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US-64 net sales positive; dividend hiked to 13.75 pc

Our Bureau

MUMBAI, July 3

UNIT Trust of India today hiked dividend under its flagship scheme -- Unit Scheme 1964 (US-64) -- to 13.75 per cent (Rs. 1.375 per unit) for the year ended June 2000 as against 13.50 per cent the previous year.

UTI would distribute, as tax free dividend, almost 89 per cent of income under US-64. It reported a total income of Rs. 2,570 crores, up 14.17 per cent over previous year's Rs. 2,266 crore.

On enhanced unit capital of Rs. 15,114 crores, the dividend distribution under US-64 would amount to nearly Rs. 2,078 crores this year as compared to Rs. 1,828 crores the previous year on a unit capital of Rs. 13,544 crores.

The UTI Chairman, Mr. Mr. P.S. Subramanyam, at a news conference here today, said that positive net sales of Rs. 2,387 crores as against negative net sales of Rs. 3,131 crores the previous year under US-64 was the highlight of this year's performance.

Sales under US-64 remained stagnant at Rs. 4,668 crores (Rs. 4,638 crores). What is noteworthy this year is considerable reduction in redemptions. Redemptions amounted to Rs. 2,281 crores (Rs. 7,770 crores) netting fresh sales of Rs. 2,387 crores. After taking into account redemptions the previous year, US-64 had negative sales of Rs. 3,131 crores.

The board of trustees decided to conserve resources, at the same time, offer returns comparable to other market instruments, Mr. Subramanyam said.

US-64 recorded profit on sale of investments at Rs. 1,882 crores (Rs. 1,682 crores). Interest and dividend income from debt instruments amounted to nearly Rs. 300 crores (Rs. 290 crores).

UTI management has brought down the equity exposure to nearly 69 per cent of total investible funds under US-64 from 72 per cent last year.

July sale, repurchase prices fixed: Sale price of US-64 for July 2000 has been fixed at Rs. 13.50 and repurchase price at Rs. 13.20 per unit of face value Rs. 10 per unit.

On July 1999 sale price of Rs. 13.50 per unit, dividend of 13.75 works out to a yield of 10.19 per cent. After adjusting for tax for investors in the highest tax bracket of 33 per cent, the effective yield works out to 15.20 per cent.

For the investors who entered US-64 in June this year, the returns on sale price of Rs. 14.95 works out to 9.2 per cent. UTI, for the first time, kept sales under US-64 open till June 15 when it raised fresh funds of about Rs. 600 crores.

NAV-linked price coming: US-64 would soon be sold and repurchased at net asset value (NAV) linked price instead of administered price. Mr. Subramanyam said that before the expiry of next 18 months, US-64 pricing would be NAV-linked.UTI is also examining an amendment in the UTI Act to comply with two other recommendations made by the Deepak Parekh Committee on US-64. These recommendations pertain to setting up of an asset management company and increase in number of trustees by five.

The committee on US-64 had recommended, among other things, that US-64 be delinked from administered pricing in 1998. It had suggested a period of three years for UTI to comply with its recommendations.

Pic.: Mr.P.S.Subramanyam, Chairman, UTI, and Dr.Basudeb Sen, Executive Director, addressing a press conference in Mumbai on Monday.