Osian claims this part payment is about 90% of the invested capital. Investors, however, are still in confusion over the final NAV

The long wait for some Osian Art Fund investors seems to have finally ended. However, investors have received only part payment of the redemption amount, while they continue to be anxious about the net asset value (NAV) returns and full payment.

In November 2009, Neville Tuli, founder-chairman and chief executive of Osain, had told Moneylife that he had informed all unit-holders of Osian Art Fund that the NAV of the scheme would be Rs112.29, including dividend payout. This message, Mr Tuli told Moneylife, was sent out to investors on 8 October 2009.
However, investors have a different story to tell.

“I have received 75% part payment of the redemption amount (considering an NAV of Rs112). The official mail stated ‘here is 90% of the investment, which is a part payment towards full payment’,” said Deepak Daftari, one of the investors in the Fund.

However, Osian officials now claim that they have been shelling out a repayment of 90% of investor capital, and not part payment of the redemption amount.

In an email to Moneylife, Mr Tuli said, “90% of all investors’ capital is being returned in the first phase, and once the final audited NAV is completed, the remaining amount will be sent.”

While Mr Daftari has received 75% of the amount invested, another investor has received only 73% of the invested amount. “I had invested Rs10 lakh in the Fund. I have received the part payment of Rs8,50,000, while the total amount to be paid is Rs11,20,000 keeping in mind an NAV of Rs112,” the investor said, preferring anonymity .

When asked about the reason for part payments, Mr Tuli said, “The difficulty in selling all the inventories and in realising the dues during the downturn has been the reason for this situation, along with the overriding priority of protecting our unit-holders’ capital.”

However, what remains a larger concern is the NAV which is being stated at present. While the NAV for the month of July was stated to be around Rs112, investors have now been informed that the NAV to be considered would be lower at Rs110.

“We were told that the NAV for the month of July was Rs112, which was declared in October this year. The NAV has gone down much lower at Rs110. I don’t understand how the NAV can go down, once the fund was closed in July,” added Mr Daftari.

Mr Tuli replied, “The NAV for final payment was always (supposed) to be the final audited NAV as per the redemption guidelines.”

However, when Moneylife had questioned Osian in October 2009 on the status of the final NAV, we were told,  “The Fund matured in August 2009. The Osian Art Fund will return nearly Rs115 (as NAV). NAV has ranged from Rs145 to Rs115, highest in 2007, lowest in 2009.”

The thirty-six month close-ended scheme announced in July 2006 made a quiet exit with returns of 5% per annum. However, investors believe that the returns they would receive could be lower at 3% to 4% per annum. As of July 2006, the total corpus held by the fund was Rs102.40 crore and it had 656 unit holders spread across 39 cities in India.

As per the Osian Art Fund prospectus, the fund distribution had to commence from 10 July 2009. With a stipulated period of 120 days, the redemption of the fund had to be completed by 10 November 2009. However, the company now claims redemption before 10 December 2010 was always part of the redemption guidelines.
— Amritha Pillay