Vodafone interest payment: When will Franklin Templeton unitholders get their share and other questions answered

Franklin Templeton received an interest payment of Rs 102.7 crore from Vodafone Idea’s bonds, held in the segregated portfolios of the fund house’s debt schemes. If you hold the units of these segregated portfolios, here is how you will be repaid.

Has Vodafone cleared all its dues to Franklin Templeton?

Not yet. Vodafone owed Templeton an interest payment that was due on June 12, 2020 and the last portion of interest plus principal on July 10, 2020 – the bond’s maturity date. Vodafone has paid just the June 12 interest to fund houses.

There are six debt funds with segregated portfolios that hold instruments issued by Vodafone. All these segregated portfolios will now pay, in part, the amount they just received to all their unitholders. For example, Franklin India Credit Risk Fund Segregated Portfolio 1 has received Rs 1.82 crore towards payment of interest on the bond which will mature on July 10, 2020.

After the bond matures, the interest due from June 12 to July 9 and the principal are expected to be paid by the issuer. This amount will differ from scheme to scheme. The amount due to Franklin India Credit Risk Fund’s segregated portfolio 1 is Rs 23.95 crore, out of which Rs 1.82 crore is received as mentioned earlier.

How much will you be paid?

Of the amount it got last week, Templeton will pay you and simultaneously extinguish units. For instance, of the total sum that Vodafone owes, it has now paid the fund house Rs 1.82 crore. That works out to 7.58 per cent. In other words, 7.58 percent of your segregated units will be extinguished.

Next, the fund house has calculated the unit price of each segregated unit across schemes and plans, to ensure that the sum gets divided equitably. Franklin Templeton has calculated this figure (across growth and dividend plans) and has communicated to all its unitholders via email. Multiply this number by the number of units you hold, and you get the amount due to you.

The fund house has fixed June 19, 2020 as the record date for the payment.

How are segregated units taxed?

If you held your investments in the original scheme for less than three years, you need to pay a short-term capital gains tax. But if you have remained invested in the units of original scheme, more than three years ago, you have to pay a long-term capital gains tax. These taxes are to be paid only if you made gains.

To calculate your gains on your segregated units, you need to ascertain the acquisition cost of the segregated unit.

When will you get the payments in your bank accounts?

For units held in physical/statement of account mode, the partial payment of the outstanding unitholding as on June 12, 2020 will be extinguished and will be distributed to unitholders by June 17, 2020.

For units held in demat mode, the partial payment of outstanding unitholding as on June 19, 2020 (i.e., the record date) will be extinguished and will be distributed immediately after the record date. NRI unitholders will also receive their payment on the same date, after deduction of TDS, as applicable.

Should you apply to the fund house or is this automatic?

You do not need to do anything to get your dues. The fund house will credit the amount to your registered bank account. If there is no registered bank account in your folio, then the fund house will send you a cheque.