UTI-I exits stocks in bull phase

Fund now left with strategic equity investments, including stakes in UTI Bank and ITC.

The bull run on the stock markets in the last three years has helped the Specified Undertaking of UTI (SU-UTI) exit from most of the 1000-odd stocks it held at a profit.

SU-UTI, popularly known as UTI-I, was entrusted with the task of managing the assured-return schemes of erstwhile Unit Trust of India in late 2002.

Senior officials said UTI-I had begun the next stage of disinvestment "� sale of hundreds of crores worth property it owns across the country.

"We have sold off bulk of the equity held by US-64 and other assured return schemes such as Children's Growth Plan at a profit," an official said.

He added that in several mid-cap and small-cap stocks, the sales were done through off-market deals with promoters to avoid huge price variations.

The bellwether Sensex has risen 224 per cent from 3,390 hit on January 1, 2003, to 11,000 levels as on this date.

UTI-I is now left with 'strategic equity investments', which include 27.72 per cent stake in UTI Bank, 11.89 per cent in ITC, about 10 per cent in L&T and stakes in unlisted entities such as National Stock Exchange, National Securities Depository Ltd and credit rating agency Icra. At the current market price, the stakes in UTI Bank, ITC and L&T are worth Rs 8,174 crore.

While the Specified Undertaking will offload its stake in Icra at the time of the rating agency's public float, slated to hit the markets in coming months, there is no directive from the government as far as its holdings in UTI Bank, ITC and L&T are concerned, officials said.

As per the restructuring exercise, the state-owned UTI was bifurcated into two separate entities "� SU-UTI and UTI Mutual Fund, which was handed over all the other market-related schemes of then Unit Trust of India.

The government also pumped in Rs 14,561 crore to SU-UTI to enable it to meet redemption pressure.

To avoid huge redemption pressure, the investors of the assured-return schemes were also given a choice to continue their investments at a fixed rate of Rs 12 per unit along with tax sops.

The five-year period will come to an end in May 2008, after which the US-64 scheme will be closed.

"At the current prices, we will not require any monetary support from the government to pay off the investors," the official said.

On sale of property, the official said, "We have begun the process of selling the real estate properties. We hope to complete the sale before the deadline."

Headquarters of UTI Mutual Fund, located at the Bandra Kurla Complex in Mumbai, was among the prized possessions of UTI that was handed over to UTI-I for disinvesting.