It has been a fortnight since Osian Art Fund has promised the first part-payment, but around 85 investors are still waiting for the same
About 15 days back, Osian Art Fund sent a mail to its investors saying that it had started the process of redeeming their capital and all unit-holders would receive around 85% of their investment over the next 8-10 days. However, there are still around 85 investors who haven’t received a rupee from the Fund.
Sharat Jain, who invested Rs10 lakh in the Fund, is one among them. Mr Jain invested the amount in the name of Rachna Jain, but till date hasn’t received any amount from the Fund. He said,” We had sent an SMS also to the number provided in the email (which is the same number as provided by someone from the Fund’s Mumbai office). But no reply or message was sent back. We also sent an email to their office ID and also to Mr Neville Tuli, but there was no reply.”
When we checked with Mr Tuli, chairman, Osian’s-Connoisseurs of Art Pvt Ltd, he confirmed that there are still some investors (around 85) who have to be paid. “The process is ongoing in a systematic manner, and will be completed in the coming three to four days (outside of the holidays). Thereafter, all the investors will be paid the balance amount by 4 January 2010 as per my letter to unit-holders on 11 December 2009,” he said in an email sent to Moneylife.
As of July 2006, the total corpus held by the Fund was Rs102.40 crore and it had 656
unit-holders spread across 39 cities in India. On 9 November 2009, Moneylife was the first to report about the fact that Osian Art Fund reported poor returns, (Read it here). On 15 November 2009, we reported on how the Fund was having trouble repaying investors’ money (Read it here) and then we wrote on how SEBI has failed to regulate the Fund (Read it here).
Responding to charges of not answering unit-holders’ calls or replying to their messages, Mr Tuli said, “There is absolutely no truth in our team not answering the client's concerns. I myself have spoken to virtually every unit-holder, and if a call remains unanswered—as it is my personal mobile number—I always return the call in the evening or the next morning.”
In a note sent to all investors on 11 December 2009, the Fund said that it has started the process of redeeming unit-holder capital and within the next 8 to 10 days, all unit-holders would receive 85% of their investment, in addition to their earlier 5% dividend.
However, there is some confusion between investors who have received some payment and the Fund. While the Fund claims that it started paying 85% of the unit-holder’s investment, in addition to their earlier 5% dividend, investors are clueless about the percentage they have received out of their total investment. Some investors are saying that they received around 75% amount that comprises their investment and net asset value (NAV) of the fund, assuming an NAV of Rs112. As of 9 June 2009, the Fund’s NAV was Rs120.27 (cum income distribution) and Rs115.27 (ex-income distribution).
In its earlier mail to Moneylife, the Fund said that it would pay around 90% of the invested amount in its first instalment. However, in its mail to investors, the Fund had said the payment would be 85% of the invested amount in addition to the earlier 5% dividend. So the discrepancies in the percentage of amount repaid continue.
For investors like Deepak Daftari who have been lucky to receive their first instalments early this month, the date for final payment is fast approaching. According to Mr Tuli’s mail, the Fund is supposed to pay balance amount to investors by 4 January 2010.
Lauding Moneylife’s efforts to protect the investor, Mr Tuli said, “The manner in which Moneylife and yourself have tried to protect the investor's concerns is commendable, even though the Osian Art Fund is at the receiving end; this is the way a better system evolves.”
“It is important to make clear the difference between a 'delay' and a 'default' during the most difficult of times, let alone using other totally unjustified negative terms,” Mr Tuli added.
Most real-estate developers are converting their commercial ventures like IT parks and SEZs into residential projects
The real-estate market is witnessing a new trend. Most information technology parks and commercial office projects are now being converted into residential projects, as most developers are not feeling confident over the projected revival in the commercial segment.
“In the commercial segment, there is a huge oversupply and absorption is very low in the market. A lot of commercial and IT park spaces are now being converted into residential projects. Approximately two million sq ft of commercial projects have recently been converted into residential projects in the island city (mainly at Lower Parel). You can witness many such similar trends in the real-estate market now,” said Pankaj Kapoor, founder, Liases Foras.
Orbit Corporation Ltd, a Mumbai-based developer, has converted its IT park project at Andheri, a Mumbai suburb, into a residential project called ‘Orbit Residency Park’. It will be constructing one bedroom, hall & kitchen (BHK) apartments of approximately 600 sq ft–700 sq ft, one-and-a-half BHK of approximately 700 sq ft–800 sq ft, two BHK of approximately 900 sq ft–985 sq ft, two-and-a-half BHK of approximately 1,000 sq ft, three BHK of approximately 1,300 sq ft-1,400 sq ft and three-and-a- half BHK of approximately 1,350 sq ft-1,450 sq ft.
Real estate giants like DLF and Unitech have also discontinued many commercial development projects and are converting these ventures into residential projects. DLF has recently de-notified four Special Economic Zones (SEZs), as there is a lack of demand in the commercial space.
“The commercial sector is growing in supply but not in off-take. You can see an over-supply in office space and SEZs. It will still take six months to one year for the absorption to come back. So we have changed our IT park project into a residential project,” said Pujit Aggarwal, managing director and chief executive officer, Orbit Corp.
According to industry sources, Bombay Dyeing’s Dadar and Worli mills, Prakash Cotton Mills’ Lower Parel project and the proposed SEZ by K Raheja Corp in Navi Mumbai are among the commercial projects which are being converted into residential projects.
Bombay Dyeing’s mill lands at Dadar and Worli (at central Mumbai) were supposed to be utilised for two commercial and IT towers earlier. But the company is now converting these lands into residential projects. Moneylife contacted Bombay Dyeing on this development, but received no answer. K Raheja Corp had also planned an IT/ITes project at Navi Mumbai earlier.
“We have still not taken a final call. But we are mostly looking at residential project development,” said Ravinder Jalan, chairman, Prakash Cotton Mills.
During the boom time of 2007, the floor space index (FSI) for residential projects was 1.33 and for IT parks it was 2.66. Ergo, most developers opted to go in for IT parks rather than residential projects. But as the slowdown hit the market, there was no movement in sales in any of the realty sectors. After a year of slowdown, the residential segment has started showing some signs of recovery. The commercial segment is expected to take a year more to show some signs of recovery. This is why developers are converting their commercial projects into residential projects.
The additional FSI being offered (from 2.66 to 4), if developers also construct parking spaces in residential properties, is also attracting developers.
“The higher FSI option in the residential segment is pulling in more and more developers,” said Mr Kapoor.
Indage Vintners has been staring at financial losses for a long time and is not able to pay its suppliers and service providers. Now, CRP, its supplier of ‘bag in box’ packaging, has issued a warning to other suppliers not to have any dealings with Indage.
Complaints from investors and suppliers don’t seem to end for Indage Vintners; this time the problems of India’s oldest and biggest wine-maker are emanating from the UK-based CRP Print & Packaging Ltd which has warned other suppliers against dealing with Indage after it failed to honour its purchase contracts.
“Calls on the guarantee provided by Indage to CRP have not met with open dialogue, but instead a closed shop of silence. Those seeking to trade with Indage going forward or placing their critical supplies at the behest of this entity should beware,” CRP said in an email.
Officials from Indage were not available for comment.
CRP is the sole supplier of ‘bag in box’ packaging and technical expertise to Indage. CRP said it had sought an assurance from Indage to enable its continued support and partnering of the business.
Santosh Verma, managing director of Indage Vintners Ltd, had offered a parent guarantee to CRP to cover a line of credit which was provided on the clear understanding that the guarantee would be upheld if the business fails or the terms of credit are violated, CRP said. Indage’s chief financial officer, Rajesh Chalke had provided “honourable assurances that the covenant of Indage was strong and should the eventuality arise, Indage would never walk away from its responsibilities,” it added.
Indage UK has now traded insolvently for 18 months on monies borrowed under false promises from its UK and worldwide suppliers, CRP alleged in its mail.
“Management sight a number of factors, but the traits of its predecessor’s failed businesses are evident once again; no in-house financial controls or credible reporting function and no financial disclosures (FD) despite a number of appointed officials; no local management to control or run the business day to day and no working-capital facilities to support the operation,” CRP said in the mail.
CRP said the UK entity of Indage has now entered a period of voluntary arrangement supported by the UK Revenue authorities and its own group entities and creditors are “again left in a limbo and clinging to a plan that is predicated on the same honourable promises given in 2008.”
In October, Indage UK had let go of around a 100 employees; and in 2008, around 250 employees left the company after not being paid. Indage has not been making payments to its suppliers and service providers since the beginning of 2009. Soon afterwards, it stopped paying its employees, forcing some of them to approach the police.
According to an ex-employee, there is a lack of communication between Indage Vintners and its sister companies and also a lack of financial accountability. “The company lacks vision, plus it doesn’t do any market segmentation for its wines,” he said.
According to company sources, recently a lot of senior employees from the marketing and sales departments have also quit.