34th Annual Report 2021-22
I write to you at a time when the country is slowly coming out of the crisis created by the pandemic, and with the hope that growing adaptation and vaccination will allow us to return to a pandemic-free future. The COVID-19 pandemic adversely affected most sectors of the Indian economy, leading to a sharp plummeting of domestic demand and exports with few notable exceptions, where high growth was observed. As a result of lockdowns and other restrictive measures imposed to control the spread of the pandemic, demand declined while lack of opportunities to spend, particularly on contact-intensive services, increased the quantum of forced savings. The country faced the situation stoically, confident in the hope of an early return to the growth trajectory.
As a technology-driven organisation and the most significant financial infrastructure and service provider in India, the Company’s primary business is being the Registrar and Transfer Agency to Asset Management Companies. During the year, a buoyant secondary market served to reduce risk perceptions by retail investors and ensured a robust year for mutual fund operations. The Mutual Fund industry witnessed all-round highs across most key metrics.
Your Company continues to be an integral part of the finance industry and plays a key role in the mutual fund ecosystem. We are well-positioned for leading the advancement in the industry. In my view, the Mutual Fund industry is poised for stronger growth. New-age fintech solutions have provided ease of access and enhanced participation by individuals in stock markets and mutual funds, which is expected to increase with greater allocation of their savings being invested into equity markets and mutual funds.
On the business front, your Company continued to operate a hybrid work model, developed at the start of the pandemic for most part of the year. This model has worked successfully, and employees of the organisation and clients have adapted to this structure, as can be inferred from higher productivity, improved collaboration and work relationships besides employee satisfaction. It has enabled the Company to ensure the health and well-being of its employees, and service support for its customers.
Despite the adverse conditions prevailing during FY 2021-22, the Company continued to focus on its growth through multiple avenues. It commenced working as Registrar and Transfer Agent for Franklin Templeton Mutual Fund. It launched CAMS WealthServ, a customisable digital solution designed to ease and expedite the onboarding of High Networth Individual investors on the Alternative Investment Fund (“AIF”) and Portfolio Management Service (“PMS”) platform and set up an office in GIFT City.
The Company made significant progress in the implementation of the Account Aggregator (“AA”) platform, to create technology solutions for the AA industry and set up the Central Recordkeeping Agency for National Pension System, which have become operational. A subsidiary of the Company designed and launched an innovative policyholder traceability solution for the insurance industry. The Company in association with another player, developed and launched MFCentral, India’s first industry-wide all-in-one investment management platform.
The Company’s core value is putting customers first and at the centre of everything. This mindset is reflected in the results of a customer satisfaction survey conducted among our clients, which revealed 93% of satisfied and highly satisfied investors.
The Company delivered positive commercial outcomes during the year while reporting strong financial results and operational performance. The Company has successfully managed multiple large New Fund Offers for Mutual Fund houses smoothly and efficiently. Besides deep appreciation from clients, our competent management has helped to establish our expertise and operational excellence in the industry. The Company’s appointment as the RTA by Zerodha AMC for its upcoming mutual fund business is a clear endorsement of the CAMS brand salience.
Looking ahead, your Company is making strong efforts to enhance its leadership position in the mutual fund industry, AIF PMS segment and to focus on new business lines.
On behalf of the Board of CAMS, I would like to thank MF investors, distributors and all the customers who avail our services for making us the industry leader. My heartfelt gratitude to all the employees of CAMS Group for their resilience and hard work which has enabled the Company to deliver in the most difficult circumstances. I would also like to thank our shareholders who have reposed their faith in us and the Directors on the Board for their support and active participation in the governance of the Company.
Warm Regards,
The Company successfully went live with 17th AMC client Franklin Templeton Mutual Fund on July 19, 2021. This was the largest migration (in terms of AAUM, folios and investors base) in the MF industry
I am pleased to present to you the 34th Annual Report of the Company. The FY 2021-22 was challenging in view of the crisis caused by the COVID-19 pandemic that seriously disrupted economies and industries worldwide. Faced with the pandemic challenges, the Company ensured employees’ well-being and safety besides successfully meeting productivity targets, by adopting a hybrid work culture as done in the previous year. We stayed on course to ensure that our customers and investors were least impacted by social restrictions as we continued to safely provide high fidelity services.
The Company’s preparedness with the Work from Home model ensured that all key deliverables to clients were met during the year without any disruption. FY 2021-22 will go down in the Company’s history as a landmark year with assets, transactions, Systematic Investment Plan (“SIP”) and New Fund Offers (“NFOs”) touching historic highs. We maintained high quality standards and efficiency in processing highest fund mobilisation from mega NFOs, 415.90 million transactions and the Company successfully went live with its 17th Asset Management Company (“AMC”) client Franklin Templeton Mutual Fund on July 19, 2021. This was the largest migration (in terms of assets under management, folios and investors base) in the Mutual Fund (“MF”) industry.
Firmly focused on client convenience, we have used technology and innovatively evolved smart strategies to unravel pockets of manual intervention within MF operations, that were known to cause delays and pressure employees. We implemented several initiatives during the year to redesign and reinvent these processes in asset management to make them happen without human intervention. Many of these initiatives that went live during the year, enabled the Company to improve its delivery standards. We also supported the mutual fund industry with implementation of several high impact regulatory changes. As in the past, the Company participated in various regulatory and policy initiatives on enhancing investor convenience and introducing technological innovations.
The Company’s philosophy as reflected in its mission statement – ‘Our Mission… Your Growth’– mirrors our core value of serving customers, including investors, distributors, clients, employees, and every other stakeholder. This mindset that drives our service efficiency, has invoked deep appreciation from our customers, as revealed by the results of our annual customer satisfaction survey. Involving participation by ~22,000 respondents, the survey showed that 93% of the respondents rated their service experience with the Company as ‘satisfied’ or ‘very satisfied’.
Our market share, as measured by Average Assets under Management (“AAUM”) serviced by us as a percentage of industry AAUM was ~69% as of March 2022. As a market leader, the Company’s mutual fund clients include the top five asset management companies as well as ten of the fifteen largest mutual funds.
We have further consolidated our leadership position for the alternatives segment viz. Alternative Investment Funds and Portfolio Management with our technology-backed full-stack digital and fund administration services. We were the first RTA in India to commence operations at GIFT City.
Our payments aggregator business expanded to serve large NBFCs & Insurers besides introducing new services such as UPI and UPI Autopay for Mutual Funds.
Enabling clients’ business growth is core to CAMS’ value proposition, and engineered through superior technology solutions for new products, development of new services, creation of brand-new digital conveniences, besides executing sales and leading campaigns backed by business analytics and call centre support. The MF industry is also witnessing a pivotal moment of digital disruption. Paper-based transactions have steadily declined over the past three years, even as the shift to digital and electronic modes of operation have significantly accelerated this year.
CAMS has also taken the lead in developing alternate KYC solutions for distributors and investors, to ensure that investing in Mutual Funds continue to remain a digital experience
While the Company’s mature, market leading platforms – myCAMS and GoCORP – continued to scale new heights during the year, myCAMS crossed the five million registrations by new users and witnessed an increase in usage and transactions and serve as the largest mutual fund focused mobile app. Our newest comprehensive platform for distributors ‘edge360’ –which allows users to manage business operations on-the-go – is also seeing rapid adoption and growing loyalty alongside the white-labelled chatbot implemented across various AMC websites. We have been investing in technology infrastructure and digital capabilities to transform the service experience of MF investors (and distributors) using our platforms. The challenges of the year did not deter the Company’s efforts and delivery to accelerate AMC business growth. In partnership with another industry player, we developed and launched MFCentral, under the guidance of SEBI and AMFI. MFCentral, conceptualised as a unified universal platform for all things MF is India’s first industry-wide all-in-one digital investment management portal to service investors across all mutual funds. The portal was formally launched on September 23, 2021 by present SEBI Chairperson Ms. Madhabi Puri Buch. Essentially targeted for use by both traditional investors and tech-savvy millennials, MFCentral will meet the requirements of the investor who has invested in multiple AMCs at a single platform through a ‘one view and one point of service/solution’ in an integrated manner. MFCentral aims to complement the existing MF ecosystem for the common goals of the investment community.
Leading banks and digital lenders have gone live with CAMS newly launched digital loan against mutual funds facility. This paperless solution streamlines loan approval and lien marking processes for Banks and Lenders and enables customers to avail loan up to ₹1 crore by pledging their debt and or equity mutual funds in a completely digital process. The Company has leveraged its myCAMS portal by integrating this digital solution for leading lenders. Plans for a mobile responsive portal are under development for better integration into lender’s platforms.
We have also taken the lead in developing alternate KYC solutions for distributors and investors, to ensure that investing in mutual funds continue to remain a digital experience. With the grant of the Aadhaarbased KYC licence, we have launched the eKYC platform to provide on-the-go KYC submissions through Aadhaar OTP and biometric facilities. Several AMCs have integrated our eKYC solution on their website and applications to provide new investors a smooth and seamless experience.
We also launched CAMS WealthServ, the customisable digital solution designed to ease and expedite the onboarding of high net worth individuals on the AIF and PMS platforms. Investors have welcomed this initiative, which has been well received by the Alternatives industry. The Company has a vibrant pipeline of prospects for CAMS WealthServ and has undertaken an ambitious target of 100 sign-ups by June 2023. We shall continue to augment our product features and partnerships with custodians which is expected to significantly strengthen the Company’s market position.
As an industry pioneer, the Company has undertaken several steps to augment its overall cybersecurity posture across the enterprise. BitSight, an internet-based continual monitoring platform for information security, provided an all-time high score of 800 for cybersecurity measures by CAMS. While this score has been consistently maintained, we are persistent in our efforts to reach the aspired milestone score of 820 on this scale. The Company has also proactively initiated steps to improve the compliance levels of 20 business applications. Significant investments were made during the year to assess the internal information security systems using a product called “SAFE” (Security Assessment Framework for Enterprises) covering over 600 business critical IT assets. In this assessment, the Company has currently achieved a score of 4.63 (on a scale of 5) and will continue to innovate and implement industry best practices in FY23.
The Company was recently appointed as the RTA by Zerodha AMC for its upcoming mutual fund business. This was a prized win and a clear endorsement of CAMS technology initiatives and brand salience – a statement that large, reputed brands want to align with the Company as the service partner of choice. There have also been significant wins in the alternative segments, for our digital products such as Loan Against Mutual Funds (“LAMF”) and Recon Dynamix. The Company has also been able to achieve commendable progress in building new business and revenue-lines on the back of existing platform capabilities.
Our foray into the emerging Account Aggregator space was marked by the launch of the Account Aggregator (“AA”) platform to provide technology solutions and services for this industry. With the upcoming participation of other financial products like mutual funds, the AA platform is poised for an interesting journey ahead.
The Company became the third Central Recordkeeping Agency (“CRA”) for the National Pension System (“NPS”) this year. It launched its cloud-based Central Recordkeeping operations for NPS, enabling it to extend the service to subscribers, and the NPS ecosystem at an event which was graced by Shri Supratim Bandyopadhyay, Chairman, Pension Fund Regulatory and Development Authority (“PFRDA”).
Your Company remains steadfastly committed to creation and delivery of longterm value to all its stakeholders through an integrated approach, centred on sustainable operations. To this end, we are continually enhancing our Environment, Social and Governance (“ESG”) focus, to enable a safe and secure business environment for all our stakeholders. The Company’s CSR programmes have invested in environmental causes and projects to support education and health measures for vulnerable groups. These projects are implemented on a PAN India basis.
During the year, the Company partnered with an NGO on an environmental project to restore two lakes and create two urban forests. The restoration of these lakes is expected to directly influence the surroundings and ensure increased water percolation and enhanced ground water recharge. This project involved cleaning up of the water body, removal of invasive weeds, increase in water storage, establishment of strong bunds, inlet-outlet regulation, tree plantation and protective fencing. While plants are expected to turn the lake into a biodiversity hotspot, the urban forest will enhance the air quality, reduce water run-off and soil erosion, and absorb noise, dust, and heat from the region.
The MF and alternatives industry are structurally in good shape to capitalise on the preference trend of financial assets over physical assets. India’s stock market capitalisation to GDP is still lower than several other major economies, suggesting an untapped potential of equity markets in unlocking growth. The proliferation of newage fintech solutions is expected to result in ease of access for individuals enabling their participation in capital markets. The expected increase in allocation of savings into equity markets and mutual funds is expected to boost the industry.
The Company’s domain expertise acquired over three decades with significant partnerships, established processes, technology-driven infrastructure, and marquee clients, will enable the Company to capitalise on this growth.
Similarly, the AA data-sharing platform is expected to gain further traction and faster adoption as the next set of key participants embark on the platform to provide superior customer conveniences. The NPS is poised for substantial growth and appointment of your Company as the third CRA will support the growth of NPS.
On this positive note, I thank all of you for the continued support and trust in the Company. I am grateful for the contribution and guidance provided by the Board to help us stride through this challenging year and honour our commitments to the various stakeholders we serve. CAMS has also benefited from the guidance and responsive support of the Regulators for which I am thankful.
CAMS will remain focused on being the preferred solutions partner for all our clients, with our range of innovative and differentiated services and products, backed by powerful technological and digital support systems and a committed workforce. We are confident that, with your cooperation, our success will touch greater heights.
Sincerely,