Leo Puri defends track record in UTI board meet at fag end of term

Says aligning shareholder interest came at personal cost

Leo Puri defended his performance as managing director of UTI Mutual Fund while presenting the report card of his five-year tenure to the board of directors last week, said sources in the know.

In what may well be the last board meeting of his term, Puri told the board that a key mandate after taking over was to resolve UTI’s governance structure and get the shareholders, trustees and the government on the same page with regard to the AMC’s future.

This, however, was no easy task and the work put in towards achieving this goal had come at a considerable professional and personal cost, Puri told the board.

Explaining his predicament, Puri said the leadership vacuum before his appointment had dented employee morale and one of his achievements was to hire fresh talent and stabilise the senior management team soon after he took over. 

He had even taken steps to change the compensation structure and engaged with the workmen’s union.

Puri’s five-year term is set to end Monday, amid disagreement between shareholder T Rowe Price and four other state-owned stakeholders on whether he should continue at the helm.

 

T Rowe has moved the Bombay High Court, seeking an extension for Puri.

While Puri admitted to the AMC losing market share during his tenure, he said that it remained a consistently profitable outfit and was also able to maintain its margins despite provisioning for additional pension costs of employees who had taken voluntary retirement.

The slip in UTI’s market share was primarily owing to the rise in the market share of bank-sponsored AMCs, said Puri. 

He also alluded to the need for a strategic distribution partnership with a bank to boost sales in future.

According to Capitaline, the AMC clocked a net profit of ~2.9 billion for 2016-17 compared to ~1.49 billion for 2012-13.

UTI Mutual Fund’s equity assets have grown 121 per cent in the past four financial years compared to 211 per cent for the top five fund houses. 

UTI was the top asset manager till FY06 but has fallen behind the top five.

Puri said the AMC had taken measures to stem the slide in its equity performance and arrest redemption pressure. The digital push, improved investor services and better brand positioning among the youth were among his other achievements, he said.

UTI AMC has been trying to list itself on the bourses but has not succeeded thus far. In 2016, T Rowe Price, Punjab National Bank and Bank of Baroda had given UTI a 'listing notice', allowing the AMC to appoint a banker and conduct a feasibility study for the IPO. In 2017, the AMC went ahead with the study and held informal talks with investment bankers. LIC, however, refused to green-light the proposal.

The five-shareholder arrangement has not worked for UTI. It took more than two years for the AMC to appoint a new chief after UK Sinha left the firm in February 2011. The AMC has also been unduly risk-averse, lost out on acquisition opportunities and become overly dependent on independent financial advisors for distribution, factors which have hampered growth, according to experts.