Mutual Funds
Motilal Oswal MOSt Prime Equity: Nothing new to offer

Motilal Oswal is planning to launch a new scheme which has a similar investment objective as those of other schemes. With so many similar schemes to choose from, investors would opt for a scheme with a proven track record

Motilal Oswal Mutual Fund plans to launch an open-end equity mutual fund scheme—Motilal Oswal MOSt Prime Equity Fund. This scheme would invest around 65% to 100% of its assets in blue chip companies. There are a minimum of 30 schemes with the same objective and this scheme from Motilal Oswal will add to the list. The new scheme of Motilal Oswal may find it difficult to lure in investors considering there are other large-cap oriented schemes with a proven track record, having a similar investment objective.
 

Recently, Indiabulls Mutual Fund launched its first equity scheme—Indiabulls Blue Chip Fund in February this year. The scheme has been able to accumulate an asset size of just Rs5.70 crore as on 31 October 2012. However, a scheme from India Infoline Mutual Fund—IIFL Dividend Opportunities Index Fund, which was launched four months later in June 2012, has accumulated a fund corpus of Rs22.86 crore. Though there are other similar dividend schemes available in the market, this scheme maps the CNX Dividend Opportunities Index, offering something new for investors.
 

Motilal Oswal, a new comer to the fund industry, has a couple of exchange traded funds (ETFs) under its belt, both having a track record of less than three years. The two schemes, put together, have accumulated assets under Rs250 crore. How have they performed over the past year? Both the schemes have a track record of less than three years and hence we cannot comment much on the fund management performance. The table shows their performance over the one year period ended 15 November 2012.

 

Scheme Name

Launch Date

Expense Ratio

1 Year

Benchmark

MOSt Shares M100

31-Jan-11

1%

16.71%

15.64%

MOSt Shares M50

28-Jul-10

1%

15.14%

17.00%

 

Read: Best mutual funds for any season

How have other large–cap oriented schemes performed in the past? For large-cap oriented schemes investing in blue chip stocks, the returns tend to be stable and less volatile compared to other multi-cap equity diversified schemes. Therefore over a long-term one can expect reasonable returns from the scheme depending on the stocks picked by the fund manger. Another important factor to keep an eye on is the expense ratio. A high expense ratio may eat into the returns of a scheme. Below is how some of the schemes with a similar investment objective have performed in the past (arranged alphabetically):

The new scheme from Motilal Oswal also has an high minimum investment amount of Rs10,000. The scheme which has kept its expense ratio at 2.50% will be benchmarked to the S&P CNX Nifty. Rajnish Rastogi who manages the other two ETFs would be the fund manager of the scheme.

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COMMENTS

Suiketu Shah

4 years ago

If Motilal Oswal is serious about getting customers,he shd refund with apology to the army elderly person who is fighting court case against them since 4 yrs and being harassed.

BSE Sensex, Nifty may see weak upmove: Tuesday Closing Report

Close above 5,585 on the Nifty may result in a short upmove

 
The market settled almost unchanged from its previous closing levels on selling pressure in realty, oil & gas and metal stocks. Yesterday we had mentioned that the Nifty is in a sideways move and a close on the index above the day’s high may lead to a short rally. Today although the benchmark managed to make a higher high during the beginning of the session, it soon started a downward journey and ended flat. A close above 5,585 may push the index for a short upmove. The NSE saw volume of 64.36 crore shares and an advance decline ratio of 493:1228.
 
The market opened with a positive note tracking its Asian peers which were in the green in morning trade on optimism that US policymakers would find ways to deal with the nation’s fiscal issues. Overnight, US markets closed with gains of 1.40% to 1.90% on news of a recovery in the US housing sector.
 
The Nifty opened 31 points higher at 5,605 and the Sensex started off at 18,423, a gain of 84 points over its previous close. All-round buying, led by the realty sector, saw the market hit its intraday high in initial trade itself. At the highs the Nifty went up to 5,614 and the Sensex scaled 18,468.
 
The market pared its initial gains as profit booking soon set in. The benchmarks witnessed a gradual descent and fell into the negative in noon trade. A lower opening of the European markets following Moody’s downgrade of France’s sovereign rating by one notch to ‘AA1’ from ‘AAA’ resulted in the domestic market going further southward.
 
The decline led the indices to their lows wherein the Nifty fell to 5,548 and the Sensex went back to 18,256. Bargain hunting saw the indices staging a minor recovery from their lows. But it was another day of lacklustre trade with the market closing flat for the second day. 
 
At the close, the Nifty gained 0.15 points to 5,572 and the Sensex lost 10 points to close at 18,329.
 
Among the broader markets, the BSE Mid-cap index declined 0.0.76% and the BSE Small-cap index dropped 0.88%.
 
The sectoral gainers were BSE Auto (up 0.64%); BSE Consumer Durables (up 0.11%) and BSE Healthcare (up 0.09%). The top losers were BSE Realty (down 3.02%); BSE Oil & Gas (down 0.88%); BSE Metal (down 0.73%); BSE Capital Goods (down 0.53%) and BSE TECK (down 0.44%).
 
Thirteen of the 30 stocks on the Sensex closed in the positive. The top gainers were Mahindra & Mahindra (up 3.25%); HDFC (up 2.02%); Tata Power (up 1.81%); Wipro (up 1.09%) and TCS (up 0.98%).  The main losers were Hindalco Industries (down 1.86%); Infosys (down 1.46%); State Bank of India, Bajaj Auto (down 1.39% each) and Reliance Industries (down 1.27%).
 
The top two A Group gainers on the BSE were—Apollo Hospitals Enterprise (up 4.56%) and Gitanjali Gems (up 3.86%).
The top two A Group losers on the BSE were—Unitech (down 5.89%) and Reliance Communications (down 5.23%).
 
The top two B Group gainers on the BSE were—Heritage Foods (up 19.99%) and Choice Infra Ventures (up 19.98%).
The top two B Group losers on the BSE were—Beckons Industries (down 16.13%) and Bio Green Papers (down 13.83%).
 
Out of the 50 stocks listed on the Nifty, 20 stocks settled in the positive. The major gainers were M&M (up 3.28%); HDFC (up 1.98%); Tata Power (up 1.76%); IDFC (up 1.65%) and TCS (up 1.49%). The key losers were Jaiprakash Associates (down 3.76%); DLF (down 2.44%); Punjab National Bank (down 1.88%); Hindalco Industries (down 1.86%) and Reliance Infrastructure (down 1.61%).
 
Markets across Asia, which were in the positive in morning trade, settled mixed following Moody’s downgrade of France’s sovereign rating and the status quo on interest rates by the Bank of Japan.
 
The KLSE Composite closed 0.05% higher, the Straits Times gained 0.27%; the Seoul Composite climbed 0.64% and the Taiwan Weighted rose 0.23%. Among the losers, the Shanghai Composite declined 0.40%; the Hang Seng fell 0.16%; the Jakarta Composite shed 0.02% and the Nikkei 255 lost 0.12%.
 
At the time of writing, the CAC 40 of France was down 0.08%, the DAX of Germany was up 0.22% and UK’s FTSE 100 was down 0.16%. At the same time the US stock futures were trading marginally higher.
 
Back home, foreign institutional investors were net sellers of stocks totalling Rs1.52 crore on Monday and domestic institutional investors pulled out Rs502.60 crore from the equities segment.
 
Indian pump major Kirloskar has completed 50 years of its existence in Egypt supplying equipment for the agriculture sector. Kirloskar Brothers is also supplying pump solutions to the industries such as process and chemical and sugar industries. At a function in Cairo today to mark the occasion, the company launched new projects. The stock declined 0.88% to close at Rs146.70 on the NSE.
 
New Delhi Television (NDTV), has now launched three of its channels—NDTV 24x7, NDTV India and NDTV Good Times—in the Malaysian market, with an aim to expand its international reach. The channels are part of Asia Broadcast Network’s (ABN) new platform in Malaysia and available in a combination of basic as well as dedicated NDTV branded packages. Malaysia is one of the largest pay TV markets in South East Asia. The stock tumbled 4.85% to close at Rs67.65 on the NSE.
 

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The deadly delisting itch of AstraZeneca Pharma India

AstraZeneca is on course to achieve its decade-long plan to delist its shares from the Indian bourses by hook or by crook

AstraZeneca India is a 90% subsidiary of AstraZeneca Pharmaceuticals AB Sweden, one of the largest pharmaceutical companies in the world. Astra AB has a decade-long itch of trying to delist its Indian subsidiary. In December 2001, the parent held 56.51% shares in it.

 

Through two voluntary offers in 2002 and open market purchases, it increased its holding to 91.61% by March 2003. In July 2004, it came out with a delisting offer at a floor price of Rs825. The exit price discovered was Rs3,000 (for paid up shares of Rs10 each then) which was rejected by the parent. Then to meet SEBI (Securities and Exchange Board of India) guidelines, it had to bring down the shareholding to 90% in March 2005.

 

SEBI then came out with fresh guidelines which made it mandatory for companies to have a minimum public shareholding of 25% by June 2013 or else they will have to delist. Keeping this in mind, Astra again came out with a delisting proposal in July 2010 with a floor price of Rs576.10 and set a maximum acceptable price of Rs1,152 (paid up shares of Rs2 each now). As per sec 8(1)(b) of SEBI’s delisting regulations, 2009, the company had to obtain prior approval of the shareholders by a special resolution through a postal ballot and that the results of the postal ballot would have to indicate that the votes cast by public shareholders in favour of the resolution should amount to at least two times the number of votes cast against it. Astra lost the postal ballot and the delisting offer had to be dropped.

 

Meanwhile, the company had launched big long-term plans for the Indian subsidiary and proposed to introduce a large number of its globally successful drugs in the Indian market. In fact, the company had almost doubled the strength of its staff and the employee expenses had also doubled. In the 12 months ended December 2009, employee expenses were Rs82.83 crore whereas in the 12 months ended March 2012, it had jumped by 95% to Rs161.91 crore.

 

In the same period, sales revenues had increased by only 34% from Rs396.81 crore to Rs531.52 crore. Thus, the base was set for a huge jump in the sales revenues and profitability in the years to come. All the plans were on target but all of a sudden SEBI had become very strict about the June 2013 deadline stating that there would be no extension.

 

To meet this, Astra adopted a seemingly innocent strategy of cleaning up its operations but the ulterior motive was to force the minority shareholders into submission by pressurizing them into tendering their shares in the next delisting offer at the lowest possible price. The game plan was reflected in the following statement of the annual report of 2012: “As a measure of extra and abundant caution, the company undertook a voluntary recall of sterile products manufactured at its Bengaluru plant of a value of Rs26.8 million, following AstraZeneca Worldwide Audit Group’s (WWAG) quality audit.

 

As a precautionary measure, the company also voluntarily suspended production temporarily to review manufacturing practices at the plant resulting in a temporary interruption of supplies. The net sales of the products affected by supply constraint amounted to Rs272 million in the last quarter ended 31 March 2012 as against Rs606.8 million in the quarter ended 31 December 2011.”

 

 

The sales revenue declined from Rs.153 crore in December 2011 quarter to Rs92, 91 crore and Rs99 crore in the subsequent three quarters of this calendar year as a result of this seemingly innocent strategy of voluntary recall and suspension of production. The audit has taken more than three quarters the reasons for which can be explained only by the company. Probably The CAG is faster than this! As a result of this, the profit after tax has declined from Rs15 crore in the December 2011 quarter to a loss of Rs33, 8 crore and Rs45 crore in the next three quarters.

 

In fact, the cleaning up took such an unholy turn that the company had suddenly realized that it had to write off deferred tax assets worth Rs24 crore in September 2012 quarter. Basically it did anything and everything to increase the losses. As a result of all this, the share price of Astra has declined from a high of Rs2,640 in April 2012 to around Rs1,450 now. So the delisting which should have taken place at Rs3,000 plus based on the results till December 2011 could now be well below Rs2,000, thus making the parent richer by approx Rs250 crore.

 

The opinion privately expressed by the minority small shareholders of the company at this year’s AGM was that the company was trying to force them to surrender and that they would helplessly have to accept whatever price the company dictates in the next yet-to-be-announced delisting offer. This brilliant but devilish strategy of a so-called “reputed multinational” is probably a trend-setter for many other ‘reputed’ companies who wish to meet SEBI’s deadline. AstraZeneca is on course to achieve its decade long plan to delist its shares from the Indian bourses by hook or by crook. One wonders what the so-called independent directors are doing!!

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COMMENTS

SUNIL KUMAR HEMNANI

4 years ago

I was a long term shareholder of this Pharma MNC.My father had purchased the same through an IPO in 1982 I think . For so many years we held the shares till 2002 . This was a company which very reluctantly brought good products to INDIA. Over the years as things got better ,they eventually started doing well.However in the late 90s "CORPORATE GOVERNANCE" took a back seat.The in management began what was described above so well "devilish intentions ".I myself went and spoke to the MD on the day of AGM and was told a final open offer the end of the road for investors .Much to my dismay this company was out to cheat its investors.From an MD who doubled as LEGAL adviser .This company has had the wrong intentions for quite some time . MNC PHARMA companies have done all the wrong things knowing they can walk away easy.

abhishek

4 years ago

Sir I have bought 150 Astrazeca pharma stocks(NSC @ Rs1930)in the month of July..What shall I do..I am really very very depressed,horrified & tensed...I am really very very upset..Shall I sell at the current price of 1400..What will happen to me?Please tell me..Will I incur a loss or sell later.Will the price ever rise

REPLY

Janardan Kothari

In Reply to abhishek 4 years ago

Abhishek, If the co goes for delisting then you may get your price. But if it divests 15%, then it will take a lot of time for you to recover your cost. Noone knows what the co will do. So you have to decide yourself. All the best.

abhishek

In Reply to Janardan Kothari 4 years ago

Janardan Sir,will it even touch Rs1700?I can sell at a loss then and invest in infosys,sbi etc...Plz advise..I am novice in stock market,came to enjoy profits but now I am ruined...

abhishek

In Reply to abhishek 4 years ago

Sir,considering yourself in my situation,what would you have done now?

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