The stalemate over repurchase of PNB Premium Plus, which was suspended last December, continues. Repurchases are not likely to resume before June 30. Following the suspension of repurchase the fund went in for postal ballot to seek unitholders' views. The response to the postal ballot, which was held early this year, is still being compiled. According to PNB Mutual Fund managing director R K Rehani, any decision would be taken only after scrutinisation of response from the unitholders. However, Rehani refuses to divulge any details on the reaction from investors through postal ballot. ``It will take some more time before we get a clear picture,'' he adds.

PNB Mutual Fund suspended repurchase in Premium Plus following huge repurchase orders from two large investors. According to sources, had the fund gone ahead and repurchased the units at par when the NAV was Rs 7.92, it would have suffered a loss to the tune of Rs 30 crore. Since the difference between the NAV and repurchase price is to be borne by the AMC, it would have wiped out the Rs 7.5-crore networth of the PNB Asset Management Company, sources say.

Rehani maintained that repurchase was suspended to protect the interest of small unitholders. ``To honour the repurchase order from big investors, we would have been forced to sell our equity holdings when the sensex was around 2700.''

However, the scenario today is no better for Premium Plus since its NAV has fallen further to Rs 7.88 as on April 25 even though the Sensex has gained around 700 points since November, 1996. Thus, in the event of a majority of investors opting for repurchase, the scheme will have to revert to the AMC for a bail out. The moot point now is will the sponsor, Punjab National Bank, step in to put an end to the crisis and honour the commitment?

Premium Plus closed for subscription in January, 1992 and mopped up Rs 90 crore from 46,000 unitholders. It took exposure to PSU scrips during the first round of disinvestment. The scheme had promised a bonus and repurchase price at Rs 10 after three years. The scheme honoured its commitment for a bonus after which the corpus rose to Rs 135 crore.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.