It may be recalled that the AMC had assured original allottees of a progressively higher repurchase price as the scheme approaches redemption in August, 2000. Selling units at Rs 300 would translate into a gain of Rs 200 or a compounded annual return of around 15.5 per cent for original investors.The AMC was repurchasing units from original allottees at a price of Rs 200 since 1995. The new repurchase price will be applicable till August 2000, when Double Square units are redeemed at Rs 400.

The unit capital as on September 30, 1998 stood at Rs 371.95 crore against Rs 381.69 crore in September, 1997. ``Much redemption is not anticipatedsince an overwhelming majority is that of passive investors,'' said an analyst. ``A second reason is the poor communication link between unitholders and the AMC and absence of a nationwide branch network that prevents investors from redeeming units,'' he added.

Assuming that 50 per cent of redemption took place in September, 1998 alone, the AMC would have faced a shortfall of Rs 108 per unit since the average NAV of BoI Double Square Plus was Rs 192. This translates into a gap of Rs 5.4 crore for the AMC.

``The problem will anyway come two years down the line in year 2000 when the AMC will have to wind up the scheme and dole out Rs 400 per unit,'' said the chief of a private sector mutual fund. A bad equity market has taken a toll on the NAV of this growth fund, which was hovering around Rs 182 in November. This leaves a gap of Rs 218 per unit or a combined shortfall of Rs 810 crore at current NAV! The NAV of the fund has to grow by close to 120 per cent in less than two years to reach Rs 400.

For thefirst six-months of the current fiscal, the income of Double Square has fallen from Rs 55.35 crore to Rs 48.75 crore. Further, unrealised depreciation in value of investments has been to the tune of Rs 122.33 crore against nil in the previous period. Thus, the scheme has seen a net deficit of Rs 81.51 crore against a surplus of Rs 48.27 crore as on September 30, 1997. This has brought down reserves and surplus from Rs 261.45 crore to Rs 179.63 crore.

Meanwhile, all the schemes under BoI AMC hold a stake in Bank of India. The stake of the five schemes is valued at Rs 13.87 crore as on September 30, 1998 with BoI closing at Rs 26.25 on BSE. The five schemes have, thus, close to 53 lakh shares between them.