There is no unanimity among the representative body and mutual fund players on what ought to constitute common operational policies
There is a simmering discontent brewing among a large number of funds that are part of the Association of Mutual Funds in India (AMFI), with the way the industry lobby AMFI functions.
According to a chief executive of a mid-size and fast-growing fund, there is no unanimity among the players on what ought to constitute common operational policies. “The main reason for this is that AMFI is really being run by a small cabal of large funds who set the policies, but are the first to break the rule in their self-interest.” One example of this is the upfront commissions they had agreed to pay but undercut the same in the end.
Sometime in September, the Securities and Exchange Board of India (SEBI) had called some of these large funds and encouraged them to have a uniform first-year commission instead of the massive undercutting that was going on.
SEBI told the funds that it was concerned over the viability of the fund industry and suggested that some large players decide what the first-year commission would be and ensure that it is maintained by the rest of the industry.
The market regulator had a closed-door meeting with eight large players and gave them autonomy to decide on the pricing for the entire industry. It was AMFI’s job to ensure the uniformity. The eight fund houses decided that the commission would be 125 basis points.
AMFI issued a directive that all players should maintain this rate. The players gave their word and this 125 basis points commission was to be applicable from 1st October.
Amazingly, out of these eight funds, five funds had already released brokerages in excess of 125 bps the day before it was supposed to have come into force, making a mockery of the whole exercise, said a source from the fund industry. “I have written proof of this,” said the source, requesting anonymity, even as he shared the evidence with Moneylife.
There are also complaints that funds often get to know of major plans and decisions from the media before even the first formal discussion has taken place under the leadership of AMFI. A recent case in point is the discussion about mutual fund trading platforms in which AMFI was planning to take a 30% stake.
“We came to know of this major decision from registrar and transfer agents and a few large distributors, not from AMFI,” said the CEO of an Asset Management Company (AMC). He is lobbying the other funds to ensure that there is far greater transparency in AMFI’s functioning. But given the fact that such efforts have not borne fruit in the past, there is little chance of any significant change in the system.
Scooters have not been selling according to Bajaj Auto’s expectations. The company is making hardly 1,000 scooters a month now—mostly for exports—and now wants to focus only on motorcycles
Bajaj Auto, once known for its scooters which revolutionised the two-wheeler market in the country, on Wednesday said that it will exit the segment by the end of the fiscal to focus exclusively on motorcycles, reports PTI.
The company that by and large created the scooter market in the country through its popular 'Hamara Bajaj' campaigns in the 1980s and 90s, today sells just one scooter category—the 100-cc gearless ‘Crystal’.
"We will exit the scooter market because we don't see much sense in it. If we are to be a motorcycle specialist, we cannot make scooters,” Bajaj Auto managing director Rajiv Bajaj told reporters in New Delhi at the launch of its 135-cc Pulsar, targeted at the mass-market audience.
"Scooters did not sell according to our expectations. We are making hardly 1,000 scooters a month now and mostly for exports. Now our focus is on motorcycles," he said and added that the company wants to become the largest motorcycle player in the world, without giving any specific time-frame.
"One day, God willing, we will be the largest motorcycle company in the world. If we have to be a motorcycle specialist, we have to make a sacrifice (in the scooter segment)," he added.
According to the Society of Indian Automobile Manufacturers (SIAM), Bajaj Auto sold only 154 units of its Crystal scooter in November 2009 and exported 104 units. Its total domestic scooter sales during the April-November period were 3,356 units and 728 units overseas.
Mr Bajaj said that the company has a production capacity of 3 million bikes annually. "In the 30-million global bike market, the world\'s largest bike maker Honda sells 7 million units. We can make 3 million units. We can double it and triple it by just staying in the motorcycle market," he said.
The company today launched its 135-cc Pulsar, priced at Rs51,000 (ex-showroom, Delhi). As part of its strategy to expand in the bikes segment, the company is developing high-end versions of its Pulsar brand. "We can go for a Pulsar 400-cc or a Pulsar 500-cc. We are already in the process of developing such bikes and our R&D teams are at work (on these projects)," Mr Bajaj said, without divulging details.
The company’s Pulsar portfolio includes the 150-cc, 180-cc and 220-cc versions besides the 135-cc bike launched today.
The company has also decided to phase out its model 'Exceed' and has already stopped its production, Mr Bajaj said.
On the sales front, Mr Bajaj said that the company was looking at a sales figure of 1.8 million units this fiscal. Bajaj Auto sold 1.2 million units last year.
"With the launch of the new 135-cc Pulsar, we expect the monthly sales of the Pulsar family to reach 75,000 units from January. Besides, we are already selling 80,000 units of ‘Discover’ every month," said S Sridhar, chief executive officer for two-wheelers, Bajaj Auto.
The company is also going ahead with a distinct branding exercise for its three-wheeler segment offering.
"Since July this year, we have been marketing our three-wheelers under the brand 'RE', denoting reverse engine. So RE will now be our brand for commercial vehicles," Mr Bajaj said, adding that RE will, however, not be a separate company.
Skywalks, or foot over-bridges, are an effort to give pedestrians much-needed space to walk as more and more footpaths were disappearing across the city. This phenomenon, coupled with the paucity of subways, necessitated the construction of these skywalks
Agitated over the construction of skywalks across the Mumbai Metropolitan Region (MMR), an activist had filed a public interest litigation (PIL) in the Bombay High Court against authorities like the Maharashtra State Road Development Corp Ltd (MSRDC), Mumbai Metropolitan Regional Development Authority (MMRDA), Maharashtra Government and the Brihanmumbai Municipal Corporation (BMC).
MMRDA, which has planned 50 skywalks, or foot over-bridges, is keen on adding more to the number. It has allocated Rs6 billion for the skywalk project and there are proposals to have shopping plazas on some of the walkways as well.
According to the PIL, there is no justification for increase in the cost of construction of skywalks especially when the price of steel has gone down from about Rs48,000-Rs52,000 per tonne to Rs24,000-Rs 22,000 per tonne. The authorities have also reduced the width of the skywalks as no shops or hawkers are to be permitted on these constructions.
The design of skywalks may have to be revised as the width of the skywalks is to be reduced on account of no hawkers and shops being permitted thereon, but no fresh tenders have been invited for construction of such skywalks by the authorities. If such tenders are invited, then construction would be done at marginally lower costs, the PIL said.
In the absence of detailed guidelines, the proposal for construction of skywalks in different areas is entirely as per the wishes of the concerned authorities and local representatives, the PIL claimed. It said that, often, after visiting the site, the local representatives have merely made an oral request over the telephone to the authorities about their desire to construct the skywalk in a particular area.
The activists are seeking to stop or stay further construction of skywalks in the MMR without amending the sanctioned development plan prescribed under the MRTP Act, till the final hearing of their litigation.
Skywalks are an effort to give the pedestrian much-needed space to walk as more and more footpaths were disappearing and there are very few subways available. Especially on the roads that lead to various suburban railway stations, these proposed skywalks would have given pedestrians much-needed freedom from roadside hawkers and the incessant honking of bumper-to-bumper traffic in congested areas. But these structures had become controversial following allegation of large-scale corruption in their construction. Even Vasant Davkhar, then deputy chairperson of the Maharashtra Legislative Council, had made serious allegations in June 2009.
Although the government promised an investigation, there is still no update on the same.
In July, Moneylife had written about the sky-high cost of these skywalks. See http://suchetadalal.com/?id=17d7467e-5407-14fa-4a5453e09771&base=sections&f&t=Mumbai%3A+The+Great+Skywalk+Rip-off