Infosys slashes debt MF exposure by $1 bn

Cash-rich IT giant Infosys slashed its exposure to liquid mutual funds by a whopping Rs 5,600 crore (over $1 billion) during the first quarter of 2013, as yields on such investments are expected to flatten.

Country's second largest IT services exporter, which had ramped up its investments in debt mutual funds to an all-time high of Rs 7,365 crore (Rs 73.65 billion) at the end of 2012, reduced exposure to Rs 1,739 crore (Rs 17.39 billion) during January-March quarter of 2013.

Returns on liquid mutual fund schemes typically peak off towards the end of the year. Liquid funds are generally seen as investment instruments suitable for parking money for tenures of less than 3 months.

"The shift is purely a decision based on what yield we get on our investments," Infosys director V Balakrishnan, who has earlier been its chief financial officer, told PTI.

At current level, Infosys' liquid MF exposure is lowest since the Rs 32 crore (Rs 320 million) recorded at the end of January-March 2012 quarter.

Large corporates use liquid debt MFs to park cash for short-term and also earn good returns, while waiting to deploy the funds for future projects.

After increasing its liquid MF exposure for consecutive quarters up to December 2012, debt-free Infosys' latest portfolio move coincides with the industry-wide over Rs 1 lakh crore outflows seen in liquid funds in March.

Mutual fund experts say it is usual for companies to take out money from liquid funds and put them in bank accounts at the end of fiscal year to report healthier cash chests.

While Infosys has taken out cash from liquid MF schemes, it's cash chest grew to Rs 21,832 crore (Rs 218.32 billion) at the end of March 2013.

This is split across saving accounts (Rs 17,003 crore), current accounts (Rs 1,725 crore) and corporate deposits (Rs 3,104 crore). Cumulatively, the company's cash and cash equivalents have remained almost unchanged for the past three quarters now.