The Unit Trust of India, the biggest Indian AMC, has just announced the portfolio position of the biggest Indian fund, US-64, as on July-end. Its equity portfolio is still worth Rs 7,133 crore – which is 62.5% of the total portfolio. The equity portfolio, which comprised of 439 stocks in June, has grown to 470 on July 31, 2002. In July, the fund fully sold 13 stocks and added 44 new stocks to its kitty. It maintained status quo in 276 stocks. The new positions built in 44 new stocks were marginal positions. The only sizable position was Rs 12 crore in JIK Industries. Even this looks insignificant going by the size of US-64. On digging further, we discovered that JIK Industries is a financial services company and a RBI authorised money-changer. Besides, it is also into chemical waste cycling and manufactures lead-free glass.
Interestingly, US-64 holds more than 10% of the equity capital of 50 companies in all. The highest, being that of SWIL (32%). SWIL, a metal company has been in limelight after the announcement of divestment of Hindustan Copper. The metal majors -- Indo Gulf, Sterlite Industries, Finolex and Metdist have evinced interest in SWIL. The other companies where US-64 owns a significant part of equity include – Nuchem, Mobile Telecommunications and Kothari Sugars & Chemicals.
Selectively Bullish: US-64 bought nearly 9 lakh shares of Ballarpur Industries. With this addition, it now holds 9% of Ballarpur.
Reduced Positions: US-64 reduced exposure in 142 stocks. The prominent sell includes Essar Steel, Reliance Petroleum, Jindal Vijaynagar Steel, Reliance Industries, TISCO and Mysore Cements.
Adieu: It totally ejected 13 stocks from its portfolio. These include Energy Development Co., Essar Oil, Frontier Information Technologies, German Remedies, Industrial Investment Trust, Merck, Nelco, Ponni Sugars (Erode), Reckitt Benckiser (India), Shree Digvijay Cement Co., Shriram Investments and T I L.
US-64 is facing a tough challenge to prepare for the likely wave of redemption in May 2003 -- only eight months away. Because investors holding upto 5,000 units have been assured Rs 12 a unit and for their unit holdings over 5,000 are assured Rs 10 a unit. With its NAV at Rs 5.94, it looks unlikely to attain a value close to the promised repurchase price. So, it will be logical for investors to realise higher value of the fund than its worth then. The government will pay the difference between NAV and the guaranteed price. Despite this bailout package, UTI will have to liquidate its portfolio to redeem the US-64. This works out to a massive Rs 7,133 crore worth of stocks as the total assets of US-64 amount to Rs 11,405 crore as on July 31, 2002, of which 63% is in equities.
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