According to Infosys CFO, V Balakrishnan, the company’s investment in mutual fund is an ongoing treasury/investment activity. The company decided to revisit the mutual fund market because the yields on liquid schemes have begun to improve recently.
Not only for the company, this is a good news for the investors as well. Infosys Technologies is a brand in itself and people associating themselves with it are sure to expect good returns in future. Investors are also happy because they will have a secure option to invest their money. Liquid funds are not only considered as an alternate to short-term fixed deposits, but the dividends from liquid funds are also tax-free in the hands of the investors, unlike the bank fixed deposits.
Mutual fund market, which had suffered a major set back during recession is sure to bounce back with Infosys jumping into the play. The reason is that other companies will also take some action witnessing the step taken by Infosys.
The action has already started with Taurus mutual fund introducing a new concept in the Indian mutual fund industry. Taurus launched its Taurus Ethical Fund. It is India’s first equity oriented Shariah compliant mutual fund, wherein investment will be made only in a universe of 152 companies in compliance with Shariah norms.
Even the Unit Trust of India (UTI) is planning to use the SMS service in mobile phones to deepen and widen its penetration, especially in rural areas. UTI is taking this step after the success of its strategy to use ‘dabbawallas’ for promoting sales of its mutual funds.
For the Infosys employees, it is a welcome step. The reason is that besides the higher rate of interest on bank FDs, MF is also being used for tax planning. The tax deducted at source (TDS) by the banks could be used to set off against the minimum alternate tax (MAT) liability of corporates. Lesser liabilities will account for more profits.
The Mutual fund industry analysts believe that Infosys might invest around Rs 1,200 crore to Rs 1,500 crore of incremental cash flow into such funds before the end of the current quarter. This will improve the situation even more.
I also like Infosys. Its one of the shining light. However, I thing to note is that it is due to its size, market presence and pricing power. I expect it to continue because of satyam debacle.
Best Regards,
Comment by Income Portfolio — February 23, 2009 @ 9:37 pm
Infosys Technologies has decided to reinvest in mutual funds.
This is best for investor that they will have a secure option to invest their money. Mutual funds is also being used for tax planning. These are the steps taken against recession which is very helpful for all the Indian employees as well as investor.
Comment by Sajal — March 7, 2009 @ 5:47 am