{"id":4719,"date":"2019-04-11T04:24:34","date_gmt":"2019-04-11T04:24:34","guid":{"rendered":"http:\/\/financeintellect.com\/home-page\/home\/?p=4719"},"modified":"2019-04-11T04:24:34","modified_gmt":"2019-04-11T04:24:34","slug":"investors-in-frenzy-as-kotak-mf-defers-returns-on-fixed-maturity-plan","status":"publish","type":"post","link":"https:\/\/financeintellect.com\/home-page\/home\/investors-in-frenzy-as-kotak-mf-defers-returns-on-fixed-maturity-plan\/","title":{"rendered":"Investors in frenzy as Kotak MF defers returns on fixed maturity plan"},"content":{"rendered":"<p class=\"ltext-inf paddingBottom20\" style=\"text-align: justify;\">The past few days has made mutual fund investors go berserk. Kotak Mahindra Mutual Fund has withheld returns on its fixed maturity plan (FMP) that matured on Wednesday.<\/p>\n<div id=\"content-body-22285694-26798869\">\n<p style=\"text-align: justify;\">The asset management company is facing delayed repayments on some of the debt instruments issued by the Subhash Chandra-backed Essel Group and IL&amp;FS Group companies. Facing a similar situation, the country\u2019s largest fund house HDFC Asset Management Company has extended an FMP that was supposed to mature on April 15 to April 29, 2020.<\/p>\n<h4 style=\"text-align: justify;\">Close-ended funds<\/h4>\n<p style=\"text-align: justify;\">Fixed Maturity Plans are the equivalent of a fixed deposit in a bank, with a slight difference. The FMP\u2019s returns are\u00a0 indicated and not guaranteed. Since the fund house knows the interest rate that it will earn on its investments, it can provide \u2018indicative returns\u2019 to investors.\u00a0The FMPs of mutual fund industry have an exposure of over\u00a0<span class=\"WebRupee\">\u20b9<\/span>8,000 crore to Essel Group debt papers. Of this, 55 close-ended FMPs have over\u00a0<span class=\"WebRupee\">\u20b9<\/span>1,700 crore maturing over the next three months.<\/p>\n<p style=\"text-align: justify;\">The FMP series 183 of Kotak Mutual Fund had asset under management (AUM) of\u00a0<span class=\"WebRupee\">\u20b9<\/span>563 crore and exposure of\u00a0<span class=\"WebRupee\">\u20b9<\/span>108 crore to debt papers issued by the Zee Group. Investors are worried that another two FMPs of Uday Kotak-owned mutual fund maturing later this month could also suffer. The two FMP series \u2013 187 and 127 \u2013 that are maturing this month has cumulative AUM of\u00a0<span class=\"WebRupee\">\u20b9<\/span>\u00a0951 crore and exposure of\u00a0<span class=\"WebRupee\">\u20b9<\/span>186 crore to the Zee Group.<\/p>\n<p style=\"text-align: justify;\">In all, six FMPs of Kotak Mutual Fund with AUM of\u00a0<span class=\"WebRupee\">\u20b9<\/span>2,094 crore maturing in the next one month have invested\u00a0<span class=\"WebRupee\">\u20b9<\/span>358 crore in the debt papers issued by the Zee Group. Kotak Mutual Fund, in a note, said amongst other investments, the three-year FMP scheme maturing between April and May had invested in non-convertible debentures issued by Edisons Utility Works Pvt Ltd and Konti Infrapower &amp; Multiventures Pvt Ltd (both are Essel Group companies \u2013 secured by equity shares of Zee Entertainment Enterprises) and IL&amp;FS Transportation Networks Ltd (credit enhancement by parent support agreement of IL&amp;FS).<\/p>\n<p style=\"text-align: justify;\">The Essel Group has been struggling with high debt and had defaulted on some of the repayments in January. The group is looking to sell stake in its entertainment, infrastructure and energy units. It added there are working closely with the Essel Group for optimal recovery from Konti and Edisons for the benefit of our unit holders and believe that such a recovery will take place albeit with some delay.<\/p>\n<p style=\"text-align: justify;\">For IL&amp;FS Transportation Networks, Kotak Mutual Fund has made a 100 per cent provision as the company falls under the \u2018Red\u2019 category, wherein recovery is uncertain.<\/p>\n<p style=\"text-align: justify;\">Ruling out the possibility of AMC promoters chipping in to meet the shortfall till the amount is recovered from Zee Group, a CEO of a mutual fund company said the overall amount will be too costly for any promoter.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>The past few days has made mutual fund investors go berserk. Kotak Mahindra Mutual Fund has withheld returns on its fixed maturity plan (FMP) that matured on Wednesday. The asset management company is facing delayed repayments on some of the debt instruments issued by the Subhash Chandra-backed Essel Group and IL&amp;FS Group companies. Facing a [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":4720,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1],"tags":[3704,3705,3703],"class_list":["post-4719","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy-and-politics","tag-essel","tag-kotak-mahindra-mutual-fund","tag-zee-group"],"aioseo_notices":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Investors in frenzy as Kotak MF defers returns on fixed maturity plan - Finance Intellect<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/financeintellect.com\/home-page\/home\/investors-in-frenzy-as-kotak-mf-defers-returns-on-fixed-maturity-plan\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Investors in frenzy as Kotak MF defers returns on fixed maturity plan - Finance Intellect\" \/>\n<meta property=\"og:description\" content=\"The past few days has made mutual fund investors go berserk. Kotak Mahindra Mutual Fund has withheld returns on its fixed maturity plan (FMP) that matured on Wednesday. The asset management company is facing delayed repayments on some of the debt instruments issued by the Subhash Chandra-backed Essel Group and IL&amp;FS Group companies. 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