Franklin Templeton sends a mid-month progress update to investors of 6 shuttered debt funds; things are moving

The outstanding borrowings of Franklin India Dynamic Accrual Fund have now become nil from Rs 124 crore in April

Kumar Shankar Roy May 19, 2020

Franklin Templeton Mutual FundFranklin Templeton Mutual Fund, which is in the process of winding up six yield-oriented fixed income schemes, has provided an update on the schemes’ security level portfolio, maturity profile, borrowing and summary of cash inflows. The latest data pertains to May 15. Find out what has changed between April 30 and May 15 in terms of the potential to get your money back. Read on.

1. Franklin India Ultra Short Bond Fund

Each fund has its own cash flows and borrowings and therefore they may  return monies at different points of time. It will be the endeavour of the schemes to accelerate these payments by actively seeking pre-payments and opportunities to sell in the market while preserving value for unitholders.

About 1% of money will come to the Rs 9,600-crore Franklin India Ultra Short Bond Fund within 1 month, which largely is the same compared to April 30 data release. The noticeable change is in the 15% money that can come within three months, up 6% points from April 30 data. Within 1 year time, cumulatively 53% of money can come in compared to 50% mentioned earlier. 90% of money can come in 3 years, says the fund-house for this scheme compared to 85% coming in 3 years mentioned earlier. The 100% of money can come in 5 years, which is largely unchanged.

The net asset value (NAV) of the fund (retail-growth) was Rs 26.10 on April 24 and on May 15 it is Rs 26.09.

Cash inflows into the scheme for the period May 1, 2020 to May 15, 2020 was 3%. Do note that cash inflows represent inflows from maturities, part payments, sale and coupons which have been utilised for payment of borrowings/ interest/ expenses and provisions, if any. Franklin India Ultra Short Bond Fund had outstanding borrowings of Rs 802 crore as on April 24 and now the borrowings are Rs 371 crore as on May 15. As a percentage of AUM, outstanding borrowings are 3.85% for the fund.

In terms of details of securities matured/ sold/ prepaid during the period May 1, 2020 to May 15, 2020, Franklin India Ultra Short Bond Fund has received full value of Rs 270 crore from Piramal Enterprises of Ajay Piramal Group as prepayment. The scheme also got Rs 1.78 crore from India Shelter Finance Corporation as per the issuance terms.

In terms of groupwise holdings, Franklin India Ultra Short Bond Fund’s top investments include Vedanta (10.99%), Clix (9.51%), Indostar (8.52%), Tata (8.37%), Punjab National Bank (8.11%), Edelweiss Capital (7.74%), Hero (6.99%), Ajay Piramal (5.87%), JM Financial (5.61%), Nirma (3.91%), Renew (3.83%), UP Power Corporation (3.79%), Motilal Oswal (3.64%) and Bharti (3.01%). The 1 segregated portfolio containing Vodafone Idea Ltd (maturing on 10-Jul-2020) remains unchanged.

2. Franklin India Low Duration Fund

For this Rs 2,300-crore fund, there is no change in maturity profile as on May 15 compared to April 30. This means 3% of the money will come in 3 months in Franklin India Low Duration Fund. A 48% of total money will come in 1 year. A 91% of total money will come in 3 years and 100% of total money will come in 5 years.

The net asset value (NAV) of the fund (growth) was Rs 20.67 on April 24 and on May 15 it is Rs 20.63.

There was no cash inflow into the scheme for the period May 1, 2020 to May 15, 2020. Importantly, Franklin India Low Duration Fund had outstanding borrowings of Rs 278 crore as on April 24 and now the borrowings are Rs 293 crore as on May 15. As a percentage of AUM, outstanding borrowings are 12.48% for the fund.

There was nil securities that matured/ sold/ prepaid during the period May 1, 2020 to May 15, 2020.

In terms of groupwise holdings, Franklin India Low Duration Fund’s top investments include Renew (16.68%), JM Financial (14.71%), Vedanta (12.17%), Esskay (8.64%), Small Business Fincredit (7.43%), UP Power Corporation (6.55%), Tata (5.47%), Shriram Transport (5.38%), Edelweiss Capital (5.10%), Motilal Oswal (3.91%), CLIX (2.71%), DLF (2.57%), Shapoorji Pallonji (2.53%) and Incred (2.03%). The 2 segregated portfolios containing Vodafone Idea Ltd (maturing on 10-Jul-2020) and Vodafone Idea Ltd (02-Sep-2023) remain unchanged.

Additional Read: 5 key points from Franklin Templeton India President’s podcast about 6 debt schemes being wound up

3. Franklin India Short Term Income Plan

There is a slight change in maturity profile in this Rs 5,300-crore debt fund. In 1 year time, 4% of total money will come, up from 3% as per April 30 update. Similarly, 33% of total money will come in 2 years time, up from 31% as per previous update. There is no meaningful change for 3 years (51% of total money will come), for 4 years (84%), for 5 years (95%) and for more than 5 years (100%).

The NAV of the fund (direct-growth) as on April 24 was Rs 4,056.93 and it stood at Rs 3,925.00 as on May 15.

Cash inflows into the scheme for the period May 1, 2020 to May 15, 2020 was 1%. Franklin India Low Duration Fund had outstanding borrowings worth Rs 1,832 crore as on April 24 and this has gone down to Rs 1,790 crore on May 15. As a percentage of AUM, outstanding borrowings are 33.5% for the fund. Do note that regulation allows mutual fund schemes to borrow funds up to 20% of the AUM to meet redemption requirements. SEBI allowed enhanced borrowing limits beyond that. Usually, the AMC pays the borrowing cost for any borrowings above the 20% limit. AMCs borrow at around MCLR rates (7-7.5% at present). The cost of borrowings by a mutual fund scheme are adjusted against the portfolio yield and if the cost of borrowings exceeds such a yield, then fund houses can use the AMC book to repay additional interest on such borrowing.

In terms of details of securities matured/ sold/ prepaid during the period May 1, 2020 to May 15, 2020, Franklin India Short Term Income Plan has received full value of Rs 18.60 crore on May 8, 2020 as prepayment from Jindal group.

In terms of groupwise holdings, Franklin India Short Term Income Plan’s top investments include Shriram Transport (13.95%), Renew (12.29%), Edelweiss Capital (11.82%), UP Power Corporation (9.86%), Andhra Pradesh Capital Region Development Authority (8.91%), Ajay Piramal (7.74%), Future (6.98%), Kedara Capital (6.59%), Vedanta (6.27%), Shapoorji Pallonji (5.73%), Five Star Business Finance (5.27%), JM Financial (3.97%), Aptus (3.89%), Esskay (3.76%), Punjab National Bank (3.57%), and DLF (3.49%). The 3 segregated portfolios containing Vodafone Idea Ltd (maturing on 10-Jul-2020), Vodafone Idea Ltd (02-Sep-2023) and Yes Bank Ltd (23-Dec-2021) remain unchanged.

4. Franklin India Income Opportunities Fund

For this Rs 1650-crore debt fund, there is no change in maturity profile as on May 15 compared to April 30. This means 18% of the money will come in 3 years, 38% of total money will come in 4 years, 55% of total money will come in 5 years and 100% of total money will come in more than 5 years.

The NAV of the fund (regular-growth) as on April 24 was Rs 22.05 and it stood at Rs 21.08 as on May 15.

There was no cash inflow into the scheme for the period May 1, 2020 to May 15, 2020. Importantly, the outstanding borrowings of the scheme dipped marginally from Rs 650 crore as on April 24 to Rs 649 crore as on May 15. As a percentage of AUM, outstanding borrowings are 39.18% for the fund.

No securities matured/ sold/ prepaid during the period May 1, 2020 to May 15, 2020.

In terms of groupwise holdings, Franklin India Income Opportunities Fund’s top investments include Tata (16.64%), Ajay Piramal (15.15%), Future (11.27%), Shriram Transport (11.22%), UP Power Corporation (10.19%), Hinduja (7.46%), DCB (7.10%), Vedanta (7.03%), Renew (6.86%), Andhra Pradesh Capital Region Development Authority (6.75%), Shapoorji Pallonji (5.95%), Sadbhav (5.23%), Edelweiss Capital (4.69%), JM Financial (4.19%), Aptus (3.51%), Multiples PE (3.48%) and Five Star Business Finance (3.00%). The 2 segregated portfolios containing Vodafone Idea Ltd (maturing on 10-Jul-2020) and Vodafone Idea Ltd (02-Sep-2023) remain unchanged.

Additional Read: Moratorium given to Future Group leads to negative NAV impact on 4 Franklin debt funds being wound up

5. Franklin India Credit Risk Fund

The Rs 3,300-crore debt fund saw a marginal change in maturity profile. In year time, 15% of total money will come, up from 14% in April 30 update. The rest is same. So, 35% of total money comes in 2 years, 56% of total money comes in 3 years, 84% of total money comes in 5 years and total 100% comes in more than 5 years.

The NAV of the fund (regular-growth) as on April 24 was Rs 18.6157 and it stood at Rs 18.2338 as on May 15.

Cash inflows into the scheme for the period May 1, 2020 to May 15, 2020 was highest at 7%. Cash inflows represent inflows from maturities, part payments, sale and coupons which have been utilised for payment of borrowings/ interest/ expenses and provisions, if any. Importantly, the outstanding borrowings of Franklin India Credit Risk Fund fell from Rs 757 crore on April 24 tp Rs 512 crore on May 15. As a percentage of AUM, outstanding borrowings are 15.37% for the fund.

In terms of details of securities matured/ sold/ prepaid during the period May 1, 2020 to May 15, 2020, Franklin India Credit Risk Fund received full value of Rs 230 crore from Ajay Piramal group as prepayment.

In terms of groupwise holdings, Franklin India Credit Risk Fund’s top investments include Shriram Transport (12.94%), UP Power Corporation (9.63%), Andhra Pradesh Capital Region Development Authority (9.09%), Ajay Piramal (8.58%), Five Star Business Finance (7.20%), Kedara Capital (6.94%), Vedanta (6.42%), Hinduja (5.96%), Renew (5.41%), Shapoorji Pallonji (5.33%), Tata (4.54%), DLF (4.53%), Edelweiss Capital (4.41%), Vistaar (3.82%), Aptus (3.64%) and JM Financial (3.32%). The 3 segregated portfolios containing Vodafone Idea Ltd (maturing on 10-Jul-2020), Vodafone Idea Ltd (02-Sep-2023) and Yes Bank Ltd (23-Dec-2021) remain unchanged.

6. Franklin India Dynamic Accrual Fund

In terms of maturity profile, 3% of total money of this Rs 2,450-crore debt fund will come in 1 month. 26% of total money comes in 1 year. 48% of total money comes in 2 years and 68% of total money comes in 3 years. 100% of total money will take more than 5 years.

The NAV of Franklin India Dynamic Accrual Fund (direct-growth) as on April 24 was Rs 70.90 and it stood at Rs 69.38 as on May 15.

Cash inflows into the scheme for the period May 1, 2020 to May 15, 2020 was 5%. Cash inflows represent inflows from maturities, part payments, sale and coupons which have been utilised for payment of borrowings/ interest/ expenses and provisions, if any. Importantly, the outstanding borrowings of Franklin India Dynamic Accrual Fund have now become zero from Rs 124 crore.

In terms of details of securities matured/ sold/ prepaid during the period May 1, 2020 to May 15, 2020, Franklin India Dynamic Accrual Fund received full value of Rs 100 crore from Hero group as prepayment, Rs 5.6 crore from Jindal group as prepayment and part payment of Rs 1.78 crore from India Shelter group as per the the issuance terms.

In terms of groupwise holdings, the fund’s top investments include Shriram Transport (9.90%), Ajay Piramal (9.40%), Vedanta (7.33%), Tata (7.26%), UP Power Corporation (7.13%), Edelweiss Capital (6.89%), Renew (6.58%), DLF (5.75%), Future (4.78%), India Shelter (4.50%), Shapoorji Pallonji (4.03%), JM Financial (4.01%), Andhra Pradesh Capital Region Development Authority (3.77%), Hinduja (3.39%) and Five Star Business Finance (3.29%). The 3 segregated portfolios containing Vodafone Idea Ltd (maturing on 10-Jul-2020), Vodafone Idea Ltd (02-Sep-2023) and Yes Bank Ltd (23-Dec-2021) remain unchanged.

Additional Read: SEBI tells Franklin MF to focus on returning money; counters blame on unlisted securities curbs


Kumar Shankar Roy

Kumar Shankar Roy is contributing editor with RupeeIQ. Kumar is a financial journalist, with a functional experience of 15 years. He tracks mutual funds, insurance, pension, PMS, fixed income/debt and alternative investments markets closely. He has worked for The Times of India, The Hindu Business Line, Deccan Chronicle Group, DNA, and Value Research, among others, across different cities in India. He is deeply interested in marrying data insights with actionable opinion. He can be contacted at kumarsroy@rupeeiq.com.

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