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No beating about the bush.
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
The Bombay Stock Exchange today launched its mutual fund trading platform, ‘BSE StAR MF’, but there is no clarity yet on the cost structure
Following closely on the heels of its rival, the National Stock Exchange (NSE), the BSE has inaugurated ‘BSE StAR MF’, its independent mutual-fund trading platform. More than 20 fund houses have already confirmed their participation in this venture. While schemes from seven-eight fund houses will be available for trading immediately, others are expected to start trading in the next few days. These fund houses are also expected to join hands with NSE for its trading platform.
Both the Central Depository Services Ltd (CDSL) and National Securities Depository Ltd (NSDL) have confirmed their participation as depositories for the new venture. NSDL has initially decided to waive all trading charges on the BSE platform. Karvy and CAMS will provide Registrar and Transfer Agent (R&TA) services.
Although investors now have the added benefit of being able to access their neighbourhood broker for buying, selling and redeeming mutual fund units, a lot of ambiguity still prevails on the cost of trading on this new platform. Industry experts claim broker charges will be on par with normal commission on equities, i.e., around 0.50% of the transaction value. Moneylife had earlier pointed out the possibility of investors actually ending up shelling out more through the broker route than if they approached a mutual fund distributor. However, Deena Mehta, managing director of Asit C Mehta Investment Intermediates, claims otherwise. “We will only charge brokerage at 0.50% for every transaction”, said Mrs Mehta, adding that no additional charges will be levied.
Commenting at the launch, Madhu Kannan, MD & CEO, BSE, said, “Mutual funds have become an essential vehicle for investors to channelize their savings. Given the breadth of our nationwide network, we are positive that investors will find value in this platform. The BSE’s new StAR platform will offer a low-cost inclusive network to all mutual funds and intermediaries in the mutual fund industry.”
BSE’s mutual fund platform, which is more of an order-routing mechanism, will take advantage of over 40,000 terminals spread across India to extend services to mutual fund investors.
Brokers are anticipating good volumes, even from retail investors. An official from a leading fund house, who did not wish to be named, said, “Initially, the response may not be huge, but we do believe that, eventually, investors will come in large numbers as certain modalities are ironed out and things become clearer.”
Describing the difference between the two rival platforms of BSE and NSE, Mrs Mehta said, “The BSE platform is mainly browser-based, providing access anywhere, while the NSE operates on the NEAT system, a dedicated point-to-point connectivity-based system.”
Sensex sheds 84 points, Nifty loses 23 points due to profit-booking
Share prices ended lower on Friday on profit-booking amid weak global cues. The BSE Sensex declined 84 points to close at 17,102 while the NSE Nifty closed 23 points lower at 5,109.
Earlier, Asia’s key benchmark indices in Singapore, Hong Kong and Taiwan fell by 0.25%-0.59%, whereas the indices in China, Indonesia, Japan and South Korea rose by 0.45%-1.61%.
In the US market on Thursday, the Dow Jones Industrial Average closed 87 points lower while the Nasdaq Composite and the S&P 500 declined 12 points and 9 points, respectively, on concerns about the implication of Bank of America selling over $19 billion worth of common equivalent securities. The market was also bogged down by weakness in the services sector. According to the Institute for Supply Management’s reading, the services index came in at 47.1, indicating a degree of contraction.
In the Indian market on Friday, index-heavyweight Reliance Industries (RIL) was down 1%. Towards the end of trading hours, there were reports that Reliance Exploration and Production DMCC (REP), a wholly-owned subsidiary of Reliance Industries, and Ecopetrol SA have signed farm-out agreements, effective from 23 November 2009, for Borojo North Block 42 and Borojo South Block 43 in Colombia, subject to approval by the Colombian national upstream regulator ANH. As per the agreements, Ecopetrol will acquire a 20% stake in the blocks while REP will retain the balance stake and operatorship of these blocks. The two deepwater blocks cover an area of around 8,000 sqkm in water depths ranging from 60 to 1,500 metres.
Reliance Infrastructure was up 1% after the firm won a road project worth Rs1,725 crore in Maharashtra from the National Highways Authority of India.
Fedders Lloyd Corporation shot up 5% after a consortium of the company received an order worth Rs120 crore.
Unichem Laboratories surged 7%, after the company’s wholly-owned unit, Niche Generics, received marketing authorisation for Anastrozloe tablets in a number of markets within the European Union.
Bilpower Ltd was up 14% after it announced that its subsidiary, Tarapur Transformers, will launch an initial public offer (IPO) of 85,00,000 equity shares though a 100% book-building process.
Navin Fluorine International was up 6% on reports that the company has received 5 lakh carbon credits from the UN, valued at 7 million euros.
Gujarat Fluorochemicals gained 4% on reports that the company is likely to bag 1.5 million carbon credits, valued at 18 million euros, in mid-December.
SRF is likely to bag 9.5 lakh carbon credits, valued at 12.6 million euros. The stock jumped 3%.
During trading hours, finance minister Pranab Mukherjee told Parliament that the government has no intention of using the proceeds of stake sales in state-run firms to cut its fiscal deficit, but would use them to fund social support programmes.
According to World Bank president Robert Zoellick, India could return to a higher growth trajectory of 8%-9 % in two years, but it needs to invest more in infrastructure for sustaining such growth. He also said that excess liquidity in the global markets is a matter of concern as it was pushing up agricultural commodity prices.
According to an RBI survey of professional forecasters, wholesale price inflation is expected to average 5.8% in fiscal year 2010-11. Based on the government’s budget estimates, India’s gross fiscal deficit at the end of the current fiscal will reach 10.2% of gross domestic product, RBI deputy governor Usha Thorat said.
Meanwhile, the UPA government cleared the introduction of the State Bank of India (Amendment) Bill. The Bill seeks to bring the government’s holding in the country’s largest public sector bank down to 51% from 59%. Under the present laws, the government’s stake in SBI cannot fall below 55 %.
However, the Cabinet has deferred a decision on the controversial Pension Fund Regulatory and Development Authority Bill (PFRDA). Although the Bill was listed in the agenda paper of the meeting, it was not discussed and is likely to be taken up in the next Cabinet meeting. The proposed legislation seeks to bring foreign direct investment (FDI) into the sector by allowing foreign players to hold up to a 26% stake in Indian pension fund companies. It will also permit pension funds to deploy a part of their corpus abroad in approved instruments.
— Swapnil Suvarna