Four debt schemes of Taurus Mutual Funds saw fall in their net asset value (NAV) by 7-12% in a single session following downgrading of the troubled Ballarpur Industries (BILT) by India Ratings and Research (Ind-Ra) on Wednesday. According to the data from Value Research, Taurus Short Term Income Fund and Taurus Ultra Short Term Bond Fund saw their NAV falling by 11.13% and 11.79% respectively. While other two schemes, Taurus Dynamic Income Fund and Taurus Liquid Fund saw its NAV down by 11.82% and 7.22% respectively. Collectively all the four funds had exposure of around 107 crore, shows the data from Value Research.
The sharp drop in NAVs has been linked to Ind-Ra downgrading BILT’s Long-Term Issuer Rating to ‘IND D from ‘IND BBB-’. BILT’s term loans, fund-based and non-fund-based working capital limits, non-convertible debentures (NCDs) and commercial paper instruments have all been downgraded by the rating agency.
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“The downgrade reflects delays in debt servicing by the company. BILT continues to face delays in the necessary deleveraging, as efforts to monetise its assets have not fructified within planned timelines. The company has also been unable to refinance its debt or elongate the maturity profile of its near-term debt obligations fully,” said the Ind-Ra in its report.
Taurus Liquid fund had exposure of R70.91 crore in commercial papers (CPs) of BILT. While Ultra Short Term Fund had exposure of 14.97 crore. Out of four schemes, Taurus Short Term Income Fund, Taurus Ultra Short Term Bond Fund and Taurus Dynamic Equity Fund had exposure of around 12% in debt papers of BILT. Senior officials in the industry say that, regulations allows only 10% of exposure in single issuers, but they can increase upto 12% with the approval of trustees. Questioner sent to the fund house remained unanswered.
In 2015, JP Morgan Mutual Fund got into troubles due to its exposure to debt securities of Amtek Auto. Earlier, JP Morgan Mutual Fund had restricted redemption from two of its debt schemes — Short Term Income Fund and India Treasury Fund.