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Future Capital seeks a more certain future

Future Capital, the ailing retail financing venture of Kishore Biyani, is making another go at leveraging its large customer base to sell retail finance products and services

Three years after he launched Future Capital Holdings (FCH), Kishore Biyani (founder of Big Baazar chain of retail stores), has found another leader to make a go of his ailing consumer financing business. He has now roped in V Vaidyanathan, currently CEO of ICICI Prudential Life, who was considered a rising star in the ICICI group to organise and grow the retail finance and insurance business that come under the Future brand. According to informed sources, Vaidyanathan will get a significant stake in Future Capital in return for his efforts to grow the business into a large retail finance company straddling every major customer-facing businesses. 

Future Capital made a public issue January 2008, at the very peak of the biggest bull market India has seen. The stock hit a high of Rs1190 in February 2008 and collapsed to a low Rs93 in March 2009, a crash of 92%. It is currently trading at around Rs250. When it made the IPO,  many smart investors had very high hopes about the company given that it was headed by Sameer Sain, a hotshot from Goldman Sachs. Mr Sain was a managing director with Goldman Sachs and head of the special investments group, co-head of wealth management for Europe, the Middle-East and Africa, and a member of the executive committee of Goldman Sachs Bank Zurich. However, it transpired that Sain was keener on the private equity part of the business and not the retail financing part for which Future Capital was mainly set up.

For Vaidyanthan it will be a different kind of assignment altogether after a decade with the ICICI group. He will take a significant stake in the company and grow it like an entrepreneur. The Future group is into the life and general insurance businesses in a tie up with Generali and some retail financial products and services. Vaidyanathan’s first job will be to make them cohesive so that there is tight supervision across these businesses. He will be the CEO overseeing the entire gamut of financial services - broking, wealth management, retail financing and insurance etc. - not only as a key manager but as a co-promoter as well. Future Capital has Rs800 crores of equity and little loans.

According to sources close to Future group, Vaidyanathan has excellent relationships with top business leaders and peers due to his long stint with the second largest bank in the country. He would like to leverage that, create value and share the upside. The new move is different but no less challenging than his current assignment as the head of ICICI Prudential Life where he has to deal with frequent and very public changes brought about by the regulator.

Future Capital will have a business leader in place, six months after Sain moved out of the CEO’s role. “Sain is very comfortable with private equity. His world was not about consumer and consumption. He had all the capital but could not build a business, especially since the macro environment turned turbulent just after the public issue” says an insider. On the other hand, Vaidyanathan comes from the retail banking side with a strong track record of understanding the Indian consumer. Biyani himself less comfortable about retail financing even though he has a great sense of what the retail consumer wants and how to deliver it. This is a gap that Vaidyanathan will fill. 

As originally planned, FCH was supposed to be Kishore Biyani’s dream financial vehicle to extract value from footfalls into Pantaloon stores. Instead, in February, he decided to split its business into financial services retailing and investment advisory. Sameer Sain stepped down from his position as chief executive and managing director of the company.

FCH was supposed to have multiple revenue streams. Apart from selling insurance, consumer loans, credit cards and wealth management services, it is an adviser to various offshore and private equity funds. FCH manages four funds under its real-estate advisory services. FCH’s retail financial services started in June 2007 with an agreement with Pantaloon Retail India Ltd (PRIL), under which FCH has exclusive right to provide financial products and services at present and future malls, stores and retail outlets in India which are owned, controlled or managed by PRIL and its subsidiaries. FCH’s private equity arm, Indivision India Partners, manages a fund that focuses on providing growth capital to businesses which benefit from the growth in consumption in the Indian sub-continent.

 

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COMMENTS

kurnooli

6 years ago

Fine information. For any investor, fundamentals of the scrip are essential, though the background of the head of the co. matters a lot. Appointment of vaidyanathan certainly will make a difference for future prospects of the co.
While giving the news like this, a link may to know more about the co.'s fundamentals and messages sharing the 'inside' info.or 'happenings' in the co. shall be solicited by the investor. After all, money should be centric to moneylife and to its members.

MF houses receive 3.94 lakh investor complaints in 2009-10, non-receipt of dividends tops the chart

Non-receipt of dividends and redemption proceeds remains the biggest worry for mutual fund investors 

Non-receipt of dividends and redemption proceeds remains the biggest worry for mutual fund investors. For instance, if an individual has invested in four different schemes and has provided an incorrect address or pin code, the dividend warrant may not reach his/her correct address. 

In a bid to improve the grievance redressal mechanism, market watchdog Securities and Exchange Board of India (SEBI) had mandated fund houses to display investor complaints on their respective websites as well as the website of the Association of Mutual Funds in India (AMFI). According to data put up so far on the AMFI website, the 37 fund houses have received 61,604 'non-receipt of dividend' complaints in the financial year 2009-10. There were 51,509 complaints pertaining to non-receipt of redemption proceeds. Issues relating to non-updation of PAN, bank details, nomination, etc attracted 42,515 complaints from investors.

Industry experts point out that it is negligence on the part of the investor while filling up forms as the primary reason behind such complaints. Often, the agent or distributor also fills in the forms on behalf of investors, who may end up furnishing erroneous details.

The mutual fund industry has approximately four crore investor accounts. Many of them are multiple accounts held by single investors. According to the aggregated data available with AMFI, the 37 fund houses received almost four lakh investor complaints during the financial year (FY) 2009-10. If we compare that to the number of folios, the four lakh complaints amount to just 1% of the folios.

"Only bigger dividend amounts are sent by registered post and smaller amounts are sent by ordinary post. If the small dividend warrants are lost, then investors have to obtain a 'reconciled statement' from banks because dividend warrants are usually issued through a cheque payable at par. The 'non-payment certificate' comes easily when a single cheque is issued in favour of a single person at a single bank. But, for 'at par payable' cheques, it takes an average of six months to get a 'reconciled statement'. So even if one complains to MFs, the transaction cannot be retraced easily," Debasish Mohanty, head-marketing, UTI AMC, told Moneylife.  

"Recently, there have been cases where wrong people have claimed dividends on behalf of genuine investors. Therefore, to tighten that loophole, fund houses have applied further restrictions. For instance, if one requests change of address, we will ask the investor to provide proof of old address, new address, etc," added Mr Mohanty.

Industry experts say that the introduction of electronic clearing system (ECS) and core banking facility has helped in smoother distribution of dividends.

Redemption cheques are normally sent by registered post, where the amount involved is higher, unlike dividend cheques. Experts point out that investors do not provide details properly while filling up forms. Many application forms received by the registrar & transfer agents (RTAs) and fund houses are incomprehensible, which results in incorrect data entry. Most cases occur during the time of new fund offers (NFOs) wherein a distributor has to submit many forms.

User

COMMENTS

NKPadhi

4 years ago

Credit to the account with a bank must be made compulsory to remove avoidable wastage of time, energy and money.

syamala

6 years ago

I have handful experience handling the problems associated with mutual fund schemes. I would like list a few suggestions and observations. SEBI is a big talker and did nothing to bring standardization of service requets. Crying need is that irrespective of the scheme or fund house, common servcie request formats have to be undertaken and published by AMFI. Dont leave this to MF houses. The most confusing service request is on change of bank mandate. Each MF has its own rules and all are equally confusing. The problems encountered in this area are either due to data capture or investors wrongly/carelessly writing their bank manadates or genuine change in the bank mandate. List each possible situation and provide a clear cut requirement and let this be published by AMFI. Further, it has to be manadatory that every common chnage in rule be published by AMFI. For example, change in cut off in Liquid schemes. Why each MF has to spend lakhs of ruppes in releasing the same content? Instead AMFI should publish and MFs have to share the cost. Investors understand better if all industry releases, changes, requirements emanate from a single body. AMFI is just a sitting duck. In all this confusion, poor RTAs are made scape goats whenever investors' grievances are aired. RTAs cant be more efficient than the MFs they service. If MF houses have no keenness in bringing uniform services through AMFI, what these poor and hapless R&T agents would do. In fact, the RTA guys have been doing excellant but thankless job. For instance, I had an excellant welcoming and resolution oriented response from Mumbai office of Karvy and i am sure CAMS also must be doing a good job. Today an investor can pick a piece of paper, scribble for redemption, and expect outcome irrespective of teh manner he expressed in the request. Can any one sell shares through a DP like this? SEBI did nothing.

shamik tiwari

6 years ago

SIR, my mother invested in reliance equity fund in folio no.42618944553in year 2006. on 25 aug 2010 she has submitted a request for redeemption. redeemption processed on 30 th aug. but the redeemption amount could not credited to account because of mistake on the part of the agent or distributor who filled in the forms on behalf of my mother. he did two mistake(I) he wrote cutomer name ASHA TIWAR insteadof ASHA TIWARI.
(II) the payment was done by my bank account cheque instead of my mother. so instead of my mother bak details he filled my bank detals.
sir,
suggest me the the right procedure to get rid of this problem.
thanks

Prakash

6 years ago

I feel it is only just to put this new comment on this forum.

Post my comment on this article, promptly the Karvy machinery was put in action. The GM at Mumbai got in touch with me on my email and also left a standing instruction at UTI (where I am forced to frequent every few days), a very smart move indeed, I must say, to get my name and contact details the moment I came there next. The moment I visited UTI at Churchgate, I was asked for my contact details and promptly the GM contacted me and requested to meet me. We met the next day and I must say that he had come there with a determined and positive mind and desire to not only look into problems faced by me but thereby eliminating and/or reducing similar problems faced by lakhs of investors. In our talk of nearly 4 hours, it was apparent that the GM and Karvy management were very keen indeed to know the problems at the investor levels so that they can improve on them and become more investor friendly in their working, at their counters across and also on the web. So, though the web site as of today is yet to evolve to make it investor and user friendly, they have promised to work towards it and improve upon it asap.

What I have liked is their promptness, willingness to address investor issues at the grass root level.

Thank you Moneylife for this platform and thank you Karvy for your whoeheartedness in resolving issues.

Vijay

6 years ago

UTI is one of the worst amc's in terms of customer service.They donot have properly trained customer service executives to guide a investor on any of the customer service requests.
I had once given for a partial redemption , but my whole corpus was redeemed, but the problem doesnot end there though all my bank details were updated (ie my ifsc and micr) i got a warrant.This shows the professionalism displayed by AMC's.
I want SEBI to take some stringent action against the mutual funds who harass the customer in this way.

Prakash

6 years ago

The good thing first:
I have scores of folios in numerous schemes under multiple heads. Yet I hardly face a problem of dividend not being received. Almost all go directly to ECS.

CAMS is excellent and I applaud their services as well as online website which I use it extensively since last one year. Their website is simple to use and user-friendly and provides all useful reports in a jiffy. No, I am not their marketing person.

Having said that, I would now like to point out the problems: The problems I face is with KARVY. I face maximum problems with them. e.g. In Reliance MF, the data is almost always wrong. The name, address, bank name, address... practically everything would be misspelt. In Reliance's case the problems end here. I do indeed get dividends in time.

But the combination of KARVY and UTI spells disaster. First of all, all old holdings show wrong data. e.g. Out of three holders the second and joint holders will show as Nominees, Anyone or Survivor becomes Joint, Birth date goes haywire, and so on. Okay the problems do not end here. When I complained about this at their Churchgate office, the officer accepted that there is Data Capturing Error. When you want to redeem, you realise that UTI and your money have almost become inseparable and they are so reluctant to return your money that most of the redemption requests would come back as 'Signature not tallying' after many days. It is known that the re-presentation of redemption request will take quite some time. Till that time the money lies with UTI. So, you ensure that every signature is attested. But then you are under estimating the ingenuity of UTI+KARVY. Even though bank account number is mentioned properly and a cheque copy is attached with redemption request, you now receive cheques with wrong bank account numbers. I have just received three cheques the same way. So, again it is know that for re-validation it will take many days. This is how your hard earned money is used by them and you once again have to work hard to get it back.

When this issue was raised, a very evasive and round about answer was given that because of frauds taking place Karvy+UTI are very stringent. That is why REDEMPTION CHEQUES WITH WRONG ACCOUNT NUMBERS ?

I would request Moneylife to carry out an article and study on these dubious ways to retain investors' money for as long as possible.

Karvy is pathetic. Their website too is so complex and un-user-friendly that I have never been able to use it.

R Balakrishnan

6 years ago

Involving the CDSL etc has created enormous problems. They do not uddate records in time. This is the biggest culprit. CAMS and Karvy were doing a good job.
Also, AMC's should send at least one yearly statement without demur. I never receive a statement except when any transaction is done. About dividends, if people give the bank account number correctly, there should be no problem. Half the time, the investor screws up and blames the AMC.

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