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75% jobs to wilt at Lotus MF

November 17, 2008 01:13 IST

At least 150 of the 205 employees at Lotus India Mutual Fund may lose their jobs. The fund house, whose assets under management have declined sharply, was last week bought by Religare Aegon Mutual Fund, promoted by the Singh family that used to own pharmaceutical company Ranbaxy Laboratories.

Sources familiar with the developments said Religare Aegon, which already has enough people on its rolls, may not retain more than 50 Lotus employees. The rest would be given a month's notice and paid all statutory dues.

Lotus AMC, a joint venture between Rana Talwar-owned Sabre Capital Worldwide and Singapore-based Fullerton Fund Management Group, was weighed down by a shortage of inflows, erosion in portfolio, and redemption pressure. Its assets under management fell to about Rs 5,500 crore (Rs 55 billion) at the end of October, almost half of what they were at the end of January this year.

Lotus India mutual fund currently has a marketing team of 127, while its investment team is managed by 12-15 employees. The rest of its workforce is engaged in operations and administration.

When contacted, Saurabh Nanavati, CEO of Religare Aegon mutual fund, declined to comment. A Religare spokesperson said its deal to acquire Lotus was subject to regulatory approvals and hence it would not be prudent to offer a comment.

The share-purchase agreement between Religare Aegon and Lotus was signed on Wednesday and is due for Securities & Exchange Board of India's approval.

The retained employees would be mostly from Lotus' marketing team, the sources said, adding: "The retrenchment will be the highest from Lotus' operations and administration departments, as Religare Aegon has already got a fully-built operations team in place."

They said the share-purchase agreement was expected to receive Sebi's clearances by December-end. The combined entity would commence operations in January next year. "The Lotus employees would be officially intimated to leave once the share-purchase agreement gets the regulatory approval," said the sources.

Religare Aegon got the final nod from Sebi for setting up a mutual fund about a month back. The acquisition of Lotus would give it access to a ready asset and customer base with a bouquet of debt schemes and six equity funds. Although the deal was struck at barely 2 per cent of Lotus' assets under management,

Religare Aegon may not benefit much from the acquisition as Lotus' portfolio mostly consists of assets in debt-oriented funds, where the annual income is only up to 0.5 per cent of the investment value. Lotus currently has an equity asset base of about Rs 300 crore (rs 3 billion) and debt assets under management of about Rs 5,100 crore (Rs 51 billion).

Anirudh Laskar in Mumbai