The UTI has decided to eventually transfer the Rs 900 crore worth of investment in real estate to its development reserve fund (DRF). With this, the total DRF corpus will swell to Rs 1,800 crore during the course of next three years.
The revaluation of the real estate has been pegged at Rs 525 crore.
"We plan to transfer the investment in real estate to DRF over the next three years," Subramanyam said, while addressing news persons after declaring annual results for year 1998-99.
Subramanyam said that the approximate corpus of DRF at the end of June 1999 stood at Rs 900 crore. "Historically, DRF has grown at 18 per cent per annum. We have decided to assign a fund manager exclusively to manage the DRF," Subramanyan said.
According to Subramanyam, the DRF corpus is largely invested into government securities and other similar instruments.
The DRF at the end of the June 30, 1998 stood at Rs 649.42 crore. As per the abridged balance sheet of UTI on December 31, 1998, the DRF stood at Rs 717.57 crore.
However, the present corpus of Rs 900 crore as on June of 30, 1999, results in a growth of Rs 38 per cent, which is much higher than what the UTI had been traditionally getting.
The DRF was constituted in the year of Rs 1983-84 as a common fund to enable the Trust to meet the expenditure in respect of research and developmental work in connection with the introduction of new schemes, innovation of new systems and procedures at this conceptual stage and also various other production and development work not related to or linked with any particular scheme itself.
The fund is also utilised for economic and capital market research, for the Trust's marketing and corporate image-building efforts, and to meet shortfalls in the assured return schemes of the Trust.
The DRF also holds significance because of a series of assured returns schemes that were launched by the UTI in the past.
In fact, the Securities and Exchange Board and India (Sebi) had asked the UTI to keep it updated on the DRF. font color=black face=arial size=2>
UTI also plans to introduce a systematic withdrawal plan under UTI Bond Fund in a bid to tap the non-tax paying investors under monthly-income plan. The withdrawal facility will allow investors to seek redemption once a month. UTI Bond Fund is an open-ended income fund. In the overall plan, UTI intends to phase out assured-return schemes.
The trust also intends to introduce a cheque-writing facility under the UTI money market fund.
UTI will also focus on implementing recommendations of the Deepak Parekh committee report on US-64.
It will include infusion of permanent capital by original contributors, focus on small investors, making US-64 NAV-based over a three-year time frame, change in the US-64 portfolio composition, bringing US-64 under the Securities and Exchange Board of India's (Sebi) purview and commissioning of an independent professional firm for review of asset management processes.
