The High Level Coordination Committee has just functioned as a coffee club for regulatory...
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.
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.