Damodaran likely to head UTI-I and UTI-II

They added that as chairman of UTI-II, which will handle net asset value (NAV) based schemes, he will be assisted by professional managers in the management of the Security and Exchange Board of India (Sebi) compliant fund.

Sources said that for UTI-I, the government is likely to appoint three or four advisors. They said that the government is currently considering appointment of at least two market experts in the board of advisors to suggest Damodaran on the mode and timing of sale of assets belonging to UTI-I to optimise the returns without effecting the stock market.

In case of UTI-II, the professional managers will be selected by the management headed by Damodaran. The process will be initiated soon after the split of the Trust.

Ministry officials said that the Ordinance to repeal UTI Act which will be followed by UTI split, is likely to be issued before the announcement of dates for Winter Session of Parliament. The draft Ordinance has already been sent by the finance ministry to the law ministry. Once law ministry vets the draft ordinance, it will be sent to the Cabinet for approval. As per the roadmap approved by the Cabinet Committee on Economic Affairs for restructuring of UTI, UTI-II will have a three-tier structure comprising an asset management company, trustee, and a sponsoring company. Officials said that the government will appoint its nominee on the board of trustees of UTI-II.

While UTI-I has to be finally liquidated, UTI-II will be privatised as per the government plans. The government has decided to support UTI-I in meeting its obligations to the investors. Both US-64 and ARS, to be handled by UTI-I, are currently facing major shortfalls. The government’s liability on this account is expected to be around Rs 14,500 crore as per the current estimates, which will vary depending on the market conditions.

Officials said the government expects that UTI-I will be in operation for next five years or so. This will allow the government to utilise the proceeds received from UTI-II privatisation to raise the income of UTI-I so that its liability goes down.