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July 4, 2001
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Money > Business Headlines > Report July 4, 2001 |
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Dud stocks form chunk of UTI's kittyB G Shirsat The Unit Trust of India seems to be loaded with underperforming stocks in as many as 57 equity-oriented schemes. Data available with Business Standard Research Bureau for April 2001 show that 60.9 per cent of the shares in the portfolio of 57 schemes are currently valued between Re 1 and Rs 100. However, these stocks account for a meager 10.75 per cent in value terms. UTI's majority shareholding in terms of value is concentrated in high value stocks (Rs 200 and above) which account for 70.69 per cent of total value. This has profound implications for any strategy that involves selling blocks of shares to promoters. Senior UTI executives have clarified that the state-owned mutual fund would be focusing on block sales of shares to promoters, to rustle up cash, and that US-64 managers can sit with managers of other UTI schemes and work out a common bulk sales strategy. If the bulk of UTI's shares are high-value ones, the promoters of big companies would in most cases have a stake of over 26 per cent. So any UTI offers to sell shares to them may not prove exactly alluring to them. Secondly, if the trust dumps its high value stocks, it will be left with a huge low-value portfolio -- something that won't serve the interests of its unit holders. In other words, UTI may be caught between the devil and the deep sea. Markets sources said with a portfolio loaded against its long-term interests, it would be difficult for UTI to attempt to sell any part of the low value portfolio to the promoters--who may not have the money to buy their shares--or to third parties. "At depressed prices like this, it should be obvious that UTI is not talking about any worthwhile companies," a fund manager with a private sector mutual fund said. "It is obviously a threat of retaliation being held out to companies. UTI had earlier said it would sell stocks of companies which press for redemption of their US-64 units," another fund manager noted. "Ironically, the depressed market conditions that are weighing down UTI's performance also imply that it cannot offload any block holdings in the open market," he added. The UTI holds 808 million shares in 57 schemes valued at Rs 113.20 billion. Of the total volume, the small value stocks--valued between Re 1 and 10--account for 276 million shares (34.11 per cent of the total volume). However, in terms of value, these stocks account for a marginal 1.50 per cent (Rs 1.69 billion). Stocks valued between Rs 10 and Rs 20 account for 6.33 per cent of the total volume but a minuscule 0.82 per cent in terms of value. Stocks valued between Rs 20 and Rs 40 total 86 million shares (10.69 per cent of the volume) valued at Rs 3.43 billion(3.03 per cent of total value). These schemes collectively hold 79 million shares whose market value ranges between Rs 40 and Rs 50, accounting for 9.77 per cent of volume and 5.40 per cent of value. The majority holding in terms of value is concentrated in high value stocks (Rs 200 and above), which account for 70.69 per cent of total value but 23.53 per cent of the total volume. Among small value stocks, the 57 schemes hold 27 million shares in SAIL valued at Rs 157 million. The UTI holds 1.38 shares of Neyveli Lignite, around 10 million shares in Jindal Vijaynagar and 9 million shares in Hindustan Motors which are currently available between Rs 1-10. Powered by YOU MAY ALSO WANT TO READ:
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