Vijay a Graduate in Chemical Engineering from IIT- Madras began his career as a Development Banker with Economic Development Corporation of Goa. He was a part of the team of seven professionals from IIT and IIM who were invited by the then Chief Minister of Goa to lay the backbone of industrialization in the state and set up Goa’s premiered development funding institution for SME sector and for start-ups and participate in debt and in equity.
Vijay has been involved in setting and operation of Engineering, Pharmaceutical, Telecommunication and Infrastructure companies both in public and in private sector and lending to SME sector. This experience helped him to network with corporate honchos, bureaucrats, industrialists, business executives, entrepreneurs and these formed the initial set of clients in mutual funds. In 1995 Vijay moved out to set up two companies in association with Mr. S.V. Salgaocar, a leading Mine-owner from Goa; Pyramid Finance Pvt. Ltd., a company which extends venture debt to SME’s and a wealth management company, SSCPL which in addition to distributing mutual funds also has clientele which invests in unlisted space.
Business development
Vijay leads a team of five professionals in SSCPL who manage 1300 clients with AUA in mutual funds of Rs.850 crores.
Goa is traditionally a conservative state with Rs. 40,000 crores in banking deposits. The strategy at SSCPL was to sell FD-like products and FMP’s fitted that role perfectly. The investors were attracted because with a 1-year holding horizon they could increase their return by nearly 40% by saving tax.
As the investors started getting comfortable with mutual funds, the team at SSCPL started creating a conviction in the investors that they could earn higher returns in equity. “Once investors are comfortable with the category, I introduce them to balanced funds and finally equity funds. Having said that, I make sure that I understand the investor’s risk appetite and develop a custom plan accordingly,” says Vijay.
SSCPL developed marketing literature which depicted the ‘Power of Compounding’ in equities and how they could be used to create wealth. The literature also provided visuals on the risks in equities and how these risks could be mitigated through a long-term holding of the equities. The Shivranjani team built a loyal clientele of 1300 investors through investment in SIP’s, STP’s or through regular infusion of funds in equities. The current equity AUM now stands at Rs.245 crores.
Even though Vijay gets a lot of new clients through unsolicited referrals, he believes in making a conscious effort to acquire new clients. But his idea of growing his client base is not through aggressive marketing. Rather, he focuses on educating people. He believes that informed people make better investors.
Vijay believes that the lay investor is driven by fear and greed and the major role of the Advisor is to change this investor behaviour. “People have bad experience in investments because they do not have enough information. They buy when the market is high and sell when the market is low. This happens due to lack of information. If they are informed then they will understand when to buy or sell,” says Vijay.
The second axiom which the team drives into the minds of the investor is that markets are safer places to invest is when they are down rather than when they are up. One thing that differentiates SSCPL is how they develop a statement of advice for the client which clearly states the objective of the saving, the tenure of the saving, the portfolio construction (depending on the risk profiling and appetite of the client) and the Periodicity of Review. “We have found that this step has insulated the investors from the market vagaries and we did not face any significant redemption during 2008 market crash,” says Vijay.
SSCPL has very small standardized products which are sold to all retail clients. The company sells only six schemes based on the fund manager and Vijay makes it a point to meet these managers regularly to understand the fund philosophy. SSCPL does not lay great stress on the past returns; they are only an indicator of how the fund manager has performed vis-à-vis the opportunities available then. We create portfolios depending on our vision of the future.
Key trends
Considering the low financial literacy in India, MF is still a push product even though it is well regulated and has created long-term wealth for investors with long horizon. With substantial amount of money coming into the banking system, and dearth of attractive alternate investment opportunities, Vijay thinks that the mutual fund business will grow many fold in the coming years. He believes that technology particularly mobile phones will be catalyst for increasing mutual fund penetration in rural areas. “For me, mobile phones are the new frontier in technology. The usage of mobile phones is growing rapidly in India and creating mobile apps which can facilitate investments in MFs would be the best way to popularize MFs,” he says.
Informed investors
Vijay has made his mission to help people invest smartly. His investor base stretches from multi-millionaires to a petrol dispenser at the petrol pump. Given this diversity, the fact that there was no significant redemption during 2008 market crash is a testament of Vijay’s ability to create a conviction in the client that long-term investing creates wealth.
