Vodafone Idea pays interest on Mutual Fund Schemes
Mutual fund schemes had segregated Vodafone Idea Ltd. Franklin Templeton India schemes have been paid 102.71 Crores with interest. Whereas UTI Mutual Fund and Nippon India Mutual Fund have received 100 Crore.
Vodafone Idea pays interest on Mutual Fund Schemes. These had segregated Vodafone Idea Ltd. However they have now received interest payments from the telecom firm on 12th June. Franklin Templeton India schemes have been paid 102.71 Crores with interest. Whereas UTI Mutual Fund and Nippon India Mutual Fund have received 100 Crore.
Yet, the payout shall be processed by extinguishing proportionate units. Furthermore, after the payment, the number of units outstanding in the investor account would fall. Because, of the result to the extent of payout. UTI and Nippon India Mutual Fund side pocketed their respective exposures to Vodafone Idea on 17th February. This was after downgrade by Care Ratings to BB- from BBB-. A downgrade of debt below the investment grade allows mutual funds to side pocket their exposure. Franklin had side pocketed exposure to Vodafone in 6 debt schemes on 24th January following downgrade by CRISIL. These 6 debt schemes are under winding up the process. Following a decision by the fund house on 23rd April.
Supreme Court Intervenes Jurisdiction
However, Vodafone Idea pays interest to Franklin schemes segregates the portfolio. Also it does not affect the refund process of these schemes. Citing illiquidity with assets under management of ₹25,856 Crore. They have been stayed by a Gujarat High Court order on 8th June.
“For units held in physical/statement of account mode. The partial payment of the outstanding unit holding as on 12th June, 2020. Will be extinguished and will be distributed to unit holders by 17th June, 2020. For units held in demat mode. The partial payment outstands with unit holding as on 19th June 2020.” Said Franklin Templeton in a press statement.
This comes for debt mutual funds. Especially the ones that had taken credit risks. As many issuers struggled to make payments and pre-payments. Since, the Corona virus-induced slowdown causing low investments.
Unhelpful rulings of the Supreme Court has impacted Vodafone Idea. Lest, it has mounted an adjusted gross revenue liability of about ₹50,000 Crores on the telecom. The interest payment by Vodafone Idea is particularly significant as Supreme Court, on 11th June. It asked telecom operators to file affidavits on the road map. Guarantying for payment of AGR- related dues to the department of telecommunications.