AMFI meet on entry load hits a dead end
The Securities and Exchange Board of India’s decision to scrap entry loads on mutual funds has not gone down well with the mutual fund companies but they seem to have no strategy now to combat it. In the general body meeting of the Association of Mutual Funds in India (AMFI) held yesterday, members were supposed to discuss the issue but it ended with no clear action plan. There was supposed to be a special committee to discuss it but that proposal was given up eventually.
 
The SEBI directive, scrapping the entry load on mutual fund schemes took effect on August 2009. The AMFI meeting which lasted for several hours, saw members agitated about the directive. One of the courses of action was to set up a committee to take up the issue with SEBI. However, by the end of the meeting, the members decided the committee would be a futile effort, given the strong SEBI stance on the issue. When contacted by Moneylife, A P Kurian, Chairman, AMFI, refused to comment on the proceedings of the meeting claiming them to be “internal.”
 
Moneylife had earlier reported on how mutual fund companies are facing a hard time, given the new SEBI directive. The entry load, which ran as high as 6%, was earlier charged to the fund investors, that is the fund corpus itself. Ever since SEBI enacted this rule, New Fund Offerings (NFOs) are down to a trickle, despite the Sensex continuing to climb. The distributors, especially Independent Financial Advisors (IFAs), too have been left high and dry after the regulator abolished the load.
 
The mutual fund companies have kept the show going by paying out a 0.5% commission to advisors from their own fees; the larger distributors are being paid 1%. Some, like JM Financial Asset Management which have a poor long-term performance record, are even paying as much as 1.5% as upfront load plus 1% brokerage on systematic investment plan ( SIPs) and systematic transfer plan (STPs). Such a steep payout will affect the profitability as well as long-term survival of the asset management company (AMC). In the circumstances, the fund industry is even more focused on large corporate investments and has no interest in incurring the high cost of servicing retail investors. After the AMFI meeting, it seems that fund companies have completely fallen in line with the regulations. It remains to be seen what the smaller fund companies do.
– By Amritha Pillay ([email protected])
 

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Unseasonal rain turns spoilsport for wineries in Maharashtra
Incessant rains and hailstorms in Nashik —the wine capital of India—and other parts of Maharashtra last week has sent over 40 wineries in Maharashtra scrambling for cover. The crops sowed in over 3,000 hectares of land in the region have been completely destroyed in the recent torrential rain.
 
After excessive heat and early summer, Nashik was hit by unseasonal rains in the last couple of days causing excessive damage to grape farming. It is difficult to ascertain the exact damage to the grape production especially in Maharashtra.
 
Maharashtracontributes about 90% of the country’s total grape output. Talking to Moneylife, Abijit Kabir, managing director of Indus Vineyards said, “Wine manufacturers in Maharashtra will now have to brace themselves for a lean phase as unseasonal rains have dampened our sprits. Wine is a sunshine industry because every vineyard in India undergoes an uncomfortable cycle, with unpredictable things happening at regular intervals like unseasonal rains and pest attacks.”
 
Vineyards will suffer from lower realisation this year due to poor demand from domestic and international markets. Grape growers have resorted to delayed harvest and prices are anywhere between Rs35-Rs55 per kg. The prices can shoot up depending on supply shortage. Once the grape arrival starts in full swing after December, the prices might come down to Rs30 per kg, which is an optimal realisation, but anything above that will hit the vineyards badly.
 
Maharashtra produces 18 lakh tonnes of grapes. But the acreage under grape cultivation had gone down by over 15% last year as most farmers turned towards fresh fruit cultivation.
 
There are approximately 40 wineries in Maharashtra with a total production of over 7 million litres annually and valued at over Rs400 crore. Over 8 lakh wine cases are sold every year of which sparkling wines consists of over 50,000 cases.
 
According to the figures available with the State Excise Department, in 2005, the annual production of wine in the country was estimated to be over 8 million litres, out of this over 5 million litres was produced in Maharashtra alone. This is quite a small fraction compared to world’s annual production of over 35,000 million litres.
 
According to Mr Kabir, grape growing is highly capital intensive. About 80% of wine consumption in the country is concentrated in four major cities—Mumbai (40%), Delhi (30%), Bengaluru (10%) and Goa (10%).
 
Inspite of tropical climate, faulty storage and transport facilities are some of the problems of the wine industry in India. Other impediments are hostile rules for domestic marketing of wines and high excise tariff barriers.
Vidyut Kumar Ta [email protected]
 
 
 
 
 

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Yash Raj Films to churn out exclusive serials for Sony TV
India’s leading television broadcaster Multi Screen Media Private Limited (MSMP), —erstwhile Sony Entertainment Television—has entered into an exclusive agreement with Yash Raj Films (YRF) to produce a mix of fiction and non-fiction serials which will be exclusive for the channel.
 
According to MSMP spokesperson Uma Sethumadhavan, “The collaboration marks another milestone in the history of TV industry. The serials will be aired by the end of the last quarter of 2009 during prime time.”
 
According to industry sources, YRF will be earning anywhere between Rs15lakh- Rs20 lakh from each episode from Sony TV.
 
Man Jit Singh, CEO of MSMP said, "We are thrilled to be working with Yash and Aditya Chopra towards creating unmatched TV content—a mix of fiction and non-fiction serials. The content will be contemporary and engaging for the TV audiences in India.”
 
Mr Singh said, “Our relations with Yash Raj Films have been longstanding and this alliance will further help in strengthening our ties. This alliance makes great sense because of the obvious ways the two businesses compliment each other.”
 
“We have a young team and this alliance gives us an opportunity to produce TV content which will connect and entertain large television audience in India,” said a source from YRF.
 
He added, “Yash Raj Films has been making feature films for almost four decades in India. We were planning to venture into the small screen space since some time now. However, we have deferred the launch for some time. The reason we forged an alliance with Sony TV is to leverage both of our experiences to produce something unique in the world of serials and bring the very best in the TV entertainment space with high quality production values which will appeal to the entire family.”
 
Over the past 40 years, YRF remained firmly rooted in Bollywood, churning out blockbuster movies like Dhool Ka Phool (1959), Dharmputra (1961), Waqt (1965), Ittefaq & Aadmi Aur Insaan (1969), Joshila (1973), Deewaar (1975), Trishul (1978) & Parampara (1993), Daag (1973), Kabhi Kabhie (1976), Kaala Patthar (1979), Silsila (1981), Chandni (1989), Darr (1993), Dil To Pagal Hai (1997) and Veer-Zaara (2004). Rab Ne Bana Di Jodi,Bachna Ae Haseeno and Dostana (2009) were the biggest blockbuster hits from YRF.
 

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