The Unit Trust of India's (UTI) investment in government securities and corporate debt instruments declined by Rs 3,103 crore during the six months ended June 2002.
One reason for this could be that the UTI offloaded its holdings to offset redemption pressure. Another reason could be that the debt instruments matured during the period.
If latter is the case, it means the trust was unable to take advantage of a buoyant debt market. During these six months, the I-Bex debt index appreciated by 7.2 per cent.
The market value of UTI's debt investments under its 42 schemes, for which comparable portfolio is available, slipped from Rs 22,214 crore as on December 31, 2001, to Rs 19,111 crore as on June 30, 2002.
In the same period, its redemptions stood at Rs 9,272 crore (including maturity value of Rs 5,297 crore).
As against the huge redemption, units sales was only to the tune of Rs 1,409 crore. The gap could had been bridged through bank borrowings, offloading of holdings or inflows following the maturity of debt holdings.
Of the Rs 38,255 crore corpus of the 42 schemes, the debt portfolio accounted for Rs 19,111 crore or 50 per cent.
Of this, investments in government securities totted up to Rs 5,127 crore or 27 per cent of the total debt portfolio.
The trust's holding in corporate debt were spread over 338 instruments as on June 30, 2002, a decline from 524 papers in December 2001.
During January-June 2002, UTI increased its holding in 126 instruments and reduced holding in 288 debt issues.
The trust's investment in the debt instruments of the Industrial Development Bank of India (IDBI) was its largest.
It stood at Rs 1,584 crore, but much lower from Rs 1,965 crore as on December 31, 2001. The trust smartly reduced its exposure in IDBI debt instruments during the period.
IDBI was downgraded in July 2001 by ratings agencies from AAA to AA+ -- a decline from highest safety to high safety.
Similarly, UTI reduced exposure to the wobbling financial institution IFCI and beleaguered steelmaker Steel Authority of India (SAIL) whose ratings were also downgraded.
UTI's holdings in ICICI, Tata Industries, IPCL, Telco, India Cement, Grasim Industries, SAIL, Ballarpur Industries, Jindal Iron & Steel, Indian Rayon Industries, J K Corp, Dalmia Cement were brought down too.
Its investment in Reliance Petroleum debt was its second biggest, accounting for 7.5 per cent of the debt portfolio.
