|New UTI head in a week|
|Monday, 30 July 2012 00:00|
New UTI head in a week
After nearly 16 months of being headless, following UK Sinha’s decision to leave to head Sebi, India’s 5th largest mutual fund may finally get a chief over the weekend. The board of UTI, as well as its 5 shareholders – LIC, SBI, PNB, Bank of Baroda and US firm T Rowe Price – are to meet in Mumbai to interview the final shortlist of candidates. This is the second time that the process of short-listing candidates is being done. Around 100 candidates are in the fray and the list of probables includes both serving and retired chief of banks and even LIC. After a UTI sub-committee interviews the candidates and presents a short-list of 3 candidates to the board, a decision will be taken on Saturday or Sunday.
While the first attempt to find a successor to Sinha began in February last year, it ran into trouble when the finance ministry, through the four PSU financial institutions who own 18.5% each of UTI, indicated it would like the job to go to Jitesh Khosla, the brother of the then advisor to the then finance minister. With Khosla not on the short-list of candidates prepared by global HR firm Egon Zehnder International, nor on the preferred list of UTI’s HR sub-committee that interviewed the candidates, this caused a stalemate. T Rowe Price officials met finance ministry officials to try and break the logjam, but with no success – T Rowe Price owns 26% of UTI.
At one point, T Rowe Price said it would accept anyone the other four shareholders proposed, but this didn’t go anywhere either since the PSU officials weren’t keen on recommending a name either in these days of Right to Information – the HR committee’s notes would very clearly show, for instance, that the finance ministry’s candidate was not the preferred candidate.
With the pressure mounting, two of UTI’s independent directors also quit, citing personal reasons. As the selection process was going nowhere and UTI suffering – it was losing customers, and focus, while other rivals were increasing their lead – it was then proposed Sinha’s ex-job be split in two, with Khosla as the Chairman and an industry person as the chief executive. This effectively ruled out some of the senior candidates who had been shortlisted since it was only the lure of being UTI chairman and managing director that had them interested in the job – a split function didn’t interest them. When one contender’s name (for the chief executive’s job in the split-job scenario) became public, that was reason enough for the contender to withdraw.
UTI has been functioning since then with an acting CEO, Imtaiyazur Rahman, a UTI insider since 1998. In the last one year, UTI’s assets under management have fallen, from Rs 67,189 crore in March 2011 to Rs 60,923 crore in June 2012.