Taurus Mutual Fund, one of the smallest fund houses in the country, plans to approach the Securities and Exchange Board of India (Sebi) after one of its investments -- Ballarpur Industries (BILT) -- failed to honour the maturity obligation last week.
The fund house, the latest to have taken a massive valuation hit in its debt schemes, plans to propose possible measures to the regulator, in order to safeguard the interests of its existing unit holders.
In a statement, Taurus said, "It is committed to initiating all steps in this regard to ensure that any recovery from BILT will be shared with the investors who have suffered erosion in the value of their investments."
Meanwhile, the fund house has temporarily suspended fresh subscriptions in the affected schemes so that any recovery of money that takes place will benefit only the affected investors.
Taurus has further decided to refrain from charging any management fee on these schemes till further notice. Interestingly, the fund house has not 'gated' redemptions in any of its schemes.
The debt-oriented schemes of Taurus Mutual Fund had bought short-term Commercial Paper (CP) issued by BILT. This paper had maturity dates between February 20 and February 27.
On February 20, BILT was unable to honour its maturity obligation. As a result, schemes of Taurus MF that were holding this paper as a part of their portfolio did not receive the full amount.
The boards of AMC and Trustee Company approved mark down of the securities of BILT held in Taurus schemes to zero to ensure a fair and equal treatment to the retail, HNI and Institutional Investors.
"If the securities had not been marked down to zero, some investors who exited the schemes earlier would have benefited at the cost of other investors. This would have been unfair to the other investors. Further, the Boards of AMC and Trustee Company decided to re-classify the commercial papers of BILT held by the fund as non-performing assets," added the statement.