Investor Interest   Exclusive
Osian Art Fund failed to live up to expectations, says Tuli

In 2006, Osian Art Fund closed with a total corpus of more than Rs102.40 crore, but at the time of redemption it disappointed investors with poor returns. Neville Tuli, chief advisor, Osian Art Fund and chairman, Osian’s-Connoisseurs of Art Pvt Ltd, talks to Amritha Pillay from Moneylife on art funds and art markets in India

Amritha Pillay (ML): The Osian Art Fund failed to produce impressive results. Was the three year lock-in too short a time for the Fund?
Neville Tuli (NT):
It is not only about the three year lock-in being too short, but the fact that market conditions were extraordinary and the scale of the meltdown (in prices, volumes, liquidity and confidence terms) was a reflection of the nascent financial infrastructure for art and culture. Many more institutional players need to enter this sphere of work for the framework to reach global standards of awareness and information flow. Further, the performance of the Fund was very good given the state of the art market, but relative to expectations in 2006 and the opportunity cost in other investments, it was a genuine disappointment.

ML: What are the main issues involved while trying to sell a work of art, in a depressed market? In such a market, how much can the value of the work of a mid-level artist go down from the peak?
Historical significance of the artwork and the artist is first and foremost the most critical parameter in understanding valuation, if not everything. Remember always that the high quality art object has been the world’s most expensive object for over 5,000 years across all periods of civilization and history—this is no short-term pedestal which gets broken with ‘technicals’. The desperation to sell is the real problem, thus holding power is critical.

Further, an artist does not become ‘historically significant’ overnight, a minimum of twenty-thirty years of critical due diligence goes into becoming a notable artist, which allows the bad periods to be absorbed with credibility and the next fertile phase to be anticipated. Changes in taste then only impact within a band; the floor is always established with immense credibility. Most people look at the highs in understanding a market, the key is only to see the changes in the floor levels which become irreversible over time. This is pivotal to understanding art as an asset idea.

ML: Should one consider the best way to invest in art is buying artworks cheap, holding them for a longer period and then selling them?
It is far from that simple. Most artworks bought by the public without appropriate knowledge, which do not hold relative historic significance, will be ‘worthless’ when they try to sell them. Everything old is not of value.

‘Art’ itself is too vague a definition when speaking about ‘art as an asset’. For every 1,000 artworks one may qualify for an investment/asset potential in the sense that it can be traded in a systematic manner at relatively fixed intervals at a price which one reasonably expects. 
ML: Financial investments usually have earnings attached to them which can be used to arrive at the intrinsic value. However, the only factor determining the earning of a work of art is what others are willing to pay for it. This value in turn is purely based on what the market mood is. How can an art fund overcome this handicap?
This is not true, though in a major meltdown much behaviour comes closer to such assumptions. As the art market becomes more efficient with a greater flow of authentic information and awareness, a greater number of institutional players, options for discounting, collateralisation and underwriting facilities, with clear regulatory guidelines, the chances of well managed art funds succeeding will very much improve. Imagine the stock markets ten years ago, without so many systems and frameworks in place, the art ‘industry’ is very much at that early stage of development. In the medium to long run, the well-managed regulated art fund will be the ideal vehicle for India to monetise and bring to the white economy the vast cultural artefacts, most of which still exist in the cash underground economy. A few hiccups and failures should not discourage anyone; one must see the stage of growth and accordingly understand that India can still become a world leader for institution building for the arts and culture, if only the system supports rather than fights the processes of greater transparency.

ML: One of the reasons why the Osian Art Fund, one of its kind in alternative investments, produced lacklustre results is the lack of liquidity of its assets. Can funds based on an illiquid underlying product ever succeed?
  Once an institutional framework emerges which tackles some of the issues raised above, such as bill discounting, collateralisation of the asset, underwriting with deeper insurance covers, option contracts which are legally effective, greater daily flow of authentic information, a stock exchange kind of a platform, appropriate regulatory frameworks which understand the unique nature of art and culture as an asset and the like, then you will see how our cultural artefacts emerge from the dark into a credible asset for India and our people.

ML: Do you still believe an art market in true trading terms exists, since buyers disappear so easily in a downturn?
  Of course, these are very early days, the nascent pioneering stage of the process. Three years from now, it will be radically different, as the knowledge of our people and system increases and more opportunities, good and bad, are taken to task and are made to prove their worth. India cannot develop unless she finds credible platforms upon which her heritage is clearly monetised and made transparent for all to value and respect.

ML: What modifications are you planning for the next proposed art fund?
At present, let me complete all my obligations and the rebuilding process will naturally follow. To build new platforms of pride and credibility takes time, we must never lose hope but next time the planning and preparation will deeply understand both the down and up sides of the project with greater equanimity.

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    Sharat Jain

    7 years ago

    We have also not received the redemption proceeds from Osian's Art Fund. We have written on many forums, but till date no action has been taken against this scheme. It is very hard to digest that this type of schemens are first floated under the nose of our Govt., and then when the company is unable to pay back (for the reasons best known to them), they try to delay the matter for years & years on one pretext or the other. Sharat Jain. New Delhi.

    Amar Singh quits Samajwadi Party posts

    Amar Singh, the 53-year-old leader, who was considered the right hand man of Mulayam Singh Yadav, has resigned as national general secretary, spokesman and member of the Samajwadi Party parliamentary board

    Samajwadi Party's (SP's) high-profile spokesperson Amar Singh on Wednesday resigned as the Party's general secretary and other posts following deepening differences with party chief Mulayam Singh Yadav, saying his priority now was his health, wife and children.

    Mr Singh, who is in Dubai, told PTI over the phone that he has resigned as national general secretary, spokesman and member of the SP parliamentary board. He faxed his resignation from all the three posts to Mr Yadav, he said.

    The 53-year-old leader, who was considered the right hand man of Mr Yadav, insisted that there was “no political motive” behind his resignation but appeared bitter about the party.

    After the kidney transplant he underwent in Singapore three months back, Mr Singh said, "My doctors said that you are not well and you are living on somebody else's kidney. Once I came back, there has been no change in my lifestyle and there is no division of labour in the party."

    He said he was resigning “strictly as per the advice of my doctors, who have asked me to take complete rest as I have just undergone a major kidney transplant operation”.

    Mr Singh said, "I had been giving more priority to Mulayam Singh Yadav and the party. After 20 years, now I should look after my children, wife and their welfare, over and above that of Mulayam Singh and the party."

    Amar Singh, who had attacked Mulayam Singh and his family over the party's humiliating defeat in the Lok Sabha by-election in Firozabad in November, at the same time maintained, "There is no difference with Yadav and I would not like to ditch him at this hour of crisis."

    Mr Yadav's daughter-in-law Dimple was the SP candidate who lost to Congress nominee Raj Babbar, who was earlier with the SP.

    Even during the Lok Sabha elections, Mr Singh's ties with the party leadership had come under strain over Jaya Prada's candidature in Rampur which was opposed by Azam Khan, who later exited the party.

    Asked why he decided to resign three months after his operation, he said, "I had resigned on three occasions in the past but on each occasion Netaji (Mulayam Singh Yadav) had rejected my request. I hold him in high esteem."

    He said, "Family and my health come first for me. Doctors have advised me complete rest and it is not possible to adhere to their advice while following such a hectic schedule. Therefore, I decided to resign from all the three posts.”

    Mr Singh said that he would continue to remain an “ordinary worker” of the party and has requested the SP chief to make Ram Gopal Yadav the party's national spokesperson in his place.

    "Ram Gopal is already member of the parliamentary board of the party and also a general secretary and, therefore, he can become the spokesperson also," the SP leader said.

    Mr Singh said that he would be going to Singapore where he was operated late last year to consult his doctors as he does not want his kidney problem to relapse and will be back in the country by the middle of this month.

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    2009: A year of hope & promise for the I&B ministry

    With the telecom ministry preparing to start 3G spectrum auction for operators, the I&B ministry is getting applications for starting new TV channels virtually on a daily basis even as there are already 500 channels on air

    A high-definition format for television viewers to enjoy the Commonwealth Games and efforts for auction of 3G spectrum were some matters that kept the information and broadcasting (I&B) ministry busy in 2009, reports PTI.

    Though there was not much forward movement for the ministry in the year gone by, a ray of hope filtered in at the fag end as the government approved the delayed Headend in the Sky (HITS), which gives cable operators an option to distribute signals through satellite and provide digital transmission to subscribers.

    UK-based Satellite Information Service Live was shortlisted in October by the ministry for broadcasting the Games through HITS on behalf of Doordarshan.

    The year saw high-pitched confrontations in the Prasar Bharati Board, deep freeze of the much-awaited Broadcast Bill due to wrangling on the content code, efforts for auction of 3G spectrum and the government trying to stop entry of fly-by-night TV and other media operators.

    On the upside, a major change was seen in the print media when the government allowed Indian editions of two foreign publications.

    But the Broadcast Bill remained in deep freeze with the ministry and the broadcasters trying to hammer out a set of content regulation rules, acceptable to both parties.

    The first half of 2009 under Anand Sharma witnessed confrontation between Prasar Bharati Board members and chief executive BS Lalli.

    In May-end, just days after the United Progressive Alliance (UPA) assumed office again, confrontations between Mr Lalli and the board members were at their highest pitch and Prasar Bharati chairman Arun Bhatnagar resigned from his post. His resignation was accepted only on 18th December after a gap of seven months.

    Ambika Soni, who succeeded Mr Sharma in the second UPA regime, sent a detailed report on the infighting within the public broadcaster to prime minister Manmohan Singh. Alleged irregularities in Prasar Bharati were also being investigated as per directions of the Supreme Court and the Delhi High Court.

    Ms Soni was unhappy over the unused infrastructure worth crores of rupees at Doordarshan headquarters in Mandi House and directed officials to start broadcasting of DD News from there from 19th November.

    She had also asked DD officials to shift operations to Mandi House. Till date, the transfer of assets to Mandi House is yet to start. Doordarshan does all its production work from its Khel Gaon studios.

    Ms Soni invited broadcasters, who were wary especially after the ministry's warning to adhere to its Content Code—formulated after the 26/11 Mumbai attacks—on TV coverage of news and sensitive events, for discussions on developing content regulations.

    Concerned over the growing number of TV channels, with many being run by fly-by-night operators, she has also sought the Telecom Regulatory Authority of India's (TRAI) views on regulating the entry of new channels.

    With the telecom ministry preparing to start 3G spectrum auction for operators, the I&B ministry is getting applications for starting new TV channels virtually on a daily basis even as there are already 500 channels on air.

    In another move, Ms Soni wrote a letter to home minister P Chidambaram on unauthorised telecast of several religious TV channels, in clear violation of the Cable Television Networks (Regulation) Act 1995. Mr Chidambaram assured Ms Soni that his ministry would look into the matter.

    Ms Soni also floated the concept of a parental lock system and fixing 'watershed hours' for showing adult content on TV through discussions with broadcasters. Such a provision would help parents lock certain channels, which they think should not be viewed by children, while adult content could be shown between 11pm and 4am.

    During the year, the ministry also gave clearance to two foreign publications—Spectator and Forbes—to bring out their Indian editions.

    Ms Soni announced her ministry would soon amend the Press and Registration of Books Act 1867, which would be known as the Press and Registration of Publications Act 2009.

    Among others, the new Act will look into blocking frivolous and non-serious publications. The preamble of the Act will be modified to include provisions for foreign direct investment (FDI), facsimile editions of foreign publications and Indian editions of foreign publications.

    By 31 March 2010, the draft of the amended Act would be put up on the ministry's website and stakeholders' comments will be sought, before sending it to Parliament.

    Ms Soni also announced that four more Indian Institutes of Mass Communication (IIMC) will be set up to meet growing demand for media professionals, taking the number of IIMCs to six from the existing two.

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