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UTI embarks on massive restructuring drive

Unit Trust of India chairman M Damodaran said on Monday the mutual fund had embarked on a series of restructuring measures aimed at improving its performance and help it recover from the problems created by its Unit-64 scheme.

"We have already put in motion a process of restructuring to maximise human resources and optimising portfolio management structure," Damodaran told newsmen in Calcutta.

Damodaran said fund management and equity research would be two key activities criticial to UTI's future performance. It had committed to strengthening its capabilities in both these areas within the next few months.

"We may also set up one or more asset management companies to manage different funds. Today, we cannot set it up because of the Mutual Fund Act. I hope this Act will be amended soon," the chairman said.

On US-64, he said re-deployment of suitable talent, performance orientation, fast-track promotions and bench-marking would constitute the first level reforms.

Simultaneously, depending on the opportunities presented by markets, the scheme would see a reduction of exposure in certain scrips and sectors and the overall number of scrips would be rationalised, he said.

Going beyond US-64, Damodaran said UTI would strengthen and refurbish all its other schemes, besides introducing a few add-ons to existing ones.

"Plans are underway to provide existing investors with the option of switching from one scheme to another, and also offering income options for those schemes currently not offering this facility, he said.

Damodaran said it was planned to bring in a 'mid-office' among its various schemes to separate the functioning of the individual ones.

"There will be a complete Chinese Wall. Even then inter-scheme transfers, wherever warranted will be done at pre-determined prices in accordance with Sebi rules," he said.

The intention, he said, was to reduce dependence on inter-scheme transfers over a time and "as far as investment decisions are concerned every manager is free to take them."

Refuting reports in a section of press, the UTI chairman said, "not a single investor lost anything. It is just that values have come down and if they stay with it they will get benefit. It is just a momentary bad phase."

Reiterating that US 64 would be NAV-based scheme from in between end October and early November, he said.

"Don't write us off. UTI has a very bright future. We will be reducing our equity portfolio which at present comprises 70 per cent of our total investment over a period of time so that it does not affect market or investors," he said.

To a query he said "considering the present market condition, I will be very uncomfortable if investment on equity goes below 50 per cent of our total investment. It is an appropriate time to invest as the prices are quite low."

Asked about reports that UTI had sought government support, the chairman said, "till today we have not asked for any support from the government. I've not borrowed anything from any of the banks and have only tied up with them.

"If the market improves, then we will not need any support from government, but if it does not improve, then government assistance might be needed."

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