The shareholders of UTI Asset Management Company are on a collision course over the selection of its new chairman and managing director,with the state-owned LIC,State Bank of India,Bank of Baroda and Punjab National Bank on one side,and the Baltimore,US-based global investment management company T Rowe Price on the other. The bone of contention between the state-owned financial institutions and T Rowe Price,sources said,is the inclusion of Jitesh Khosla,a 1979-batch IAS officer,in the panel of prospective candidates to be interviewed by the shareholders. It is learnt that Khosla,who is the brother of Omita Paul,adviser to Finance Minister Pranab Mukherjee,was not in the shortlist prepared by the boards human resources committee. Khosla,who was until recently with the Indian Institute of Corporate Affairs,an institution under the Ministry of Corporate Affairs,is now additional chief secretary,Assam. The case for Khosla,government officials said,is that he is a competent officer with a solid record of integrity. He played a key role in the Corporate Affairs Ministry during the Satyam Computers accounting scam. Under normal circumstances,his appointment should be a smooth process, a senior official said,pointing out that the previous two UTI Asset Management Company (AMC) chiefs U K Sinha and M Damodaran too were civil servants. Sources close to T Rowe Price,however,said times have changed in the past five years. The mutual fund industry is very competitive today and the business environment is particularly challenging. AMC must have a professional who understands fund management very well. A civil servant does not make the grade today, the source said. Khosla,when contacted by The Indian Express today,declined to comment. Sources said the selection process has started again last Friday and it will be mid-October before a new chairman is announced. UTI AMC has been without a chairman since U K Sinha quit earlier this year after he was appointed the new stock market regulator. Sinha joined the Securities and Exchange Board of India as its chairman in February. Ten days ago,one of the independent directors on UTI AMC board,Prithvi Haldea of Prime Database,a company that undertakes primary market-related research,resigned citing personal reasons. The other board members of the company are Anita Ramachandran of Cerebrus Consultants; Pradeep Gupta; P R Khanna; Sachit Jain; Flemming Madsen,Director,Head of Asia Pacific,T Rowe Price; and James Sellers Riepe,also of T Rowe Price. Haldea,Ramachandran and Riepe were the three members of the boards HR committee. One of the members in this committee said its job was confined to presenting a shortlist to the shareholders. The shareholders can accept it,call for expanding the list or altogether scrap it. The committees job is over, the member said. Sources said T Rowe Prices definitive agreements clearly state that the appointment of UTI AMC chief must be unanimously approved by all shareholders. When contacted,Finance Ministry officials said it is for the shareholders to appoint the new chief. U K Sinha was also selected by shareholders. Government-owned banks and institutions did not wish to take questions on the selection process. As per June 30,2011,figures,UTI AMC manages a corpus of Rs 69,105 crore. T Rowe Price,that manages $521 billion in assets as per the figures,had entered into definitive agreements on November 7,2009,to buy 26 per cent in UTI AMC and UTI Trustee Company Pvt Ltd. It acquired 6.5 per cent each from the four shareholders LIC,SBI,BoB and PNB for a total consideration of Rs 650 crore. T Rowe Price declined to answer a list of questions mailed to it in the last week of September. We support the search process being conducted by the UTI board to identify qualified candidates for the position of chairman, a spokesperson for the company said. Sources said T Rowe Prices statement clearly reflected its intention. If there was a deviation in the search process,it will raise the issue in the shareholders meeting, a source,who did not wish to be identified,said.
