US-64 report in Jan

MUMBAI, DEC 15: The Deepak Parekh committee on US-64 restructuring which met in the Unit Trust of India's UTI headquarters here today h...

MUMBAI, DEC 15: The Deepak Parekh committee on US-64 restructuring which met in the Unit Trust of India8217;s UTI headquarters here today has decided that they would submit their report by early next month. quot;It will be the new-year offering,quot; UTI chairman P Subramanium said soon after the meeting.

The committee members present at the meeting agreed that there were a number of options before the committee and a lot of brainstorming was needed before any final recommendation could be made.

Said the chairman of the committee, Deepak Parekh: quot;There are a number of alternatives before the committee and it will take some time before a report could be made. The committee is considering a number of options. We are still discussing the choices available. The report will be finalised and presented in the first week of January.quot;

quot;There are a number of options before the committee but most of the options are nebulous at present. There was a lot of brainstorming at the meeting but nothing final has been arrived at,quot;said former chairman of State Bank of India SBI, MS Verma, who is a prominent member of the committee besides IDBI chairman G P Gupta.

There was, however, a consensus among the committee members, that it will not insist on declaring the net asset value NAV of the beleaguered Unit Scheme, 1964. quot;We have met all relevant people outside UTI8230; now we need to sit and formalise the recommendations. There will be nothing in the recommendations which should shatter investors8217; confidence,quot; a panel member said.

quot;We are deliberating on the issues present before the committee concerning US-64. It is difficult to say what the final report will be,quot; said Jagdish Kapoor, deputy governor of Reserve Bank of India and a panel member.

The panel8217;s proposal of not insisting on the US-64 NAV is significant against the backdrop of as many as 39 UT schemes of UTI showing negative reserves totalling Rs 2,014.631 crore. Of this, the US-64 accounted for 54 per cent of the total negative reserves with a widely reportednegative reserve of Rs 1,098.49. The remaining Rs 916 crore of negative reserves were contributed to by other schemes of UTI.

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The UTI has, meanwhile, stepped up the sale and repurchase prices of the units every month ever since the US-64 controversy rocked the financial system in September. The mutual fund major has recently fixed a higher sale and repurchase price of its flagship US-64-scheme for the month of January. The hike is 10 paise over the December prices.

quot;We have had a close look at the US-64 portfolio. Something needs to be done for those securities which have lost their market value substantially. This can be done through floating another scheme by transferring a part of the US-648217;s underperforming equity portfolio and replacing it with debt securities with a higher income-generating potential or may be by seeking the government guarantee,quot; the panel member said.

There was a unanimity among the panel members that the rescue operation needs to be launched on a war-footing. quot;There is no timeto waste. The panel will submit its recommendations before the end of December,quot; a member said. The panel is in favour of restructuring the US-64 by reducing its dependence on equities and improve its ability to maintain dividends to unitholders. The fund in currently overweight in equity around 68 per cent of investible funds whereas its basic attraction to investors is as a fixed-return income scheme.