NEW DELHI, November 4: Believe it or not, investors of Ind Shelter will receive only 59 paise from the initially invested amount of Rs 100. An investment of Rs 100 depreciating to 59 paise in five years is undoubtedly the worst of nightmares. But for investors of Ind Shelter, it is a harsh reality.

A tax planning scheme from Indbank Mutual Bank, Ind Shelter issued units at a face value of Rs 100. Currently, the units are being repurchased at Rs 20.59. Since 20 per cent of the face value (Rs 20) would be deducted as tax on redemption, an investor will be left with only 59 paise. Thus, this translates into a loss of Rs 99.41 on the face value of Rs 100.

Worse, the net asset value has steadily declined since August this year. Hence, the unitholders run the risk of paying out of their pockets, if the NAV were to fall below Rs 20. The net asset value, as on October 24, stood at Rs 21.68.

Ind Shelter, launched in 1992, managed to mop up an initial subscription amount of approximately Rs 23 crore. While Plan A offered a regular dividend, Plan B was a cumulative scheme. The fund offered repurchase facility after three years, ie, in 1995.

Over the last one year, Plan A has been the worst performer among the 51 tax planning schemes with a 32 per cent depreciation. Plan B has done a shade better and takes the 49th slot with a depreciation of 20 per cent.

Since the tax saving scheme was launched during the scam period, it was hit initially. However, the NAV later recovered and in the case of Plan A, it touched a high of Rs 141.55 in December 1994. In fact, in March 1995, Indbank MF declared a maiden dividend of 24 per cent (Rs 24) for the dividend option with the NAV at Rs 131.47. After the payout, the NAV declined to Rs 102.24 and has continued to fall since then. As of March 31, 1997, the unit capital of Plan A stood at Rs 9.78 crore. If one were to compare the extent of erosion in the value of investments, investors in Plan A are still better off for their total return (inclusive of the dividend of Rs 24) works out to Rs 24.59. On the other hand, for investors in the cumulative option, the current repurchase price is at Rs 36.89. With Rs 20 deducted as tax, a unitholder would get only Rs 16.89. The NAV of Plan B is Rs 38.84.

Ind Shelter is to be redeemed after 10 years, viz, in 2002. Thus, if the scheme aims at providing at least the face value to unitholders by 2002, the fund manager is faced with a rather herculean task of propelling the NAV to Rs 120. This translates into an NAV growth of Rs 81 (for plan B) in five years or approximately Rs 16 per year.

As of March 31, 1995, Ind Shelter's top ten holdings were Indo French Biotech, DCM, Premier Synthetics, Saw Pipes, Everest Organics, Nath Seeds, Balaji Industries, Binani Zinc and PSL Holdings.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.