Investors of Kotak Fixed Maturity Plan (FMP) 183, which was maturing on April 10, may not receive full redemption amount as the company is facing delays in recovering investments made in non-convertible debentures (NCDs) issued by Essel Group companies, sources told CNBC-TV18.

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Kotak FMP Series 183 has invested in debt securities issued by Edisons Utility Works, Konti Infrapower and Multiventures Pvt Ltd, IL&FS Transportation Networks, among others. The series has exposure of 19.25 percent to Essel group companies Edisons Utility and Konti Infrapower. NCDs of Edisons Utility and Konti Infrapower were backed by equity shares of Zee Entertainment.

Subhash Chandra-owned Essel Group has been struggling with high debt and had defaulted on some of the repayments in January. The group in February said that it sealed an agreement with its lenders to keep it afloat. The group is reportedly in talks with Sony Entertainment to sell its stake in Zee Entertainment.

"We are working closely with the Essel Group for optimal recovery from Konti & Edisons for the benefit of our unitholders and believe that such recovery will take place albeit with some delay," said Rohit Rao, chief communication officer, Kotak Mahindra Group.

Sources told CNBC-TV18 that the principal amount has been repaid in full to investors on all maturing FMPs, along with appreciation so far, and all the realisable investments have been liquidated for payment to investors.

"For IL&FS Transportation Networks, Kotak Mutual Fund has made a 100% provision for this investment as the company has been classified in the Red category where recovery is uncertain and will be dependent on the resolution plan achieved by the new board / NCLT," added Rao.

Ananth Narayan, money market expert, said "There was no reason for investors to panic because the bulk of the papers held in any kind of debt instruments held by MFs is reasonably safe. This case could be an aberration which is expected to get sorted out soon."

First Published:Apr 10, 2019 11:44 AM IST