Money & Banking

Investors should have patience, says Nilesh Shah of Kotak AMC

Suresh P Iyengar Mumbai | Updated on July 21, 2019 Published on July 21, 2019

Nilesh Shah, Managing Director, Kotak Mahindra Asset Management Company   -  BUSINESS LINE

Must wait for churning from tough moves by policy-makers/regulators to settle

Likening the tough measure taken by policy-makers and regulators to that of Samudra Manthana or mythological churning of the ocean, Nilesh Shah, Managing Director, Kotak Mahindra Asset Management Company, said that investors need patience to enjoy the nectar resulting from these hard decisions.

“The poison is being sucked out with the churning but if anyone reacts in a knee-jerk manner then they may end up consuming the poison,” Shah said during an exclusive interaction with journalists at BusinessLine’s Mumbai office on Friday.

Talking about the recent action on rating agencies, Shah said that one of the issues is the lack of a common standard for rating agencies. While licensing and regulations are common for all of them, ratings given by some agencies are valued more than the others.

Shah said that those making investment decisions are increasingly looking at the corporate governance structure of a company.

Self governance

“For us, rating is the starting point as we use our own information before taking an investment decision. We do a complete analysis of a company including its equity performance and corporate governance structure before taking an investment decision.” Mutual fund companies have also come under scrutiny by the regulator, especially on the ‘‘standstill decision” on payments to defaulting promoters.

Refusing to delve much on the standstill agreement signed with Essel Group, Shah said: “We are responding to queries raised by SEBI and it will not be proper for me to talk about it here. We can convince anyone that what we have done is for the benefit of investors.”

Asked if the mutual fund industry overstepped its mandate by extending loans to promoters, Shah said most experts are just drawing their own conjectures without the full knowledge. MFs heither lent money like NBFCs nor did they do anything unusual but just subscribed to certain instruments where the underlying was promoter-linked collateral, he said.

On the impact of mutual funds’ lending to promoters and their group companies, Shah said his company is one of the sufferers of the Group’s self-set rule that it cannot invest in each other companies.

By virtue of this, Kotak Mutual Fund was not allowed to buy into Kotak Bank shares. After almost three years of persuasion, it was allowed to invest up to the schemes benchmark’s index weightage of Kotak Bank share.

Published on July 21, 2019
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