Ind Moti’s rollover option flops

CHENNAI, May 31: Ind Moti may turn out to be a plastic pearl for its investors. Plans to roll over the six-year close-ended scheme for a fu...

int(2)

CHENNAI, May 31: Ind Moti may turn out to be a plastic pearl for its investors. Plans to roll over the six-year close-ended scheme for a further two years have come a cropper with less than 16 % of the 57,000-odd unit holders agreeing to the proposal. And leaving Indian Bank Mutual Fund with the unenviable task of finding an estimated Rs 67 crore and change by July 1 for the payola.

The Fund needed at least 51 % of investors to opt for the roll-over for the scheme to go through. The asset management company (AMC) Indfund Management Ltd will not take the hit on its books, since the offer condition stipulated redemption at Net Asset Value (NAV) prevailing as on June 30, 1997.

With the scheme’s current NAV (as of May 23) standing at Rs 7.66, investors have suffered a 2.34 % capital loss in nominal terms. The loss in real terms, naturally, will be substantially higher.

Story continues below this ad

Chances of a last-minute surge appear slim, at best. Trading in the unit has been underwhelming, with the 52-week high/low at Rs 9.75 and Rs 5.20 respectively.

Indfund was hoping that the roll-over may buy enough time to change the bottom line, but investors clearly appear to have preferred to cut their losses and run.

The scheme was launched as a growth fund and investors were to have been rewarded with regular dividends. The latter assuarance was adhered to in 1993, 1994 and 1995 when Ind Moti paid dividends of 15, 18 and 21 % .

The unaudited results published by the fund on Saturday, however, does not indicate any dividend payout for the year ended March 31, 1997. In fact the latest results show a net loss of Rs 19.72 crore through the sale/redemtion of investments. This was Rs 1.69 crore in the previous year. There is also a massive provision of Rs 17.01 crore for depreciation/losses in value of investments.

Story continues below this ad

The figures also indicate that the scheme has steadily been changing its investment profile. Launched before the bullish phases of the early 1990s, the scheme chose equities and IPOs as its focus of investment.

But it has now reduced its equity exposure considerably. While investments in equities and preference shares stood at Rs 80.45 crore on March 31 1996 the same figure was Rs 20.32 crore in the latest published results.

This trend is visible in most of its investments. Exposure to debentures and bonds has dropped from Rs 14.86 crore to Rs 3.11 crore in the same period.

In fact, with the market continuing to be in a bear grip, the fund may find it difficult to offload its investments and realise even the current NAV. In its latest results the fund has shown that 10 of its 11 schemes have reported net losses. Only Swarna Pushpa shows a net income of Rs 22.05 per unit.