MC Insider: Realty firm's IPO roadblock, PMS losing out on sin stocks, SEBI alert for MFs and more

In an earlier edition of MC Insider, we told you that a real estate IPO will be hitting the primary markets soon. We have an update! A little birdie tell us that it has been pushed back again. First, it was worsening market conditions. This time due to state government regulatory issues. If troubles mount, the company might have to refile its draft prospectus.

We heard buzz about promoters of this SME firm who have been quietly loading up shares ahead of a crucial board meeting. To the extent that in March shareholding, promoter’s stake might be about 2-3 percentage points higher. One item on the board meet agenda: Bumping up the authorised capital. This means the stock could soon migrate to the mainboard. Let’s wait and watch what plays out.

When fund managers cherry pick stocks – valuations, growth prospects and management’s track record takes precedence. But for one portfolio management service, with an AUM of over Rs 700 crore, the checklist runs a bit longer. No tobacco, no alcohol, no animal cruelty - the companies should tick these boxes as well. “That’s not the right way for a society to prosper” That’s the top boss’ belief. We wonder if its clients are miffed about missing out on the tremendous rally in some of the ‘sin’ stocks over the past few years!

Once bitten, never choose the messaging again. That’s what this kitchenware maker believes in. Once upon a time, this company’s tagline was famous. It was a catchy rhyme that measured a person’s (read husband’s) love for his wife in the kitchenware he got her. Times have changed and to give them credit, this kitchenware brand has kept up well. We hear that they were offered a chance to partner with a women’s collective and it would have guaranteed them a sizeable captive audience, but they turned it down. That’s allyship for you!

This PSU under the coal ministry is having a tough time going ahead with its projects in the southern part of India. The entity has been facing a lot of pushback from the political opposition as well as locals in the region. A little birdie tells us that the Navratna company is now on a hiring spree to create its own public relations and media communications team. Until now, the task was being handled by the HR department and the top management wasn't pleased by their activities. The management realises that it needs better public relations to strike (black) gold!

The capital market regulator, Securities and Exchange Board of India (SEBI) had written a letter to the Association of Mutual Funds of India (AMFI; the MF industry’s trade body) to not assure returns to investors. It reminded AMFI to stick to the advertisement code as part of the SEBI MF regulations. Apparently, it came across some literatures- and even some equally detailed one on social media handles of a distributor or two- on how investors can “benefit” from doing a combination of Systematic Investment Plan (SIP) and Systematic Withdrawal Plan (SWP). This is a popular strategy used by distributors and financial planners to help investors get some sort of regular income. It works like this: Investors start an SIP in a debt fund and continue to pour money for at least three years. Since debt funds are more tax-efficient after three years, withdrawals are usually advised after investors complete their three years. That’s when, the SWP kicks in. An SWP is a facility that allows investors to withdraw fixed sum of money every month. While the fund corpus would have grown in the first three years, the SWP is a way to reap the benefits, later.

The strategy is fine.

The problem comes when detailed and elaborate illustrations are circulated in pamphlets that sort of mesmerize investors into believing that the income is guaranteed. In reality, volatile or bad markets can result in negative returns; an SWP can eat into your principal amount, if the withdrawal exceeds the funds’ growth rate. Word on the street is such campaigns, floated by three of top 10 fund houses, were abruptly closed after the SEBI letter to AMFI.

A lot can happen over coffee. The G-20 meeting of Central bankers and ministers in Bengaluru on Feb 24th and 25th treaded in turbulent waters as it stopped short of issuing a communique of its resolutions and released instead a "Chair's summary and outcome document" but even with the pushback from Russia and China, Finance Minister Nirmala Sitharaman is convinced that the "world wants India to succeed in this presidency." As part of her own outreach, she hosted an informal breakfast meeting every morning of the meet where representatives of 17 countries made it a point to be present. The ones missing were China, Russia and Turkey. The buzz is that a lot of the agenda was covered in these informal meetings where India seems to have done things a bit differently- the first host country to hold informal breakfast meetings before the main meet. The menu was the usual south Indian fare with filter coffee!

This old business has a new owner, and its employees are not exactly elated. The industry buzz is that transfer letters have been sent to some employees to leave Mumbai and relocate to a smaller city in a neigbouring state which is the new owner’s three-decade old bastion. The corporate head office of the company was in a pre-independence era building and had a posh 'townie' pin code. Employees are not happy about leaving the building and more unhappy at the prospect of leaving the city. We hear that anxious employees are applying for jobs at rival companies to avoid this one-way ticket!

A former RBI deputy governor had an embarassing moment with some journalists last week when he shared the draft of a paper to 'play by the ear'. In other words, journos were asked to use it discreetly without quoting directly. But after sending the mail draft, the person realised that there is an embargo commitment which the event organisers take rather quite seriously. This forced the former central banker to write to the journos again asking not to use the content. The back and forth obviously ended up as a frustrating exchange for journos and as lesson for the author-- talk to your people before pressing the send button!