The Hindu Business Line : Birla Sunlife Basic Industries Fund

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Birla Sunlife Basic Industries Fund — Petro, construction favoured

Birla Sunlife Basic Industries Fund uses a blend of the value and growth styles to focus on companies that are sensitive to economic cycles and commodity pricing cycles. We take a look at the changes to the portfolio during the quarter-ended October 2006. The fund's assets have grown by 110 per cent, of which 21 per cent is accounted for by NAV growth; this is suggestive of substantial net inflows into the fund. During the same period the fund increased its cash position to 22 per cent by end-October. For an asset size of Rs 224 crore, the fund has a well-diversified portfolio, with 56 stocks.

Over the quarter, the fund favoured sectors such as petroleum and construction. The sector profile became more diversified, with allocation to other equity rising from 1.5 per cent to 12 per cent. The fund pruned exposures to sectors such as capital goods, banks, industrial products, cement, auto and non-ferrous metals.

The quarter was quite eventful for the petroleum sector, with stocks on a roller coast ride on the back of fluctuating crude prices. The fund stepped up exposure to the sector from 4 per cent to 8 per cent. Holdings in Reliance Industries rose from 25,000 to 75,000 shares. Hindustan Petroleum, Bharat Petroleum and Chennai Petroleum were added afresh.

With IPO activity accelerating, the fund added to its holdings in the construction sector. IVRCL Infrastructure was added, along with the newly listed Action Construction Equipments. Exposure to Jaiprakash Associates and Gammon India was increased. Mahindra Gesco was the lone stock in the space that witnessed profit-booking.

The other stocks added to the portfolio during this period were Century Textiles, Jyoti Structures, South East Asian Marine and TNPL.

Within capital goods (17 per cent of assets), BEML and Bharati Shipyard moved into the portfolio. Exposures to ABB, BHEL and Larsen & Toubro were enhanced. The fund trimmed the exposure to Siemens. In the banking space, the fund booked profits in Union Bank of India and added Bank of India to the portfolio.

In the industrial sector, the fund retained Cummins India, BOC India and Greaves Cotton, with holding levels unchanged. The fund trebled its weight in Kirloskar Oil Engines through new purchases. The fund pared exposure to the auto sector, trimming holdings in Tata Motors and adding Mahindra and Mahindra.

Suresh Parthasarathy

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