Q&A with : A Balasubramanian, CEO of Birla Sun Life MF
Updated on: 30 Jun 2016
Change is constant and there's space for everybody to exist as the mutual fund industry shifts and changes, says A Balasubramanian, CEO, Birla Sun Life AMC, reflecting on new restrictions on investing and higher disclosure requirements. In a chat with BusinessLine, he says the fund-house is doing well on its fixed income investments, despite the turbulence with credit quality in India, and is investing ₹15 crore this year to boost its technological capabilities. Excerpts:
Now that the Brexit referendum is over, what do you think will be its impact on Indian companies? What would you want to tell investors?
Brexit as an event brings some more uncertainty on the global economy and, in particular, for currency movements. While many opinions have come along in the last two days, it is very difficult to predict what is in store.
From India's point of view, it will have very limited impact. However, companies that have exposure to the pound sterling may see some volatility in earnings. At the macro level, India is doing many things that will drive domestic economic growth and is going in the right direction in order to deliver better performance, compared to peers anywhere else in the world. Therefore, one should stay confident and keep accumulating Indian equities and debt schemes as both will deliver better returns.
In the past year, a lot of corporates have been downgraded and mutual funds held some of their papers and suffered as a result. How have you been dealing with this?
We've always been cautious and thorough in our working, the kind of credit acceptable to us at any point in time, the kind of covenants we want to take. Sometimes, we let go off opportunities if the credit underlying is not good. If there is a deteriorating balance sheet on a forward-looking basis, we avoid it, as we avoid highly-leveraged companies.
We only buy credit where our internal comfort is high, if the company has enough cash flow to pay both principal and interest and if it can refinance part of the borrowing. That way, our lending standards are well-proven, and as a firm, we stayed above the crisis seen in the market.
There's been a lot of talk recently about deepening the bond markets and bringing in more participants. Are you able to find good papers to invest in when you receive flows? Is quality an issue?