A PROJECT REPORT

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
1

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
3

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
4

and Post office advisor etc. with the help of questionnaire, certain
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.

INTRODUCTION
COMPANY DETAILS
Background
Karvy Consultants Limited was established in 1982 at Hydrabad. It was
established by a group of Hydrabad-based practicing Chartered
Accountants. At initial stage it was very small in size. It was started
with a capital of Rs. 1,50,000.
In starting it was only offering auditing and taxation services. Later, it
acts into the Registrar and Share transfer activities and subsequently
into financial services and other services like Financial Product
Distribution, Investment Advisory Services, Demat Services,
Corporate Finance, Insurance etc.
All along, Karvys strong work ethics and professional background
leveraged with Information Technology enabled it to deliver quality to
the individual. A decade of commitment, professional integrity and
vision helped Karvy achieving a leadership position in its field when it
handled largest number of corporate and retail that proved to be a
sound business synergy.
Today, Karvy has
companies, banks,
the past one and
between industry,

access to millions of Indian shareholders, besides

financial institutions and regulatory agencies. Over
half decades, Karvy has evolved as a veritable link
finance and people.

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.
6

WHERE KARVY STAND IN THE MARKET?

KARVY is a legendary name in financial services, Karvys credit is
defined by its mission to succeed, passion for professionalism,
excellent work ethics and customer centric values.
Today KARVY is well known as a premier financial services enterprise,
offering a broad spectrum of customized services to its clients, both
corporate and retail. Services that KARVY constantly upgrade and
improve are because of companys skill in leveraging technology. Being
one of the most techno-savvy organizations around helps company to
deliver even more cost effective financial solutions in the shortest
possible time.
What bears ample testimony to Karvys success is the faith reposed in
company by valued investors and customers, all across the country.
Indeed, with Karvys wide network touching every corner of the
country, even the most remote investor can easily access Karvys
services and benefit from companys expert advice.

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]

Karvy Investor Services Limited

Parthasarathy C
Yugandhar M
Ramakrishna M S
[Table2: BODs of Karvy Investor Services Limited]

Karvy Securities Limited

Parthasarathy C
Yugandhar M
Ramakrishna M S
Ajay Kumar K
William Samuel
Nicholas Tully
[Table3: BODs of Karvy Securities Limited]

Karvy Stock Broking Limited

Parthasarathy C
Yugandhar M
Ramakrishna M S
Ajay Kumar K
Kutumba Rao V
William Samuel
Nicholas Tully
[Table4: BODs of Karvy Stock Broking Limited]

Mission Statement of Karvy

An organization exists to accomplish something or achieve something.
The mission statement indicates what an organization wants to achieve.
The mission statement may be changed periodically to take advantage
of new opportunities or respond to new market conditions.
Karvys mission statement is To Bring Industry, Finance and People
together.
Karvy is work as intermediary between industry and people. Karvy work
as investment advisor and helps people to invest their money same way
Karvy helps industry in achieving finance from people by issuing shares,
debentures, bonds, mutual funds, fixed deposits etc.
Companys mission statement is clear and thoughtful which guide
geographically dispersed employees to work independently yet
collectively towards achieving the organizations goals.

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.

10

Behind the
KARVY?

Picture:

What

Customers

matter

for

The underlying picture forming answer for above question is given

below.

Market
Power

Brand
Preference

Customer
Value

RELATIONSHIPS
OUR COMPETITIVE ADVANTAGE

[Fig.1 Competitive Advantage of Karvy]

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.
11

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.

12

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.

13

KARVY SERVICES AN OVERVIEW

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

1.

Stock broking
Demat services
Investment product distribution
Investment advisory services
Corporate finance & Merchant banking
Insurance
Mutual fund services
IT enabled services
Registrars & Transfer agents
Loans

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
14

investors. The relationship between the DPs and the depository is

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.

3. Investment Products Distribution:

Company is also concern with the distribution of investment products
like
(a).
(b).
(c).

Fixed Deposit
Bonds
IPO

(a). Fixed Deposit:

KARVY is dealer of 34 fixed deposits of various types which includes
fixed deposits of Public Sector, Non Banking Finance Companies,
Housing Finance Companies and Manufacturing Companies.
Company is dealer of following Fixed Deposits
PUBLIC SECTOR
Sl. No.
Company Name
1
HUDCO
2
Sardar Sarovar Narmada Nigam Ltd.
3
Tamilnadu Power Finance Corporation Ltd.
4
NTPC
[Table5: Public Sector FD with which Karvy deals]
15

NON BANKING FINANCE COMPANIES

Sl. No.
Company Name
1
Ashok Leyland Finance Ltd.
2
Bajaj Auto Finance Ltd.
3
Birla Home Finance Ltd.
4
Cholamandalam Investment & Finance Co. Ltd.
5
Escorts Finance Ltd.
6
First Leasing Company of India Ltd.
7
IDBI Suvidha
8
Nicco Uco Alliance Credit Ltd.
[Table6: FD of Non Banking Finance Companies with which Karvy deals]

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.
16

13
14
15

Sound Craft Industries Ltd.

Supreme Industries Ltd.
Zuari Industries Ltd.
[Table8: FD of Manufacturing Companies with which Karvy deals]

(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.

Investment Advisory Services:

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
17

in various financial products like shares, bonds, debentures, mutual

funds, 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 & Merchant banking:

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
18

Underwriting
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.

Mutual Fund Services:

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
19

minded focus in delivering products for customers has given it the

distinguished position of being the preferred provider of financial
services in the country.

List of Mutual Fund Clients of KARVY:

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24

Alliance 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
Franklin Templeton Investments
GIC Mutual Fund
HDFC Mutual Fund
HSBC Mutual Fund
IL & FS Mutual Fund
JM Mutual Fund
Kotak Mutual Fund
LIC Mutual Fund
Punjab National Bank Mutual Fund
Prudential ICICI Mutual Fund
Principal Mutual Fund
Reliance Mutual Fund
State Bank of India Mutual Fund
Standard Chartered Mutual Fund
Sundaram Mutual Fund
SUN F&C Mutual Fund
Tata Mutual Fund

[Table9: List of MF Companies with which Karvy deals]

8. Income Tax enabled services:

20

Karvy has been started this service since March, 2004. Karvy is work
as TIN Facilitation Centre it provides following IT enabled services.
a. Distribution of PAN Card.
b. Distribution of TAN Card.
c. Services related to e-TDS.
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.

21

[Fig.2 TIN System]

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.

22

9.

Registrars & Transfer agents:

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 and Technological Up gradation.
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

23

MARKETING STRATEGY OF KARVY

Market Positioning:
Market positioning statements of Karvy are At Karvy we give you
single window service and We also ensure your comfort.
So, Karvy focus on the consumers who prefer almost all investment
activities at same place by providing number of various financial
services. At Karvy a person can purchase or sell shares, debentures
etc. and at the same place also demat it. Karvy also provides other
investment option to the same person at same place like Mutual
Fund, Insurance, Fixed Deposit, and Bonds etc. and help the person
in designing his portfolio. By this way Karvy provides comfort to its
customers.
Karvy is also positioned according to Ries and Trout. Karvy is promoted
as a no. 1 investment product distributor and R & T agent of India.

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.

24

Marketing channel System:

Karvy uses one level marketing channel for investment product
distribution. Sub-brokers work as intermediary between consumer and
company. Company has both forward and backward flow of activity
through channel. Company distributes stationery, brokerage, and
information forward to its sub-broker. The sub-brokers send filled
forms, queries, amount of investment etc. back to the company.

Training Channel Members:

Karvy provides training to the sub-brokers because they will be viewed
as the company by the investors. The executives of Karvy explain
various new schemes of investment to the sub-brokers with its
objective, risk factors and expected return. Company also periodically
arrange seminar to guide sub-brokers.

Advertising and Promotion:

The objective of advertising of Karvy is to create awareness about
services of Karvy among investors and sub-brokers and increase subbrokers of Karvy.
Company doesnt give advertisement in media like TV, Newspapers, and
Magazines etc. Karvys advertisement is made indirectly by the
companies associate with it. Karvy is R & T agent of around 700
companies. They publish name, address and logo of Karvy on their
annual report.
Karvy also publish its weekly Stock Market Newsletter Karvy Bazaar
Baatein and monthly magazine The Finapolis to guide investors and
sub-brokers about market.

25

HR POLICY OF KARVY
Karvys HR Department is located at Hyderabad.

Recruitment and Selection Policy:

The upper level members like zonal managers, regional managers,
branch managers and senior executives are recruited by publishing
recruitment advertisement in leading national level newspaper. The
qualified applicant are then called for interview and selected.
The regional manager has authority to select lower level employee like
peon, marketing executives, accountant etc. by approval of zonal
manager.

Training and Development:

Continuous training and upgrading technical, behavioral and managerial
skills is a way of life in Karvy. Karvy encourages employees to hone
their skills regularly to enable them to face the challenges of the
changing requirements of customers that fit market up and down.
Training needs analysis is done on a regular basis and systematic
methodologies are ensured that skills and capabilities of all employees
are constantly upgraded to enable them to perform in the challenging
work environment.
New employee has given training under experienced employee. The new
employee work under experience employee and observe his all
activities. When company employs new technology or there is any
change in the working of company the training program is arranged.

26

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.

27

NATIONAL LEVEL ORGANIZATION CHART

CM & MD
(Hyderabad)

GM
(Marketing)

GM
(Finance)

GM
(HRM)

Zonal Manager
(Baroda)

Regional Manager
(Rajkot)

Branch Mgr.
(Junagadh)

Branch Mgr.
(Jamnagar)

Accountant

Sr. Executives

Branch Mgr.
(Bhavnagar)

Executives

[Fig.3 National Level Organization Chart of Karvy]

28

BRANCH LEVEL ORGANIZATION CHART

Branch Manager

Sr. Executive
(Investment)

Executives
(SB - 4)

Marketing
Executives-3

Clerk

Executive
(Demat)

Peon

Executive
(IT)

Accountant

Peon
[Fig.4 Branch Level Structure of Karvy]

29

Quality Policy Of Karvy:

To achieve and retain leadership, Karvy shall aim for complete
customer satisfaction, by combining its human and technological
resources, to provide superior quality financial services. In the
process, Karvy will strive to exceed Customers expectations.

Quality Objectives of Karvy

Build in-house processes that will ensure transparent
and harmonious relationships with its clients and investors to
provide high quality of services.
Establish a partner relationship with its investor
service agents and vendors that will help in keeping up its
commitments to the customers.
Provide high quality of work life for all its employees
and equip them with adequate knowledge & skills so as to respond
to customer's needs.
Continue to uphold the values of honesty & integrity
and strive to establish unparalleled standards in business ethics.
Use state-of-the art information technology in
developing new and innovative financial products and services to
meet the changing needs of investors and clients.
Strive to be a reliable source of value-added
financial products and services and constantly guide the
individuals and institutions in making a judicious choice of same.
Strive to keep all stake-holders (shareholders,
clients, investors, employees, suppliers and regulatory
authorities) proud and satisfied.

30

Achievements of Karvy:
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 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

31

SWOT ANALYSIS OF KARVY

Strengths:
Employees are highly empowered.
Strong Communication Network.
Good co-operation between employees.
Number 1 Registrar and Transfer agent in India.
Number 1 dealer of Investment Products in India.

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.

32

About Jamnagar Branch:

Jamnagar branch comes under Rajkot branch which is a regional office
of Karvy for Saurashtra Kutch region. It was established on Jan. 2002.
In Saurashtra there are four Branch Offices of Karvy:
Rajkot
Jamnagar
Junagadh
Bhavnagar
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.

33

INDUSTRY DETAILS

Following are list of Mutual Fund companies in India.

Sr. No.

Mutual Fund Name

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

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

No. of
Schemes
36
5
74
17
25
45
40
40
15
130
5
79
32
43
55
55
56
35
1
4
124
68
74
12
59
100
52
1
100
34

30
31
32

Taurus Mutual Fund

Unit Trust of India
UTI Mutual Fund

9
42
66

[Table10: Mutual Funds in India]

Development of Mutual Funds in India

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
FirstPhase-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 Canbank 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.

35

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
36

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.

[Fig. 5: Growth in Assets Under Management]

[Source: www.amfiindia.com]

Mutual Funds Organisation

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

37

38

[Fig. 6: Assets Under Management By Fund Type]

[Source: www.amfiindia.com]

[Fig. 7 Assets Under Management By AMC]

[Source: www.amfiindia.com]

39

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

SEBI
Stock Brokers
R & T Agent
Mutual Fund

RBI

Dept. of IT

Commercial
Banks
NBF Co.

PAN
TAN
e-TDS

[Fig.8: Regulatory bodies]

40

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

41

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
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.
42

3. N.J.India Investments Pvt. Ltd.

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

4. ICICI Securities Ltd.

ICICI Securities Limited (i-SEC) is a wholly owned investment-banking
subsidiary of ICICI Limited. ICICI is the only non-Japanese Asian
financial institution to be listed on the New York Stock Exchange
(NYSE). ICICI Securities was formed on 22nd Feb. 1993, when
ICICI's Merchant Banking Division was spun off into a new company,
ICICI Securities today is India's leading Investment Bank and one of
the most significant players in the Indian capital markets.
ICICI Brokerage Services Limited (IBSL) set up in March 1995, IBSL
is a 100% subsidiary of i-SEC. It commenced its securities brokerage
activities in February 1996 and is registered with the National Stock
Exchange of India Limited and The Stock Exchange, Mumbai.
ICICI has started a website ICICIdirect.com which is the most
comprehensive website, which allows you to invest in Shares, Mutual
funds, Derivatives (Futures and Options) and other financial products.
ICICI has a large network of branches all over India.

43

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

6. Kotak Securities Ltd.

Kotak Securities needs no introduction as one of the largest stock
broking houses in the country and a leading distributor of primary
market offerings. Kotak Securities limited is a joint venture between
Kotak Mahindra Bank and Goldman Sachs, the international investment
banking and brokerage firm.
Kotak Securities is a corporate member of both the BSE and the NSE.
It is also a depository participant with the National Securities
Depository Limited (NSDL) for trading and settlement of
dematerialized shares.

44

Services offered:
Stock Broking
Financial Product Distribution
Demat Services
Investment Advisory Services

7. Motilal Oswal Securities Ltd.

Motilal Oswal Securities Ltd (MOSt) is one of the leading equity
research and broking houses of India. MOSt has a 20-member
research team, which is engaged round the clock in analyzing the
Indian economy and corporate sectors to identify equity investment
ideas. Asia Money Broker's Poll 2002 has rated MOSt as one of the
best Indian broking house, for research, for the second time since
2000.
Motilal Oswal is member of NSDL and CDSIL for DP. It has wide
network of branches. It has 158 branches all over India.

Services Offered:
Demat Services
Stock Broking
Investment Advisory Service

45

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).

46

STRUCTURE OF INDIAN MUTUAL FUNDS

Mutual fund industry is highly regulated by the government keeping in
view of the protection of investors interest as well as to maintain
operational transparency.
In India SEBI Regulations Act, 1996, guides the formation and
operation of Mutual Funds. A Mutual Fund comprises of 4 separate
entities.
1.
2.
3.
4.
5.

Sponsor
Board of Trusties
Asset Management Company
Custodian and Depositories
Distributors

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.

47

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.

Asset Management Company:

The role of an AMC is to act as the investment manager of the Trust

under the Board supervision and direction of the Trustees.
The AMC is required to be approved and registered with SEBI.
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.
AMC can be terminated with 75% unit holders or majority of
trustees.

48

4.

Custodian and Depositories:

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.

49

MUTUAL FUND A GLOBALLY PROVEN

INVESTMENT
Worldwide, the mutual fund has a long and successful history. The
popularity of mutual fund has increased manifold. In developed
financial market, like US mutual funds have almost overtaken bank
deposits and total assets of over US $ 3 trillion.
In India, Mutual Fund industry started with the setting up of UTI in
1964. Public sector banks and financial institution began to establish
Mutual Funds in 1987. The private sector and foreign institutions were
allowed to set up Mutual Fund in 1993.

WHAT IS MUTUAL FUND?

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.

50

Critical View About Mutual Fund

Advantages:
1.

Portfolio Diversification:

Each investor in a fund is a part owner of all the funds assets, thus
enabling investor to hold a diversified investment portfolio even with a
small amount of investment, which would otherwise require big capital.
2.

Professional Management:

Mutual Funds provide the services of experienced and skilled

professionals, backed by a dedicated investment research team that
analyze the performance and prospect of companies and selects
suitable investments to achieve the objectives of the scheme.
3. Diversification:
Mutual Fund invests in a number of companies across a broad crosssection of industries and sectors. This diversification reduces the risk
because all stock can not go through a downtrend at the same time and
in the same proportion. You achieve this diversification through a
mutual fund with powerless money that you can do on your own.
4.

Reduction of Transaction Cost:

The investors bear all the cost of investing such as brokerage or

custody of securities. When going through the fund investor has the
benefit of economies of scale; the funds pay lesser cost because of
larger volumes, a benefit passed on to its investors.
5.

Liquidity:

By investing in Mutual Funds the investors can cash their investment

by selling their units to the fund if open-ended, or selling them in the
stock market if the fund is close ended.
51

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:

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.

53

MUTUAL FUND CYCLE

[Fig.9: Mutual Fund Cycle]

[Source: amfiindia.com]

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.

54

Types of Mutual Fund

Types of Mutual Fund

By Objective
Equity Fund

Balanced
Fund

Debt Fund

Money
Market

Gilt Fund

By Duration
Open Ended

Close Ended

Interval

By Load
Load Fund

No Load Fund

Other Fund
Tax Saving

Index Fund

Sector Fund

Comm. Fund

Offshore

[Fig.10: Types of Mutual Funds]

55

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.

(a). Equity Fund:

Equity funds invest a major portion of their corpus in equity shares
issued by companies. NAV of equity funds are fluctuated by
fluctuation in price of shares that it holds. So there is a high risk as
well as high return in equity fund. Potential to earn in such funds is
higher when they are invested for long term.
The leading example of such funds are
Prudential ICICI Growth Plan,
Tata Pure Equity Fund,
Reliance Vision,
Franklin India Prima Fund etc.

(b). Debt Fund:

Debt funds invest in debt instruments debt instruments issued by
governments, private companies, banks and financial institutions. By
investing in debt, these funds target low risk and stable income
investors. These funds are low risk low return funds.
The leading examples are
Birla Income Plus,
Principal Income Fund,
HDFC Income Fund,
UTI Bond Fund etc.
56

(c). Balanced Fund:

A balanced fund is one that has a portfolio comprising debt
instruments as well as preference and equity shares. The idea is to
reduce volatility of funds, while providing some upside for capital
appreciation. They are best suitable for the people looking for a
combination for capital appreciation and regular income and best time
spend for such investment is more than 3 years.
The leading examples are
Prudential ICICI Balanced Fund,
Birla Balance Fund,
Franklin India Balance Fund,
Sundaram Balance Fund etc.

(d). Money Market Fund:

Money market funds invest in securities of a short-term nature, which
generally means securities of less than one-year maturity such as
Treasury Bills issued by governments, Certificates of deposit issued by
banks and Commercial paper issued by companies.
The major strength of money market funds are the liquidity and safety
of principal that the investors can normally expect from short term
investments.
The leading examples are
Prudential ICICI Liquid Plan,
Templeton India Liquid Fund,
Grindlays Cash Fund etc.

(e). Gilt Fund:

These funds are sort of government funds wherein the investments
are made in debt instrument of government, which carry no risk of non
payment of interest as the RBI manages the payment of interest and
57

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.

(b). Close-ended Fund:

A close ended fund has a stipulated maturity period e.g. 5-7 years. The
fund is open for subscription only during a specified period at the time
of launch of the scheme. Investors can invest in the scheme at the
time of initial public issue and thereafter they can buy or sell units on
stock exchange where the units are listed at NAV. These mutual fund
schemes disclose NAV generally on weekly basis.

(c). Interval Fund:

Interval funds combine the features of open-ended and close-ended
schemes. They are open for sale or redemption during pre determined
intervals at NAV related prices.

58

Risk Return Grid

Risk
Tolerance/Return Focus
Expected

Suitable Products

Benefits offered
by MFs

Low

Debt

Bank/ Company FD,

Debt based Funds

Liquidity, Better
Post-Tax returns

Medium

Balanced Funds, Some

Partially
Diversified Equity
Debt,
Funds and some debt
Partially
Funds, Mix of shares
Equity
and Fixed Deposits

High

Equity

Liquidity, Better
Post-Tax returns,
Better Management,
Diversification

Diversification,
Capital Market, Equity
Expertise in stock
Funds (Diversified as
picking, Liquidity,
well as Sector)
Tax free dividends

[Table11: Risk Return Grid of various MF]

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.
59

(ii).

Exit Load or Back-end Load:

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.

(b). No Load Fund:

Funds that dont charge entry, exit, or deferred load or any other
charges for sales expenses are called no load funds.
Now, generally all Mutual Fund companies charge 2 to 2.5% entry
load on equity fund.
Generally there is no exit load on equity and sectoral funds to
maintain liquidity of that funds.
Generally there is no entry load on gilt scheme and 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.

60

4. Other types of fund:

(a). Tax Saving Funds:
These schemes offer tax rebates to the investors under specific
provisions of the Income Tax Act, 1961 as the Government offers tax
incentives for investment in specified avenues. E.g. Equity Linked
Saving Scheme (ELSS). Pension schemes also offer tax benefits.
The leading examples are
Prudential ICICI Tax Plan,
Templeton India Pension Plan,
Franklin India Taxshield etc.

(b). Index Funds:

Index Funds replicate the portfolio of a particular index such as the
BSE Sensitive index, S&P NSE 50 index (Nifty), etc. These schemes
invest in the securities in the same weightage comprising of an index.
NAV of such funds are changed accordance with the change in the
index.
The leading examples are
Birla Index Fund,
HDFC Index Fund,
Prudential ICICI Index Fund,
UTI Index Fund etc.

61

(C). Sector Funds:

These are the funds which invest in the securities of only those
sectors or industries as specified in the offer documents. E.g.
Pharmaceuticals, Software, Petroleum etc. These types of funds are
more risky compared to diversified funds.
The leading examples are
Birla IT Fund,
Pru. ICICI FMCG Fund,
Franklin India Pharma Fund etc.

(d). Commodity Funds:

Commodity funds invest into the different commodities directly or
through shares of commodity companies. E.g. Commodity fund invest in
gold or shares of gold mines. Commodity funds have not yet developed
in India.

(e). Off Shore Funds:

These funds invest in equities in one or more foreign countries there
by achieving diversification across the countrys borders. However
they also have additional risks such as the foreign exchange rate risk
and their performance depends on the economic conditions of the
countries they invest in.

62

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.

63

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 City.
To find out level of awareness of mutual funds in Jamnagar City.
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.

64

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:

Mutual Fund Advisors.

Characteristics of interest:
Advisors knowledge about Mutual Fund
Advisors knowledge about Karvy
Advisors interest in getting knowledge of Mutual Fund
Advisors willingness to deal in Mutual Fund with Karvy
Advisors preference in selecting tax saving instrument of
investment
Advisors preference in selecting dealer

65

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:

Sample Size: 50 units

Sample Extent: Jamangar City

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.

66

5.

Data Collection Method:

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 & Interpretation:

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.

67

RESEARCH ANALYSIS AND INTERPRETATION

Rate reason for choosing particular dealer.

[Fig.12: Mutual Fund Advisors Suggestions]

[fig.13: Reasons of Choosing Above]

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[Fig.17: Differentiate advisors according to no of their clients}

[Fig. 18 Advisors gets invested IT payers in]

[Fig.20: Advisors who are interested in dealing of Mutual Funds]

69

[Fig.22: Advisor know about MF services provided by Karvy]

[Fig.23: Advisor who are interested to attend seminar on MF]

[Fig.24 Reason for not attending Seminar]

70

[Fig.25: Advisors who are interested to work with KARVY]

[Fig.26: Reasons for not interested in work with KARVY]

71

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.

72

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.
Some of the respondents may be biased in giving responses.
My inexperience in research area might have affected results.

73

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.

74

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.

75

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

2.

Mutual Fund
Fixed Deposit
PPF

Please indicate reason for choosing above.

Returns
Safety
Timely Brokerage
Other

Risk
Tax Benefits

3.
4.
5.

Approximately how many customers you have?

What is the brokerage Payment Period?
Expected Brokerage Payment Period

6.

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 _______________________________________
76

7.

Are you interested to deal in MF?

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 :

Phone (O)
Mobile :
Email :

(R)

Thank You
77

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.

78

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.

79

DETAILS OF TABLES & FIGURES

Tables:
No.
1
2
3
4
5
6
7
8
9
10
11

Particulars

Page
No.
BODs of Karvy Consultants Limited
5
BODs of Karvy Investor Services Limited
5
BODs of Karvy Securities Limited
6
BODs of Karvy Stock Broking Limited
6
Public Sector FD with which Karvy deals
12
FD of Non Banking Finance Companies with which 13
Karvy deals
FD of Housing Finance Companies with which Karvy 13
deals
FD of Manufacturing Companies with which Karvy 13
deals
List of MF Companies with which Karvy deals
17
Mutual Funds in India
31
Risk Return Grid of various MF
53

80

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

64

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

65
65
65
66
66
66
67

81

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

(Association of Mutual Funds in India)

82