service offerings and currently provide a comprehensive portfolio of technology based services, such as transaction origination interface, transaction execution, payments, settlement and reconciliation, dividend processing, investor interface, record keeping, report generation, intermediary empanelment and brokerage computation and compliance related services, through our pan-India network and electronic interfaces to our mutual fund clients, distributors and investors,” adds Kumar, who over the years has leveraged the domain expertise, technology, processes and infrastructure to diversify the offering of services to cater to a variety of other financial services sectors.

In the electronic payment collections services business, CAMS manages mandated transactions, including registering of mandates, initiation of collections, reconciliation and the related reporting services for mutual funds, non-banking finance companies and banks. Whereas in the insurance services business, CAMS offers processing of new business applications, holding policies in dematerialised form, servicing policies and other support functions to insurance companies, while in the alternative investment funds services business, CAMS provides services to investors, manage records and perform fund accounting and reporting, among other services, for alternative investment and other types of funds. 

 

The company also has a banking and non-banking services business, where it offer digitisation of account opening, facilitation of loan processing and back-office processing services to banking and non-banking financial institutions. In the software solutions business, the technology team develops software for the mutual funds services business and for mutual fund companies.

“The markets for our services are highly competitive. We compete with a number of entities that provide similar services in each of the business lines in which we operate. We compete on the basis of a number of factors, including depth of service offerings, innovation, reputation, price and convenience. Our primary competitor for mutual funds services business is KFin Technologies Private Limited,” says Kumar.

Among MF RTAs, CAMS has the highest AUM serviced, which is approximately 70 per cent of the market share as of July 2020, followed by Karvy (including Sundaram BNP Paribas Fund Services). Also, the fastest growing MF RTA for the last five years has been CAMS with a compounded average growth rate (CAGR) of 18.6 per cent in AUM managed whereas, the CAGR growth for Karvy and Sundaram BNP Paribas Fund Services remained at 10.4 per cent and 6.6 per cent, respectively in the past five financial years, as per the CRISIL report.

In the Insurance Repository business, NSDL Database Management Limited and CAMS have a combined market share of approximately 84 per cent based on e-insurance policies being managed and approximately 67 per cent based on e-insurance accounts. 

Talking about the future, “a key element of the business strategy is to maintain the leadership position by continuously enhancing the scope of the service offerings in the core MF R&T agency business and further deepen integration with our clients and improve value delivery,” adds Kumar believing that electronic transformation and technology-led services innovations is integral to the MF industry.

“Our market position has been a function of our in-house technology capabilities, which we plan to continue investing in. Our spend on technology has continued to be significant and we believe the advantages available to us by developing and investing in technology include client commitment and loyalty, economies of scale, effective risk management, scalability and expansion to the adjacent financial services sectors, among others.

 

He believes in creating sustainable and scalable business platforms early on in the life cycle, and focus on delivering incremental value to the clients. “Most of our businesses and client relationships in such businesses continue to grow over time and at scale the businesses contribute favourably to our profitability. Key new offerings continue to be imbued with a platform character and are technology-based”. For example, it launched CAMSPay, which is an end-to-end highly automated National Automated Clearing House (NACH) platform that supports electronic payments through the National Payments Corporation of India platform. 

Through automation, CAMS targets not only to improve cost efficiencies but also enhance customer experience. “We are currently engaged in several automation projects, including automation of subscription reconciliation, purchase and SIP processes, document receipts and storage. Our applications such as myCAMS, GoCORP, digiSIP, CAMSserv and edge360 are aimed not only at enhancing the investor and distributor ease of operation but also to automate the flow of transactions, thereby reducing manual efforts and risks associated with manual efforts,” says Kumar.

Financially speaking, CAMS’ total income for the three months ended 30 June, 2020 and FY20 was Rs163.46 crore and Rs721.34 crore, respectively. For the same period its revenue from mutual funds services business was Rs133.33 crore and Rs608.25 crore, while revenue from other businesses was Rs15.3 crore and Rs91.38 crore, respectively. The profit after tax for the period was Rs40.83 crore and Rs173.46 crore, respectively. 

Lastly, the key growth drivers of the mutual fund industry are expected to include anticipated economic growth, a growing investor base, higher disposable incomes and investable surplus, increasing aggregate household and financial savings, increase in geographical penetration as well as better awareness, ease of investing, digitalisation and perception of mutual funds as long term wealth creators. “As a result of our domain expertise, established processes, technology driven infrastructure and marquee clients, we are well positioned to capitalise on such growth,” concludes Kumar.

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