Stork Capital, a SEBI Registered Mutual Fund, launched its first New Fund Offer (NFO) on June 1, 2024, with a face value of 10 per unit. The fund…
CA Final · Advanced Financial Management · PYQS · January 2026
Stork Capital, a SEBI Registered Mutual Fund, launched its first New Fund Offer (NFO) on June 1, 2024, with a face value of 10 per unit. The fund received subscriptions for 180 lakh units. An underwriting agreement was in place with Griffin Securities Ltd., which agreed to underwrite the entire issue of 200 lakh units for a commission of 2.0%. The fund's financial activities are summarized below: Initial investments in various capital market instruments amounted to 1,780 lakhs.Marketing expenses for the NFO were 25 lakhs.During the financial year ended March 31, 2025, the fund sold securities with a cost of 250 lakhs for 280 lakhs.The fund subsequently purchased new securities for 265 lakhs.Management expenses are regulated by SEBI and cannot exceed 0.50% of the average funds invested during the year. The actual management expenses incurred were - 5.50 lakhs, of which - 50,000 was outstanding at year-end.Dividends earned on investments amounted to 5.0 lakhs, of which - 40,000 was yet to be collected.The fund's policy is to distribute 80% of all realized earnings (capital gains and dividends).The market value of the investment portfolio as of March 31, 2025, was - 2,150.50 lakhs. Required: Determine the closing per unit Net Asset Value (NAV) of the fund as on March 31, 2025. Show all necessary workings. (Note: Round off all intermediate and final calculations to two decimal places.)
Suggested Answer and Working Notes:
Working Notes: (1) Computation of Opening Cash Balance Particulars Amount (₹ in Lakhs) Proceeds from NFO (200 Lakh units @ 10) 2000.00 Less: Initial Purchase of Securities (1780.00) Less: Underwriting Commission (2% of 2000) (40.00) Less: Meeting Expenses (25.00) Opening Cash Balance 155.00 (2) Management Expenses Amount (₹ in Lakhs) A. Actual Expenses Incurred 5.50 B. SEBI Limit (0.50% of Average Funds) - Opening Investment 1780.00 - Closing Investment (1780 – 250 + 265) 1795.00 - Average Fund Invested 1787.50 - SEBI Limit (0.50% of 1787.50) 8.94 Chargeable Expenses (Lower of A or B) 5.50 Less: Amount unpaid (Outstanding) (0.50) Management Expenses Paid 5.00 (3) Computation of Closing Balance Particulars Amount (₹ in Lakhs) Opening Cash Balance 155.00 Add: Cash Inflows Proceeds from Sale of Securities 280.00 Dividend Received (₹ 5.00 Lakh Earned - 0.40 Lakh uncollected) 4.60 Less: Cash Outflows Cost of New Securities Purchased (265.00) Management Expenses (5.00) Capital Gains Distributed [80% of (280sale – 250cost)] (24.00) Dividend Distributed (80% of 5.00 Lakh total earned) (4.00) Closing Cash Balance 141.60 Net Asset Value (NAV) as on March 31, 2025 Particulars Amount (₹ in Lakhs) Assets: Closing Cash Balance 141.60 Closing Market Value of Investment 2150.50 Accrued Dividends (Receivable) 0.40 Total Assets 2292.50 Less: Liabilities Outstanding Management Expenses (0.50) Closing Net Assets (A) 2292.00 Total Units Outstanding (in Lakhs) (B) 200.00 NAV per Unit (A/B) 11.46 Alternative Solution: In case dividend has been paid excluding the dividend receivable from the Dividend Income then solution will be as follows: Working Notes: (1) Computation of Opening Cash Balance Particulars Amount (₹ in Lakhs) Proceeds from NFO (200 Lakh units @10) 2000.00 Less: Initial Purchase of Securities (1780.00) Less: Underwriting Commission (2% of 2000) (40.00) Less: Meeting Expenses (25.00) Opening Cash Balance 155.00 (2) Management Expenses Amount (₹ in Lakhs) A. Actual Expenses Incurred 5.50 B. SEBI Limit (0.50% of Average Funds) - Opening Investment 1780.00 - Closing Investment (1780 – 250 + 265) 1795.00 - Average Fund Invested 1787.50 - SEBI Limit (0.50% of 1787.50) 8.94 Chargeable Expenses (Lower of A or B) 5.50 Less: Amount unpaid (Outstanding) (0.50) Management Expenses Paid 5.00 (3) Computation of Closing Balance Particulars Amount (₹ in Lakhs) Opening Cash Balance 155.00 Add: Cash Inflows Proceeds from Sale of Securities 280.00 Dividend Received (₹ 5.00 Lakh Earned - 0.40 Lakh uncollected) 4.60 Less: Cash Outflows Cost of New Securities Purchased (265.00) Management Expenses (5.00) Capital Gains Distributed [80% of (280sale – 250cost)] (24.00) Dividend Distributed (80% of 4.60 Lakh total realised) (3.68) Closing Cash Balance 141.92 Net Asset Value (NAV) as on March 31, 2025 Particulars Amount (₹ in Lakhs) Assets: Closing Cash Balance 141.92 Closing Market Value of Investment 2150.50 Accrued Dividends (Receivable) 0.40 Total Assets 2292.82 Less: Liabilities Outstanding Management Expenses (0.50) Closing Net Assets (A) 2292.32 Total Units Outstanding (in Lakhs) (B) 200.00 NAV per Unit (A/B) 11.46
Topics: Mutual Fund
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