A

Summer Project Report On

Buying Behaviour of Investors towards IPO and NFO
Undertaken At

Majura Gate Branch, Surat

IN THE PARTIAL FULFILLMENT OF

MASTER OF BUSINESS ADMINISTRATION

DEPARTMENT OF BUSINESS AND INDUSTRIAL MANAGEMENT

Veer Narmad South Gujarat University
Surat.
(2008-2010)

SUBMITTED TO:
PREPARED BY:

Dr. Renuka Garg

Sudhir Bhalani

DEPARTMENT OF BUSINESS AND INDUSTRIAL MANAGEMENT (DBIM)

CERTIFICATE

VEER NARMAD SOUTH GUJARAT UNIVERSITY, SURAT

YEAR 2007-2008

This is to certify that Mr. Sudhir Bhalani has successfully completed his project work titled
Buying Behaviour of Investors Towards IPO and NFO at NJ India Invest, Majura Gate
Branch, Surat, as a part of partial fulfillment of Masters In Business Administration, full time
program at Department of Business and Industrial Management, 3 rd semester during the
academic year 2009.

Date: _______________
Place: _______________

____________________

______________

Dr. Renuka Garg

Dr. Renuka Garg

Head of the Department

Project Guide

Declaration
I, Sudhir Bhalani hereby declare that the study titled Buying Behaviour of Investors towards
IPO and NFO is based on my own work. Wherever I have used other works/publications, it
has been duly acknowledged at the relevant places. I also assure that the report is prepared as a
part of partial fulfillment of Master of Business Administration Program at, Veer Narmad South
Gujarat University and the same has not been produced before any other university or college.

Sudhir Bhalani
DBIM, Surat

Acknowledgement
It is beyond my word power to express the gratitude and thankfulness I am feeling for Mr.
Avinash Chachre at NJ India Invest, Majura Gate Branch, Surat. He has been constant source of
information and encouragement to me and has guided and motivated me as and when required.
The keen interest evinced by him has helped me in dealing with the problems I face during my
work.
I am thankful to other staff members also for giving information about their different products
and procedure.
I am very thankful to Dr. Renuka Garg for her regular input during the study. She has shown
me the right direction to work and has always helped me by giving suggestions and comments at
the right time.
Last but not least I am highly grateful to all those who helped me directly and indirectly in my
endeavor.

Executive Summery

This report is on Buying Behaviour of Investors towards IPO and NFO.

The survey was done to know the preference of investors between IPO and NFO.
It is also an attempt to know the awareness and attitude of investors towards
IPO and NFO.
The objective is to know the preference of investors between IPO and NFO. To
know the level of awareness of IPO and NFO is also one of the objectives of the
study. Which one is considered profitable by the investors.
I have used the Descriptive Research Design in my study. The sampling method
used is Judgmental Sampling method. In this I have taken Target respondents.
The sample size is of 100 respondents from diversified area and the data are
collected through primary source that is with the help of Questionnaire.
I have done the data analysis using SPSS (Stastical Package for Social Science)
software. In which I have used Frequency table, Chi-Square test and Factor
Analysis to analyze and interpret the data which were collected.
I hope the findings of this survey would go a long way in helping the NJ India
Invest for better understanding not only existing customer but also potential
ones. The finding of the survey may help NJ India Invest to find new customer
and to get new business.

INDEX
Chapter No
1.

2.

Particulars
Industrial Profile

Page No.
19

What is Dairy?

Dairy Industry In India

History of Indian Dairy

Dairy Co-Operative

Perspectives Plan 2010

Market Overview

SWOT Analysis of Indian Dairy

Company Profile

2
4
5
5
7
10 28

History of Sumul

10

Milestone of Sumul

13

Corporate Office

Objective of Sumul

Vision of Sumul

Board of Directors

17

Organizational Structure

17

Work Map

19

Milk Cycle

20

Product Categories

23

Milk Procurement

New Project and Expansion Activities

14
14
15
16

24
26

3.

4.

5.
6.
7.
8.

SWOT of Sumul
Theoretical Aspects of Project

29 42

Strategy

29

Strategic Approaches

33

Defining your Comparative Strategy

Research Methodology

34
43 49

Scope of Study

43

Objective of Study

43

Benefits of Study

Problem Identification

Research Design

Data Collection

Sampling Design

Limitation of Research
Data Analysis
Project Findings
Conclusion
Recommendations
Bibliography

Web site

Books

44
45
45
46
47
49
50 109
110 111
112
113 114
115

Magazine
Annexure
I.
II.
III.
IV.

Questionnaire of Consumer
Questionnaire of Distributors
Population Data of Surat
Photo of Survey

L IST OF TABLE:
TABLE NO

PARTICULARS

PAGE

5.1
5.2
5.3
5.4
5.5
5.6
5.7
5.8
5.9
5.10
5.11
5.12
5.13
5.14
5.15
5.16
5.17
5.18
5.19
5.20
5.21
5.22
5.23
5.24
5.25
5.26
5.27
5.28
5.29
5.30

Gender
Age group of respondents
Income of family
Education / qualification of respondents
No of family members
Age of family members
Assets own by respondents
Expenditure on milk & food item
Who makes purchases
Form of milk
Timing of purchase milk
Mode of payments
Currently using brand
Price of milk
Purchase frequency
Source of purchase milk
Type of milk
Extra consumption of milk during the various occasions
Total average consumption
Usage of milk
Reason to use particular milk brand
Reason to non-use particular milk brand
Income * quantity of milk purchase
Income * price
Income * payment cycle
Income * type of milk
Income * milk expense
Income * place of purchase milk cross tabulation
Income * who make purchase cross tabulation
Crosstabs no of family member * daily once cross

NO.
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
75
81
87
89
90
91
92
93
94
95

5.31
5.32
5.33
5.34
5.35

tabulation
Quantity of milk purchase * timing of purchase milk
Education * type of milk
Education * type of milk
Income * type of milk
Quantity of milk purchase * no of family member cross

96
98
99
101
102

5.36

tabulation
Quantity of milk purchase * timing of purchase milk

104

5.37

cross tabulation
Regression analysis between quantity of milk purchase

105

5.38
5.39

* no. Family member and infant in family

Factor analysis
Comparison of various dealer of packed milk in Surat

106
107

city

LIST OF GRAPH:
TABLE NO
5.1
5.2
5.3
5.4
5.5
5.6
5.7
5.8
5.9
5.10
5.11
5.12
5.13
5.14
5.15
5.16
5.17
5.18
5.19
5.20

PARTICULARS
Gender
Age group of respondents
Income of family
Education / qualification of respondents
No of family members
Age of family members
Assets own by respondents
Expenditure on milk & food item
Who makes purchases ?
Form of milk
Timing of purchase milk
Mode of payments
Currently using brand
Price of milk
Purchase frequency
Source of purchase milk
Type of milk
Extra consumption of milk during the various occasions
Total average consumption
Usage of milk

PAGE
NO.
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69-71

5.21
5.22
5.23
5.24
5.25
5.26
5.27
5.28
5.29
5.30

Reason to use particular milk brand

Reason to non-use particular milk brand
Income * quantity of milk purchase
Income * price
Income * payment cycle
Income * type of milk
Income * milk expense
Income * place of purchase milk cross tabulation
Income * who make purchase cross tabulation
Crosstabs no of family member * daily once cross

76-80
82-86
88
89
90
91
92
93
94
95

5.31
5.32
5.33
5.34
5.35

tabulation
Quantity of milk purchase * timing of purchase milk
Education * type of milk
Education * type of milk
Income * type of milk
Quantity of milk purchase * no of family member cross

97
98
100
101
103

5.36

tabulation
Quantity of milk purchase * timing of purchase milk

104

5.37

cross tabulation
Comparison of various dealer of packed milk in Surat

109

city

Chapter: 1

Industry Profile
IPO:
1.1 What is IPO?
Stocks available for the first time are offered through new issue market. The issuer maybe a new
company or an existing company.
1.2 Parties involved in the IPO:

In the sixties and seventies, public issues were managed by company and its personnel. But, at
present public issues involve a number of agencies and parties. They are as following:

Manager to issue:

Lead managers are appointed by the company to manage the public issue programmes. Their
main duties are,
Drafting of prospectus
Preparing the budget of expense
Suggesting the time of the Public issue
Assisting the marketing
Advising the company to appoint registrar
Directing the various agencies

Registrar to issue

Quotation containing the details of the various functions they would be performing and charges
for them are called for selection. Among them most suitable one is selected.

Underwriters:

It means that a contract by means of which a person gives assurance to the issuer to the effect
that the former would subscribe to the securities offered in the event of non subscription by the
person to whom they were offered.

Bankers to issue:

Bankers to the issue have the responsibility of collecting the application money along with the
application form.

Advertising agents:

Advertising plays a key role in promoting the public issue.

The financial institution:

The financial institution generally underwrites the issue and lends term loans to the company.

NFO:
CONCEPT
A Mutual Fund is a trust that pools the savings of a number of investors who share a common
financial goal. The money thus collected is then invested in capital market instruments such as
shares, debentures and other securities. The income earned through these investments and the
capital appreciation realized is shared by its unit holders in proportion to the number of units
owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it
offers an opportunity to invest in a diversified, professionally managed basket of securities at a
relatively low cost. The flow chart below describes broadly the working of a mutual fund:

ORGANISATION OF A MUTUAL FUND

holders
There are many entities involved and theUnit
diagram
below illustrates the organizational set up of a
mutual fund:

Trustee

Sponsors

AMC

Mutual Fund
Transfer agent agagent agentAgent

SEBI

ADVANTAGES OF MUTUAL FUNDS

The advantages of investing in a Mutual Fund are:
Professional Management
Diversification
Convenient Administration
Return Potential
Low Costs
Liquidity
Transparency
Flexibility
Choice of schemes
Tax benefits
Well regulated
2.1 TYPES OF MUTUAL FUND SCHEMES
Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial position, risk
tolerance and return expectations etc. The table below gives an overview into the existing types
of schemes in the Industry.

FREQUENTLY USED TERMS

Net Asset Value (NAV)
Net Asset Value is the market value of the assets of the scheme minus its liabilities. The per unit
NAV is the net asset value of the scheme divided by the number of units outstanding on the
Valuation Date.
Sales Price
Sales price is the price you pay when you invest in a scheme. It is also called Offer Price. It may
include a sales load.

2.3 History of the Indian Mutual Fund Industry

The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the
initiative of the Government of India and Reserve Bank the. The history of mutual funds in India
can be broadly divided into four distinct phases.

First Phase 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the
Reserve Bank of India and functioned under the Regulatory and administrative control of the
Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development
Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The
first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700
crores of assets under management.
Second Phase 1987-1993 (Entry of Public Sector Funds)
1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and
Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC).
SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by Can
bank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual
Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established
its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990.
At the end of 1993, the mutual fund industry had assets under management of Rs.47,004 crores.
Third Phase 1993-2003 (Entry of Private Sector Funds)
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.

Chapter: 1

Company Profile
History of the company
NJ India Invest, the company established by two youths of Surat and Navsari has today a place
in top mutual fund distributors in India. Niraj Choksi of Surat and Jignesh Desai of Navsari
together have achieved Great achievements. Mutual funds have become a well-known
investment instrument and NJ India Invest is among the top mutual fund distributors. The
investment in mutual funds through NJ India Invest has riched 7000 crores.
Niraj Choksi completed his schooling from st. zaviers school and B.B.A. from Vidyanagar. He
met Mr. Jignesh Desai in Vidyanagar. Mr. Jignesh Desai was there for diploma in civil. Both of
them were room partners in a hostel. Mr. Nirajs father Mr. Ravindra was businessman and
wanted his son to join his business but Mr. Niraj wanted to set up his own business. He started
his career in Baroda sharemarket. On the other hand Mr. Jignesh wanted to do something
different. They joined hands and started a share broking office in Surat. They bought a computer
and analytical software in 1993 when computers were not used for that purpose. And this made
them different from others. They felt that it was riskier to invest in shares than mutual funds. It
was the time when mutual funds were unknown for most of the people. They felt that fund
managers invest in a particulars company after enough of the research. They started NJ Capital
Stock (a share broking company) on 3 rd June 1994. Gradually they started decreasing share
broking and increasing mutual funds and in 1995-96 they turned to mutual funds. It was the time
when there was no need for license.
It was the time when investors had lost a lot of money because of Hashad Maheta. Investors had
no faith on share market. Mutual funds also were in the same position. On the other hand bank
F.D.s and Postal savings were safe and paying a good return. People had not a good opinion
about mutual funds. After the 1992 share market was passing through bad days but Mr. Niraj and
Mr. Jignesh were sure that it was not because of the mutual funds. Though market is down, it will
pay a good return at long run. They started explaining people the reasons of their loss. In such
bad condition they collected around 20 lakhs for mutual funds. Mr. Niraj says that the initial
three years were very critical, but they did not lose the courage. Step by step they were
successful in explaining the people. The market also became favourable. They started spreading

their business. Today there are 110 branches in India, in Surat 2 and in Gujarat 20 branches. The
company which had started with only three employees has 800 employees today. It has also
started NJ Gurukul to train the advisors. NJ has 10,000 advisors today. It also provides
personality development programmes to the advisors. There is customer care division for the
investors. There is a printing division in NJ for the necessary pamphlets, newsletters and
stationery for advisors. The most important thing is that here everything is online. There is RP
solution for both customers and employees. NJ has also started its own software company.
Because of all these things Njs after sales service is well-known.
Mr. Niraj and Mr. Jignesh say that we dont give only the product-brokerage but also the whole
recipe and rules.

Overview of the company

NJ IndiaInvest Pvt. Ltd. is one of the leading advisors and distributors of financial products
and services in India. Established in year 1994, NJ has over a decade of rich exposure in
financial investments space and portfolio advisory services. From a humble beginning, NJ over
the years has evolved out to be a professionally managed, quality conscious and customer
focused financial / investment advisory & distribution firm.
NJ prides in being a professionally managed, quality focused and customer centric organisation.
The strength of NJ lies in the strong domain knowledge in investment consultancy and the
delivery of sustainable value to clients with support from cutting-edge technology platform,
developed in-house by NJ.

NJ believes in

having single window, multiple solutions that are integrated for simplicity and sapience

making innovations, accessions, value-additions, a constant process

providing customers with solutions for tomorrow which will keep them above the curve,
today

NJ has over INR 5,050 Crores* of mutual fund assets under advice with a wide presence in over
130 locations* in 22 states* in India. The numbers are reflections of the trust, commitment and
value that NJ shares with its clients.
With NJ IndiaOnline, the online initiative of NJ, seeks to offer an online platform to customers
to transact in financial products. NJ IndiaOnline leverages the strong domain knowledge and the
technical expertise of NJ to offer customers with a comprehensive online investment account
with truly online trading features and quality portfolio reports.
The experience, knowledge and understanding of NJ enable it to provide its clients with the
expected value, in an enhanced way. As a leading player in the industry, NJ aspires to
successfully meet the expectations of its clients, through meaningful and comprehensive
solutions.

Alliance Capital Mutual Fund

Birla Mutual Fund

AMCs

Cholamandalam Cazenove Mutual Fund

NJ
Invest:

with
India

DSP Merrill Lynch Mutual Fund

Dundee Mutual Fund

Escorts Mutual Fund

First India Mutual Fund

Franklin Templeton Mutual Fund

Pioneer ITI

HDFC Mutual Fund

HSBC Mutual Fund
IDBI Principal
IL & FS Mutual Fund
ING Savings Trust

JM Mutual Fund
LIC Mutual Fund
Prudential ICICI Mutual Fund
Reliance Capital

SBI Mutual
Standard Chartered Mutual Fund

Sun F&C Mutual Fund

Vision of the company:

To be the leader in our field of business through,

Total Customer Satisfaction

Commitment to Excellence

Determination to Succeed with strict adherence to compliance

Successful Wealth Creation of our Customers

Mission of the company:

Ensure creation of the desired value for our customers, employees and associates, through
constant improvement, innovation and commitment to service & quality. To provide solutions
which meet expectations and maintain high professional & ethical standards along with the
adherence to the service commitments

Philosophy of the company:

At NJ our Service and Investing philosophy inspire and shape the thoughts, beliefs, attitude,
actions and decisions of our employees. If NJ would resemble a body, our philosophy would be
our spirit which drives our body.
Service Philosophy:
The primary measure of success is customer satisfaction
The company is committed to provide its customers with continuous, long-term improvements
and value-additions to meet the needs in an exceptional way. In its efforts to consistently deliver
the best service possible to its customers, all employees of NJ will make every effort to:

think of the customer first, take responsibility, and make prompt service to the customer a priority

deliver upon the commitments & promises made on time

anticipate, visualize, understand, meet, exceed our customers needs

bring energy, passion & excellence in everything we do

be honest and ethical, in action & attitude, and keep the customers interest supreme

strengthen customer relationships by providing service in a thoughtful & proactive manner and
meet the expectations, effectively

Investing Philosophy:
NJ aim to provide Need-based solutions for long-term wealth creation
Nj aims to provide all customers, directly or indirectly, with true, unbiased, need-based solutions
and advice that best meets their stated & un-stated needs. In its efforts to provide quality
financial & investment advice, NJ believes that

Clients want need-based solutions, which fits them

Long-term wealth creation is simple and straight

Asset-Allocation is the ideal & the best way for long-term wealth creation

Educating and disclosing all the important facets which the customer needs to be aware of, is
important

The solutions must be unbiased, feasible, practical, executable, measurable and flexible

Constant monitoring and proper after-sales service is critical to complete the on-going process

The management at NJ brings together a team of people with wide experience and knowledge in
the financial services domain. The management provides direction and guidance to the whole
organisation. The management has strong visions for NJ as a globally respected company
providing comprehensive services in financial sector.

The Customer First philosophy is deeply ingrained in the management at NJ. The aim of the
management is to bring the best to the customers in terms of

Range of products and services offered

Quality Customer Service

All the key members of the organisation put in great focus on the processes & systems under the
diverse functions of business. The management also focuses on utilizing technology as the key
enabler for all the activities and to leverage the technology for enhancing overall customer
experience.
The key members of the management are:
Mr. Neeraj Choksi

Jt. Managing Director

Mr. Jignesh Desai

Jt. Managing Director

Sales Team:
Mr. Misbah Baxamusa

National Head

Mr. Naveen Rathod

V.P.

Executive Team:
Mr. Shirish Patel

Information Technology

Mr. Vinayak Rajput

Finance & Operations

Mr. Abhishek Dubey

Marketing & Development

Mr. Viral Shah

Research

Mr. Dhaval Desai

Human Resources

People & Culture

People:
Enthusiasm, Enterprise, Education and Ethics form the four pillars at NJ. At NJ one can witness
the vibrant energy, enthusiasm and the enterprising drive to excel flowing freely throughout the

organisation. At NJ can also experience the creativity, one-to-one responsiveness, collaborative

approach and passion for delivering value.
At NJ people evolve to be more effective, efficient, and result oriented. Knowledge is inherent
due to the education-centric approach and the experience in handling different clients groups
across diverse product profiles.
NJ understands that the people are the most important assets of the company and it is not the
company that grows but the people. NJ hence undertakes rigorous training and educational
activities for enhancing the entire team at NJ. NJ also believes in the Learning through
Responsibility concept for its employees.
For people at NJ success is not a new word, but is a regular stepping-stone to realize the one
vision that everyone shares.
Culture:
NJ believes in transforming the lives of our customers. NJ exists to create a difference a change
towards a better life. The culture at NJ reflects this responsibility, this dream of transforming
lives. And NJ is always excited and enthused in doing so.
NJ believes in keeping You First, providing you with products and services that meet your
stated and unstated needs. Client satisfaction and client service is the Mantra we constantly
recite. This service oriented philosophy runs throughout the organization, from top to bottom.
Employees are given ample freedom in their work. The objective is to keep an open, healthy
environment with ample scope for enterprise, improvement, innovations and out-of-the box
solutions
The companys efforts are constantly engaged in improving our existing services, offering new
and innovative solutions that go beyond your expectations. This focus has made NJ one of the
most respected and preferred service providers, especially in the mutual fund industry.

Service Standards
Service in words, service in action
Service is the key to unlocking customer satisfaction, which again is key for sustainability of any
business. NJ understands this very well. NJ has set strict processes in place to deliver quality
services to customers. At NJ strict quality service standards are set and a well-defined process is
established and followed religiously by our quality customer service teams. Performance is
evaluated on a frequent basis and glitches are ironed out.
But quality service also involves quality people in addition to processes. NJ gives significant
focus to the proper training and development of the people involved in the service delivery chain.
Further NJ,

Has well-defined "Privacy Policy" to keep clients information confidential & internal
audits done on the same at regular intervals

Receives various statistics which are analyzed on an ongoing basis to improve the service
standards

NJ is committed to improve and enhance its services and undertakes new service initiatives.
Such and other services differentiate us with other service providers in the industry.
The Service Commitments of the company
The service commitments are to guide the actions of the people at NJ. Clearly stated, customers
can freely communicate any such actions/events wherein they feel that any of the following
commitments have been breached / compromised. At NJ we desire to honour our commitments
at all points of time and to all our customers without any bias.

To provide customer-focussed need-based valued services

To provide reliable, accurate and timely information

To maintain all records in privacy

To optimise services/benefits at least justifiable cost

To develop and grow the customers business

To provide constructive after sales service

To honour our service commitments

Recognitions
Some of the awards & recognitions that we have received in past
Year 2000:
For Outstanding Performance presented by Chairman, Prudential Plc. at London
Year 2002:
For Outstanding Performance presented by Group Chief Executive, Prudential Plc. at London
Year 2003:
For Outstanding Performance presented by Group Chief Executive, Prudential Plc. at London
Year 2004:
Among Most Valued Business Associates presented by HDFC Standard Life at Edinburgh,
Scotland
Year 2004:
For Outstanding Performance by Deputy CEO, Prudential Singapore at Malaysia
Year 2006:
Award for mobilising the Highest Number of SIPs at National Level by Fidelity Mutual Fund Plc

at Mumbai
Year 2006:
Award Vietnam

Comments from Industry Stalwarts:

The essence of investment consultancy lies in optimal asset allocation as against security
selection or timing the markets for clients. NJ understands this very well and has added
significant value to the clients through this approach. I am sure with this new initiative; a much
larger number of clients will be able to benefit from this approach. I wish them all the best in this
initiative
- Prashat Jain, CIO, HDFC AMC
The success of any business lies in innovation ahead of times and NJ has proved it time again
-Rajan Krishnan, Principal Pnb AMC

NJ Products
1. Mutual funds covering all AMCs & all schemes,
2. Life insurance Prudential ICICI
3. Fixed deposits of companies,
4. Government/RBI bonds,
5. Infrastructure Bonds,
6. Approved securities for charitable trusts, etc

Chapter 3
RESEARCH METHODOLOGY
Research Problem:
Nowadays awareness about mutual funds is increasing. Generally NFO is considered safer than
IPO. Its not easy to know about the investors style of investment unless and until some kind of
research is not conducted to the investors profile. So in order to solve the problem, I have
decided to conduct a research on the Buying Behaviour of Investors towards IPO and
NFO.

Research Objectives:

To know the awareness level of investors towards IPO and NFO.

To know the preference level of investors towards IPO and NFO.

To know the attitude of investors towards IPO and NFO.

Research Design:

I have used the Descriptive Research Design for the purpose of survey as it will enable me to describe the
characteristics of a particular individual or a group of people and their tendency towards something and in
our case it could be the investment options available.

Sampling Method:
I would use the method of Judgmental as it would give better idea because we have to focus in target
respondents.

Sample Size:
It would be better to have a sample of 100 people to make research.

Research Instrument:
A detailed questionnaire will be used for the purpose of survey and it is attached with this proposal.

Data analysis tool:

In SPSS I use Frequency table, Chi-Square, Factor analysis.

Limitations:
The project was carried out on the subject Buying Behaviour of Investors Towards IPO and NFO.
During the project following hurdles are faced:

Limited time of study.

Because of judgmental sampling method it is difficult to target more number of respondents.

Some of the respondents are not willing to fill up the questionnaire.

CHAPTER : 4
DATA ANALYSIS AND INTERPRETATION
(1)

Do you like to save your money?

Option
yes
No
GRAPH:

Save Money
100

Interpretation:
All Respondents are interested in saving their money. We can see from the table
that all the respondents have chosen the option yes for the question Do you
like to save your money?. It shows that they are 100% interested in saving
money.

(2) Please tick mark in proper box keeping in mind your position about
IPO and NFO.

Option

Aware

Invest

IPO

55

62

NFO

30

52

GRAPH:

Interpretation:From the above table & graph we can see that 55% are aware about IPO and
30% are aware about NFO out of 100 respondents and from these respondents
62% are investing in IPO and 52% are investing in NFO.

Cross tab of IPO Investment

IPO Investment

Age

Total

Not Invest

Invest

20-30

21

37

58

31-40

12

18

30

41-50

>50

Total

38

62

100

GRAPH:

120

20-30

31-40

41-50

>50
100

100
80
60
40
20

62

58
37
21
0

30
18
12
0

38
0 36

IPO not invest

IPO invest
Total investor

02 13

0
age

Total

Chi-Square Tests

Value

DF

Asymp. Sig. (2-sided)

Pearson ChiSquare
Likelihood Ratio
Linear-by-Linear
Association
N of Valid Cases

1.260(a)

.739

1.222

.748

.380

.537

100

Interpretation:
Explanation of pearsons chi-square:
The Chi-square test is carried out at 95% confidence level (0.05 significance
level). The Pearson Chi-square value comes out as a probability of 0.739 which
is greater than significance level of 0.05, it means there exist no significant
difference between IPO investment and age.
Here we conclude that there exist no significant difference between IPO
investment and age.

Cross tab of NFO investment

NFO Invest

Total

Age

Not Invest

Invest

20-30

28

30

58

31-40

16

14

30

41-50

52

100

>50
Total

48

GRAPH:-

Chi-square Tests

Value

DF

Asymp.sig (2-sided)

pearson chisquare

3.158

0.369

Likelihood Ratio

4.313

0.23

Assocition

0.74

0.39

N of valid cases

100

Linear-by-Linear

Interpretation:
Explanation of Pearsons chi-square:
The Chi-square test is carried out at 95% confidence level (0.05 significance
level). The Person Chi-square value comes out as a probability of 0.369 which
is greater than significance level of 0.05, it means there exist no significant
difference between NFO Investment and Age.
Here we conclude that there exist no significant difference between NFO
Investment and Age.

(3) How much percentage (%) of your savings you would like to invest in
IPO and NFO?

Proportion

IPO

NFO

OTHERS

5% - 10%

37

15

26

11% - 15%

26

36

31

16% - 20%

24

Above 20%

11

GRAPH:-

Interpretation:From the above table & graph we can see that 37%, 15% and 26% of
respondents are investing in IPO, NFO & OTHERS of the proportion of 5% 10% than after 26%, 36% and 31% are the proportion of 11% - 15% than after
7%, 5% and 24% are in the proportion of 16% - 20% and the last is the only
4%, 3% and 11% are in the proportion of Above 20% of their savings.

Cross tab of Proportion of Investment in IPO

IPO

Incom
e

0 - 60,000
60,001 1,20,000
1,20,001 1,80,000
>1,80,001

Total

Total

5% to

11% to

16% to

Above

10%

15%

20%

20%

10

15

33

11

29

12

13

33

26

37

26

100

GRAPH:-

120
100

income

80
60
40
20

Total

0
IPO

Total

Chi-Square Tests

Value
Pearson Chi-Square
Likelihood Ratio
Linear-by-Linear
Association

DF

Asymp. Sig. (2-sided)

19.215(a)

12

.083

20.392

12

.060

2.938

.087

N of Valid Cases

100

Interpretation:

Explanation of Pearsons chi-square:

The Chi-square test is carried out at 95% confidence level (0.05 significance
level). The Person Chi-square value comes out as a probability of 0.083 which
is bit greater than significance level of 0.05, it means exist no significant
between Investment proportion in IPO and Income.
Here we conclude that there exist no significant difference between Investment
proportion in IPO and Income.

Cross tab of proportion of Investment in NFO

NFO
5% to

11% to

16% to

above

10%

15%

20%

20%

13

11

33

14

29

11

17

33

41

15

36

100

0
Income

Total

060,000
60,001 1,20,000
1,20,001
1,80,000
>1,80,00
1

Total

GRAPH:-

Chi-Square Tests

Pearson Chi-Square
Likelihood Ratio
Linear-by-Linear
Association
N of Valid Cases

Value

DF

Asymp. Sig. (2-sided)

12.032(a)

12

.443

13.658

12

.323

.523

.470

100

Interpretation
Explanation of Pearsons chi-square:

The Chi-square test is carried out at 95% confidence level (0.05 significance

level). The Person Chi-square value comes out as a probability of 0.443 which
is greater than significance level of 0.05, it means exist no significant between
Investment proportion in NFO and Income.
Here we conclude that there exist no significant difference between Investment
proportion in NFO and Income.

Cross tab of proportion of Investment in Others

OTHER

Income

0 - 60,000
60,001 1,20,000
1,20,001 1,80,000
>1,80,001

Total

GRAPH:-

Total

5% to

11% to

16% to

above

10%

15%

20%

20%

12

33

10

29

12

33

26

31

24

11

100

Chi-Square Tests

Pearson Chi-Square
Likelihood Ratio
Linear-by-Linear
Association
N of Valid Cases

Value

DF

Asymp. Sig. (2-sided)

18.801(a)

12

.093

20.884

12

.052

5.155

.023

100

Interpretation:
Explanation of Pearsons chi-square:
The Chi-square test is carried out at 95% confidence level (0.05 significance
level). The Person Chi-square value comes out as a probability of 0.093 which
is bit greater than significance level of 0.05, it means exist no significant

between Investment in Other options and Income.

Here we conclude that there exist no significant difference between investment
in other options and Income.

(4) How much return you expect from your investment in IPO & NFO?

Return

IPO

NFO

OTHERS

10% - 20%

14

65

20% - 30%

46

34

19

30% - 40%

13

40% - 50%

GRAPH:-

Interpretation:From the above table & graph we can see that 14% , 8% and 65% of
respondents are investing in IPO, NFO & OTHERS of the proportion of 10% 20% than after 46%, 34% and 19% are the proportion of 20% - 30% than after
8%, 13% and 6% are in the proportion of 30% - 40% and the last is the only
7% and 3% are in the proportion of 40% - 50% of their savings.

Cross tab of Return Expect in IPO

Age & return Expect in IPO

Age

Total

Total

10 to

20 to

30 to

40 to

20%

30%

40%

50%

20-30

12

13

29

58

31-40

11

30

41-50

>50

25

14

46

100

GRAPH:-

Chi-Square Tests

Pearson Chi-Square
Likelihood Ratio
Linear-by-Linear
Association
N of Valid Cases

Value

DF

Asymp. Sig. (2-sided)

18.805(a)

12

.093

20.526

12

.058

.192

.661

100

Interpretation:

Explanation of pearsons chi-square:

The Chi-square test is carried out at 95% confidence level (0.05 significance
level). The Person Chi-square value comes out as a probability of 0.093 which
is bit greater than significance level of 0.05, it means exist no significant
between Return in IPO and Age.
Here we conclude that there exist no significant difference between Return in
IPO Investment and Age.

Cross tab of Return Expect in NFO

Age & return Expect in NFO

Age

Total

10 to

20 to

30 to

40 to

20%

30%

40%

50%

20-30

21

21

58

31-40

16

10

30

41-50

>50

42

34

13

100

Total

GRAPH:

Chi-Square Tests

Value
Pearson Chi-Square

DF

Asymp. Sig. (2-sided)

20.070(a)

12

.066

15.988

12

.192

.484

.487

Likelihood Ratio
Linear-by-Linear
Association
N of Valid Cases

100

Interpretation:

Explanation of Pearsons chi-square

The Chi-square test is carried out at 95% confidence level (0.05 significance
level). The Person Chi-square value comes out as a probability of 0.066 which
is bit greater than significance level of 0.05, it means exist no significant
between Return in NFO Investment and Age.
Here we conclude that there exist no significant difference between Return in
NFO Investment and Age.

Cross tab of Return Expect in OTHER

Age & Return Expect in Other

Age

Total

10 to 20%

20 to 30%

30 to 40%

20-30

38

58

31-40

19

30

41-50

>50

10

65

19

100

Total

GRAPH:-

Chi-Square Tests

Pearson Chi-Square
Likelihood Ratio
Linear-by-Linear
Association
N of Valid Cases

Value

DF

Asymp. Sig. (2-sided)

7.820(a)

.552

9.560

.387

.852

.356

100

Interpretation:

Explanation of pearsons chi-square:

The Chi-square test is carried out at 95% confidence level (0.05 significance
level). The Person Chi-square value comes out as a probability of 0.552 which
is greater than significance level of 0.05, it means exist no significant between
Return of Investment in Other options and Age.
Here we conclude that there exist no significant difference between Return of
Investment in Other options and Age.

(5) What would be your preference if you want to invest in IPO & NFO or
both?

Option

IPO

NFO

BOTH

Short
Term

25

24

31

Long
Term

GRAPH:-

Interpretation:From the table & graph we can see that 25% of the respondents are investing
in Short Term IPO and 24% respondents are investing in Long Term IPO while
only 5% of respondents are investing in Short Term NFO and 31% respondents
are investing in Long Term NFO and in BOTH only 6% are invest.

(6) Rate the following statement.

NF
mana
ged
profe
ssiona
l

IPO
better
than
NFO

NFO
better
than
IPO

Strongly
Disagree

Disagree

14

23

Neither
Agree or
Disagree

18

34

Agree

29

Strongly
Agree

29

PARTICUL
AR

Company
name
imp't in
NFO

Taxs
affetts
decisi
on

NFO
safe
than
IPO

Return in
IPO
more

In
IPO
Trane trans
rabili actio
ty
n
easy
cost
in
affec
IPO
t

Entry/E
xit
NFO barrier
liquid NFO
more make it
than unattra
IPO
cted

Expectati
on of
return in
NFO
satisfied
than IPO

25

20

40

36

15

20

12

23

32

13

14

29

42

45

40

39

18

47

35

16

58

34

50

16

35

20

29

22

27

25

34

49

14

FACTOR ANALYSIS
KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of
Sampling Adequacy.
Bartlett's Test of
Sphericity

Communalities

Approx. ChiSquare

.782
552.101

DF

66

Sig.

.000

15

Initial

Extraction

IPO>NFO

1.000

.679

NFO>IPO

1.000

.712

NFO Managed Prof'l

1.000

.745

Company name

1.000

.777

Taxes

1.000

.733

NFO is safer

1.000

.567

Return in IPO

1.000

.535

Transf IPO easy

1.000

.663

T.Cost affect

1.000

.586

NFO Liquidity

1.000

.614

Entry Barrir

1.000

.641

Satishfied Return

1.000

.631

Total Variance Explained

Compone
nt

Initial Eigenvalues
Tot
al

Extraction Sums of
Squared Loadings

Rotation Sums of
Squared Loadings

% of
% of
% of
Varian Cumulati Tota Varian Cumulati Tota Varian Cumulati
ce
ve %
l
ce
ve %
l
ce
ve %

4.7
60

39.663

39.663

4.76
0

39.663

39.663

3.20
2

26.684

26.684

1.8
47

15.388

55.051

1.84
7

15.388

55.051

3.10
0

25.834

52.518

1.2
77

10.641

65.693

1.27
7

10.641

65.693

1.58
1

13.175

65.693

.
872

7.267

72.959

.
747

6.222

79.182

.
597

4.977

84.159

.
474

3.953

88.112

.
420

3.503

91.615

.
367

3.056

94.671

10

.
268

2.237

96.908

11

.
221

1.839

98.747

12

.
150

1.253

100.000

Component Matrix (a)

Component
1

IPO>NFO

-.801

-.144

.126

NFO>IPO

.833

-.125

.055

NFO Managed Prof'l

.730

-.326

.327

Company name

.692

-.154

.524

Taxes

.085

.563

.640

NFO is safer

.467

-.590

.013

Return in IPO

-.579

-.342

.287

Transf IPO easy

-.503

-.281

.575

T.Cost affect

.371

.652

.154

NFO Liquidity

.742

.239

-.081

Entry Barrir

-.563

.561

.100

Satishfied Return

.770

.152

-.119

Rotated Component Matrix (a)

Component

IPO>NFO

-.433

-.695

-.090

NFO>IPO

.683

.494

.041

NFO Managed Prof'l

.839

.180

.089

Company name

.801

.127

.345

Taxes

.019

-.025

.855

NFO is safer

.667

.044

-.346

Return in IPO

-.095

-.720

-.087

Transf IPO easy

.048

-.795

.170

T.Cost affect

-.037

.479

.596

NFO Liquidity

.357

.674

.182

Entry Barrir

-.670

-.186

.398

Satishfied Return

.409

.674

.098

Component Transformation Matrix

Component

.708

.698

.104

-.560

.467

.684

.430

-.543

.722

Interpretation:
From the above table we have come to know that from various parameters the

investors have selected some major parameters which are very essential for any
investors who invest in IPO or NFO. These all parameters help the investors to
take decision whether to invest in IPO or NFO with existing portfolio or not.
So, on the basis of these parameters the investors choose their investment
pattern and it will also guide them also. So, here the most important
parameters investors preferred is as under:
1st component
NFO managed by professional, Company Name.
2nd component
Liquidity and the satisfied return are most probably same.
3rd component
The taxes.
So, these are the parameters are investors chosen while investing in IPO or
NFO.
(7) Which criteria will you consider important while you investing in
IPOs or NFOs? (Give RANK i.e. 1, 2, 3, 4, 5, 6) (1 is the Most Important &
6 is the Least Important)

IPO
Ran
k

Risk

NFO
Ti

Retu

Safet

Price

Compa

me

rn

Band

ny

Risk

Ti

Retu

Safet

Pri

Compa

me

rn

ce

ny

Ban
Name
1

10

36

11

37

13

11

33

10

34

15

21

11

15

18

38

18

18

19

50

25

52

Name

37
6

25

43

FACTOR ANALYSIS
KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy.
Approx. Chi-Square
Bartlett's Test of Sphericity

Communalities

Initial

Extraction

IPO-risk

0.699

Time

0.819

Return

0.704

Safety

0.716

Price band

0.572

Company Name

0.645

.811
1092.930

DF

66

Sig.

.000

NFO-risk

0.69

Time

0.9

Return

0.821

Safety

0.816

0.744

0.45

Price band
company Name

Total Variance Explained

Com
pone
nt

Initial Eigenvalues

Extraction Sums of Squared

Loadings

Total

% of
Varian Cumulati
ce
ve %

Total

6.418

53.485

53.485

6.418

53.485

2.157

17.978

71.463

2.157

17.978

Rotation Sums of Squared

Loadings

Total

% of
Varianc Cumulati
e
ve %

53.485

5.049

42.079

42.079

71.463

3.526

29.384

71.463

% of
Cumulati
Variance
ve %

.980

8.164

79.627

.683

5.691

85.318

.468

3.899

89.217

.346

2.883

92.101

.298

2.480

94.581

.224

1.869

96.450

.170

1.417

97.867

10

.115

.958

98.826

11

.088

.735

99.560

12

.053

.440

100.000

Component Matrix (a)

Component

IPO-risk

-.495

.674

Time

-.804

.415

Return

-.698

.465

Safety

-.789

.305

Price band

-.298

.695

Company Name

-.798

.091

NFO-risk

.788

.264

Time

.894

.318

Return

.802

.421

Safety

.833

.349

Price band

.839

.200

Company Name

.481

.468

Rotated Component Matrix (a)

Component

IPO-risk

-.025

.836

Time

-.427

.798

Return

-.311

.779

Safety

-.477

.699

Price band

.149

.741

Company
Name

-.606

.527

NFO-risk

.799

-.229

Time

.916

-.245

Return

.900

-.108

Safety

.884

-.185

Price band

.804

-.311

Company
Name

.661

.113

Component Transformation Matrix

Component

.824

-.567

.567

.824

Interpretation:

From the above table we have come to know that from various parameters the
investors have selected some major parameters which are very essential for any
investors who invest in IPO or NFO. These all parameters help the investors to
take decision whether to invest in IPO or NFO with existing portfolio or not.
So, on the basis of these parameters the investors choose their investment
pattern and it will also guide them also.
So, here the most important parameters investors preferred is as under,
In IPO,
1st component
Safety and Return.
2nd component
Risk, Time, Return and Price Band.

In NFO,
1st component
Time and Return.
2nd component
Time and Risk.

So, these are the parameters are investors chosen while investing in IPO or
NFO.

Chapter:-5
FINDINGS

Out of 100 respondents 62 are aware about IPO and in that 55 are
investing in IPO.

Out of 100 respondents 30 are aware about NFO and in that 52 are
investing in NFO.

In IPO 37 respondents out of 100 investing in proportion of 5% to 10%

from their savings.

In NFO 36 respondents out if 100 investing in proportion of 11% to 15%

from their savings.

The return in IPO, 46% of respondents are expect 20% to 30% return
from their investment.

In NFO also 34% of respondents are expect same return as in IPO.

25% of respondents are investing in Short Term IPO and in NFO only 5%
of respondents are invest in Short Term NFO.

In IPO 24% of respondents are invest in Long Term and NFO 31% of
respondents are invest in Long Term.

In IPO, 29% respondents are Strongly Agree that IPO is better than NFO.

In NFO 34% respondents are neutral that NFO is better than IPO.

47% respondents are believes that NFO is managed by professional

managers.

Respondents are agree that Company name is important in NFO.

Most of the respondents are agreed that Transferability is easy in IPO.

Respondents are neutral about that liquidity in IPO and NFO.

In IPO, Most of the respondents are prefer Price Band as a important

criteria for investment. while in NFO most of respondents are prefer
company name.

In NFO most of respondents are prefer company name.

Chapter:-6
Conclusion

Most of the respondents are aware about IPO and they are investing in
it.

Compare with IPO, NFO is not as popular as IPO so less no. of

respondents are investing in it.

People are taking less risk in NFO that is they investing more no. of
proportion in it and regardless they have reasonable in invest in NFO.

In terms of return the people are expect higher return in IPO compare
to NFO.

For investment the most of the respondents are preferred Medium

Term investment.

To prefer which is better, the respondents are preferred IPO is better

than NFO.

Chapter:-7
RECOMMENDATION
Only 30% respondents are aware about NFO, so more focus on
that compare to IPO.

Company should improve its advertising in NFO.

NFO agents Provide help in selecting the best NFO for investment.

Chapter:-8
BIBLIOGRAPHY
BOOKS:

Punithavathy Pandian(2007), Security Analysis & Portfolio Management,

Vikas Publishing Housing Pvt. Ltd.

AMFI Module.

Donald R Cooper & Pamela S Schindler(2003), Business Research

Methods, Tata McGraw-Hill, New York.

QUESTIONNAIRE

I am Sudhir Bhalani, a student of MBA studying at D.B.I.M. Surat. I have

prepared this questionnaire for the project work on Buying Behaviour of
Investors Towards IPO and NFO.It is meant for educational purpose only.

I ensure you to maintain highest degree of confidentiality.

1. Do you like to save your money?

1. Yes
2. No
2. Please tick mark in proper box keeping in mind your position about IPO and NFO.

OPTION

AWARENESS

INVESTMENT

IPO
NFO
3. How much percentage (%) of your savings you would like to invest in IPOs and
NFOs?

PROPORTION OF INVESTMENT

IPO

NFO

OTHERS

5% to 10%
11% to 15%
16% to 20%
Above 20%
4. How much return do you expect from your investment in IPO & NFO?

RETURN ON
INVESTMENT

IPO

NFO

OTHERS

10 to 20%
20 to30%
30 to 40%
40 to 50%
5. What would be your preference if you want to invest in IPOs and NFOs or both?

OPTION
IPO
NFO
BOTH
6. Rate the following statement

SHORT TERM

LONG TERM

Sr.
No
.

Statement

Do you think IPO is better

than NFO?

Do you think NFO is better

than IPO?

Do you think NFO is managed

by professionals, so it is better
than IPO?

Company name is important

in NFO than IPO.

Taxes affect my decision.

Investment in NFO is safer

than IPO.

Return in IPO is more than

NFO.

Transferability in IPO is easier

than NFO.

In IPO Transaction cost affects

my decision.

10

Stron
gly
Disag
ree

Disag
ree

Neither
Agree
Nor
Disagr
ee

Agr
ee

Stron
gly
Agre
e

In NFO liquidity more compare

to IPO.

11

Entry or Exit barrier on NFO

makes it unattractive compare
to IPO for investment.

12

Your expectation of return

from investment in NFO is
more satisfactory than IPO.

7. Which criteria will you consider important while investing in IPOs or NFOs? (Give
Rank i.e. 1,2,3,4,5,6) ( 1 is the Most Important & 6 is the Least Important )

OPTION

IPO

NFO

Risk
Time
Return
safety
Price Band
Company Name

Personal details:
Name: ____________________________________________________________________
Address: ___________________________________________________________________
Contact No: _________________________________________________________________
Age Group:
1. 20 to 30 years

3. 41 to 50 years

2. 31 to 40 years

4. 50 above

Occupation:
1. Student

4. Professional

2. Businessman

5. Others

3. Service class
Household yearly Income:

1.

0 60,000

2. 1,20,001 - 1,80,000

3. 60,001 - 1,20,000
[

4. >1,80,001

THANK YOU