Time for firms to rejig investments

<div class="section0"><div class="Normal"><span style="" font-size:="">BANGALORE: It was literally a day off for investment managers in corporate India on Friday as they were strictly told to put their investment plans on hold till next week.</span><br /><br /><span style="" font-size:="">Since mutual funds too decided to keep dividend announcements in abeyance, the investment advisors asked the corporates to hold on to their cash.“We are waiting for a clear signal on the long term capital gains tax from the FM as the mutual funds are confident that they would be treated on par with direct investments’’ says Manoj Shenoy, regional director of Anand Rathi.</span><br /><br /><span style="" font-size:="">Whether FM concedes to MFs or not, it’s probably time for companies like Infosys andWipro,which hold on to a huge cash balance in the range of Rs 1,200-1,300 crore, to rejig their investment strategies. </span><br /><br /><span style="" font-size:="">Till now, these companies managed to earn a decent return (4-5%) from their investments in liquid funds. The higher dividend distribution tax of 20% and the 0.15% transaction costs are bound to lower those returns in future. “Corporates will now have to look at options like growth funds if they can invest for longer time’’ says Srikanth Bhagavat of Hexagon Capital Advisors.</span><br /><br /><span style="" font-size:="">An investment manager admitted that his company would look at growth option if tenure was not an issue. “If MF investors are given short term capital gains tax benefit and dividends are taxed at 20%, we will look at growth option if tenure is not an issue’’.</span><br /><br /><span style="" font-size:="">For theRs 1,40,000 crore Indianmutual fund industry, it would bemore beneficial if theFM doles out short term and long term capital gains tax sops to corporate investors too.</span><br /><br /><span style="" font-size:="">Nearly 66%of theMFindustry’s corpus is contributed by the corporate investors and 60% of the same (around Rs 60,000 crore) is held in debt instruments.</span></div> </div>