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Franklin Templeton Mutual Fund has marked down to zero the debt securities of Vodafone Idea Ltd (VIL) held by six of its schemes. The fund house said in a release that the decision was taken considering Thursday’s Supreme Court verdict on adjusted gross revenue (AGR).
“The valuation adjustment only reflects the realisable price of the relevant securities on the date of valuation and does not indicate any reduction or write-off of the amount repayable by VIL,” it said.
The six schemes withexposure to Voda-Idea are Franklin India Low Duration Fund (6.5 per cent), Franklin India Dynamic Accrual Fund (4.1 per cent), Franklin India Credit Risk Fund (4.7 per cent), Franklin India Short Term Income Plan (4.4 per cent), Franklin India Ultra Short Bond Fund (4.2 per cent) and Franklin India Income Opportunities Fund (4.9 per cent).
According to analysts, the move is aimed at arresting the redemption pressure. Post the Supreme Court ruling, the NAVs of the six schemes fell 4-7 per cent.
₹1,950-crore exposure
As on September 30, 2019, the six schemes had an exposure of about ₹1,950 crore to Voda-Idea instruments. According to MF analysts, altogether 25 schemes of various fund houses have an exposure of ₹3,435 crore.
Franklin Templeton said the schemes will continuously monitor the developments at Voda-Idea and take appropriate steps to recover the investment proceeds in the best interest of their unit holders.
Fresh inflows in the scheme have been limited to ₹2 lakh per day per fund per investor till further notice, it added. This limit is imposed only on new applications received after the cut-off time on January 16, 2020.
“We will review these decisions on a regular basis and take appropriate action as clarity emerges on this matter. A limit on purchases will help ensure that once clarity emerges and as resolution takes place, the interest of existing unit holders is not significantly diluted in the interim through fresh purchase activity while limiting the inconvenience to retail investors,” Franklin Templeton said, and added that it continues to “remain engaged” with Voda-Idea, and is closely tracking the developments.
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