Uti Braces For Us-64 Redemptions

The Unit Trust of India chairman M Damodaran today said the trust is ready to face the redemption rush when it opens it repurchase window for US-64 tomorrow.

The trust will repurchase the flagship scheme, up to 3,000 units for all unitholders as on June 30, 2001, at an administered price of Rs 10. The repurchase will continue till May 2003 and price will increase by 10 paise every month. The scheme will go net asset value (NAV)-based from January 1, 2002, and UTI will continue to repurchase either at NAV or the administered price which ever is higher.

"We have tied up far more funds than what we required at any point of time. Liquidity is not at all a constraint at this point in time. It is really a situation in which we have overprovided in relation to our anticipated repurchase requirement," Damodaran said.

The chairman does not expect large-scale redemption in the immediate future. "Only those unit holders who need Rs 30,000 right now and have no other alternative source of income would queue to redeem (units)," Damodaran said.

On whether UTI will go in for block deals, Damodaran said the trust is not going to sell stocks in a depressed market but wait for it improve. He also said that UTI is reviewing its entire portfolio and looking at the significance of each holding. "

We will talk to companies to buy back their equity in case the holding is insignificant," Damodaran said.

He also said that UTI will start working from 8.30 am tomorrow so that it is able to enter stock market on time. Till date, UTI's offices commenced work from 9.30 and, hence, was a late entrant in the market.

On whether the UTI is reviewing the decisions taken by the former chairman, Damodaran said, "It is a mere allegation but nothing has been established and nobody can guarantee that there is no wrong decision but action will taken against malafide decision."

On the issue of improving investor confidence after the recent crisis, Damodaran said, "There is no crisis in UTI. There are some problems which would be resolved at the earliest."