The Hindu Business Line : Sundaram Mutual unveils `Star'

SUNDARAM Mutual Fund has lined up an equity scheme aimed at investing in companies that are (or are expected to emerge as) global sourcing bases for products and services.

Sundaram Star Fund will pick up companies that are turning out to be global sourcing points for their overseas parents or for other global companies or even on the basis of their own strengths while foraying into international markets. Such companies will be perceived as `star' performers, the offer document lodged with SEBI has mentioned.

The trend that serves as the backdrop is obvious: Indian manufacturing outfits are no longer confining their businesses to the domestic market. Companies are looking at global opportunities irrespective of the sector they operate in. Some of the more noteworthy areas are chemicals, engineering, automobiles, auto components, electrical machinery and capital goods.

Incidentally, a number of Indian subsidiaries of MNCs are becoming global sourcing centres. The pressure to cut costs on global companies is making them turn to Indian manufacturers - a la software. Players which are geared to reap the potential of export markets and expect to get at least 25 per cent of their revenues from overseas over a period of five years will be the target companies for this scheme.

Many companies are insulated to a certain extent from the vagaries of domestic demand. The examples that have been cited include Cummins, Alfa Laval, Bayer India, BASF, Maruti, Bajaj Auto, TVS Motor, Kirloskar Oil Engines, LMW, SKF Bearings and Bharat Forge. Many belong to the "top end of the mid-cap" segment, it is pointed out.

Investors in Sundaram Star Fund will pay no entry load during the IPO. A 2.25 per cent exit load will be charged for amounts less than Rs 5 crore if redeemed within six months from the date of allotment. Mr S. Krishna Kumar has been named as the fund manager.

Focus on rural Indian cos

SUNDARAM MF has mooted an equity fund to invest in companies focused on rural India.

Successive governments have made huge outlays for social infrastructure and development of rural areas.

Incidentally, the plan allocation for the rural development will be Rs 18,000 crore for 2005-06, the offer document of the proposed Sundaram Rural India Fund has stated. A number of companies will be direct beneficiaries of the State-initiated investment programme. The industries concerned may include cement, fertilisers, pesticides and agro chemicals and tractors. Further, areas such as sugar, tea and textiles are also expected to gain.

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