Mutual Funds
Equity MFs continue to bleed, record redemption of Rs1,133 crore in April

Equity funds record redemption of Rs1,133 crore in April compared to Rs196 crore in the corresponding period last year, while debt funds witnessed inflows of Rs1,77,773 crore

Equity MFs have been bleeding over the last six months and they could not buck the trend in April. Equity schemes saw redemptions of Rs1,133 crore in April 2010 compared to Rs196 crore for the corresponding period last year, while assets under management (AUM) of equity schemes are up 63% at Rs1,76,830 crore in April compared to Rs1,08,507 crore in the corresponding period last year.

Investors have preferred to put their money in debt funds during the start of the year and have steered cleared of equity schemes. During April 2010, debt funds or fixed income schemes have recorded inflows to the tune of Rs1,77,773 crore. In March 2010, debt funds saw Rs1,64,487 crore in redemptions.

Equity-linked savings schemes (ELSS) recorded net outflows to the tune of Rs106 crore in April 2010. In March, ELSS schemes witnessed net inflows of Rs641 crore while the BSE Sensex was down 1% between 1st April-30th April.
Net inflows of all schemes stood at Rs1,85,956 crore in April 2010 compared to net outflows of Rs1,62,165 crore in March 2010. The total AUM of all schemes stood at Rs8,08,541 crore in April compared to Rs5,93,516 crore in the corresponding period last year.

According to the monthly data released by the Association of Mutual Funds in India (AMFI), the average AUM in the month of April 2010 grew by 40% at Rs7,69,165 crore compared to Rs5,51,300 crore in the corresponding period last year.

Equity funds have witnessed continuous redemptions since August 2009 to the tune of Rs7,970 crore except in January and February 2010 which recorded inflows of Rs1,514 crore and Rs980 crore respectively.

Industry experts cite market uncertainty as the main reason for investors shifting to debt funds. Institutional investors have also parked their money in fixed-income funds in April. 
 

User

COMMENTS

chetan batia

7 years ago

1. Uncertainities - globally
2. Amt of profits made during the last 1 year
3. DTC coming with new tax rules next year
4. loads of money flowing nto hybrids like MIP's, again due to reason 1 above & past performance of MIP's, combined
5. results have not lowered the PE's

Ravindra Shetye

7 years ago

I was surprised to see this article. Personally I am quite happy about the rewards of the Equity Funds and investing more. With the current inflation levels debt instruments lead you nowhere.

SC asks Sebastin to file fresh petition in High Court for early hearing

The Supreme Court, ruling in favour of A Sebastin, has asked him to file a fresh petition in the Bombay High Court, seeking an early hearing in a case related to his severance from the NSE

The Supreme Court has asked A Sebastin, a former employee of the National Stock Exchange (NSE), to file a renewed petition in the Bombay High Court, which seeks for an early hearing of a case related with various dues of Mr Sebastin from the NSE. This is the second time the apex court has ruled in favour of Mr Sebastin.

Earlier, the Supreme Court, while dismissing an appeal of the NSE, had passed strictures on the Exchange. The Supreme Court dismissed NSE’s petition for quashing the orders of the Bombay High Court and asked the Exchange and its top brass to face a criminal case in the Mumbai Metropolitan Court.

Mr Sebastin had filed a petition in the Bombay High Court requesting an early hearing of his application related with dues owed to him by the NSE. However, the High Court rejected his application. Mr Sebastin filed a special leave petition in the Supreme Court, which on 12 April 2010 asked him to file a fresh petition in the High Court for early hearing of his appeal.

The Supreme Court order dated 12th April said: "As the earlier rejection of the interim prayer was on the assumption that an early hearing application will be entertained, it is always open to the petitioner to renew his prayer for interim relief in accordance with law."

Mr Sebastin is likely to file his fresh petition in the High Court after the summer vacations.

Mr Sebastin, a compliance officer with the NSE, had resigned from the bourse in October 2008. Later he joined Multi Commodity Exchange of India Ltd (MCX) and came under a nasty personal attack from the NSE. The Exchange has still not cleared various dues of Mr Sebastin, except his provident fund (PF), since holding back PF is illegal.

The NSE, through a clarification, had said that Mr Sebastin’s “services were terminated” because he “had not met the company’s requirements.” It also indicated, without being specific, that the employee had failed to complete “severance” formalities.

Mr Sebastin, however, has evidence of a formal handover of charge, an exit interview and an email assurance that he would be relieved. He says that the public notice was issued after he sent a legal notice to the NSE on 4 April 2009, demanding severance benefits like PF and gratuity.

The NSE credited his PF account immediately after receiving a legal notice but till date had not paid other dues, including gratuity, super-annuation, leave travel allowance (LTA), medical allowance, leave encashment, additional ex-gratia and salary for 14 days in November 2008, together amounting to about Rs32.50 lakh.

Since the Exchange is flush with funds, derived from profits of a well-preserved, near-monopoly commercial position, it can afford to fight a case right up to the Supreme Court. However, the question is whether this was necessary and whether it merely reflects its bullying antics, as has now been proved by the High Court and Supreme Court judgements.

We sent an email to the NSE requesting details of the Exchange v/s Sebastin case, such as legal expenses, cost of public notice and other costs. But Divya Malik Lahiri, the recently-appointed head for corporate affairs and communications, NSE, replied in one line saying, “I am sorry, I won’t be able to comment on these things."

According to industry sources, the public notice published in various business newspapers would have cost the NSE about Rs20 lakh-Rs25 lakh. Also hiring the top legal brains for fighting cases from lower courts to the Supreme Court is also not without a financial burden that the Exchange may have to bear with. {break}

The Sebastin Case

In October 2008, A Sebastin, a compliance officer in NSE, resigned from his job and joined MCX. On 6 April 2009, the NSE issued a ‘public notice’ in all leading business newspapers with the employee’s photograph announcing that anyone dealing with the “said Mr A Sebastin” would do so at their own risk.

Normally, such notices are published only if an employee is guilty of financial fraud or a serious betrayal of trust. However, there is no such mention. Instead, the NSE issued a clarification in response to media queries, saying that Mr Sebastin’s “services were terminated” because he “had not met the company’s requirements.” It also indicated, without being specific, that the employee had failed to complete “severance” formalities.

Mr Sebastin, however, has evidence of a formal handover of charge, an exit interview and an email assurance that he would be relieved. He says that the public notice was issued after he sent a legal notice to the NSE on 4 April 2009, demanding severance benefits like PF and gratuity.

Holding back PF is illegal, so the NSE reportedly credited his PF account immediately after he served the legal notice but simultaneously issued him a termination letter followed by the public notice, almost six months after he had quit the Exchange.

We published the case under the title "Vindictive Action?" on our website www.suchetadalal.com; it has received 28 comments (so far) from readers. One reader, Mr Golak, said: “NSE should try to find out why NSE ex-employees are willing to join MCX-SX and sort out the problems rather than take this kind of vindictive action. As an organisation, it has failed to come out of the whims of a few people who run the Exchange on their own sweet terms.”

Another reader, Mr Satish Swaminathan, commented, "If there is attrition, then the human resources (department) should be pulled up for explanations and probably try to get to the root cause and address it. I also fail to understand how the NSE is proposing to beat its competition by stopping people and being vindictive when they join a competing firm.”

“It is highly unethical behaviour by a highly professional company like NSE. Such a step by any company cannot be justifiable as employees are a company’s human assets and not physical assets,” said ‘SS’, another reader.
 

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COMMENTS

DWARIKA PRASAD

6 years ago

Pl give your details of SLP No. and date of order by SC.My notice of motion is also pending before Bombay High Court.

DWARIKA PRASAD

6 years ago

By direction of supreme court to file fresh application before Bombay High Court does not imply early hearing direction to decide the payment of terminal benefits.Pl come out in what way the direction of SC will be helpful to take up the case for final hearing?
-Dwarika Prasad
General Manager
ONGC
Mumbai
Mobile No.9869222046

Don’t let private cos override public interest in KG Basin: EAS Sarma

In the wake of the recent SC ruling, the Union government cannot abandon its own obligation to exercise due diligence and prudence in fixing the price of gas & determine the sectoral and regional allocations, a former secretary to the government of India has said in a letter to the prime minister

EAS Sarma, a former secretary to the government of India, has requested the prime minister not to allow the government to be pressurised by a private company to overlook the public interest involved in the KG Basin gas development.

In a letter dated 7th May, Mr Sarma wrote to prime minister Dr Manmohan Singh saying that in the wake of the recent court ruling, the Union government cannot abandon its own obligation to exercise due diligence and prudence in fixing the price of gas, determine the sectoral and regional allocations and take all such measures necessary to prevent the supplier from exercising monopolistic leverage to the detriment of public interest.

Here is the letter written by Mr Sarma...

To

Dr Manmohan Singh
The Prime Minister
New Delhi.
 
Dear Dr Manmohan Singh,
 
Subject: Natural Gas Pricing—Latest orders of the Hon'ble Supreme Court
 
I am happy that the Hon'ble Supreme Court has ruled unambiguously that the Production Sharing Contract (PSC) with private parties cannot override the inalienable right of the State and the people of the country to the natural gas resources that belong to them.
 
As reported in the press, it is significant that the Hon'ble Supreme Court has also made the following landmark observation.
 
"It is the duty of the Union to make sure that these resources are used for the benefit of the citizens of this country. Due to shortage of funds and technical knowhow, the government has privatised such activities through the mechanism provided under the production sharing contract. It would have been ideal for the Public Sector Undertakings (PSUs) to handle such projects exclusively."

Against this background, I wish to impress upon the government that the Central government cannot, in the wake of the latest Court ruling, abandon its own obligation to exercise due diligence and prudence in fixing the price of gas, determine the sectoral and regional allocations and take all such measures necessary to prevent the supplier from exercising monopolistic leverage to the detriment of the public interest.

In this connection, I enclose here a copy of the detailed letter dated 22 August 2009 I had written to you on these very same issues that continued to be relevant even after the latest Court order.

The price fixed by the Empowered Group of Ministers (EGoM) is based on a contrived bidding format that was more beneficial to RIL than the public. The present arrangement of the EGoM administratively fixing the price goes against all canons of competitive price fixation. The EGoM had, before it, the details of the price quoted by the supplier in a global competitive bid floated by NTPC. It was around $2.34 per million metric British thermal unit (mmBtu). Ignoring that price in favour of the price obtained by RIL through a procedure that would fail to stand the test of good competition, the EGoM adopted a non-transparent process to accept the price indicated by RIL, raising questions of propriety.

When I requested both the ministry of petroleum and the Cabinet secretariat to provide me copies of the EGoM proceedings under the RTI Act, the government chose to cite "confidentiality" as an excuse and deny me the same. (Perhaps, the latest move on the part of the government to amend the RTI Act to preclude Cabinet proceedings from the public is a sequel to this, to keep such crucial decisions from public knowledge!)

I request the government to review the price fixed for the Krishna Godavari (KG) Basin natural gas in such a manner that the price is in the public interest. The mechanism of pricing should not be politicised. Instead, it should be entrusted to a statutory authority like the petroleum regulator, as already envisaged in the PSC itself. The government should also carry out an economic evaluation to arrive at the sectoral allocation priorities for natural gas, as suggested in my earlier letter.

I may mention in this connection that gas development is known to cause land subsidence. In the case of KG Basin gas, the ministry of environment had conveniently bypassed evaluating this aspect while according environment clearance to RIL. Some concerned citizens had to approach the Hon'ble Andhra Pradesh (AP) High Court to intervene and order a fresh environment appraisal of the project. The KG Basin comprises the heartland of agriculture of Andhra Pradesh and if there is land subsidence in that basin, it will break the backbone of the state's economy. The state and the Central governments are oblivious, indifferent and perhaps insensitive to this impending calamity that is waiting to happen.

I hope that the government does not allow itself to be pressurised by the private company to overlook the public interest involved in KG Basin gas development.

Regards,
 
Yours sincerely,
 
EAS Sarma
Former Secretary to GoI

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