UTI MF and Reliance MF are among the fund houses that seem to have made losses on their purchases of the stock Deccan Chronicle Holding after failing to make a timely exit in the stock. While the latter?s Reliance Regular Savings Equity exited the stock after the March quarter this year, the former?s UTI Long Term Advantage Fund Series I remained invested in the June quarter as well. The other major investor in Deccan Chronicle was Franklin Templeton Asset Management, which made good its exit in the second quarter of FY12.
UTI MF had purchased 2.25 lakh shares under UTI Long Term Advantage Fund Series I in the quarter ended September 2007 and held the same number of shares till the quarter ended March 31, 2012. The value of the 2.25 lakh shares touched a peak of R 3.47 crore for the period ended December 31, 2009 but fell to R0.78 crore at the end of March 2012. In the first quarter of FY13, the fund house brought down its holding in the stock marginally to 2.17 lakh shares with a total value of R0.69 crore. Reliance MF, on other hand, had purchased 33 lakh shares under its scheme Reliance Regular Savings Equity in the quarter ended September 2009. The value of these holdings touched a peak of R54.35 crore at the end of the December quarter of 2009. The fund house then offloaded about 6.5 lakh shares in the quarter ended March 2010 to book a small profit.
It subsequently brought down its holding to 14.88 lakh shares in the quarter ended September 2010 and held more than 14 lakh shares till the quarter ended September 2011, during which time the shares? value fell from R19.32 crore to R8.16 crore. In the quarter ended March 2012, the fund house further reduced its holding to 10 lakh shares, which were valued at just R3.45 crore. The fund house sold off its remaining holdings in the June quarter this year.
Franklin Templeton Asset Management?s investments in Deccan Chronicle through its schemes Franklin India Flexi Cap and Franklin India High Growth Companies were collectively valued at R44.8 crore at the end of June quarter of 2011, after which the schemes exited the stock. The fund had earlier offloaded sizeable number of shares after Q2FY10.
The number of MF schemes invested in Deccan Chronicle has fallen from a peak of 39 at the end of FY08 to 18 at the end of FY09 to 9 at the end of FY11 to 3 at the end of FY12, according to data sourced from Value Research. The company?s mounting debt woes and its inability to sell assets to raise capital has also impacted investor confidence of late. Total institutional holding in the stock has reduced to 8.67% for the quarter ended June 2012 from 9.95% in the previous quarter, according to data put up on the NSE website. MF holdings, in particular, have fallen drastically to 0.59% at the end of Q1FY13 from 4.31% at the end of Q4FY11, according to data sourced from Capitaline. This holding was as high as 10.5% in Q2FY10 and had touched a peak of 19.66% in Q1FY07.
According to analysts, things started going wrong for the company after it proceeded to merge its non-printing business in the fourth quarter of FY11. ?The disclosures in the balance sheet became opaque, the management started becoming inaccessible and there was no sense of where the core business was headed. That?s when most analysts stopped tracking the business,? said a media analyst with a leading broking firm, on condition of anonymity.
However, some experts say the company had issues even in the heady days, when its stock price was soaring. ?The controversy surrounding the circulation numbers in Chennai erupted way back in 2005. Over the years, it has talked about many things but failed to deliver. I cannot understand why so many fund houses chose to invest in the company,? said the fund manager of a mid-sized fund house on condition of anonymity.
On Monday, the Deccan Chronicle scrip closed at Rs 13.26, 8.4% lower than its previous close on the BSE. As of June 30, 2012, promoters held 73.83% stake in the company, which reported a net profit of Rs 60.68 crore in FY12. The firm is now reportedly seeking a debt recast from creditors to emerge from the financial crisis.