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'No US-64 unit sales during consolidation'

Unit Trust of India chairman M Damodaran said on Tuesday no new units in the fund manager's troubled flagship scheme US-64 will be sold until its problems are sorted out.

"There will be no sales of fresh units while the consolidation process is at hand," the chairman of India's largest mutual fund management company told a news conference in Bombay.

He did not say when he expected that process to be completed.

Damodaran was speaking during a function organised by the Association of Mutual Funds of India to mark the release of the Mutual Fund Year Book -- 2000.

State-run UTI rattled Indian financial markets by announcing on July 2 that it was freezing for the remainder of the year redemptions and sales of units in its largest fund, US-64. Some 20 million investors own units in the fund.

To ease the impact on small investors, UTI on Sunday announced it would allow all investors to redeem up to 3,000 units each between August 1 and May 2003 under a special price offer.

Investors will be able to redeem that number of units under a price formula designed to "pave the way for migration of the scheme from administered pricing to NAV-based pricing," the asset management company said.

UTI manages Rs 575 billion ($12.2 billion) in assets -- about two-thirds of the total assets of the Indian mutual fund industry.

Some 41 million investors have invested money through its massive offering of 87 funds. Its flagship US-64 fund is the largest and accounts for a fifth of its assets.

Damodaran was appointed on Sunday by the finance ministry as the new chairman of UTI, succeeding PS Subramanyam, who quit on July 4 under pressure from the ministry.

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