Damodaran to head asset management firm of UTI

Unit Trust of India Chairman M Damodaran will take over as the chairman and managing director of UTI Asset Management Company (P) Ltd on February 1, following the formal bifurcation of the fund into UTI-I and UTI-II.

C Ramachandran, former secretary (expenditure) in the finance ministry, has been appointed the chairman of UTI Trustee Company (P) Ltd.

The two-tier structure is in accordance with the norms of the Securities and Exchange Board of India.

On January 15, the government had formally split UTI by handing over the net asset value-based schemes (UTI-II) to a company floated jointly by the Life Insurance Corporation, the State Bank of India, Punjab National Bank and Bank of Baroda.

The flagship Unit Scheme 64 (US-64) and other assured return schemes will be under the UTI-I umbrella, which will also be run by Damodaran as the administrator. In the case of UTI-I, the administrator will have the last word because there will not be any board to report to.

UTI Trustee, to be headed by Ramachandran, will have M P Radhakrishnan, former SBI chairman, Kanta Ahuja, former vice-chancellor of the University of Rajasthan, I D Agarawal, chairman, Over The Counter Exchange of India and Pritam Singh, director-incharge, IIM Lucknow, on its board.

Besides Damodaran, UTI Asset Management Company will have S H Bhojani, partner, Amarchand Mangalada & Suresh & Co, J S Mathur, former deputy Comptroller and Auditor General of India, and B D Sumitra, deputy managing director and chief financial officer, SBI, on the board.

However, no decision has been taken on Damodaran's tenure as chairman. Damodaran said UTI AMC would manage 47 NAV-based, Sebi-compliant schemes with assets of Rs 15,079.64 crore (Rs 150.796 billion) on December 31, 2002. UTI-I's assets are pegged at Rs 30,591.19 crore (Rs 305.911 billion).

"UTI-I will lean on UTI-II for service operations, but no terms have been indicated yet," Damodaran said.

He also hinted the asset management fees for UTI-II would be the lowest in the industry, but the exact details would be discussed in the advisory committee meeting on Wednesday.

The sponsors will also discuss whether the 2,000 employees of UTI, who will now be on the payroll of UTI AMC, can be retained.

Commenting on whether UTI-II will give an exit option to investors in its close-ended schemes, Damodaran said since the new set-up was through a legislative Act, it was above Sebi regulations, and the new management would be exempted from giving an exit option to investors.