Infiniti: Case Notes

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Infiniti – 7th out of 27 among mutual funds in March 2006 (from 10th) •Middle and high income population growing at 10% p.a. in decade to 2005 •20.9% growth in real disposable income of middle class households in 1999-2003 •New fund offers raising more than 15,000 crore in Q ending 31-Mar-06 •Compared to industry, Infiniti also had a lower level of AUM under equity funds, though share of private sector in mutual fund industry was increasing (Fig2) •Over 5 years to 2010, working population set to grow by 100 million and consuming category to rise by 280 million •Penetration levels of financial products low – 8% of India’s population currently insured and 2% (7 million) of bankable population are credit card holders •Banks account for 30% of private MF sales – large distribution network, established customer relationships •Fees contribute only 21% of income for Indian banks vs. 30-35% for peers internationally •MF sales in country have 77% CAGR over 4 years to 2005

MF new fund offers added Rs.6000 Cr (24% increase over previous year) during 12 months to 31 Mar,2005 •Penetration low in rural areas (3.8%) vs. 13.7% of urban •11.8 million (6.7% - 23million unit holders) of Indian households own MF in 2000-01 (49.6% in US, 17% in UK) Table 1. in1998-99, 15 million households (9% - 19 million unit holders) •Investments in shares and debentures only 3% of investment in financial assets •Fundamentally conservative nature

oNon-banking financial companies
oFinancial advisors
oPost offices
3 functions of distributor – give advice, distribute product, promote different financial products •2 tier distribution structure – retail sales and institutional sales •Public bank sectors in highly preferred category but not very effective in terms of generating AUM for Infiniti •Brand recognition of Infiniti as good AMC was much lower though very well known internationally (not being a bank) •Sales force – 30 sales...
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