Bailout plan eludes US-64
Indian Rayon to be rechristened
Burnpur Cement
Foreign funds lean towards equities

 
 
BAILOUT PLAN ELUDES US-64 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, July 14: 
The wait for millions of US-64 investors got a bit longer, with the rescue package from the Unit Trust of India (UTI) yet to materialise.

The board of trustees of the mutual fund major again failed to arrive at any decision today and sought more time to finalise the revival package.

After a marathon meeting lasting over three hours, the board, announced in a press statement: “The board needed more information to refine the package and will meet soon to continue its deliberations.”

Today’s board meeting was held to work out a package to address liquidity needs of small investors of the mutual fund’s flagship scheme, the US-64.

While indications are that the package is likely to be out next week, the reasons for the delay in arriving at a rescue plan are not clear. Though UTI officials chose not to speak to waiting mediapersons, the tension was palpable as grim trustee members walked away without offering any comments.

Noticeable among them were R. H. Patil, former managing director of the National Stock Exchange and N. Soonawala, non-executive vice-chairman, Tata Sons, even as board members were still closeted in a meeting. Both Patil and Soonawala, alongwith Y. H. Malegam, are part of a committee formed to advise the board on alternatives to provide redemption facilities to US-64 investors. Asked to comment on today’s deliberations, Patil declined, saying, “the UTI chairman should tell you”.

However, the UTI chairman went into a huddle with his management team immediately after the board meeting.

Though retail US-64 investors may now have to wait till next week for the freeze on sale and repurchase to be lifted, the board, it is speculated, may be divided over the issue of favouring small investors, as the move could be legally challenged by the larger investors. Reports say the bailout will be restricted to those investors holding a maximum of 1,000 units of US-64. Estimates suggest UTI will have to fork out at least Rs 3,000 crore if redemptions were to be allowed for the small investors.

   

 
 
INDIAN RAYON TO BE RECHRISTENED 
 
 
BY PALLAB BHATTACHARYA
 
Calcutta, July 14: 
Indian Rayon, the Rs 1526-crore flagship of the Aditya Vikram Birla group, will shortly go in for a rechristening to reflect the company’s diversified business activities. Confirming the move, sources said group chairman Kumar Mangalam Birla is of the opinion that the company needs to be rechristened so that its various business activities can be properly conveyed.

“The name—Indian Rayon—has lost its relevance because the company no longer makes only viscose filament yarn. Its businesses now range from garments to insurance. Hence, the need for a new name,” sources said.

They, however, observed that the rechristening process will take some time.

Meanwhile, the promoters have decided to raise their stake in Indian Rayon from the existing 36 per cent to 40 per cent through the creeping acquisition route during the current year. The financial institutions hold around a 22 per cent stake in the company, while the public holds 33 per cent.

Sources said Birla has decided to raise his stake in all group companies to a “comfortable” 40 per cent level in the wake of the threat of hostile take-overs faced by several firms.

“The stakes in group companies will mostly be raised through the creeping acquisition route and there is no question of offering any open offer,” they added.

Indian Rayon has undergone a massive business restructuring over the last couple of years that saw the spinning off its cement business in favour of another group company, Grasim.

   

 
 
BURNPUR CEMENT 
 
 
FROM OUR CORRESPONDENT
 
Calcutta, July 14: 
Ashoka Concrete and Allied Industries, the Asansol-based cement company, is raising its installed capacity from 400 tonnes per day to 1200 TPD. The company, which owns the Burnpur Cement brand, plans to explore markets in other states in the eastern region. The company has drawn up a Rs 100-crore diversification plan.    

 
 
FOREIGN FUNDS LEAN TOWARDS EQUITIES 
 
 
BY ANIEK PAUL
 
Calcutta, July 14: 
Foreign institutional investors (FIIs) have stepped in where domestic funds fear to tread. Even as you thought there were few takers for equities, especially after the way they did a humpty-dumpty on the bourses, in the two weeks since the introduction of rolling settlement, FIIs have withdrawn funds from debt securities and invested over Rs 350 crore in equities.

During the same period, mutual funds have withdrawn over Rs 250 crore from equities and invested close to Rs 700 crore in the debt market.

Since the beginning of the year, mutual funds have been pulling out of equities and investing in debt instruments, but the 500-odd FIIs operating in the country are unfazed by the carnage on the bourses, and continue investing.

So far this year, mutual funds have invested Rs 5,184 crore in debt instruments, while offloading equities worth Rs 3,628 crore. This is largely due to fact that the debt funds have gained popularity while equity ones have been facing redemption pressure, mutual fund experts say.

“The interest in debt funds is understandable. The yield from the debt markets is very attractive at present — certainly much higher than bank deposits, but for the FIIs, debt instruments are meaningless, given that the Indian currency devalues by about 7 per cent each year,” John Band, chief executive officer of ASK Raymond James said.

“The equity market, on the other hand, looks extremely cheap compared with other Asian markets. The sensex has clawed back to over 3,500 points, but the market still looks far below its normal level,” Band said, adding the introduction of rolling settlement was a non-issue for the FIIs.

   
 

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