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Vassal kicks off austerity drive at UTI

Rakesh P Sharma

Unit Trust of India's acting chairman K G Vassal plans to kick off an austerity drive at the fund behemoth to conserve resources, thereby providing better returns to the investors. He has also warned UTI employees against leaking information to outsiders in this hour of crisis. The warning assumes significance against the backdrop of the finance ministry's probe into suspected insider trading in UTI. There has been apprehension that the corporate rush for US-64 redemption was triggered by an information leak on the six-month ban on sales and repurchases of the units.

In a communication to UTI employees on Wednesday, Vassal said: "We should observe austerity measures in all our day-to-day activities, by saving on avoidable expenditure so that better returns can be provided to the unit-holders. It is our responsibility to help the organisation in regaining the trust of millions of our investors."

Warning against leakage of sensitive information, Vassal wrote: "Each one of us under all circumstances should ensure that all data, information and records which we come across are kept strictly confidential and disclosed to a third party if specifically authorised by the competent authority and is routed only through the corporate communication cell."

Admitting that UTI is facing a shrinkage in assets, Vassal said: "During the last year, while the size of the mutual fund industry has grown, the size of the total assets managed by us declined, partly due to falling markets and partly because of repurchases, redemptions and termination of RUS 9."

PIL on US-64: UTI asked to file reply

The Bombay high court Wednesday directed UTI to file by August 1 an affidavit in reply to a public interest litigation challenging its recent decision to suspend sale and repurchase of units under the US-64 scheme.

The PIL, filed by the National Association of Small Investors, prayed that the suspension of sale and repurchase of units be lifted and UTI be directed to repurchase the units at the same price offered to investors. The PIL also prayed for a direction to UTI to raise the dividend announced for the US-64 scheme to at least 20 per cent.

The PIL contended that the yield to the investors based on the present 10 per cent dividend was a mere 6.67 per cent, even below the prevailing the bank interest rate per annum. Nasi contended that there was no clause in the agreement or conditions for investment about temporary suspension or freeze of sale and repurchase of units under this scheme. Therefore, UTI had no right to issue the impugned order.

It alleged that large corporate houses like Reliance, petroleum giants such as BPCL, IPCL, IOC and other multi-nationals were among the investors of the US-64 scheme. Prior to the abrupt suspension of sale and repurchase of units under this scheme, many companies had redeemed their investment.

Between March and April, an estimated Rs 41.41 billion was redeemed of which corporate investment was to the tune of Rs 40 billion, the PIL said.

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