UTI Mutual hopes to manage Rs 40000 cr

UTI Mutual Fund (UTI MF) aims at managing Rs 40,000 crore of assets at the end of this fiscal, which would require growth of a shade over 90 per cent over the last year's kitty of Rs 21,000 crore. The mutual fund had an asset under management (AUM) of Rs 13,800 crore a year ago when it was formed.

In an interview, UTI MF chairman and managing director Meleveetil Damodaran said the acquisition of ILFS Mutual Fund, which was expected to be over in four-five months, would add nearly Rs 2,000 crore to UTI's AUM while the balance would be generated from retail investors.

He cited the example of UTI Thematic Fund to corroborate the interest of the retail investors about UTI MF. The first few days of the initial public issue (IPO) of the fund attracted 55,000 applications from retail investors, so far the largest in the industry.

The mutual fund authorities was forced to extend the closure of the scheme on public demand as investors got their funds locked in the public issues of the divestment candidates. Thematic Fund will close on April 7.

Damodaran added that total numbers of applications would be attracted by Thematic Fund would be much higher than what it received in the first few days of the IPO as "retail investors always want to chip in fund on the last date."

UTI MF would extend its network in the country by doubling the number offices. At the end of the year, he said, UTI MF would be having 110 offices from the current 55.

Damoradan clearly indicated that the country's largest fund house would not go for any immediate acquisition, after the take over of ILFS would be over." There is no MF up for the grab with the size we want to acquire. I am not interested to take over small fund having a few hundred crores of AUM. Neither I am keen on taking over large funds," he said.

UTI MF would not go for introduction of any new product, barring a variety of Global Opportunities Fund, this year. He said the mutual fund schemes for the equity market were exhausted.

Boasting the kind of growth of the mutual fund was registering- it recorded a 52 per cent over last year and targeted a 90 per cent this year-Damodaran said the growth was due to prudent practice and service it offered.

"Last year, a brave man from a fund claimed that his fund would supersede UTI's size in a year. But the reality was something different. Not only the fund slipped to the 4th position from the second slot, the man was out of the market," he mentioned.

He mentioned some of the first being offered the fund house. It included independent trustee board, integrated front office automation, full time compliance officer, full-fledged risk management system and independent research department.

'UTI had doubled government's money': The clean-up of investment books along with other components of the restructuring of UTI has delivered unprecedented returns to the Government of India, Damodaran said.

"The government has doubled its money in five years, for the Rs 3,000 odd crore that it allocated to turn around UTI has generated around Rs 6,000 crore", he said.

Over half the scrips have been sold in the market or back to the promoters and this process was helped by the rally in the Indian capital market, said the UTI chief.

Speaking at the sidelines of the launch of an alliance to sell UTI mutual fund products through Allahabad Bank branches, Damodaran said UTI's three-pronged strategy to release value from its investments had paid off handsomely.

"The fund's non-performing holdings have virtually come down to zero," he said.

The fund, to unlock value from scarcely traded or scrips of ailing companies, had aggressively sold shares in the market whenever these scrips showed some activity.

As the recent revival in markets was broadbased, the value of several scrips which had been all but written off had soared "to as much as Rs 50". UTI managed to sell these off.