Birla Mutual Fund believes its investment of ₹1,270 crore in the operating subsidiaries of trouble-ridden IL&FS is safe and there is no need for resorting to side-pocketing these investments as they are being serviced.

A Balasubramanian, CEO, Birla Mutual Fund, told BusinessLine that the fund house’s exposure to IL&FS is limited to its operating companies, which includes ₹950 crore in road project, ₹250 crore in power plant and ₹70 crore in education project.

The new IL&FS board has already ring-fenced these operating assets and put them on the block. It has already received good response from bidders and there is no need for side-pocketing these investments, he said.

The SEBI facility of side-pocketing is prospective and for investments made after the norm has been implemented, he said.

Moreover, Balasubramanian added that IL&FS subsidiaries are still servicing their obligations on investment made by the fund house.

Adopt to changes

With SEBI banning upfront commission and norms on cutting expense ratio coming into force from April, he said, distributors have to rework their working model and adopt to the changing business environment.

In fact, he added, the fund house plans to have presence in all the 542 Lok Sabha constituencies in the next three years.

“Today, we have presence in 260 locations with 200 branches and a single official representative in 60 other locations. Our target to reach 542 locations will also help the industry’s target of five lakh AMFI-registered distributors,” he said.

Good response to new SIP

The newly-launched systematic investment plan of Birla MF with free life insurance cover has gained good traction and about 30 per cent of new SIP investments are registered with free insurance.

The fund house receives ₹1,000 crore a month through the SIP route and is growing steadily despite a temporary blip in the industry’s equity inflow, he added. Balasubramanian expects the FPI inflow to resurrect and domestic inflows through SIPs reaching new heights. While foreign pension funds are making a beeline for Indian stocks, he believes more inflow from NPS and EPFO .

There is expectation of a stable GST collection and reduction in interest rate ,which could boost consumption, he said.

“I will not be surprised, if there is a move for reduction in personal income tax in the next Budget post the General Election.

“Given the fact that the tax base is rising and there is a need to widen it further, it would be worth it to extend the benefit of lower corporate tax rate to individuals,” said Balasubramanian.

The move will not only boost consumption but also help sustain the overall economic growth, he added.

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