These two players are following Japanese funds that have collectively invested close to $3 billion in the past few months.

26 July 2005

UTI MF stake sale not to harm investors
Mumbai: The stake sale of UTI Mutual Fund to one or all of its current sponsors is not likely to affect investors' interest, the chairman of UTI AMC, Dr R.H. Patil, has said. Dr Patil was speaking at the inauguration of UTI's new financial centre in Powai, in Mumbai.

The UTI AMC, in a bid to expand its distribution network, plans to open 12 centres this year. The AMC is targeting a growth rate of 30 per cent this year, according to A K Sridhar, chief investment officer, UTI AMC. Currently, the AMC plans to open branches in centres such as Mumbai, Delhi, Chennai, Kolkata and Bangalore.

Among the current sponsors, LIC, SBI and PNB have their own asset management companies, and if UTI is bought by any of these, SEBI will come out with regulation to ensure that there is no conflict of interest between their existing mutual fund business and that of UTI's, Dr Patil added.

Dr Patil also confirmed that UTI AMC is interested in being a player in the pension fund business, and is ready with its product offerings. As and when the final regulations are in place, these would be tweaked and announced, he said.

Damodaran: Bull run in the markets is welcome
New Delhi: Securities and Exchange Board of India chairman M Damodaran has welcomed the bull run in stock markets, but has cautioned investors to take informed decisions in order to get a reasonable return from their investments. Damodaran was speaking to reporters after a workshop of the 'standing committee on public enterprises' with the CEOs of public sector companies.

With regard to the representation of independent directors on a company's board, he said that there were no differences between the ministry of company affairs and the regulator on the issue.

The J J Irani committee, appointed by the ministry of company affairs to revise the Company Act, has suggested that a third of the company's board be populated by independent directors. But clause 49 of the listing agreement under Sebi has mandated that independent directors should occupy fifty per cent of a company's board.

On listing issues, he said that corporate governance norms should be applicable to both PSUs and private sector corporates. "There cannot be a separate prescription for any sector," he said.

Damodaran said the performance of the stock market was in line with the strength of the economy. "There is no evidence to support (the view) that stock markets have outperformed the economy," he said. Finance minister P Chidambaram had stated last week that he would not be concerned as long as the sensex does not outperform the economy. The SEBI chairman also rejected reports that the share of retail investors in the market had come down in the last few years while the presence of foreign institutional investors had increased.

He explained that the data does not indicate that retail investors were going out of the market, but acknowledged that new retail investors were not entering the market. He also said there was a paucity of good shares to match the kind of money that was coming into the market. According to him, there was nothing to worry about the surge in foreign institutional investor money entering the stock markets. "We will get all the information (on FIIs), with the proposed 'integrated market surveillance system' coming up early next year," he added.

Damodaran: No extension of deadline for clause 49 compliance
New Delhi: The Securities and Exchange Board of India (SEBI) chairman M. Damodaran has ruled out any extension of the December 31 deadline set by it for compliance by listed companies with the revised clause 49 of the Listed Agreement.

"No concerns about December 31 deadline were expressed to me at today's meeting. Nobody has told me 'no'. No Ministry has yet told us that December 31 is too close a deadline for appointment of independent directors. We will stick to the December 31 deadline," Damodaran, told newspersons after an interactive meeting with CEOs of listed public sector enterprises (PSEs) today.

About 40 CEOs and senior executives of listed PSEs attended the meeting, including the IOC chairman, S. Behuria, and the SAIL chairman, V S Jain, the NTPC chairman and managing director, C P Jain, and the BEML chairman and managing director, V R S Natarajan. The meeting, organised by the 'ttanding conference of public enterprises' (SCOPE), discussed the entire gamut of issues relating to revised clause 49 of the listing agreement.

The SEBI Chairman also made it clear that there was no conflict at all between what the capital market regulator was attempting to do and what the ministry of company affairs was attempting to do based on the Irani committee recommendations.

"I would urge you to read the Irani committee's recommendations carefully. It says that in the opinion of the committee, in general a minimum of one-third of the total number of directors as independent directors should suffice. However, for separate categories, regulators may prescribe a higher limit."

Assuming that this translates into law without any change, it should be possible to reconcile the SEBI's position with that of the position of the ministry of company affairs, he added.

At today's meeting, the PSE chiefs sought the SEBI's help in complying with the revised Clause 49.

Some of them pointed out that the 'memorandum of association' / 'articles of association' of certain PSEs stipulated that the government would have to appoint the directors to the board.

Accordingly the compliance of the PSE with the revised clause 49 depended on the government (administrative Ministry).
The SEBI chairman complimented the PSEs for their outstanding commitment to corporate governance.

"It is not simply in terms of complying with the letter of clause 49 but even the spirit of clause 49. I go back from here not merely encouraged about the positive response but armed with practical suggestions they have made to enable me to make whatever improvements are necessary in pursuit of corporate governance."

Stating that PSE entities have by and large done exceptionally well in the area of governance, Damodaran said that the SEBI recognised that there are problems that are faced only by the public sector and not by others.

He added that he had urged the PSE captains to be alongside SEBI in furthering the cause of governance and selling the concept of corporate governance.

Rupee weakens - securities down
Mumbai: The rupee further weakened against the dollar on Monday ending at 43.5450/55, weaker than Friday's close of 43.50.

Forwards market: The 12-month was at 1.01 per cent (0.97) and the 6-month was at 0.93 per cent (0.89).

G-Secs: The 7.27 per cent-8-year-2013 paper, which is currently active, closed at Rs101.18 (7.08 per cent YTM), slightly lower than Friday's Rs101.20/22 (7.07 per cent). The 7.37-9 year-2014 paper closed at Rs101.48 (7.14 per cent YTM). The 7.38-10 year-2015 benchmark paper was dealt at Rs101.65 (7.15 per cent YTM).

Call rates: The inter bank rates were at 5.05 per cent (3-4 per cent).

CBLO market: 213 trades, put through in the 4.95-5.25 per cent range and amounting to Rs8,869.70 crore, were realised.

Reverse repo auction: The RBI received and accepted 24 bids amounting to Rs11,495 crore.