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August 10, 2001
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Money > Business Headlines > Report August 10, 2001 |
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US-64 may be NAV-linked by OctoberBS Markets Bureau Unit Trust of India plans to link its flagship scheme US-64 to its net asset value by October, ahead of the stipulated deadline of January 2002. UTI chairman M Damodaran told Business Standard on Thursday: "We are working towards this. We will certainly make it NAV-linked much before January 2002, possibly in October." "We hope that by the time we make it NAV-linked, its net asset value will go up to a healthy level," he added. The UTI chairman also expects the market to look up by that time. "You have seen the downgrade (by Moody's and Standard and Poor's) has had no impact on the market. It will certainly look up over the next 2-3 months. But we are not entirely depending on the market to raise the NAV. The scheme is also being restructured," he said. Damodaran plans to kick off the US-64 restructuring exercise around the time it is linked to the NAV. "The scheme is over-exposed to certain scrips. We are in the process of slashing high exposures to those scrips as well as certain sectors. We plan to bring down the number of scrips from the current level of more than 1000," he said. The Trust is also planning to increase its exposure to good quality debt paper. Going beyond US-64, UTI plans to give a face-lift to all the existing schemes. "We are planning a few add-ons to the schemes. There will be new options offered to investors. For instance, a growth scheme may be added, with new features like liquidity and so on. Moreover, we are also working on plans whereby an investor will be given the option of switching from one particular scheme to another," he said. The Trust will take a decision on increasing the number of units that can be redeemed through the special window next month. "We will watch the trend for another month and then take a decision," Damodaran said, adding, "it seems that those who are in genuine need of liquidity are coming forward to redeem part of their holdings in the current month." The average redemption per unit holder is around 1200-1500, almost half the limit of 3,000 units. Till Thursday, UTI received applications for repurchase to the extent of Rs 480 million. On July 15, UTI announced it would allow US-64 investors to redeem up to 3,000 units from August 1 to May 31, 2003 to ease the impact of the freeze on small investors. Under the limited redemption scheme, UTI is offering investors a stipulated minimum price beginning at Rs 10 for August, and increasing by 10 paise every month to a maximum of Rs 12 in May 2003. Once it shifts to NAV, the redemption price paid will be the higher of either the net asset value of the fund at the time the units are redeemed or the stipulated minimum price for that month. UTI to press for management change in corporate defaulters Pay off or face the music, Unit Trust of India chairman M Damodaran has told companies that have failed to clear interest payment overdues on debt papers. UTI is ready to roll out an aggressive recovery strategy next week to contain its swelling non-performing assets. The Trust plans to even press for a change in management in corporates that are not ready to clear their dues. "We have drawn up a list of defaulters. We can even go to the extent of changing the management if they do not come forward to clear their dues," UTI chairman M Damodaran said. The net NPA of UTI is pegged at over 9 per cent. In absolute terms, the sticky debts amount to Rs 26.72 billion as on June 30, 2001. "There have been cases where corporates have genuine problems. But those who can afford to but are not clearing their dues will face strict action." Damodaran said. The mutual fund is adopting a multi-pronged approach to recover sticky assets. "We are taking stock of the collateral which can be sold to realise our dues," he said. We will also move the debt recovery tribunals and attach the property of defaulters. Besides, we are also checking out whether we have exposure to any group company of the defaulters," Damodaran said. UTI is also in talks with banks and financial institutions where defaulting corporates have overdues. Powered by YOU MAY ALSO WANT TO READ:
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