UTI swaps fund managers for better yield
Banks want to lend more to farmers
Corporate governance yardstick under way
BSNL targets 50% of mobile pie in 2 years
Taj bid to woo tourists

 
 
UTI SWAPS FUND MANAGERS FOR BETTER YIELD 
 
 
BY SATISH JOHN
 
Mumbai, Aug. 3: 
The Unit Trust of India (UTI) has reshuffled the portfolios of its top fund managers in order to streamline the management of its various schemes.

The most significant move in the reshuffle is the additional responsibility vested with A.K. Sridhar, general manager, to manage US-64, the mutual fund major’s flagship scheme having a corpus of over Rs 12,662.15 crore.

Sridhar is the general manager of the department of funds management and till recently responsible for managing the equity schemes of UTI. He will now also manage US-64.

The flagship scheme was earlier under the control of executive director B.S. Pandit and N.K. Garg, general manager, department of funds management.

Garg will now manage the close-ended debt schemes that includes the beleaguered monthly income plans.

Earlier, R. Rangarajan, general manager, department of funds management, was managing both the close and open-ended debt schemes. Rangarajan will now be in-charge of only the open-ended debt schemes that include the UTI Bond Fund and G-Sec Fund among others which have significantly outperformed the other players in the industry.

UTI officials said it was a routine reshuffle and nothing much should be read into it.

Mutual fund circles, however, say that there is a lot of logic behind the recent reshuffle. It is done in order to streamline the management of the schemes and bring about synergy of skills in fund management.

Most of the equity schemes, especially the growth sector funds, under Sridhar have done well and even compares favourably with other private sector funds.

Industry circles aver that the move also means that the top brass in US-64 have now come to the conclusion that the Trust’s flagship scheme can come out of the rut only if its equity portfolio does well.

Till lately, US-64 was touted as a balanced scheme and the managers of the scheme have been trying to shed the over dependence on equity. The volatility in the equity markets and the steady returns on debt schemes had forced the management to do a rethink on the exposures.

But with the recent decline in interest rates, it is felt that only deft equity management could bring the flagship scheme out of the morass it unwittingly got into over the years.

Further, with the predominance of equity in the US-64 portfolio which accounts for almost 63 per cent of the total basket, “it makes sense for fund managers with skills in managing funds in the stock markets to take a hold in the scheme,” sources said.

At present, UTI manages funds amounting to Rs 49,655.57 crore (market value of investments as on June 28) of 28.96 million investors under its 72 schemes.

UTI has a track record of more than three decades in the mutual fund industry and has always enjoyed the position of the leader.

   

 
 
BANKS WANT TO LEND MORE TO FARMERS 
 
 
A STAFF REPORTER
 
Calcutta, Aug. 3: 
Public sector banks want the Rs 2-lakh limit on agricultural lending to be raised and interest rates fixed on these advances so as to boost agricultural lending.

They made this submission today before the working group on agricultural lending set up by the Indian Banks’ Association. B. Samal, chairman and managing director of Allahabad Bank, heads the working group.

The bankers said that the overall structure of interest rates have been simplified and deregulated. However, the lending rates of commercial banks for agriculture advances have been fixed at prime lending rate for loans up to Rs 2 lakh.

“PLR has lost its relevance these days. The regulated rates operate as a barrier to the sanction of small loans as the managers look for comparatively large borrowers for financing limits above Rs 2 lakh. For large borrowers the banks are offering sub-PLR rates. This acts as a major stumbling block in agricultural lending,” they said.

Samal accepted the problem and said that it will be reviewed and the working group will come up with some recommendation. The group will submit its report by August 31.

Most of the banks fail to achieve the 18 per cent target of agricultural advances. Currently, co-operative banks, regional rural banks and commercial banks are the three institutional agencies meeting credit requirement for agriculture and allied activities.

The total credit flow to this sector was Rs 64,000 crore during 2001-02. The credit flow for farm and allied activities, Rs 98,850 crore during 8th plan period, has increased to Rs 2,30,000 crore during the 9th plan period.

   

 
 
CORPORATE GOVERNANCE YARDSTICK UNDER WAY 
 
 
A STAFF REPORTER
 
Calcutta, Aug. 3: 
Spooked by the lack of objective analysis of corporate governance by the auditors, the Securities and Exchange Board of India (Sebi) has asked the Institute of Company Secretaries of India (ICSI) to develop yardsticks for objective evaluation.

At the moment, a typical compliance certificate on corporate governance issued by the auditors reads like this: “The compliance of conditions of corporate governance is the responsibility of the management. Our examination was limited to procedures and implementation thereof… It is neither an audit nor an expression of the financial statements of the company”.

The capital market watchdog wants all these to change.

Sebi chairman G.N. Bajpai says corporate governance can be objectively evaluated by examining a company’s performance on three parameters: “wealth-creation, wealth-management and wealth-sharing with the stakeholders”.

ICSI has started working on devising a model for evaluation of corporate governance. It expects to finalise its recommendations by the end of November, and present it to the market regulator by the turn of the year.

ICSI president S. Gangopadhyay says: “It’s early days yet; the research has just started. But the new corporate governance standards may require companies to evaluate their key brands regularly. Such an exercise will clearly indicate wealth created by a company.”

“Creation of wealth alone is not enough. It must also be shared with the stakeholders. But then, you cannot expect all companies to distribute a certain percentage of profits as dividend every year. Some companies may need to retain more cash than others.”

The need for improvement in corporate governance is being felt worldwide. Even in the relatively developed markets, revelations of accounting scams have shaken investor confidence.

   

 
 
BSNL TARGETS 50% OF MOBILE PIE IN 2 YEARS 
 
 
OUR SPECIAL CORRESPONDENT
 
Hyderabad, Aug. 3: 
Bharat Sanchar Nigam Ltd (BSNL), the largest public sector telecom provider in the country, will roll out cellular services by the end of this month with a target to cover 1,000 cities by March next year, its chairman and managing director Prithipal Singh said today.

BSNL would enter the cellular market with a “competitive tariff and a host of value-added services” and was hoping to capture over 50 per cent of the market in the next two years, Singh told a press conference here.

The telecom giant was looking at providing 2.5 million mobile connections in the first phase and to start with the connectivity would be offered to a few cities in each zone, he said.

“We will work out tariffs that are acceptable and convenient to the customers,” the chairman said without elaborating on the company’s tariff strategy.

Asked about the fierce competition among private cellular operators resulting in reduction of tariff, Singh said “lot of people are eagerly waiting for BSNL’s entry into the market. We are actually helping the customers to get low tariff.”

Asked about delay on the part of BSNL in expanding the wireless in local loop network in the face of a more aggressive push by private operators, he said the validation of WLL equipment was “more or less over” in all zones and it would be rolled out in another two months.

Simultaneously, the company was giving finishing touches to branding, marketing and accounting strategies, he said.

BSNL is investing over Rs 2,500 crore in cellular network, Singh said and added that the company would soon announce brand names for its sevices.

Asked about the possibility of mobile phone rentals coming down further with BSNL’s foray into the market, he said “let us hope so. The real race will be in providing value-added services.”

On whether the company would go in for ‘bundling’ of handsets along with cellular services, the chairman said “we want to do lot of bundling provided the Telecom Regulatory Authority of India approves it.”

Earlier, Singh launched the answering machine service (AMS) here to be provided to BSNL customers free of cost and a customer utility portal to facilitate a large number of service functions through internet and to serve as a one-stop resource centre for the telecom industry.

   

 
 
TAJ BID TO WOO TOURISTS 
 
 
PALLAB BHATTACHARYA
 
Calcutta, Aug. 3: 
The Taj group has come up with a number of holiday packages to woo Bengali tourists during the pujas.

The packages include three nights and four days for a couple and a kid at Vizag, the sea cum hill station, for just Rs 5999. An unthinkable offer from a hotel that commanded more than four times the price only a few months back.

Similarly a nawabi holiday of three days and two nights at the Taj Residency in Lucknow comes to a couple for Rs 5499. Moreover, two children below 10 years of age would be accommodated free of charge.

All these packages, being hawked in Calcutta now, offer many more services like buffet breakfast, buffet lunch or dinner, half-a-day sight-seeing free of cost.

The 62-hotel Taj group, considered the most expensive hotel chain in the country, is going all out to lure middle-class tourists who would otherwise prefer second-rung hotels.

“The hotel business has been badly hit especially after the September 11 attack. There are hardly any foreign tourists due to the diplomatic tensions between India and Pakis tan. The hotels need more and more domestic tourists to survive,” says Samir Khanna, general manager, Taj Bengal.

General manager Mathew C. Thomas also agrees with Khanna.

“Vizag, a beautiful tourist spot, attracted a lot of tourists along with business travellers. But now the situation is extremely difficult as hardly any tourist is coming. Business delegations are also rare,” says Thomas.

Economic recession, international tension and lack of good infrastructure have been cited as reasons for the massive downfall in the hotel occupancy.

Most of these hotels are surviving on even less than 50 per cent occupancy level.

“The hotel business is highly perishable. If our rooms go vacant, we are ready to negotiate with a prospective client and offer him discounts,” says a top Taj group official.

   
 

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