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Wednesday, Mar 27, 2002

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Enough options for MFs in FMCG portfolio

Neha Kapoor
Aparna Krishnan

MUMBAI, March 26

WITH fast moving consumer goods (FMCG) companies such as Cadburys, Reckitt Benckiser and Nestle moving towards delisting, fund managers do not perceive a major restructuring in fund allocation. They claim that though investment options would be reduced, there are still enough fish in the sea!

According to Mr Anup Maheshwari, Fund Manager (Equity), DSP Merrill Lynch, Asset Management Ltd, ``delisting of a Cadbury or a Reckitt surely reduces our options in the FMCG sector. But looking at the universe of FMCG stocks, I'd say that there are alternatives of significant size still available. As for the stocks that have gone, though it's bad to lose on `good ideas', these developments do not warrant a dramatic change in fund allocation.''

Mr Siva Subramanian, Vice-President, Investments, Pioneer ITI AMC Ltd, said, ``the investment universe is definitely shrinking. However, this may force analysts to look at hitherto neglected Indian FMCG companies, apart from other listed MNCs.''

There are a few FMCG companies that still hold a lot of weightage in the fund portfolio of top-notch mutual funds. And these `few' include the likes of Hindustan Lever Ltd (HLL), Dabur, SmithKline, Nirma and ITC.

HLL, in particular, seems to be a `hot' favourite, with fund managers claiming that ``if HLL delists, then there would be major cause for worry!''

A fund manager with a large mutual fund, not wanting to be named, said, ``the delisting trend would spur a shift of focus in the FMCG sector. Earlier, if a Reckitt or a Nestle held about two per cent of the total portfolio, that two per cent would now be shifted to the FMCG major Hindustan Lever. HLL would be the favourite now for mutual funds as far as FMCG sector is concerned.''

A point corroborated by another industry expert who offered: ``The weightage given to FMCG majors such as HLL will increase substantially and Indian companies such as Dabur and Nirma will also gain immensely.''

``Having said that, one must note that companies that have now gone out of orbit were ones considered to have good fundamentals and management capabilities. It's a pity that investors will not be able to participate in them any more,'' he added.

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