| |
BUSINESS: UTI
"Mutual Funds Also To Blame"
Subramanyam
also attributes some of the investment decisions to the competitive mutual-fund
market. Agrees M.M. Kapur, UTI executive director: "When you have
a sector-specific fund and not too many opportunities, re-investments
in Zee and investments in dotcoms and media stocks are bound to happen."
But it is not just the tech sector which has seemingly irrational diversification.
Dhiren Kumar, director of Value Research, a research agency, argues, "Too
much diversification can be counterproductive-parti-cularly the kind the
UTI has opted for." A case in point is UTI's Masterplus. In the Rs
692-crore portfolio, 39 of the 117 stocks account for 93 per cent of the
investments."This wild diversification has contributed to the poor
performance," explains Kumar. Mastershare, therefore, has recorded
a five-year return of a paltry 0.57 per cent.
The UTI is also notorious for its lack of transparency.
The investors have to believe what UTI chooses to-or rather chooses not
to-reveal. UTI discloses only 75 per cent of its portfolio in any scheme.
The rest remains a mystery. But surely, SEBI guidelines guard the investors's
interest? UTI claims that except for four, "all other schemes are
fully compliant with SEBI mf guidelines". The truth: UTI's compliance
is merely voluntary and SEBI can do precious little if the Trust impinges
on investors' interests.
THE KETAN EFFECT ON THE UTI
UTI was not the only fund buying
into K-10 shares, but the big daddy takes the cake. INDIA TODAY
calculated the holdings of UTI (barring US 64) in K-10 stocks
as on Feb 28, 2001 to get an idea of their value and also looked
at the current price to estimate the possible size of the hole.
|
| Name of the
company |
Share Price on Feb 28
(Rs)
|
Value of holding (Rs Cr)
|
Current Share Price(Rs)
|
Peak Share Price (Rs)
|
| Aftek Infosys |
396.20
|
5.53
|
85.35
|
5,000
|
| DSQ |
373.59
|
13.13
|
66.85
|
2,820
|
| Global Tele |
404.25
|
54.02
|
116.15
|
3,550
|
| HFCL |
670.40
|
227.15
|
79.65
|
2,553
|
| Pentamedia |
179.35
|
15.33
|
61.50
|
2,052
|
| Ranbaxy |
689.75
|
113.37
|
420.00
|
1,020
|
| Satyam |
347.00
|
455.64
|
190.05
|
7,229
|
| Silverline |
185.20
|
0.40
|
60.80
|
1,360
|
| SSI |
1,272.00
|
47.40
|
476.05
|
7,200
|
| Zee Telefilms |
171.25
|
122.82
|
76.90
|
1,630
|
| It is estimated that June 30, 2000
UTI had investments of Rs 4,669.50 crore in KP stocks. The value of
the holdings through sales and price fall came down to Rs 1,054 crore
by Feb 28, 2001. The value is perhaps a fourth of what it was on the
budget day. |
One cause of UTI's ailment is centralised decision-making-a
point raised by the Deepak Parekh Committee in 1999. But two years later,
little has changed. UTI continues to be managed from the UTI Bhavan on
Marine Lines in Mumbai. So when UTI lends
Rs 50 crore through NCDs to HFCL, it is not just the commercial rationale
which is under suspicion, but also its motivation. Only recently the board
pruned the UTI chief's power to take investment decisions on Rs 50 crore
to Rs 40 crore. That is not enough. To restore investor confidence, UTI
needs transparency and accountability. Trust, after all, is the name of
the game.
|
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