The Unit Trust of India (UTI) has, in an internal exercise, assessed that investors holding up to 3,000 units account for about 53 per cent of its flagship Unit Scheme-64's total capital, which stood at Rs 12,778 crore as on June 30, 2001.
The assessment allows the UTI to paint scenarios on the hit it would have to take when the scheme turns net asset value (NAV)-based on January 1, 2002.
According to UTI sources, the UTI had to arrive at an estimate of the redemption pressure US-64 could encounter when its NAV becomes part of the public domain on January 1.
More From This Section
Also, since UTI would have to bear a loss equal to the difference between Rs 10.50 per unit committed to the unitholder in January and the NAV as it stands on the day of redemption, the institution would have to arm itself with sufficient liquidity.
If the market price of US-64 units, which hovered around Rs 8.30 to Rs 8.50 per unit in the National Stock Exchange last week is any indication of its NAV, then the UTI would have to cough up at least Rs 2.00 on redemption of every unit.
With over 20 million individual unit holders, the higher the redemption, the more the hit UTI or the government would take.
UTI has never disclosed its flagship scheme's full portfolio since its inception in the last 37 years. Nor has it ever published its NAV which is equal to the total market value of US-64's net assets divided by the number of outstanding units.
Fund analysts point out that the average of the sale and repurchase price of US-64 units gives an approximate idea of the scheme's NAV. The investments of US-64 in debt and real estate also came in the way of the Trust not publishing the daily NAV.
UTI has, however, now decided to transfer US-64's debt portfolio and real estate investments to its development reserve fund (DRF) at market value which is estimated at Rs 1,200 crore and withdraw an equal amount from the DRF.