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Equity MFs add 34 lakh folios this fiscal, created 25 lakh new ones in full FY15

Equity mutual funds witnessed an addition of over 34 lakh investor accounts, or folios, in the first 10 months of the current fiscal (2015-16), primarily on account of strong retail participation. This follows an addition of 25 lakh folios for the entire last fiscal, 2014-15. Folios are numbers designated for individual investor accounts, though one investor can have multiple accounts. According to the Securities and Exchange Board of India (Sebi) data on investor accounts with all the fund houses, number of equity folios jumped to 3.51 crore (3,51,38,492) last month from 3.16 crore (3,16,91,619) at March-end, a gain of 34.47 lakh.

April last year had seen the first rise in folios in more than four years. Prior to 2014-15, the equity MF sector had seen a continuous closure of folios since March 2009, following the global financial crisis in late 2008. Since March 2009, as many as 1.5 crore folios were closed.

Industry experts said growing participation from retail investors has led to a sharp increase in folios. Besides, optimism in investors too helped raise the number of investors’ account in the equity segment. “We could continue to see a soaring retail participation in mutual funds in the remaining part of the current fiscal if domestic and global cues play their card,” Quantum Mutual Fund Chief Executive Officer Jimmy Patel said.

Moreover, addition in equity folios helped increase overall investors’ base to a record high of 4.64 crore in January from 4.17 crore at the end of March. Mutual funds have reported net inflows of over Rs 69,000 crore in equity schemes in the first 10 months of 2015-16, helping the industry grow the folio count.

Meanwhile, Indian companies raised more than Rs 27,000 crore through retail issuance of non-convertible debentures (NCDs) in the ongoing financial year to meet business requirement. This is much higher than Rs 9,713 crore garnered by firms in the entire last fiscal.

Most of the funds have been mobilised for expansion, to support working capital requirements and other general corporate purposes. NCDs are loan-linked bonds that cannot be converted into stock and usually offer higher interest rates than convertible debentures.

As per the latest data with the Securities and Exchange Board of India (Sebi), firms raked in a total of Rs 27,277 crore through NCDs in the current fiscal (2015-16) as on February 4. In terms of numbers, 16 issuance taken the route in the ongoing fiscal as compared to 25 in the entire past financial year.

Interestingly, some of the companies taken the route twice to garner funds. Experts said sluggish market conditions have forced many companies to opt for NCD route to garner fresh capital.

Individually, National Highways Authority of India (NHAI) raised Rs 10,000 crore against the base size of Rs 1,000 crore, while Housing and Urban Development Corporation (HUDCO) mobilised Rs 6,203 against the target of Rs 500 crore. Indian Railway Finance Corporation and Indian Renewable Energy Development Agency mopped-up Rs 4,532 crore and Rs 1,716 crore respectively. 

These firms raised funds against the base size of Rs 1,000 crore each. NTPC, Rural Electrification Corporation (REC) and Power Finance Corporation (PFC) collected Rs 700 crore each against a target of Rs 400 crore, Rs 300 crore and Rs 100 crore, respectively.

Besides, Muthoot Finance, SREI Equipment Finance, SREI Infrastructure Finance, Muthoottu Mini Financiers, Muthoot Fincorp and Kosamattam Finance too have taken this route to garner funds.
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