Anil Ambani, the chairman of Reliance Communications Ltd., speaks at a news conference in Mumbai, India. (Photographer: Scott Eells/Bloomberg News)  

Q3 Results: NBFC Crisis, Regulatory Changes Drag Reliance Nippon’s Earnings Down 

Anil Ambani-controlled Reliance Nippon Life Asset Management Company Ltd.’s revenue and profit fell in the quarter ended December, partly because of credit crunch for non-bank lenders.

The slowdown in the revenue came on account of three things—the NBFC crisis, lower realisation from exchange-traded funds and a partial impact of regulatory changes, Chief Executive Officer Sundeep Sikka told BloombergQuint. “We saw a lot of money shifting from debt into money market funds,” he said.

Non-bank lenders faced liquidity crunch after serial defaults by IL&FS group. A flight to safety by NBFCs is bound to happen during such times, Sikka said.

“We added about Rs 17,000 crore of ETF money, which came because of Central Public Sector Enterprises,” Sikka said, adding that while these add to the overall assets, “ETF-realisation is a little lower than the active funds.”

Sikka is confident about the company’s growth prospects, stressing that operating profit has improved in the last 10 months. He said the asset manager added 100 new branches in the last year, which will lead to higher revenue in the coming quarters.

Also read: What The Post-NBFC Crisis ‘New Normal’ Looks Like

Other Highlights:

  • Cost of acquisition to come down industry-wide.
  • Says AMC is a cyclical business, markets can be volatile.
  • Regulatory changes needed to improve functionality of businesses dealing with public money.
  • Expects good growth opportunities in all segments.
  • Digital inflows grew 71 percent yearly

Also read: India Sells Over 3% Stake In NBCC To Reliance Nippon’s CPSE-ETF

Q3 Results Highlights (YoY)

  • Revenue fell to Rs 350 crore in the quarter ended December from Rs 409 crore a year earlier.
  • Net profit down at Rs 110 crore from Rs 130 crore.
  • Assets under management up 7 percent to Rs 4.14 lakh crore.
  • Equity assets rose 11 percent to Rs 9.22 crore.

Watch the full interview here: