Professional Documents
Culture Documents
Karvy
Karvy
ON PERFERENCE OF THE ADVISORS TOWARDS MUTUAL FUND AT KARVY SECURITIES LTD., JAMNAGAR SUBMITED BY Badiyani Amit (MBA IV SEM.) ACEDAMIC YEAR 2007-09 SUBMITTED TO SHRI JAYSUKHLAL VADHAR INSTITUTE OF MANAGEMENT STUDIES JAMNAGAR. AFFILIATED TO SAURASHTRA UNIVERSITY RAJKOT.
ACKNOWLEDGEMENT
I am really happy and exited in representing this summer training project report before you. I must express my gratitude towards KARVY SECURITIES LTD for giving mean opportunity to work with on this report.
And of course I am very much thankful to our honorable Dy. Director Prof. Ajay Shah (PROJECT GUIDE) for giving me opportunity and his guidance help me through out preparing this report. He has also provided me a valuable suggestions and excellence guidance about this training, which proved very helpful to me to utilize my theoretical knowledge in practical field. At last I am also thankful to my friends, to all known and unknown individuals who have given me their constructive advise, educative suggestion, encouragement, co-operation and motivation to prepare this report.
EXECUTIVE SUMMARY
Shri Jaysukhlal Vadhar Institute of Management Studies, Jamnagar 2
Indias economy is highly developing. The development is taken place due to the growth in the financial system. This financial system provides the background to various investors regarding varied options to invest. Thus, development of the economy depends on how these investors invest for the well being in long run. As financial markets become more sophisticated and complex, investors need a financial intermediary who provides the required knowledge and professional expertise on successful investing. Mutual Funds represent perhaps the most appropriate investment opportunity for investors. No wonder the concept of Mutual Fund was initially developed in the U.S. market, but the entry of the concept in the Indian Financial Market was in the year 1964 with the formulation of the UTI, at the initiative of the RBI and Govt. of India. For most people, money is a delicate matter and when it comes to investing they are wary. Simply because there are many investment options out there, each out promising the other. An important question facing many investors is whether to invest in Banks, National Savings, Post office, Non-banking finance companies, Fixed deposits, Shares etc. or to invest distinctively in Mutual Funds. It has been perceived that there is huge potential market in the region of Saurashtra. Thus an exploratory research with the hypothesis The region of Saurashtra being progressively industrializing & developing should provide a large & wider market share for Mutual Fund has been done. Thus the purpose of this research was to find why people do not actively invest in mutual fund in spite of various benefits like Professional management, Diversification, Convenience liquidity, Flexibility, Tax benefits etc. as well as to find out potential of business of KARVY in distribution of Mutual Fund in Jamnagar City. After performing the detailed exploratory research by interviewing different persons who act as investment advisor like Insurance advisor and Post office advisor etc. with the help of questionnaire, certain
Shri Jaysukhlal Vadhar Institute of Management Studies, Jamnagar 3
facts were revealed regarding the view about Mutual Funds in the mind of investors. I have observed that approximately 60% of the people are unaware of Mutual Funds but most of them are interested to know about Mutual Funds and ready to attend seminar arranged by KARVY. They are also interested to work with KARVY if sufficient information is provided to them about Mutual Fund and KARVY. People from service class prefers safety of income plus the regular income as well as tax benefits while on the other hand Professional and Businessman focus on high return with some risk. For growth and development of the Mutual Fund Industry, the misconception regarding Mutual Fund should be removed & the awareness for the same should be made.
In January 1998, Karvy became first Depository Participant in Andhra Pradesh. An ISO 9002 Company, Karvys commitment to quality and retail reach has made it an Integrated Financial Services Company. Today, company has 230 branch offices in 164 cities all over the India. The company adds 5 new offices every month to the companys ever growing national network in every nook and corner of the country. The company service over 16 million individual investors, 180 corporate and handle corporate disbursements that exceed Rs.2500 Crores.
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KARVY GROUP
Karvy Consultants Limited Karvy Securities Limited Karvy Investor Services Limited Karvy Stock broking Limited Karvy Computer Shares Pvt. Ltd.
Board of Directors
Karvy Consultants Limited
Parthasarathy C Yugandhar M Ramakrishna M S Prasad V Potluri Robert Gibson Sanjay Kumar Dhir R Shyamsunder
[Table1: BODs of Karvy Consultants Limited]
Vision of Karvy
Companys vision is crystal clear and mind frame very directed. To be pioneering financial services company. And continue to grow at a healthy pace, year after year, decade after decade. Companys foray into IT-enabled services and internet business has provided an opportunity to explore new frontiers and business solutions. To build a corporate that sets benchmarks for others to follow.
Picture:
What
Customers
matter
for
The underlying picture forming answer for above question is given below.
Market Power
Brand Preference
Value
Customer
RELATIONSHIPS
OUR COMPETITIVE ADVANTAGE
Every year with this picture keeping in mind Karvy accelerate with Recovery, Revival and Reappearance. Karvy has started 2004 on a strong note with the realization to signal some of the challenges it faced previous year. In a competitive market and a branded business, Karvy need to carefully manage itself to avoid down trading or brand shifts by consumers. For Karvy, Jamnagar branch 2003 was truly exhilarating because of: Successful implementation of a carefully crafted strategy. Excellence in execution. Immense learning enabling to set up a launch pad for revitalizing itself.
Shri Jaysukhlal Vadhar Institute of Management Studies, Jamnagar 10
Some competitive advantages are long lasting. These are intangible, difficult to replicate and thus more sustainable. Karvy has focused on some of these to gain competitive advantages. There are: Winning culture and a desire to excel in everything
Karvy do.
Strong meaningful relationships with Customers along with Strategic Partners in which Karvy operate and above all, its own staff. Karvy value and carefully nurture relationships with customers. Karvy truly believe that more than technological prowess and business process innovations, it is the focus on relationships which has been the corner stone of satisfying and successful presence in India over many years. This has been possible with deep insight of consumer behavior as well as market demand drivers, understanding of the arena where to operate and quality execution all thanks to a greater team that makes this happen. Karvys customers consider themselves part of Karvy family and share their experiences and dreams with other customers and thus Karvy becomes successful not only in relating customers but also gains new customers from satisfied prevailing customers. Karvy want to create a strong emotional bond with new customers promoted by prevailing customers.
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Karvy Values:
Integrity Responsibility Reliability Unity Understanding Excellence Confidentiality Karvy has adequate internal control systems and procedures commensurate with the size nature of its business. These system and procedures provide reasonable assurance of maintenance of proper accounting records, reliability of financial information, protection of resources and safeguarding of assets against unauthorized use.
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1.
Stock Broking:
KARVY is working as Capital Market Intermediaries. Stockbrokers are regulated by SEBI [Stock-brokers and Sub-brokers] Regulations, 1992. The stockbroker is a member of the stock exchange. Stockbrokers are the intermediaries who are allowed to trade in securities on the exchange of which they are members. They buy and sell on their own behalf as well as on behalf of their clients. Stockbrokers expand their business by engaging sub-broker. Subbrokers mean any person not being a member of a stock exchange who acts on behalf of a stock broker as an agent or otherwise for assisting the investors in buying, selling or dealing in securities through such stock-brokers.
2. Demat Services:
Karvy is a depository participant with the National Securities Depository Limited (NSDL) for trading and settlement of dematerialized shares. Depository Participants (DPs) are described as an agent of the depository. They are intermediaries between the depository and the investors. The relationship between the DPs and the depository is
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governed by an agreement made between the two under Depositories Act. A DP can offer depository-related services only after obtaining a certificate of registration from SEBI. Since Karvy is also in the broking business, investors who use Karvys depository services get a dual benefit. They can use Karvys brokerage services to execute transactions and Karvys depository services to settle them.
Sl. No. 1 2 3 4 5 6 7 8
Company Name Ashok Leyland Finance Ltd. Bajaj Auto Finance Ltd. Birla Home Finance Ltd. Cholamandalam Investment & Finance Co. Ltd. Escorts Finance Ltd. First Leasing Company of India Ltd. IDBI Suvidha Nicco Uco Alliance Credit Ltd.
HOUSING FINANCE COMPANIES Sl. No. Company Name 1 Can Fin Homes Ltd. 2 Dewan Housing Finance Corporation Ltd. 3 Gruh Finance Ltd. 4 HDFC Ltd. 5 PNB Housing Finance Ltd. 6 Sundaram Home Finance Ltd.
[Table7: FD of Housing Finance Companies with which Karvy deals]
MANUFACTURING COMPANIES Sl. No. Company Name 1 A P Paper Mills Ltd. 2 Amtek India Ltd. 3 Atul Ltd. 4 Ballarpur Industries Ltd. 5 Chambal Fertilizers & Chemicals Ltd. 6 Escort Ltd. 7 Greaves Ltd. 8 Gujarat Alkalies & Chemicals Ltd. 9 Indian Express 10 Ind-Swift Ltd. 11 JK Industries Ltd. 12 Jindal Steel & Power Ltd. 13 Sound Craft Industries Ltd. 14 Supreme Industries Ltd.
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(b). Bonds:
Karvy is dealer of following bonds RBI Saving Bonds NHB REC
(c). IPO:
Company is also provides services related to Initial Public Offer of company. Company provides stationary at the time of IPO as well as provides information to investors regarding IPO and solves their queries.
4.
This division provides portfolio management services to high net-worth individuals and corporate. The expertise of Karvy in research and stock broking gives it the right perspective to provide investment advisory services. Company provides advisory services to its clients. Financial goal of each individual investor varies according to his dream, ambition and family size and future financial planning for the children & old age pension for self and wife so does the pathway to achieve it. Karvy apply the principles of Financial Planning as both science & art, it understands the time horizon, risk bearing capacity and investment goals of investors keeping in mind their psyche and financial needs. Based upon this Karvy helps individual investors to plan their entire life up to retirement, Taxes, Insurance needs and other important personal financial goals. It designs portfolio for investor to invest their saving in various financial products like shares, bonds, debentures, mutual funds,
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fixed deposits, insurance etc., Company design portfolio by considering following factors. Investors requirement of getting money back, Investors willingness to take risk, Investors tax planning etc.
5.
Corporate finance is the financial activity of corporation. It deals with the firm's operations with regard to investing and financing. It concerned with how firms raise capital and the consequences of alternative methods of raising capital. Firms capital can be raised by raising loans, issuing shares, and acquiring or merging with other businesses by public or private companies. Merchant banking is a financial intermediation that matches entities that need capital and those that have capital. Hence they facilitate the flow of capital in the market. Karvy enjoys SEBI category (I) authorization for Merchant Banking. Karvy offers the full spectrum of Merchant Banking Services, beginning from identifying the best time for an issue to final stage of marketing it, to harvest unparalleled success. As a merchant banker Karvy offer following services: Issue management Instrument designing Pricing of the issue Registration process for the issue of shares Marketing efforts Final allotment to investors Listing details on stock exchanges Loan syndication Lease financing Corporate advisory services Underwriting
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Portfolio management
6.
Insurance:
Karvy is also dealer of many private life insurance companies. At Jamnagar branch, company is associated with dealing of following companies. ICICI Prudential Life Insurance HDFC Life Insurance TATA AIG Life Insurance
7.
Since its inception in 1982, Karvy has demonstrated a dedication coupled with dynamism that has inspired trust from various segments corporate, government bodies and individuals. Karvy has since been performing a pivotal role as the intermediary the interface between these players. With Mutual Funds emerging as a distinct asset class, Karvy has made a strategic choice to leverage the power of latest technology to provide a cutting edge to its services. Karvy, today, service nearly 80% of the asset management companies (AMCs) across an extensive network of service centers with assets under service in excess of Rs.10,000 crores. Karvy's ability to mass customize and offer a diverse range of products for a diverse range of customers has helped mutual fund companies to uniquely position themselves in the market place. These diverse range of services cut across multiple delivery channels service centers, web, mobile phones, call center has brought home the benefits of technology to investors, distributors, and the mutual funds. Going forward, Karvy shall strive to create new products and services, which would address the needs of the end customer. Companys single minded focus in delivering products for customers has given it the distinguished position of being the preferred provider of financial services in the country.
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Karvy work as an intermediary between NSDL and IT payers. Karvy provides various form for different IT enabled services and guide people to fill that forms. It also solves queries of the tax payers. It also distributes PAN and TAN card to the tax payers.
TIN Overview
National Securities Depository Ltd. (NSDL) has established a nationwide Tax Information Network (TIN) on behalf of the Income Tax Department (ITD). This is designed to make the tax administration more effective, furnishing of returns convenient, reduce compliance cost and bring greater transparency. While NSDL will be the primary agency responsible for the design, implementation and maintenance of TIN as per the requirements of ITD, other agencies will also play key roles in the TIN system. Karvy has established infrastructure required to provide IT enabled services so, Karvy provides TIN facilitation centers all over India on behalf of NSDL. Besides Karvy following companies can also work as intermediary between NSDL and customers. Alankit Assignments Ltd. Integrated Enterprise (I) Ltd. Shell Tran source Ltd.
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The banking system, being the agency that collects the money on behalf of the ITD against tax obligations from the tax payers will be linked to the TIN central system to provide accounting information on tax paid by various entities under various heads. As banks are relatively technology-enabled entities, they will directly be linked electronically to the TIN central system enabling online tax accounting. On the other hand, the entities depositing the tax (deductors) vary substantially with respect to their computer skills and hence TIN design provides for TIN Facilitation Centers managed by NSDL to help digitization and upload of tax payment related information to the TIN central system. Besides NSDL, UTI Investor Services Ltd. may also provides IT Enabled services.
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9.
In 1985, Karvy entered the Registrar and Share Transfer Business to create a market niche in the competitive field of financial services. In 1994-95, it reached a milestone when it processed 104 Public Issues constituting 46 per cent market share. Now in its second decade of existence, Karvy is the leader in the industry: In an opinion poll conducted by an independent market research agency - MARG, Karvy has been rated as Indias Most Admired Registrar on various parameters: Overall Excellence. Handling of Volumes Timely Dispatch Quality Management
gradation.
and Technological
Up
A SEBI Category 1 Registrar, So far, Karvy has handled over 675 ISSUES as Registrars to public issues processed over 52 million applications and is servicing over 16 million investors from various locations spread over 205 clients.
10. Loan:
Karvy has recently started this service at selected branches of metro cities. This service has not been started in Saurashtra-Kucch region. Karvy provides loans for following. Vehicle Loan Home Loan Personal Loan
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Target Market:
Karvy uses demographic segmentation strategy and segment people based on their occupation. Karvy uses selective specialization strategy for market targeting. Target person for the Karvy Stock Broking and Karvy Investment Service are persons who can work as sub-broker for the companies. Companies focus on Advisors of Insurance and post office, Tax consultants and CAs for making sub-broker.
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HR POLICY OF KARVY
Karvys HR Department is located at Hyderabad.
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Employee Motivation:
Karvys employees are highly empowered. They dont have to report any person of the same branch but they report upper level branch. E.e. Marketing executive of Jamnagar branch directly reports Senior Marketing executive of Baroda zonal office. If particular branch earn certain profit then Karvy gives them special incentives. E.g. last year Karvy had arranged two days tour of Div for their employees of Rajkot, Jamnagar, Junagadh and Bhavnagar branch which was totally free of cost. This also helps in maintaining cooperation between employees.
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GM (Marketing)
GM (Finance)
GM (HRM)
Accountant
Sr. Executives
Executives
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Branch Manager
Executives (SB - 4)
Executive (IT)
Marketing Executives-3
Clerk
Executive (Demat)
Accountant
Peon
Peon
[Fig.4 Branch Level Structure of Karvy]
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Achievements of Karvy:
Securities Ltd Handled over 500 Public issues as Registrars Handling the Reliance Account which accounts for nearly 10 million account holders First Depository Participant from Andhra Pradesh Largest mobilizer of funds as per PRIME DATABASE First ISO - 9002 Certified Registrar in India A Category- I Merchant banker A Category- I Registrar to Public Issues Ranked as "The Most Admired Registrar by MARG Handled the largest- ever Public Issue - IDBI Strategic tie-up with Jardine Fleming India
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Weaknesses:
High Employee Turnover.
Opportunity:
Growth rate of mutual fund industry is 40 to 50% during last year and it expected that this rate will be maintained in future also. Marketing at rural and semi-urban areas.
Threats:
Increasing number of local players. Past image of Mutual Fund.
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In Jamnagar Karvy has started Demat Services on 21 June 2002. DP ID of Karvy is IN300394. In Jamnagar Karvy has started IT enabled services on Mar. 2004.
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INDUSTRY DETAILS
Following are list of Mutual Fund companies in India. Sr. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Mutual Fund Name Alliance Mutual Fund Benchmark Mutual Fund Birla Mutual Fund Bank of Baroda Mutual Fund Can Bank Mutual Fund Chola Mutual Fund Deutsche Mutual Fund DSP Merrill Lynch Mutual Fund Escorts Mutual Fund Franklin Templeton Investments GIC Mutual Fund HDFC Mutual Fund HSBC Mutual Fund IL & FS Mutual Fund ING Vysya Mutual Fund JM Mutual Fund Kotak Mutual Fund LIC Mutual Fund Morgan Stanley Mutual Fund Punjab National Bank Mutual Fund Prudential ICICI Mutual Fund Principal Mutual Fund Reliance Mutual Fund Sahara Mutual Fund State Bank of India Mutual Fund Standard Chartered Mutual Fund Sundaram Mutual Fund SUN F&C Mutual Fund Tata TD Mutual Fund Taurus Mutual Fund
Shri Jaysukhlal Vadhar Institute of Management Studies, Jamnagar
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With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores. The Unit Trust of India with Rs.44,541 crores of assets under management was way ahead of other mutual funds. Fourth Phase since February 2003 In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs.29,835 crores as at the end of January 2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes. The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations. The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 crores of assets under management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes. The graph indicates the growth of assets over the years.
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154018
Rs. In Crores
100000 80000 60000 40000 20000 0 25 4564 Mar-87 Mar-93 Jan-03 Mar-03 Sep-03 May-04 47000 79464
Mar-65
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37
42% 36%
Fund Type
38%
21%
19%
Joint-F
Joint-I
Institutions
Private
ELSS
0%
1%
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REGULATORY BODIES
Financial System is basically responsible for the major up and downs in the economy. So, there are some regulatory bodies on it which ensures effectiveness in the management of fund of the investors and transparency in the transactions.
Ministry of Finance
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COMPETITORS DETAILS
1. Bajaj Capital
It was established in 1964 at Delhi. In 1965 it innovates a new financial instrument Companies Fixed Deposits and becomes the first company to raise Fixed Deposits. The objective of company is to provide professional guidance to investors on where, when and how to invest and to assist the corporate sector in its resource raising activities. Bajaj Capital became the first company to set up Investment Centers all over India for this purpose. Today, Bajaj Capital has 90 offices in over 40 important Indian Cities and has a team of around 500 employees nationwide.
Services provided
Merchant banking Buying and Selling of Money Market Investments Distribution of financial products Investment Advisory Service Company fixed deposits Bonds Mutual funds Life insurance General insurance Pension schemes Post office schemes Tax saving schemes Insurance linked investment schemes Initial public offerings Housing loans NRI schemes Car insurance
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Financial Planning Investment planning Retirement planning Insurance planning Children's future planning Tax planning Short-term cash flow planning
2.MCS Ltd.
It is established in 1985 in Delhi. It is one of the largest Data Processing House employing more than 600 people. MCS Ltd. has 8 branches all over India including 2 in Gujarat, Ahmedabad and Baroda.
Volumes Handled
Share registry activities for over 100 corporate servicing over 10 million investors. Mutual fund operations for 25 funds, servicing over 4.5 million investors. Billing & settlement plan for Indian operations of IATA Geneva for 1.2 million tickets per annum covering (26 airlines & over 1200 agents).
Services Offered:
Registrars and Transfer Agents Registrars to IPOs /Right Issues Registrars to Open Offers Registrars to Mutual Funds Data Processing for Airlines Print Shop Services
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MCS is a major player in these activities in the Country with a market share of about 25%. MCS today provides these services to over 140 Corporate and Mutual Funds for a total investor base of 15 million.
NJ India Invest (formerly known as NJ Capital stocks) was started in 1994 to cater to the growing financial services sector. NJ India Invest evolved out as a client focused need based investment advisory firm. NJ regards mutual fund as one of the best investment avenue available to satisfy any kind of investment need. NJ India Investment has 11 branches in Gujarat including 3 branches in Saurashtra. Rajkot Jamnagar Bhavnagar
Services offered:
Merchant Banking Demat Service Stock Broking
5. HDFC
HDFC is the leading financial company in India. IT has large network of branches all over India. HDFC Securities which is fully subsidiary of HDFC provides demat service. HDFC and its subsidiary provides following services. Demat Service Life Insurance Banking Service Housing Finance Vehicle Finance Education Loan Personal Loan Mutual Fund
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Services offered:
Stock Broking Financial Product Distribution Demat Services Investment Advisory Services
Services Offered:
Demat Services Stock Broking Investment Advisory Service
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PRODUCT DETAILS
Mutual funds serve as a link between the saving people and the capital market in that they mobilize saving from investors and bring them to borrowers in the capital markets. In short, it is a common pool of money into which investors place their contribution that is to be invested in accordance with a stated objective. A mutual fund uses the money collected from the investors to buy those assets, which are specially permitted by its stated investment objective. When an investor subscribes to a mutual fund, he/she buys a part of asset or the pool of funds that are outstanding at that time. A mutual fund is constituted as an investment company and an investor buys into the fund, means he buys the share of the fund and is known as a unit holder. Since each unit holder is a part of owner of a mutual fund, it is necessary to establish the value of his part. Since the unit held by an investor evidences the ownership of the funds assets, the value of the total asset of the fund when divided by the total number of units issued by the mutual fund gives us the value of one unit. This is called as Net Asset Value (NAV).
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1.
Sponsor:
Sponsor is defined under SEBI regulation as any person who, acting alone or in combination with another body corporate, establishes a mutual fund. The sponsor gets the fund registered with SEBI. The sponsors form a trust and appoint a Board of Trustees.
The sponsor must contribute at least 40% of the net worth of the AMC. The sponsor must posses a sound financial track record over 5 years prior to registration.
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2. Board of Trustees:
Mutual funds are managed by Board of Trustees. Trust is created by a document called the Trust Deed that is executed by fund sponsor in favour of trustees. The trustees appoint the AMC and custodian with the prior approval of SEBI. They also approve all the schemes floated by the AMC. They have right to dismiss the AMC, with the approval of SEBI. Half of the trustees should be independent persons. Neither the AMC, nor its employees can act as trustee. A trustee can not be appointed as a trustee of two or more mutual funds until and unless he is an independent person or has permission from the Mutual Fund where he is trustee. Trustees can be removed only by prior approval of SEBI.
3.
The AMC of a Mutual Fund must have a net worth of at least Rs. 10 crore at all time. The AMC can not act as a trustee of any other Mutual Fund. They will float schemes only after obtaining the prior approval of the Trustees and SEBI. The director of AMC should be a person of reputed of high standing and at least have five years experience in relevant field.
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4.
As per SEBI Regulations Mutual Funds shall have a custodian who is not any way associated with the AMC. It carry outs the activity of safe keeping the securities or participating, in any clearing system. The custodian should be independent from sponsors and AMC and should have a sound track record and adequate relevant experience. As Indian capital markets are moving away from having physical certificates to ownership of these securities in dematerialized form with Depository. Mutual Funds dematerialized securities are hold by depository participant.
5.
Distributors:
For a fund to sell units across a wide retail base of individual investors, an established network of distribution agents is essential. AMCs usually appoint Distributors or Brokers, who sell units on behalf of the fund. A broker usually acts on behalf of several mutual funds simultaneously and may have several sub-brokers under him for the purpose of distribution of units.
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6. Convenience & Flexibility: Mutual Funds Companies offer investor to transfer their holding from one scheme to other. 7. Tax Benefits: The investors are totally exempt from paying any tax on the income they receive from the Mutual Funds. Investment up to 10000 in ELSS qualifies for tax rebate of 20%. 8. Regulatory oversight: Mutual funds are subject to many government regulations that protect investors from fraud. 9. Convenience: You can usually buy mutual fund shares by mail, phone, or over the Internet. 10. Well regulated
Limitations:
1. No Control over Costs:
An investor in a mutual fund has no control over the overall cost of investing. He/she has to pay investment management fees as long as he/she remains with the fund. Fees are payable even while the value of the investment may be declining. 2. No Tailor made Portfolios:
Investors who invest on their own can build their own portfolios of shares and bonds and other securities. Investing through fund means he/she delegates this decision to the fund managers. 3. Managing a Portfolio of Funds:
Shri Jaysukhlal Vadhar Institute of Management Studies, Jamnagar 52
Availability of a large number of funds can actually mean too much choice for the investor. He/she may again need advice on how to select a fund to achieve his/her objectives, quite similar to the situation when he/she has to select individual shares or bonds to invest in. 4. Entry and Exit Cost:
When large bodies like a fund invest in shares, the concentrated buying or selling often result in adverse price movements i.e. at the time of buying, fund has to pay high and vise-versa. 5. No Guarantees:
No investment is risk free. If the entire stock market declines in value, the value of mutual fund shares will go down as well, no matter how balanced the portfolio. Investors encounter fewer risks when they invest in mutual funds than when they buy and sell stocks on their own. However, anyone who invests through a mutual fund runs the risk of losing money.
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From above cycle, it can be observed clearly that how the money from the investors flow and they get returns out of it. With a very small amount of fund, investors pool their money with fund managers. After studying the market, the fund manager invests money of the investors in various securities like shares, bonds, debentures, government securities etc. to achieve goal of the investors. With ups and downs in the market returns are generated and they are passed on to the investors in form of dividend or capital gain or lost. The above cycle is very clear and also very effective. The fund manager while investing on behalf of investors takes into consideration various factors like time, risk; amount etc. so that he/she can make proper investment decision.
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Types of Mutual Fund By Objective Equity Fund Debt Fund Balanced Fund By Duration Open Ended Close Ended By Load Load Fund No Load Fund Interval Money Market Gilt Fund
Other Fund Tax Saving Index Fund Sector Fund Comm. Fund Offshore
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1.
By objective:
Investment goals vary from person to person. While somebody wants security, others might give more weightage to returns alone. Somebody else might want to plan for his childs education while somebody might be saving for the proverbial rainy day or even life after retirement. With objectives defying any range, it is obvious that the products required will vary as well. So, Mutual funds can be classified based on the objectives of the investor.
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principal on the investments. These funds are best suited for regular income and long term investment objectives. The leading examples are Prudential ICICI Gilt Fund, Tata Gilt Securities Fund, Templton India Government Securities Fund etc.
2. By Duration:
(a). Open-ended Fund:
An open ended fund is one that is available for subscription and repurchase on a continuous basis. These schemes do not have a fixed maturity period. Investors can conveniently buy and sell units at NAV related prices which are declared daily basis. The key feature of this fund is liquidity.
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Suitable Products
Medium
Bank/ Company FD, Debt based Funds Balanced Funds, Some Partially Diversified Equity Debt, Funds and some debt Partially Funds, Mix of shares Equity and Fixed Deposits Equity
High
Diversification, Capital Market, Equity Expertise in stock Funds (Diversified as picking, Liquidity, well as Sector) Tax free dividends
3. By Load:
(a). Load Fund:
Marketing of new mutual fund scheme involves initial expenses. These initial expenses may be recovered from the investors by entry or exit load. (i). Entry Load or Front-end Load:
If initial expenses recovered from investors at the time of investors entry into the fund, by deducting a specific amount from his initial contribution it is called Entry Load.
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(ii).
If initial expenses recovered at the time of the investors exit from the scheme, by deducting a specified amount from the redemption proceeds payable to the investor it is called exit load. (iii). Deferred Load: The load amount charged to the scheme over a period of time is called a deferred load.
income fund.
There is 0.25 to 1% exit load on gilt and income fund if investors exit from fund before specified time which is generally 3 to 6 months.
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PROBLEM FORMULATION
Marketing Research being a logical process definitely follows our predetermined sequence or steps in order to obtain the desired results or outcomes. Though the entire process of Marketing Research is quite complex and requires a considerable degree of knowledge and skill, the step of the Problem Formulation is the most challenging and critical one for the researcher as well as the research. It is rightly said that a problem, well defined is half solved. In todays competitive world companies can not afford to reactive, instead the trend is toward proactive. It is due to the increasing competition that the companies can not afford to undertake research until something goes wrong. This can curtail the future growth or even affect the very existence of the organization seeing to the trend of being proactive in the future; companies are allocating more resources to the disciplines of research. In such case it becomes a duty of researcher to ensure that the organization gets an optimum return on the resources it has invested. Thus, Problem Formulation assumes great importance in Marketing Research. The Marketing Research project undertaken by me for the Karvy Securities Limited encompasses within its scope, the study of The Mutual Fund and to find out market potential of KARVY Investor Service Ltd. with special reference to distribution of Mutual Fund in Jamnagar City. Company wants to increase its sub-brokers who can work as intermediary between company and the investors.
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RESEARCH OBJECTIVES
Any activity done without an objective in a mind cannot turn fruitful. An objective provides a specific direction to an activity. Objectives may range from very general to very specific, but they should be clear enough to point out with reasonable accuracy what researcher wants to achieve through the study and how it will be helpful to the decision maker in solving the problem. The objective of any research is basically divided into two categories.
Primary Objective:
To find out market potential of Karvy Investor Service Ltd.
Secondary Objectives:
Following are secondary objectives. To assess an awareness of mutual funds in Jamnagar To find out level of awareness of mutual funds in
To find out how many investment advisors are interested in dealing of mutual fund. To find out how many investment advisors are willing to work with Karvy.
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RESEARCH METHODOLOGY
1.Research Design:
A research design is a pattern or an outline of a research projects working. It is a statement of only the essential elements of a study, those that provide the basic guidelines for the details of the project. It comprises a series of prior decision that taken together provide master plans for executing a research projects. A research design serves as a bridge between what has been established i.e., the research objectives and what is to be done, in conduct of the study to relish those objectives. If there were no research design, the research would have only foggy notions as about what is to be done. I have used Cross-Sectional Design of Exploratory Type. The research is of both qualitative as well as quantitative type.
2.
Unit of Analysis:
Characteristics of interest:
Advisors knowledge about Mutual Fund Advisors knowledge about Karvy Advisors interest in getting knowledge of Mutual Advisors willingness to deal in Mutual Fund with
Fund Karvy
Advisors preference in selecting tax saving instrument of investment Advisors preference in selecting dealer
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3.
a.
Sources of Data:
Primary Source:
The primary data is collected using sampling method and by survey using questionnaire.
b.
Secondary Source:
Secondary data includes information regarding present market scenario, Information regarding Mutual Funds and competitors are collected by Internet, Magazines and News papers and books.
4.
Sample Planning:
Sampling Design:
A Sample Design is a definite plan for obtaining a sample from a given population. It refers to the technique or method the researcher would adopt in selecting items for the sample. I have used both Convenience Sampling Method and Snow Ball Sampling Method.
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5.
I have used Survey Method to collect data. I have collected data using questionnaire.
Questionnaire Plan
I have used Structured Questionnaire for gathering the required data through contacting respondent personally.
Type of Information:
I have collected Fact, Awareness, Attitude, Future action plan and reason using questionnaire.
Type of Questions:
Close-ended questions of Dichotomous and Multiple Choice type are asked in the questionnaire for data collection.
6.
Data Analysis is based on the data collected by way of Questionnaires. From the collected data findings are extracted. The data is tabulated and frequency distribution chart is prepared.
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15 12
10 5 0 5 6 4
>1000
[Fig.17: Differentiate advisors according to no of their clients} Shri Jaysukhlal Vadhar Institute of Management Studies, Jamnagar 68
55%
14%
14%
11% 1%
Pension ELSS
5%
Bond
Insurance
NSC
PPF
Investme nt Options
Plan
60%
Not Interested
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90%
Don't KNOW
70
54%
Not Inteested
52%
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FINDINGS
The awareness level about Mutual Funds is quite low in the Jamnagar City among advisors. Approximately 40% of advisers are aware of and interested in dealing of Mutual Funds. The reason for not interested in dealing of Mutual Fund is unawareness about Mutual Fund. Only 10% investment advisors are aware of MF services provided by Karvy, so we can say that awareness level about MF services of Karvy is very low. Most of advisers are interested to know about Mutual Funds and interested to attend seminar on Mutual Funds arranged by Karvy. Only 46% of advisers are interested to work with Karvy. Most of advisors dont want to work with Karvy because they have no time for expanding their services. Most of people invest in insurance to save tax followed by PPF. Insurance is widely used as tax-saving instrument.
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LIMITATIONS
Due to limitation of time and cost constrains a sample size of only 50 respondents are chosen. Data Analysis and interpretation done may not be that strong due to small sample and Convenience Sampling Method. The sample extent for research is only Jamnagar
City.
responses.
affected results.
My
inexperience
in
research
area
might
have
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CONCLUSIONS
Mutual Fund Advisors give emphasis on mutual funds than other investment options. Mutual Funds have given a new direction to the flow of personal saving and enable small and medium investors in remote rural and semi urban areas to reap the benefits of the stock market investment. Indian Mutual Funds are thus playing a very important developmental role in allocation of scares resources in the emerging economy. Karvy is not able to provide sufficient services to the investors due to unawareness among advisors regarding services. The awareness level of investor is low in advisors are interested in dealing in mutual fund. Very less advisors are knowing about services provided by karvy.
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RECOMMENDATIONS
There is high potential market for Mutual Fund Advisors in Jamnagar city, but this market needs to be explored as investors are still hesitated to invest their money in Mutual Funds. In Jamngar investors have inadequate knowledge about Mutual Funds, So proper Marketing of various schemes is required, company should arranges more and more seminars on Mutual Funds. Awareness of MF services provided by Karvy is also very low so company needs proper marketing of their all services by advertising, distribution of pamphlet, arranging seminars etc. Most of advisors are not interested in dealing of Mutual Funds because they dont want to expand their services due to lack of time, so company should provide them knowledge about single window services by which investor can get all financial services from one place. Company should also provide knowledge about the growth rate and the expected growth rate of Mutual Fund industry in India. Most of people aware of life insurance, NSC and PPF for tax saving so, company should market various tax saving schemes of Mutual Funds and their benefits. The interface among the investors and the Mutual Fund Companies is the agents, so the agents should have proper knowledge about Mutual Funds as well as market so that they can help investors in their investment decisions. The quality of agents performance and investors trust on them can be improved only if they are permanent in nature.
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ANNEXURE
QUESTIONNAIRE
We assure you that all the information that will be collected from you will remain fully confidential and it is used for study purpose only. 1. As a financial investment adviser which investment options you suggest to your customers? Shares Insurance Tax Bond Other Mutual Fund Fixed Deposit PPF
2.
Please indicate reason for choosing above. Returns Safety Timely Brokerage Other 3. 4. 5. 6. Risk Tax Benefits
Approximately how many customers you have? What is the brokerage Payment Period? Expected Brokerage Payment Period If a service person who pays Income Tax wants to invest, generally which option do you suggest for investment? Insurance Pension Plan PPF Infrastructure Bond ELLS Scheme Other _______________________________________ Are you interested to deal in MF?
Shri Jaysukhlal Vadhar Institute of Management Studies, Jamnagar 77
7.
Yes No If No Why?
8.
Do you know about MF services provided by Karvys Jamnagar Branch? Yes No 9. In future will you attend seminar arranged by Karvy to guide investors about MF?
Yes No
If No Why?
10.
Will you like to work with Karvy Securities Ltd for dealing in mutual fund? Yes No If No Why? 11. Name : Address :
(R)
Thank You
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GLOSSARY
Corporate advisory services Merchant bankers offer customised solutions to solve the financial problems of their clients. Merchant bankers study the working capital practices that exist within the company and suggest alternative policies. They also advise the company on rehabilitation and turnaround strategies, which would help companies to recover from their current position. They also provide advice on appropriate risk management strategies. Loan syndication Arrangement of loans for clients, by analysing their cash flow pattern, so that the terms of borrowing meet the clients cash requirements and offer assistance in loan documentation procedures. Portfolio Total number of all holdings held by a company is called portfolio. The portfolio mix is aimed at spreading the risk over different sectors. It consists of all assets of company. NAV Net Asset Value is the current market worth of the mutual fund shares. It is calculated daily by taking the funds total asset securities, cash and any accrued earning deducting liabilities, and dividing the reminder by the number of shares outstanding.
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Depository The principal function of a depository is to dematerialize securities and enable their transactions in book-entry form. A depository established under the Depositories Act can provide any service connected with recording of allotment of securities or transfer of ownership of securities in the record of a depository. Capital gain The profit made from selling shares, mutual funds etc. IPO Abbreviation for initial public offering. Generally associated with admission to listing of the share capital on the stock exchange.
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Figures:
No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Particulars Competitive Advantage of Karvy TIN System National Level Organization Chart of Karvy Branch Level Structure of Karvy Growth in Assets Under Management Assets Under Management By Fund Type Assets Under Management By AMC Regulatory bodies Mutual Fund Cycle Types of Mutual Funds Differentiate advisors according to yearly amount they get invested Pg. No. 8 19 25 26 33 34 34 35 48 49 62
Instrument in which advisors gets invested to IT payers Advisors who are interested in dealing of Mutual Funds Reasons for not interested in dealing of Mutual Funds Advisor know about MF services provided by Karvy Advisor who are interested to attend seminar on MF Reason for not attending Seminar Advisors who are interested to work with KARVY Reasons for not interested in work with KARVY
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65 65 65 66 66 66 67
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BIBLIOGRAPHY
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. www.mutualfundsindia.com www.amfiindia.com www.themanagementor.com www.dewb-vc.com www.karvy.com www.indiacorporateadvisor.com www.nsdl.co.in www.incometaxdelhi.nic.in www.incometaxindia.gov.in David J. Luck & Ronald S. Rubin, Marketing Research, Ed. 7 (ISBN) D.C.Anjaria & Dhaivat Anjaria, AMFI Workbook, Ed. 2
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