Return
to Story Page
To print: Select File and then Print from your
browser's menu
FE NEWS SERVICE
Mumbai, May 23: Unit Trust of India (UTI) will undertake sale of equity holdings of US-64, in certain select companies, in consultation with other financial institutions.
The management of the country's largest mutual fund was still mulling over the Deepak Parekh committee report on US-64, where it had recommended that the scheme could be profitable if significant stakes that it had in some companies could be sold by negotiation to the highest bidder.
"No timeframe has been set for effecting such a sale," a senior trust official said on Sunday, adding that the trust would embark on such an exercise only when, "UTI is in a position to sell."
Elaborating on the need to have consultations with other FIs, sources said that apart from UTI, institutions such as ICICI, IDBI and IFCI also held significant stakes in certain companies.
So any decision to sell off its own significant stake through US-64 would have to be done after discussions with the institutions, sources said, adding the trust's management wasin the process of initiating dialogues with the heads of the FIs.
Incidentally, the percentage of debt investments by US-64, has shot up to 42 per cent.
The debt-equity composition of the scheme's portfolio as on November 30, 1998 was in the ratio of 27:73 in favour of equity.
However, within a span of around four months, US-64 has managed to increase its debt portfolio from 27 per cent to 42 per cent, sources said.
The committee, which had in its analysis of the scheme, argued that too much dependence on equity investments had resulted in erosion of its net worth, had recommended, "the composition of the portfolio needs to be changed to provide for more weightage to debt consistent with the objectives of the scheme."
With rather large scale downgrading of corporate debt instruments which are taking place, UTI is treading carefully in selecting its investment portfolio. "Government securities will yield low returns to investors and we have decided to go in for only market-related, credit-rated debtinstruments from corporates," the official said.
According to sources close to the management, UTI has put in place a strategy to "hard-sell" its open-ended schemes.
"So far from being deterred by the reverses, we are already aggressively marketing our open-ended schemes," the official confirmed.
Among the open-ended schemes of the Unit Trust Of India are - UTI Bond Fund with a net assets value of Rs 11.22, Grandmaster (Rs 11.55), Master Index Fund (Rs 11.95), Mastergain 92 (11.83), MasterPlus 91 (22.01), Money Market Mutual Fund (12.31), Primary Equity Fund (12.64) and Unit Scheme 95 (112.44).
The intention is to leverage the existing schemes to their maximum potential, so as to offset the losses and the redemption pressures that it had suffered from an erosion in the value of US-64.
Sources gave indications that UTI would embark on its exercise of aligning its purchase price of US-64 with its net asset value, from the current year itself. The dividend to be declared and the sale and purchase pricewould, however, depend on year ending results as of June 30 and sources said the trust's management was depending a lot on the stock index remaining above the 4000-level.
More interested in regaining investor confidence, UTI has for the moment put a number of its plans on the backburner, sources said.
For instance, the agreement it had signed with Manulife of Canada for management of pension funds is in "limbo," so also its plans of entering the insurance sector.
As for putting its nominees on the boards of corporates, the official described it as a "dead issue," so far as UTI was concerned. While some were agreeable to the proposal, most of the corporates kicked up a fuss at the prospect of having nominees on their boards.
UTI was, however, going ahead with its $500-million fund in collaboration with AMP of Australia for funding equities of infrastructure projects.
The modalities of the scheme, especially the exchange-risk liability were being worked out, the sources said.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
------------------------------------------------------------
This story was printed from Net Express located at http://www.expressindia.com. Net Express provides a portal to India, with news from The Indian Express and The Financial Express along with sites on travel and tourism, the entertainment industry, the power sector, the environment and much more.
------------------------------------------------------------