UTIAMC — earnings call
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Prepared remarks
Moderator · Conference Operator
Good day and welcome to the UTI Asset Management Company
Questions and answers
Moderator · Conference Operator
Thank you very much.
We will now begin the question and answer session.
The first question is from the line of Viraj from Securities Investment Management.
Please go ahead.
Viraj
I just have three broader questions.
First is on the employee cost.
In the past calls when we talked about us looking to rationalize the cost and expecting somewhere around Rs.
65-70 crores of savings over the next two to three years.
So, is it that the bulk of the savings we would expect it to be more back ended say in FY23 or FY24 and, we may not see much of a gain in FY22?
The reason I am asking this is because, if I look at last year, we added somewhere, net employees count has increased my 100 employees and even in this quarter there has been an increase of employee cost by around four crores.
So, just trying to understand how should we expect this to play out for us?
And a related question here is, since we approved this 2007 ESOP plan at the AGM, is there any revision to the ESOP charges which we have been communicating earlier?
So that is one.
Imtaiyazur Rahman
Vinay and Surojit, can you take the employees cost savings and increase in cost.
Vinay, you take about saving of employee cost and Surojit you take about why it has increased and I will talk about the ESOPs related questions.
Surojit Saha
Yeah.
If you go by the figure of Q1 FY21 and Q1 FY22, if you see the employee benefit expenses in Q1 FY21, it was Rs.
98 crores, and now this quarter it is Rs.
94 crores.
So, actually the cost has decreased from Rs.
98 crores to Rs.
94 crores because of the ESOP expenses, which earlier we have said that last year FY 2021 it was Rs.
30 crores and this year the ESOP cost for ESOP which has been already allotted, it is Rs.
12 crores.
So, accordingly we have seen a reduction in employee costs.
But if you go by the quarter that is Q4 FY21 and Q1 FY22, the cost for Q4 is Rs.
74 crores against Rs.
94 crores.
That is mainly because, if you remember in the last quarter in Q4, we have reduced the variable pay expenses.
If you remember till December, we booked a variable pay expenses of Rs.
45 crores and actually according to the KRA in the March figure, what we booked in the books of accounts is Rs.
38 crores.
In the last quarter, we have reversed Rs.
7 crores and this particular quarter we have utilized for variable pay Rs.
9 crores.
So there is a net impact of Rs.
16 crores in that.
Apart from that, our regular incremental annual increment cost of salary is around Rs.
4 crores.
That is why if you compare with the Q4 FY21 and Q1 FY22, you will see a difference of Rs.
20 crores.
At UTI, we are fully aware of the employee cost and we are taking all the steps to be within the cost which we have incurred in FY 2021.
Overall cost of the group was around Rs.
380 crores.
Vinay Lakhotia
Viraj, Vinay here.
Just to give the guidance on the saving on the employee costs on account of retirement.
As indicated in our earlier calls as well, the savings of Rs.
65-70 crores will be over a period of next three years.
It is not a back-ended thing or a front-ended thing but it is a non-linear progression over the next three years.
Definitely, significant portion of this amount will be booked in this or the next year as well.
So, all we can say it is a non-linear progression only and not a back-ended one at all.
Imtaiyazur Rahman
So, Viraj whatever the indications which we have given about the savings, indication is in the same line.
So far as ESOP is concerned, this scheme was required to be ratified by shareholders, post listing.
So therefore the shareholders have approved the ESOP scheme and there is only one change; and the change is that the exercise period - we have changed from three years to five years.
That is the only change.
We have issued the new ESOP grant which we have planned to issue, we have already issued rather, is at the market price.
And therefore, I am not expecting any further costs to the P&L other than the defined ESOP cost.
So, there will not be any substantial ESOP cost.
The policy approval will not have any additional impact, let me put this way.
Moderator · Conference Operator
The next question is from the line of Shubranshu Misra from Systematix.
Please go ahead.
Shubranshu Misra
A couple of questions Sir.
First is, what is the sourcing of our equity AUM from PNB, BOB and SBI?
The second is, what is our NFO pipeline for the rest of the year?
And if you can split it asset class wise as in equity and the other schemes.
Third is on the ESG, Sir.
Although you have given the number of women employees in the workforce, I want to specifically know how many women employees in senior management?
These are my three questions.
Imtaiyazur Rahman
Sandeep, Can you take this question.
Sandeep Samsi
Yes.
Thank you Subhranshu for the question.
In PNB as well as BOB, we have a good share of market in gross sales as well as in the SIPs.
However, as we had mentioned earlier that SBI is a work in progress.
We are continuing to talk with them and to ensure that our funds are included in their selling list.
So that is where we are with SBI, PNB and BOB.
In terms of senior management, the women who are there in senior management, atleast there are four or five senior officials across the organisation, like we have Swati Kulkarni who is the senior fund manager on the equity side, we have Bhavna Tiwari who is at senior position in HR.
In international business, we have a woman heading our London branch, Sandrine.
So, we have a number of people in senior management who are women.
And as you know, that, we have two directors who are on the AMC Board, who are women.
We have a lady director on the Trustee Board, as well as in all our active subsidiaries we have at least one woman director.
Shubranshu Misra
If you could specify how much are we sourcing from PNB and BOB and what is your NFO pipeline?
Vinay Lakhotia
No, I don't think Shubranshu at individual relationship level we will be able to disclose any number.
Sandeep Samsi
And in the pipeline, we have an approval which is there for our Focused Equity Fund, which we will be launching shortly.
We have got the SEBI approval for that, and we also have a SEBI approval for a Multi Cap fund.
So, these are the two approvals that we have received from SEBI.
Moderator · Conference Operator
Thank you.
The next question is from the line of Madhukar Ladha from Elara Capital.
Please go ahead.
Madhukar Ladha
I was expecting a slightly higher reduction in employee expenses.
So, while you quantified the deviation, but shouldn't the number of employees also have reduced from quarter-over-quarter and even year-over-year, and there should have been some savings in that account also?
Can you help me with the number of employees and maybe any explanation on that?
Second our other expenses, have seemed to have risen, both on a year-over-year basis and even on a quarter-on-quarter basis.
So, is there some element as a result of the higher pension - the fees that we are not allowed to collect due to the PFRDA changed regulations?
Is there any expense also related to that, which has sort of increased?
So, I wanted to check on that.
And third our other income has improved substantially.
So, maybe you could help explain that a little bit.
And finally, if you could give me a closing AUMs in each category.
That would be my final question.
Thank you.
Sandeep Samsi
Yes.
So, Madhukar as of 30th June we have a total of 1,457 employees out of which 1,413 are UTI AMC employees and 44 work with the subsidiary.
Surojit Saha
Madhukar in respect of the retirement; I think I spoke in the last call also.
See total fees which we receive from PFRDA now will be 5 bps. So what you see as the income of retirement in the presentation, which we have already shared, that is the 5 bps and 1.5 bps is the PFRDA fees which we have to pay, that comes in the administration expenses.
Madhukar Ladha
So that is what is causing the increase in expenses?
Surojit Saha
Yeah, exactly.
Basically Rs.
21.80 crores is the sale of service and the Rs.
6.5 crore is the administration expenses, which includes Rs 6.23 crore which is paid to PFRDA.
Madhukar Ladha
And what was the number last year?
Surojit Saha
Yeah, last year PFRDA fees was Rs.
1.5 crores and the total amount was Rs.
4.5 crores.
Imtaiyazur Rahman
Madhukar on the employee cost you need to see in the first quarter there are various employee benefit expenses and therefore based on the actual valuation, this needs to be charged in the Quarter 1 itself.
But these are not charged in the Quarter 2 and Quarter 3.
There are other expenses which will come there, but employee cost is an area where we have got a key focus.
We are working on this and this has got my personal attention.
As Vinay has pointed out, we are also developing a bench of the bright people so that when the retirement happens, we should not be left with less resources.
Last year, we hired large number of people, the year before we hired larger number of folks from the campus to mitigate the risk of loss of human resources.
But it has got our attention.
We are witnessing the savings.
Vinay Lakhotia
In terms of closing AUM as on 30th June 2021, was Rs.
1,93,940 crores, a 35% increase vis-à-vis 30th June 2020.
A break-up of that, Equity AUM is Rs.
58,050 crores, Hybrid Rs.
24,696 crores.
So total Equity and Hybrid put together is Rs.
82,747 crores.
ETF and Index funds constituting roughly around Rs.
47,942 crores.
Income Funds Rs.
20,680 crores and Liquid Funds constitute around Rs.
42,572 crores.
Madhukar Ladha
And the other income part.
Surojit Saha
Madhukar, the other income, if you see, we have some investments in the venture fund – Ascent Fund 3.
So, they have exited from one of the investment - Big Basket, for which, we have received a profit of around Rs.
24 crores.
And, still they have 1.73% stake in the company, and they have other investments also.
And the Ascent Fund 3, will be closing around 30/06/2022.
So, we expect over the period some more exits and some more other income may flow in.
Madhukar Ladha
So that fund stills owns about 1.73% in Big Basket, that is what you said, right?
Surojit Saha
Yeah.
Moderator · Conference Operator
Thank you.
The next question is from the line of Kapil Agarwal from ITUS Capital.
Please go ahead.
Kapil Agarwal
So I wanted to understand your revenue as a percentage of your AUM has increased.
What is the reason behind this during this particular quarter?
Vinay Lakhotia
So, revenue the percentage yield is roughly around 44 basis points.
It is slightly higher as compared to last June quarter number because as you are aware last June quarter, there was a significant drop in the equity and hybrid AUM because of market depreciation, which impacted our overall yield.
But if you compare vis-à-vis with the last quarter, we are almost on the similar range of around 44 to 45 basis points as far as the AMC yield is concerned.
So, if you compare year-on-year, there is an increase in the yield because of the increase in the AUM of equity and hybrid funds.
Kapil Agarwal
And going forward what is the rough split that you suggest?
Vinay Lakhotia
I think from a full year guidance perspective the revenue yields as a percentage of AUM should be in the range of around 43 to 44 basis points only.
Moderator · Conference Operator
Thank you.
The next question is from the line of Aditya Jain from Citi Group.
Please go ahead.
Aditya Jain
So just to confirm on the NPS.
The cost, the sharing with PFRDA is Rs.
6.23 crores is what you mentioned.
So the Rs.
6.23 crores is the sharing with the PFRDA.
Is there also some impact, which comes in the staff cost, because of the new contracts with PFRDA, or is it predominantly in other expense?
Surojit Saha
See, there will be some impact, not a material impact, but there will be some impact because PFRDA has norms, different norms that the Retirement company as an institution, as an entity should have its own compliance officer, own dealer, own fund manager and own risk management.
So based on that we have already put in place the personnel in different positions.
There will be a cost for that, but it will not be material.
Aditya Jain
Thank you.
On the tax rate, I think it is at about 18% at a consolidated level.
So could you just explain what all is driving this?
I understand the international locations are taxed differently.
So, going forward, what is the right tax rate that we should take?
Surojit Saha
Yeah, you are absolutely correct.
I think for another two to three years, we will be having an effective tax rate of 18 to 19% on a group level.
Moderator · Conference Operator
Thank you.
The next question is from the line of Mr. Kunal Thanvi from Banyan Tree Advisors.
Please go ahead.
Kunal Thanvi
My first question was on the digital side of the business.
Like we had in the presentation talked about the internship of the new customers, 30% from the digital side.
So just to understand more about, what kind of tools, what kind of strategy we have implemented in the digital side of the business in order to get the integration with the third party, aggregators who are gaining market share, and also within UTI, what are the new tools that we have implemented in terms of data analytics and cross selling the existing products?
If you can explain a bit in detail, it would be great actually.
Sandeep Samsi
Thank you.
Kunal, we have focused, and as Mr. Rahman has also said in his opening remarks, we are focusing on the digital growth of the business and we are refreshing our digital apps, as you know, these digital assets tend to get old very quickly.
We are looking to refresh both, our app as well as our website to make it friendlier to the investor and for easing their transaction journey.
We have also started a number of new initiatives.
Some of them, I can share and some of these are Work in Progress and may not be able to share in this call and maybe we can share in the next call.
We have started, WhatsApp for our distributors, live chat bots and a live interaction with our investors and distributors through our website, as well as our app.
All these are to help in the assisted journey that the investor takes and sometimes, there are certain steps where the investor wants to know something more and some help is required.
That is where these live chats come into help.
So, backed by Call Centre and backed by our data analysis, we are able to help investors.
We are seeing increasing traction, as can be seen from the presentation, you can see that the number of digital transactions have been increasing.
And, this quarter we have witnessed about Rs 17 lakh transactions.
So, all the digital effort that we are taking on helping us to get, more investors in the digital mode.
Of course, we continue to partner with our distributors, providing them apps like our Buddy app, as well as our website, which is enabled for the distribution partners to help their investors come through those apps.
Imtaiyazur Rahman
So Kunal, if I can add one point.
We are the only AMC in the Country and I don’t know about other organisations, to have a Board level Digital Transformation Committee, and this committee is helping us and guiding us to take our digital initiatives forward.
We have built a very good team.
I will continue to invest in the team and in the asset.
Kunal Thanvi
Sure.
Just a follow-up on that.
When you also say that you have formed the digital transformation committee, can you throw some light on how do we leverage, the digital aggregators in the country?
Like how do those things they are, very aggressive in terms of like acquiring new customers.
How, how does that journey of acquiring customers from that aggregators to making the customer or UTI Mutual Fund customer, plays out?
Sandeep Samsi
Yeah.
So Kunal, generally most of the aggregators, as you would know, they are Registered Investment Advisors.
They are not distributors per se, who are selling; they advise, rather than distributing the product.
So, we are partnering with most of the RIAs of Fintechs who are coming to the business.
The most recent one has been PhonePay, where we have successfully integrated our APIs with them.
And now all our schemes are live on them.
As you would know that, there are various Fintechs, which are doing very well, like GROWW, PayTM Money, ET Money etc. So, all these are where we are marketing our products, we are highlighting our fund managers, highlighting our schemes to these investors, so that the good performance of our schemes as well as the fund managers are exposed on this channel or on this Fintech platform.
Imtaiyazur Rahman
Kunal, we're developing API, to basically to get connected with them.
And we work very closely with all those Fintech companies.
Kunal Thanvi
Sure.
That is really helpful.
Thanks.
Just last, if I can squeeze on was on the UK International like in terms of profitability how should one look at it from say three to five years perspective?
Imtaiyazur Rahman
Yes, extremely profitable business.
We have our IDEF fund has an allocated as well as disclosed number is around $800 million.
We are distributing very aggressively our fund.
We also have a plan to launch three funds, which we will let you know the details in the next quarter.
And that is the main focus area for us.
So, for me as a CEO, I have to grow both international business and the domestic business and build a very strong retirement business further for the private sector employees and the AIF business.
So I’ve given you the full picture of UTI.
Kunal Thanvi
Sure.
That’s really helpful.
But what I wanted to understand was from a profitability in the terms of contribution to the overall profits.
Like how should one look at it more?
What could it be say three- to-five years time on what is something that we should expect?
Imtaiyazur Rahman
Today, its AUM is like one of the bigger AMC in the country.
I would not be in a position to give you any forward-looking number, but this company is going to be highly profitable.
Kunal Thanvi
Sure, that is helpful.
Thank you so much.
Imtaiyazur Rahman
Thank you.
Moderator · Conference Operator
Thank you.
The next question is from the line of Susmit Patodia from Motilal Asset Management, please go ahead.
Susmit Patodia
I have two quick questions.
First is any update on the case, between the Officer Association and the UTI AMC?
Imtaiyazur Rahman
Which case are you talking about?
Susmit Patodia
The Rs.
500 Crore case.
Imtaiyazur Rahman
Is it regarding the pension one?
Susmit Patodia
Yes, sir.
The old case pertaining to pension issue of former employees.
Imtaiyazur Rahman
As you know the matter is sub-judice and therefore it is not appropriate for me to speak on that, the details which we have given in the DRHP and RHP is the complete document to follow and read.
And the status quo is maintained there so far.
Susmit Patodia
Yeah.
So, okay.
So, there's not been any new dates or anything, correct?
That's what I wanted to ask.
Imtaiyazur Rahman
No.
Susmit Patodia
And the second thing, sir is so there might be the increase dividend payout by 5-6 percentage points in FY21, over FY20. Why isn't the board or the management thinking of a more aggressive policy because majority of the free cash is being kept in liquid and in income funds where the post-tax need is very, very minuscule?
Any thoughts on that?
Imtaiyazur Rahman
First of all, I didn’t get your name.
Susmit Patodia
My name is Susmit Patodia from Motilal Asset Management Company.
Imtaiyazur Rahman
First of all, you should be very happy that we increased the dividend from Rs.
7 to Rs.
17.
Rise of 250%.
And we have the very definite policy that minimum of 50% of the profit will be declared as dividend.
And this year it was 61%, Right.
I understand, we don't need much cash to run our business, we have profitable business.
But we also need to retain some cash because we are the only professionally management company in the country; promoter-less.
And as we go along, we will see based on the requirement of the company and the Board will review the policy and do the appropriate thing.
But our dividend policy is generally in line with the other peers in the industry.
Susmit Patodia
Right and the last question sir is, the IPO will complete its one year in two months.
Any discussions that some of the large shareholders are having with respect to their intent.
Now that the one-year lock-in will be over in a couple of months.
Imtaiyazur Rahman
Not to the best of my knowledge and belief.
Susmit Patodia
Okay.
Sure, sir Thank you very, very much.
And all the best for the next.
Imtaiyazur Rahman
Thank you so much.
Moderator · Conference Operator
Thank you.
The next question is from the line of Gaurav Jani from Centrum Broking Limited, please go ahead.
Gaurav Jani
Just one question Sir if you could just elaborate on the UTI Retirement Solution business as to how we look at the flows and how do you look at the asset mix Is it similar to that we have on the UTI MF book?
Thanks.
Sandeep Samsi
So, basically what you're talking about Gaurav is the types of schemes, which are there.
So, there are different schemes and the investor has an option to choose the scheme in which he wants to invest.
Basically, there are three categories.
One is the equity portion, Second is the corporate debt, and third is the government security.
So, an investor makes a choice of the mix that he wants to have.
There are certain caps and there is also an automatic choice where the allotment keeps on changing as your age increases.
So that is basically what you're mentioning.
Secondly, on the flows which you're talking about, the government flows, the flows which come from the government sector are much higher than compared to private sector.
But as the CEO also mentioned, that it has his personal attention, and we are looking to get more and more clients on the private sector, especially institutions which, for their employees, can tie up with UTI Retirement Solutions for the pension need.
Then that money will come into the NPS directly.
Gaurav Jani
So could you quantify the flow that we could sort of predict.
I mean you know that are kind of sustainable in the retirement.
Surojit Saha
Gaurav we won’t be able to quantify the flow, but there is a method by which the flow gets allocated which is based on the last year's return.
Based on that it gets allocated, somebody’s return is 10 and somebody’s return is 11 and 12.
Suppose, UTI’s return is 12.
Then, it will be 12 by 33 into the corpus they want to distribute.
The flow gets distributed based on the return of the last year.
Gaurav Jani
And sir, you just mentioned on the three main segments, if you could just quantify the mix, how much of that is Equity, how much is G-Secs, how much is Debt and whatever is remaining?
Sandeep Samsi
You want the assets, which are under management in each of these categories?
Gaurav Jani
Yes, or at least the percentage mix.
Sandeep Samsi
I have to get that, I don’t have it off hand Gaurav.
Surojit Saha
Gaurav, offline I will give it to you.
Gaurav Jani
Sure.
Well, no worries.
Thank you.
Moderator · Conference Operator
Thank you.
The next question is from the line of Prayesh Jain from Yes securities, please go ahead.
Prayesh Jain
A couple of questions.
Firstly, on the UTI International business.
If I look at the P&L Statements, there's a big element of mark to market.
Could you explain what is that and the significance sources on the other income?
So, what is that?
Surojit Saha
Yeah Prayesh, I think you must be knowing last year also, UTI International has a seed investment in one of the schemes that is India Dynamic Equity Fund.
And that fund over the years has been doing very well.
And they had invested in the year 2015-16.
So, according to the market NAV, they have a mark-to-mark gain, which last June 20, was around Rs 37 crores.
And this year it is around Rs 21 crores.
Prayesh Jain
Okay.
Could you tell the quantum of the investment?
Surojit Saha
Yeah, initial investment was around $25 million and that NAV went up to $41 million.
And then the last year, if you remember around March, they have redeemed around $8 million.
So, now it's still around the $34 million is outstanding as of today, mark to market wise.
Prayesh Jain
Ok.
And this question on the employee cost.
On a run-rate basis, it will be a good number to be assumed that for the next three quarters the total amount that you have reported minus the variable pay.
Would be a good number to assume?
Surojit Saha
Yeah, as of now we are very confident that we'll be able to maintain this run-rate.
Prayesh Jain
Ok.
That is the right number, the total amount minus the variable pay.
Surojit Saha
Yes.
Prayesh Jain
Alright, Thank you so much and all the best.
Moderator · Conference Operator
Thank you.
The next question is from the line of Pritesh Chheda from Lucky Investment Managers, please go ahead.
Pritesh Chheda
Yeah.
So just a follow up on that question.
So if you could just comment the absolute employee cost for the year.
What it should be after accounting and whatever retirement plus salary increases, and the variable costs?
It would be good if you could give for the full year.
The full year last year was Rs.
380 Crores.
Surojit Saha
Yes, that is what I think I answered in one of the first questions which was there.
All our efforts are on and we are vigilant on the employee cost and we will try our best to maintain our employee cost.
Pritesh Chheda
Okay.
All right.
This part is all right, the retirement and the increment the salary heads.
Surojit Saha
Yes, We have factored already.
Pritesh Chheda
My, other question is that any change in the holding at the trustee level?
Imtaiyazur Rahman
No further changes., Last year the T Rowe Price holdings went up to 51.5%, after that there's no change.
Pritesh Chheda
So, There's no change between last year and as on date?
Imtaiyazur Rahman
That’s correct.
Pritesh Chheda
Okay.
And my last question on the expense side.
So, the other expenses which we see at amount Rs 50 crores to 55 Crores is there any variable element in this, 50 to 55 Crores?
Surojit Saha
There is no variable element as such but one item but I would like to mention, since you are asking this question.
The PMS which handles the Rural Post Office Linked Insurance plan and the PLI that is Post- office Linked Insurance plan there is an Investment Board in Delhi, who directs us how much and what should be our equity percentage and what should be our debt percentage.
Accordingly, they have taken a call in the first quarter that the equity exposure should be reduced from 18% to 13%.
Because of that, there was a brokerage cost of around Rs.
6.88 crores, which will not be a recurring in nature, which has come in the first quarter.
Pritesh Chheda
So then about 48 crores to 50 Crore is a more realistic number, which we should take incrementally.
Surojit Saha
Yes.
Pritesh Chheda
Okay.
Thank you very much, sir.
Thank you.
Moderator · Conference Operator
Thank you.
The next question is from the line of Shubranshu Mishra from the Systematics Group.
Please go ahead.
Shubranshu Mishra
What is the market share, in our equity and hybrid flow?
We have given the number but what is the market share?
That’s first question sir and the second is what the total tech cost per annum and what's going to be the run-rate going forward.
Vinay Lakhotia
For quarterly market share for the Equity and Hybrid funds put together for June quarter was 5.33%
Shubranshu Mishra
But also, that is on the stock.
I'm talking about this flow sir; you have given the flow as well, on this flow what is the market share?
Vinay Lakhotia
The flow should be roughly in the range of around 4.2%, on the net flows that I am saying.
Shubranshu Mishra
Yes, that is around equity and hybrid.
It should be around 4%.
Vinay Lakhotia
Yes.
Shubranshu Mishra
And what is the tech cost that we are going in FY22 and what should we be the run-rate that we should be modeling?
Vinay Lakhotia
You are asking tax costs?
Shubranshu Mishra
Technology cost.
Surojit Saha
Yeah, Technology cost.
Yeah, what we the factor around the run-rate basis for the running cost it will be around 18 crore, which has been factored and obviously another 10 crore we have a budget on respect of the CAPEX.
Shubranshu Mishra
Okay.
So that is only for FY22?
So, we are having the run rate of 18 crores right?
Surojit Saha
Yeah, exactly.
Shubranshu Mishra
Sure, Thank you so much.
Moderator · Conference Operator
Thank you.
The next question is from the line of Viraj from Securities Investment Management.
Please go ahead.
Viraj
I Just have two questions.
First is that the international business.
Just trying to understand on the profitability front.
If you look at last one year, you have seen doubling of our AUM and despite that, our overall profit, I mean we are almost close to breakeven at all operating level.
So just trying to understand, should one look at profitability and is it subject to further scale in AUM and then only will see any profitability or do we see any costs, which is there in the financials, which is kind of one-off in nature and hence the business should also be profitable.
So just trying to understand on this.
So that's one and second is on the employee cost, as you said earlier to the other participants you said it is for the increment or what the normal run-rate should be.
But if you look at we have been giving ESOPs for last two, three years.
So even the increment intensity in coming years should also gradually reduce I mean considerably reduced, is that the right thinking?
Thank you
Imtaiyazur Rahman
Going forward, ESOP will not be given to all employees.
It will be given to the select employees.
So therefore, other employees will definitely get yearly increase.
And on UTI International profit, I don't believe there's any one-time expenses.
There is only all the costs of employees and the administrative expenses, the legal fees, which we have to incur to continuously launch their schemes.
And as I mentioned earlier that this company, is a profitable company, solid profitable company, and we will continue to book good profit.
Viraj
Sir, because just to follow on this, because if I look at the operational level, I understand you had a much lower AUM and first half of FY21. But even if I look at Q1 22, despite such a healthy growth in AUM, at an EBITDA level, you are not making any money.
So whatever growth and fee income we are seeing is more than offset by the jump in expenses.
So I'm just trying to understand, you know, how, what will actually drive the profit, since we're expecting a substantial profit in future, what will drive it is that higher scale or better yield.
Imtaiyazur Rahman
It is a higher scale.
Viraj
Okay.
Imtaiyazur Rahman
It is a growth in the AUM, higher scale.
Viraj
Okay.
And the expenses in which has seen a similar jump. one of the major drivers there?
Surojit Saha
Yeah.
You must be seeing that from Rs.
15,726 Crores it has gone up to Rs.
30,498 crores.
And there is a jump on the sale of service and revenue from Rs.
12 crore to Rs.
26 crore.
Basically, the trail fees is being paid in the international market is around 45 bps. So because of the trail commission, which has been paid, which is factored in that admin and other expenses, you see a substantial jump over there.
So basically, when this money stays with us for a longer period, because this money has come in during the May-June period.
So once it stays with us for a longer period, we will see a much better revenue jump in UK international, apart from scale.
Viraj
Okay.
And is there a carry element in the performance here?
Surojit Saha
No, there was no carry element there.
Viraj
Okay.
Thank you very much.
And good luck.
Moderator · Conference Operator
Thank you very much.
Ladies and Gentlemen, I now hand the conference over to Mr. Imtaiyazur Rahman for closing comments.
Imtaiyazur Rahman
Thank you friends for your participation to this our call.
And I can't thank you enough for asking all relevant questions.
I would like to assure you and everybody that we will continue to work hard and it will be our endeavour to be fully compliant, to do the things which is in the interest of the investors and all the stake holders.
And thank you very much for joining this conference.
Thank you.
Stay safe and stay careful.
Bye.
Moderator · Conference Operator
Thank you very much on behalf of UTI- Management Company Limited that concludes this conference.
Thank you for joining us, you may now disconnect your lines.