Tata Motors Rating: buy; Expanding EV portfolio to small cars We attended the launch event of Tiago EV, Tata’s third electric PV and its first electric hatchback. We believe Tiago EV offers an attractive proposition, providing the differentiated appeal of an EV at a reasonable price. Tata is also expanding its EV availability from 85 to 165 cities as it expects good acceptance of Tiago EV in tier-2/3 cities. EVs now form 8% of Tata’s India PV volumes, and we believe Tata has potential to gain share as EV adoption rises. Tata brings electric to small cars: We attended the launch event of Tiago EV, Tata’s third electric passenger vehicle (PV) and its first electric hatchback (small car). The vehicle is a modified version of the existing Tiago ICE, along similar lines as the Nexon and Tigor Evs. Tiago EV will come at an attractive introductory price, starting at Rs 849K (ex-showroom) for the first 10K customers. Multiple battery and charging options: Tiago EV will have two battery options of 24kWh & 19kWh, providing a range of 315km & 250km, respectively, under test conditions. Bookings will start on Oct 10 and deliveries are expected to commence in January. Tata is providing four charging options: Standard 15A plug point, 3.3KW, and 7.2KW AC home chargers, and DC fastcharging. Tata is offering 8-year and 160K km battery warranty. An attractive proposition: We believe Tiago EV offers an attractive proposition for consumers, providing the differentiated appeal of an EV at a reasonable price. The on-road price of Tiago EV (mid-variant XT, 19kWh battery) is ~Rs 206K (27%) higher than the petrol option (XT, automatic); however, we estimate the energy cost of the former would be ~Rs 5/km lower than latter. This implies a breakeven driving distance of ~40K km to offset the higher capital cost of EV. Assuming a 25km/day driving distance for 25 days/month, implies breakeven in ~5 years. For a higher-intensity user with 40km/day driving, breakeven would be lower, at ~3 years. Also read: Electronics Mart India IPO opens on Tuesday, GMP rises; should you subscribe? Aggressive and timely EV strategy: India is in the nascent stages of electrification, with Evs forming just ~1% of PVs. Tata has taken an early lead, with EVs now contributing ~8% of its India PV volumes. Tata intends to expand its electric PV portfolio from 3 EVs at present to 10 by FY26. It is also expanding its EV availability from ~85 to ~165 cities as it expects Tiago EV to see good acceptance in tier-2/3 cities. The launch of electric ACE in May extended electrification to small commercial vehicles. We like Tata’s EV strategy, which we believe should drive market share gains for the company as EV adoption rises in India, although capacity constraints might limit its total PV volume in the near term. Maintain Buy: Notwithstanding the near-term macro challenges for JLR, we continue to like Tata given strong cyclical recovery in Indian trucks and PVs, an improved franchise in Indian PVs, and a strong EV focus. We retain Buy; India business forms ~70% of our PT.
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In its consultation paper, Sebi has suggested that trustees of mutual funds should focus on market abuse by AMC, its employees and mis-selling by the AMC to increase the asset base.
Also, trustees should be responsible for fairness of fees and expenses charged by the AMC, compare its performance with peers and ensure that AMC’s sponsor is not getting any undue advantage.
In addition to the core areas, the trustees should be responsible for periodically reviewing the steps taken by AMCs for the folios which do not contain all KYC attributes with bank details.
Further, Sebi has suggested that trustees and their resource persons should independently evaluate the extent of compliance by AMC and not merely rely on AMC’s assurances.
To facilitate trustees’ supervision, AMCs should provide them with analytical information.
Presently, the trustees primarily rely on the AMCs for ensuring compliance with the applicable rules.
Under the rules, trustees hold the property of the mutual fund in trust for the benefit of the unitholders. The trustees appoint an AMC to float schemes for the mutual fund and manage the funds mobilised under various schemes, in accordance with the investment objectives.
“In view of the increasing scale and reach of the mutual fund industry, trustees’ role in respect of unitholders’ protection assumes even greater significance,” Sebi said on Friday.
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Over the past decade there has been a five-fold increase in the size of the mutual fund industry. The assets under management (AUM) has surged from Rs 7.93 lakh crore in November 2012 to Rs 39.89 lakh crore in December 2022.
To ensure that trustees devote time and attention to their core responsibilities, Sebi has suggested that for fulfilling other responsibilities, trustees may rely on professional firms such as audit firms, legal firms, merchant bankers for carrying out due diligence on their behalf.
The Sebi also listed some duties trustees can delegate to AMCs. This include ensuring that all systems are in place prior to the launch of any scheme by the AMC, and calculating any income in the mutual fund due to the fund and any income received in the mutual fund for unitholders.
The regulator has proposed to provide a one year time to existing trustees with board of trustee structure to convert into a trustee company, from governance point of view.
Presently, two structures for trustees are permitted — corporate and board of trustees structure. Moreover, there are a few mutual funds which have the board of trustees structure while the trustees of all other mutual funds have adopted the structure of a trustee company.
Considering the enhanced role of trustees over the period of time, Sebi has suggested to increase the minimum number of trustees to adequately perform their functions. Presently, the minimum number of trustees prescribed is four.
Also, it has been proposed that the chairperson of the trustee company should be an independent director.
Sebi has suggested that apart from the meeting of the audit committee of AMCs and trustees (which mostly comprises of independent directors), the board of AMCs and the board of trustees may be mandated to meet at least once a year to discuss the issues concerning the mutual funds.
The regulator proposed that the existing MF Regulations on AMC and its obligations may be amended to include additional clauses with respect to the obligations of the board of AMC.
The proposed amendment may include a clause which casts an obligation on the board of AMC to ensure that all the activities of the asset management company are in accordance with the provisions of these regulations.
The Securities and Exchange Board of India (Sebi) has sought comments from public till February 24 on these proposals.