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Project report submitted in Partial fulfillment for the award of
MASTER OF BUSINESS ADMINISTRATION
Submitted by: RANJITH KUMAR.P Bearing Roll No.0240-60-141
PRINCETON P.G. COLLEGE
(Affiliated to Osmania University) RAMANTHAPUR, HYDERABAD (2006-2008)
I hereby declare that the project titled “NFO PROCESS IN MUTUAL FUNDS” done at India Info line submitted by me as part of partial fulfillment for the award of the Masters of Business Administration, at Princeton P.G College, OSMANIA University, Hyderabad is a record of Bonafide work done by me. I also declare that this report has to my knowledge is my own and is neither submitted to any other university nor published any time before.
(RANJITH KUMAR P)
The presentation of this project has given me an opportunity to express myprofound gratitude to all concern in guiding me. Foremost I would like to thank GOPAL SIR (Manager of Indiainfoline) for giving me an opportunity to undertake this projectwork. I would like to thank the INDIAINFOLINE staff for giving me support and the required material on time. Iwould also thank the principal of our college, P.G.R.R CENTER FOR DISTNACE EDUCATION,OSMANIA UNIVERSITY Hyderadad. For providing an opportunity to undergo a project study program. I would like to thankMOHD.ABDUL NAYEEM for assisting and guiding me to complete the project work.
plans and options in order to provide a better service. gilt and balanced funds. Somebody else might want to plan for his child's education while somebody might be saving for the proverbial rainy day or even life after retirement. ensures that the investors are not cheated out of their hard earned money. The range of products includes equity funds. Indian Mutual Funds industry offers a plethora of schemes and serves broadly all tupe of investors. ABSTRACT 4 . schemes and options with respect to rate of returns. While somebody wants security. debt. dividend frequency and liquidity.e. The study is an attempt in that direction. Investors of all categories could choose to invest on their own in multiple options but opt for Mutual Funds for the sole reason that all benefits come in a package. All in all. it is obvious that the products required will vary as well. In view of the growing competition in the Mutual Funds industry. it was felt necessary to study the investors orientation towards Mutual Funds i.The Mutual Fund industry is having its hands full to cater to various needs of the investors by coming up with new plans. small and large investors. a universal appeal. There are also funds meant exclusively for young and old. With objectives defying any range . benefits provided by them cut across the boundaries of investor category and thus create for them. Moreover. others might give more weightage to returns alone. their pattern of risk apetite and preferences in various schemes. liquid.FOREWORD Investments goals vary from person to person. the setup of a legal structure. which has enough teeth to safeguard investors intersts.
Subscriptions amount received etc. To schoolwork the technical procedure. New Fund Offer process may not be same for all Mutual funds that are released.of Applications received. . requirements to launch a new fund. and from the staff of Indian Info Line. Books. It may differ from one fund to other depending up on the size like NO . The analysis is made by carrying the applications of reliance equity fund The data for his study is colleted from various sources like magazines. Websites. legal dimensions of NFO at India info line and examine briefly the organizational structure. communication network. It generates an Idea to the investors in knowing the technical procedure in carrying a NFO by the Organization. resource. 5 . The school work of this project is based on the procedure takes place in indiainfoline while going through the NFO.The purpose of this project creates a design in relation to process of NFO (NEW FUND OFFER) and how this process is carried out till the end.
CONTENTS TITLE INTRODUCTION REVIEW OF LITERATURE COMPANY PROFILE ANALYTICAL FRAME WORK PAGE NO 1 7 23 29 52 57 58 60 QUESTIONNAIRE FINDINGS AND CONCLUSIONS SUGGESTIONS & RECOMMENDATIONS BIBLIOGRAPHY 6 .
INTRODUCTION 7 .
The competitions had given raise to demand for specialized products and skills of various individuals who can contribute towards the containment and growth of individual firms in the mutual firm industry. This gave rise to various related organizations and individuals working as specialized teams in the various areas of mutual funds. insurance companies entered into mutual fund industry apart from foreign players. This growth in the Mutual Fund Industry and scope of increasing markets has further increased the competition between the firms in the industry. This increased the competition between the various firms working in the mutual fund Industry The need for developing various new schemes arises so as to attract investors towards the firm and equally encouraging them to invest. 8 .Introduction to the study: Mutual Fund Industry which is a relatively of a post-economic reforms phenomena in India. In the early years of evolution of mutual fund industry in the Indian financial market it was a monopoly and continued to be the same till very recent time. Then many players both foreign and Indian entered in the Mutual Fund Industry. One such organization is INDIA INFO LINE PVT LTD it comes into pictures where the investors apply for the units in a Mutual Fund schemes and verify the validity and eligibility of the investor and allots the units The mutual fund companies now receive millions of applications if a new scheme is launched. has been expanding during this Period in branch and bound Many commercial banks.
This is due to the wide spread awareness created among the urban and rural Population of India. human and knowledge resources to take up such a gigantic task. Further to this problem. launching of mutual fund scheme has become a well organized activity which is accomplished through the coordinated endeavors of task groups. the mutual fund industry does not know where it stands in the current volatile and turbulent environment. commodities linked and specific industry linked instruments. it is in fact not needed by a mutual fund firm to create such a vast organizational structure when it is seen from the point of view scale of economies. It therefore becomes a Herculean task to Manage the flooding applications However it should be noted that this is a One time activity similar to that of a short run project It is needless to State that a given mutual fund firm will not be possessing The technological. These developments have led to an outcome that today. The asset management companies have designed various schemes in accordance with the requirements of the various sections on investors on basis of equity linked. The investor today is given a wide 9 . debt instruments linked. This may be The reason they prefer to hire the services of professionals firm with specialized knowledge and Expertise.
Mutual funds enable even a small investor to investor to invest. There are various related organizations which specialize in the activities at various stages of the functioning of the mutual funds.range of options to invest in various types of funds according to his interests and capabilities. 10 . the asset management company has been forced to develop and design new schemes and hire the services of professionals. as most of the mutual funds just start from a minimum amount of investment of RS. till the stage of investing the amount raised in accordance with the norms stipulated with offer document and distributing the returns to the investor by way of dividend. All this process is well organized and performed in a specific order. reaching the selected market through launching the scheme which is thereby called NFO. mutual fund industry involves various operations from the stage of identification of the target group or defining a market segment. This shows that mutual fund industry is one which aims at every section of the society. designing a scheme which comes up to the expectations and aspirations of the target group or market segment. To deal with this large population of investors and the competition. 5000 hence even a small investor can invest into a mutual fund and reap returns in the same proportions as the other big time investors. after making adequate provision for taxation and other operating costs.
Specifically the various documents that are being processed. the rejection criteria. Objectives of the study: * To study the technical. communication network. Such a dissertation would help to come out with a comprehensive report which may serve as a guide for the prospective entrants into mutual fund investment and to the existing mutual fund investors to some extent.It is therefore felt expedient to examine the various intricacies involved in the new fund offer (NFO). the parameters evolve either customarily or by legal mandate to scrutinize the applications. procedural. resource requirements to launch a new fund * To study a sample of application drawn from Reliance Mutual Fund. the creation of human organization to monitor the activities. 11 . Various stages involved in the scrutiny. the communication channel and the structure of the organized activities and the legal environment of NFO to some extent. legal dimensions of the NFO * To examine briefly the organizational structure.
Secondary data is the data collected previously by someone else for some other purpose which can be analyzed and interpreted according to requirements. Reconciliation statements. and the applications of Reliance equity fund. worldwide web etc. In this study the Secondary data is mainly taken from * * * The company’s training material.com. For example. 12 . newspapers.www. indiainfoline. Primary data is the data collected specifically for the study.Methodology of study: To fulfill the objective of the study both primary and secondary data has been collected. www. Other documents generated with in the organization Which have to Access? * www. In this study primary data was collected through interaction with staff of India info line Pvt Ltd.amfiindia. Data is collected directly from people and organizations via questionnaires or surveys before being analyzed to reach conclusions concerning the issues covered in the questionnaire or survey. sources of secondary data are government publications.sebi.com.com.
The data available is therefore restricted by the design of the application. etc. etc are not available and therefore a description of these aspects is given. * NFO process may not be same for all mutual funds that are released. 13 . total subscription amount received. the possibility of sampling fluctuations affecting the findings cannot be ruled out. * Numerical data like number of applications received. It may differ from one fund to other depending upon the size like the no. statement of accounts. * The inspection of applications is done on the basis of a sample of 120 applications. subscription amount received. of applications received. investor details.Limitations of study: * Analysis of the applications is carried out by taking the applications from Reliance equity Fund. Though the sample is drawn randomly.
REVIEW OF LITERATURE New fund offer (NFO): 14 .
When a mutual fund company plans for a new fund offer it first informs to the registrar or the back office functions provider like INDIA INFO LINE through email. reopening date. This offer document sets forth concisely. Data entry team. The offer document contains the salient features of the scheme like NFO opening date. the key information memorandum (KIM) and offer document to INDIA INFO LINE. necessary information about the scheme for a prospective investor to make an informed investment decision on the scheme described. NFO closing date. 15 . expected number of applications. Scheme class. number of bank branches involved. NFO expert’s team. The unit manager or the NFO coordinator will arrange a meeting where the AMC team. Later they send the sample application form. minimum amount – fresh purchase. entry load and exit load. Reconciliation team and the dispatch team will discuss and fix the target dates by which the work has to be completed accordingly. plans available banks involved.When a mutual fund asset management company announces Public issue of units of a new fund/scheme it is called a New Fund Offer (NFO). In this Mail the fund manager will ask the NFO coordinator to get ready for the new fund with the required man power and software. This is called as “NFO Launching Information Mail” send by the fund manager of the asset management company to the NFO coordinator of the INDIA INFOLINE. Scheme name. maximum amount – fresh purchase.
Each investor owns shares. mutual funds are gaining popularity day by day Now-a. A mutual fund is required to be registered with Securities and Exchange Board of India (SEBI) which regulates securities markets before it can collect funds from the public. Mutual fund issues units to the investors in accordance with quantum of money invested by them. The mutual funds normally come out with a number of schemes with different investment objectives which are launched from time to time. bonds and other securities.What is a mutual fund? Mutual fund is a mechanism for pooling the resources by issuing to the investors and investing funds in securities in accordance with objectives as disclosed in offer document. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. Investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced. The profits or losses are shared by the investors in proportion to their investment. Mutual fund is a collection of stocks and / bonds.day’s mutual funds are performing well will high returns to the 16 . Investors of mutual funds are known as unit holders. which represent a portion of the holdings of the fund. With increased uncertainties or fluctuations in the primary market and decreasing bank interest rates. A mutual fund as a company brings together a group of people and invests their money in stocks.
5.investors. 3. 4. Let us assume that you inertia million rupees over night and want to invest the same to get better returns you can consider the following investment avenues that are popular in Indian context Company shares Fixed deposits in banks Government bonds Fixed deposits in NBFC Chit fund Real estate Other local money lending options Pros and con’s of the investments: SNO. bonds Fixed deposits in NBFC Chit funds Real estate Other money lending options Risk Return Effort required to track/maintain investment High Low Medium Medium Medium Medium Depends 1. High Low Medium High High Medium Medium High Low Medium Medium Medium Medium Medium How you can make money from a mutual fund? 17 . Investment avenue Company shares and stocks Fixed deposits in banks Govt. 7. 2. There are various types of schemes and plans available to all type of investors. 6.
A fund pays out nearly all income it receives over the year to fund owners in the form of a distribution. If fund holdings increase in price but are not sold by the fund manager. the funds shares increase in price. You can then sell your mutual fund units for profit. Funds will also usually give you a choice either to receive a check for distributions or to reinvest the earnings and get more shares. Because of their nature of 18 . they are also called as equity funds.. since these funds invest in equities. Income it earned from dividends on stocks and interest on bonds. the fund has a capital gain Most of the funds also pass on these gains to investors in a distribution. There are about dozen fund classes but all of them are derivatives of three basic classes are as follows. Growth Income Liquidity Growth: Long term growth. Their risk level is high so is the return. debentures etc.If the fund sells the securities that have increased in price. Income: This type of fund provides regular income by investing in debt instruments like bonds. Types of Funds: Mutual funds also come in various sizes and shapes.
known as cash or money market funds. technology etc. In addition to the above type there are other derivative classes as listed below. These are called mutual fund schemes. If the fund offers purchase or selling on a Continuous basis it is called 19 . They provide tax These funds are also benefits.. There is another Classification based on the capitalization of funds.. Their risk and return levels are medium. Balanced fund Invest in this area Is an investment blend of equity and dept Instruments Index fund Invests in the companies that participate in stock market indices in the same weight age comprising of an index Sector fund Invests in companies pertaining to specific sectors like health care.investment. It is based on the investment objective. FMCG. banking. Ells / Tax funds Invests is Government bonds and generally long term in nature. they are also called debt schemes. safer and give lower returns. Liquidity: These are primarily invested in money market instruments and thus most volatile. This type of fund.
5. Differences: SNO. On the contrary. 20 . Open ended and Closed ended funds Open ended Unlimited Yes Yes Yes No (with exemption of FMP schemes) Generally No Closed ended Limited No No No Yes Yes Feature Capitalization Any time entry Any time exit Tax advantage Available for a fixed period Listed on the exchange Open ended funds gained popularity because of their flexibility and variety of features they offer. 2. 4. They are the owners of the mutual funds and forms trust by a group of sponsors. Arms of a mutual fund: Primarily mutual fund is formed as a trust by a group of sponsors. 3.open ended mutual fund. if the fund is open only for a particular period. 6. majority of the mutual funds are ‘open’ in nature. it is called closed ended fund. 1. For this reason.
50% of the directors of AMC must be independent. Also. Appoints AMC Floats MF Schemes. Manages funds and cash.e. Registers with SEBI.They are the owners of the mutual funds and forms trustees who in turn appoint AMC and manage the mutual fund. This entity… Sponsor Trustees Asset management company Registrar Distributors Does this… Forms Mf as a trust. All mutual funds are required to be registered with SEBI before they launch any scheme. Holds investor data. they should not be associated with the sponsors. 21 . Do services to investors Market various schemes of MF Transaction types (commercial & non-commercial): Let’s compare various transactions of mutual funds with those of banks. Ensure compliance with SEBI. Holds funds invested in a form of units. SEBI regulations require that at least two at least two thirds of the directors of trustee company or board of trustees must be independent i.
we always talk about ’units’ in a mutual fund and not money itself. it will have many more transaction types as well. 22 Transaction New purchase . Switch/shift Transferring investment from one scheme to other. 5. Net asset value: As you must have noticed. Buying units in a scheme 2. 4. you will… Open an account with initial deposit Deposit money With draw money Opt for a recurring deposit In a mutual fund… You subscribe in a scheme and buy units Do additional purchases You redeem units Start a systematic investment plan Since mutual fund offers many more options to investors. Redemption Selling units and getting money back. Dividend When AMC announces dividend in a scheme. 1.In a bank. Additional purchase Buying additional units in a scheme 3. 6. 7. So they are non-commercial transactions. Description New investment. Systematic with Reverse of drawl systematic investment Selling units periodically Rest are relating to general maintenance only. Systematic Investing fixed investment amounts periodically like a recurring deposit. A unit is basic measure of investment n a mutual fund. Let us see some popular transactions in mutual funds SNO.
Each scheme / plan will have a different market value is called the Net asset value or simply NAV. Since market value of the underlying securities changes every day, NAV of a scheme also varies on a day to day basis.
NAV = Total assets – Total liabilities/Number of units
SEBI Guidelines on New Fund Offer:
1. Procedure for launching of schemes:
No scheme shall be launched by the asset management company unless
such scheme is approved by the trustees and a copy of the offer document has been filed with the Board.
Every mutual fund shall along with the offer document of each scheme
pay filing fees as specified in the Second Schedule. 2. Disclosures in the offer document:
The offer document shall contain disclosures which are adequate in order
to enable the investors to make informed investment decision [including the disclosure on maximum investments proposed to be made by the scheme in the listed securities of the group companies of the sponsor].
The Board may in the interest of investors require the asset management
company to carry out such modifications in the offer document as it deems fit.
In case no modifications are suggested by the Board in the offer
document within 21 [working] days from the date of filing, the asset management company may issue the offer document.
No one shall issue any form of application for units of a mutual fund
unless the form is accompanied by the memorandum containing such information as may be specified by the Board. 3. Advertisement material:
Advertisements in respect of every scheme shall be in conformity with
the Advertisement Code as specified in the Sixth Schedule and shall be submitted to the Board within 7 days from the date of issue.
The advertisement for each scheme shall disclose [investment objective
for each scheme] 4. Misleading statements: The offer document and advertisement materials shall not be misleading or contain any statement or opinion, which are incorrect or false. 5. Listing of close ended schemes: Every close ended scheme shall be listed in a recognized stock exchange within six months from the closure of the subscription Provided that listing of close ended scheme shall not be mandatory.
If the said scheme provides for periodic repurchase facility to all the unit
holders with restriction, if any, on the extent of such repurchase; or
if the said scheme provides for monthly income or caters to special
classes of persons like senior citizens, women, children, widows or physically handicapped or any special class of persons providing for repurchase of units at regular intervals; or
If the details of such repurchase facility are clearly disclosed in the offer
If the said scheme opens for repurchase within a period of six months
from the closure of subscription. 6. Repurchase of close ended scheme:
The asset management company may at its option repurchase or reissue
the repurchased units of a close ended scheme.
The units of close ended schemes referred to in the proviso to regulation
may be open for sale or redemption at fixed pre-determined intervals if the maximum and minimum amount of sale or redemption of the units and the periodicity of such sale or redemption has been disclosed in the offer document.
The units of close ended scheme may be converted into open ended
If the offer document of such scheme discloses the option and the period
of such conversion; or
The unit holders are provided with an option to redeem their units in full. A close ended scheme shall be fully redeemed at the end of the maturity
period [Provided that a close ended scheme may be allowed to be rolled over if the purpose, period and other terms of the roll over and all other material details of the scheme including the likely composition of assets immediately before the roll over, the net assets and net asset value of the scheme, are
Offering Period: No scheme of a mutual fund other than the [initial] offering period of any equity linked savings schemes shall be open for subscription for more than 45 days 8. that such roll over will be permitted only in case of those unit holders who express their consent in writing and the unit holders who do not opt for the roll over or have not given written consent shall be allowed to redeem their holdings in full at net asset value based price. Allotment of Units and refund of money: (1) (a) The Asset management company shall specify in the offer document The minimum subscription amount it seeks to raise under the scheme and (b) In case of over subscription the extent of subscription it may retain Provided that where the asset management company retains the over subscription referred to in clause (b). all the applicants applying up to five thousand units shall be given full allotment subject to the oversubscription mentioned in clause (b). (2) The mutual fund and asset Management Company shall be liable to refund the application money to the applicants(i) If the mutual fund fails to receive the minimum subscription amount referred to in clause (a) of sub-regulation (1). 26 . 7. Provided further.disclosed to the unit holders and a copy of the same has been filed with the Board.
10. shall be freely transferable by act of parties or by operation of law. unit certificates or a statement of accounts specifying the number of units allotted to the applicant as soon as possible but not later than six weeks from the date of closure of the [initial subscription list and or from the date of receipt of the request from the unit holders in any open ended scheme].(ii) If the moneys received from the applicants for units are in excess of subscription as referred to in clause (b) of sub-regulation (1). In the event of failure to refund the amounts within the period specified (4) in sub-regulation (3). 9.Provided that if an applicant so desires. by Registered A. Transfer of units: (1) A unit certificate unless otherwise restricted or prohibited under the scheme. the asset management company shall be liable to pay interest to the applicants at a rate of fifteen percent per annum on the expiry of six weeks from the date of closure of the subscription list. the asset management company shall issue the unit certificates to the applicant within six weeks of the receipt of request for the certificate. 27 . (3) Any amount refundable under sub-regulation (2) shall be refunded within a period of six Weeks from the date of closure of subscription list. Unit certificates or Statement of Accounts: The asset management company shall issue to the applicant whose application has been accepted.D and by cheque or Demand Draft marked "A/C Payee" to the applicants.
Provided that if the units are with the depository such units will be transferable in accordance with the provisions of the Securities and Exchange Board of India (Depositories and Participants) Regulations. Wherever an application for a total value of RS. each of the applicants. on production of instrument of transfer together with relevant unit certificates. the applicant or in the case of application in joint names. 50. 1996. (d) Aside payment of such interest to the unit holders under sub-clause (c) the asset management company may be liable for penalty for failure to dispatch the redemption or repurchase proceeds within the stipulated time. (a) Dispatch to the unit holders the dividend warrants within [30 days] of the declaration of the dividend. (b) Dispatch the redemption or repurchase proceeds within 10 working days from the date of redemption or repurchase. (c) In the event of failure to dispatch the redemption or repurchase proceeds within the period specified in sub-clause (b). 11. the asset management company shall be liable to pay interest to the unit holders at such rate as may be specified by Board for the period of such delay. 28 . register the transfer and return the unit certificate to the transferee within thirty days from the date of such production. Dispatch of warrants and proceeds: Every mutual fund and asset management company shall.000 or more.(2) The asset management company shall.
the new provisions should be incorporated in the offer documents. the GIR number and the income-tax Circle/Ward/District should be mentioned. 29 . 12. while filing offer document for launching a new scheme/revising and filing existing offer document with SEBI. Instructions for filing scheme offer document with SEBI: As advised in SEBI circular MFD/CIR/06/275/2001 dated July 9. Any application form without these details should not be accepted by the mutual fund. 1996. In case of any amendment to Regulations. In case where neither the PAN nor the GIR number has been allotted. the fact of non-allotment should be mentioned in the application form. The above clarification is being issued in accordance with Regulation 77 of the SEBI (Mutual Funds) Regulations. the mutual funds should highlight and clearly mention the page number of the offer document on which each of the following observation has been incorporated.should mention his/her permanent account number (PAN) allotted under the Income Tax Act. 1961 or where the same has not been allotted. 2001.
COMPANY PROFILE 30 .
FIS. the business required a reincarnation. The Objective was to provide unbiased and independent information to market intermediaries and investors.5 million. the number of users may well jump from 250 to 2. a colleague had a crazy idea that if the company made all the research available free on the web. Banks like Citibank. To make it true. The quality of research soon caught the imagination of all major participants in the financial market.COMPANY PROFILE: Circa1995. One fine morning in early 1999. The name was later changed to India Info line Ltd. A group of professional formed a company called Probity Research & Services Pvt Ltd. The list included consulting firms like Mc Kinsey. In a span of 2 to 3 years the client list read like the who’s who of Indian Financial market. And the pre-requisite was a death. foreign brokers as well as leading Indian brokers. Rating agencies like CRISIL. D&B. It meant that 31 . companies like Hindustan Lever.
The core promoters of the company had little experience of broking. Our Key Milestones: • • • • • • Incorporated on October 18. the market was hit by a scam.5paisa. 32 . Launched Internet portal www. Started life insurance agency business in December 2000 as a Corporate Agent of ICICI Prudential Life Insurance. most market observers had written them off. There was no money available from the private equity investors at any valuation. there would be ‘no comebacks’. Although devastating for morale. To add to it. They survived against all odds and started capturing market share. if the new avatar failed. Worse. The company rose from strength to strength to become the leading corporate agent in life insurance and among the top retail players in mutual fund and broking space. Commenced distribution of personal financial products like Mutual Funds and RBI Bonds in April 2000. They cut all possible costs and worked on a bare bones structure. There was a core group who never lost hope. 1995 as Probity Research & Services. It was difficult to retain people.indianinfoline. Became a depository participant of NSDL in September 2001. but not surprising. The odds were against them.com in May 1999. Launched online trading in shares and securities branded as www. They also had their share of price to pay and lessons to learn. The company became heavily dependent on its e-broking business for survival.com in July 2000.the company put up all the information free on the website and let go of all the revenues and profits.
Merger of India Info line Securities Private Limited with India Info line Limited in January 2007. • Acquired 100% equity of March Mont Capital Advisors Pvt Ltd in December 2005 through which we have ventured into Merchant Banking. R.Venkataraman (Executive Director) 33 . which is a distributor of Mortgages and other Loan products.20crores in India Info line by way of preferential allotment in December 2005.80crores in December 2005. Acquired 75% stake holding in Money tree Consultancy services. in October 2005. Listed on NSE and BSE on May 17. Acquired commodities broking license in March 2004. Became a depository participant of CDSL in June 2006. 2005. IRDA license for Insurance Broking April 2007.Nirmal Jain (Chairman and Managing Director) • • Nirmal Jain is the founder and Chairman of India Info line Ltd. • DSP Merrill Lynch Capital subscribed to convertible bonds aggregating Rs.• • • • • Launched stock messaging service in May 2003. He holds an MBA degree from IIM Ahmedabad. Launched portfolio management services in August 2004. Our Management Team: Mr. Their current stake in India Info Line is a little over 14 % as on 31st March 2007. Mr. and is a Chartered Accountant (All India Rank 2) and a Cost Accountant. • • • • • Bennett Coleman & Co Ltd (BCCL) invested Rs. Entered into an alliance with Bank of Baroda for Baroda e-trading in February 2007.
Nilesh Vikamsey (Independent Director) • Mr. • He has held the position of Assistant Vice President with G E Capital Services India Limited in their private equity division. 2005. 34 .• • R. Mr. Venkataraman is the co-promoter and Executive Director of IndiaInfoline Ltd. He is a director of a number of public companies in Singapore and India. He holds a B tech degree in Electronics and Electrical Communications Engineering from IIT Kharagpur and an MBA degree from IIM Bangalore. Mr. Ahuja graduated from National University of Singapore with a degree in Computer Science and is also a Certified Public Accountant. 2002. Sanjiv Ahuja joined the Board with effect from August 28. The Board of Directors: Mr. He started his own investment advisory and consulting company in 2001. Sanjiv Ahuja (Independent Director) • • • Mr. named Centennial Management Consultants Private Limited. Sat Pal Khattar joined the Board with effect from April 20. Mr. Nilesh Shivji Vikamsey joined the Board with effect from February 11. 2001. Sat Pal Khattar is a lawyer by profession. Sat Pal Khattar (Non Executive Director) • • • Mr. Mr.
Our Vision: Its vision will not be accomplished only by maintaining high growth alone. we leverage technology to deliver best service to our clients at the least cost. Knowledge: • Always keep yourself up-to-date by reading newspapers like Economics Times. Needless to emphasize that it is imperative for all us to align our personal goals and values to this vision. 2005. Mr. IRDA exams also help you to get basic domain understanding. Larsen & Turbo Limited & LICHFL Care Homes Limited. 35 . Vikamsey qualified as a Chartered Accountant in 1985 and has been a member of the Institute of Chartered Accountants of India since 1985. • We are in a knowledge industry and hence we cannot afford to go to a client and appear ignorant and foolish by not even knowing basic things. AMFI. we mean that as an organization. Mr. Sinha graduated from the Agra University with a Masters degree. Mr. Business standard and Business Line daily. Kranti Sinha joined the Board with effect from January 27. Sinha is also on the Board of Directors of Hindustan Motors Limited. Technology: • By technology. Our vision is to emerge as the most respected financial services company in India. Kranti Sinha (Independent Director) • • • Mr. Passing NCFM.• Mr.
36 . We expect our employees to be comfortable with and confident of using technology. friendly and responsive that media cannot help but rave about. Basically. We take pride in our ability to add value that our customers can feel and appreciate. • Remember we have to always ensure that simple things like ensuring customer problems are solved. requests are catered to. Today. giving him investment ideas etc. Service: • Our customer service is warm.• • Our trading interface for broking is absolutely world class. service is the key driver for growth in financial services. whatever it takes to keep him served.
ANALYICAL FRAME WORK 37 .
Once the AMC get the approval of SEBI for the fund it does the marketing of the fund by it self or through brokers. Systems(S/W) dept. These banks collect the application and amount and direct it towards the registrar specified by the AMC. IPO Centre coordinator. Scanning and Printing & Dispatching. Teams involved in the NFO process Mutual fund unit Technology team Data entry team 38 . it is called a new fund offer (NFO). Internal auditor. are AMC. forms and reports involved in this process of NFO is general. The role. SIP I/c. activities.. The investors who are willing to invest in a particular fund deposit the amount they plan to invest in the bank as directed by the AMC. NFO Coordinator. IPO-RTI. The new fund is planned and sources from where it should be collected and where the amount should be invested is planned by the AMC. From this point India info line came into the picture as the registrar. responsibilities.NFO process: When a mutual fund Assets Management Company (AMC) announces a public issue of units of & new fund/scheme. IPO-EDP. fund manager. According to the SEBI rules any new fund launched should be approved by SEBI. Switches I/c.
Verification team External audit team Scanning team Franking and dispatching team 39 .
India info line gives this IH numbering to those applications. these applications are segregated bank wise and branch wise. we can get any information of a particular application or investor that we require by entering this IH number. This is done for their convenience in doing back office functions easily. All the data on the application is entered into systems through software developed by India info line technology team called K-Bolt. Hyderabad. First Entry: After finishing binding of applications they are sent to Date Entry team. IH Numbering: IH numbering is also called as In house Numbering. Later on. India info line does this Binding because to keep all these applications safe. Binding: All the applications that are received are given for binding. All the information or date of an investor 42 . Here the first time entry is done. These applications are sent to India info line processing center. out of any damage and miss-place. Binding of application is done by segregating them according to the bank and branch fro which they are received. After receiving.Description of NFO process: Bank wise segregation: The India info line branches collect the applications of the investors across India and abroad for all the branches of the bank that is involved in this NFO.
Here in online matching the physical form of application are kept side by an checking of data that was entered in the first entry and second entry is done. This team verifies mistakes that are left in online matching. Name blank.. name of the scheme or plan invested in. PAN blank for amount greater than or equal to 50000 RS.. broker code. email addresses. invalid or blank broker code etc. Bank details. guardian name. Here in second entry. First time verification: Data from online matching is sent to the verification team. etc. Second Entry: After first entry the data is again sent for the second entry. age. amount invested.. amount invested. Bank details. are entered into the systems of India info line. Mistakes like blank address. name of the scheme or plan invested in. Address. guardian name.that is available on the application like name of the applicant. broker code. email addresses. sub broker code. sub broker code. in the first entry and once again in the second entry it is sent to the online matching. PAN. Online Matching: After entering the data like applicant. are rectified in the first time verification. First time CCL: 43 . age. Address. the data that is entered in first entry is checked and the information what ever is missing is entered. bank details blank. PAN. etc.
blank/null application number. invalid date of birth for minor. After preparing second time CCL it is again sent to external audit team. amount invested. First Time CCL is prepared based on the data that is provided after first time verification. invalid existing account number. saving or current.First time check clearing list is in short is called as first time CCL. This external audit team will mainly check name of the investor. Integrity Check (NFO team): 44 . But in total they will check more than 30 characters Second time verification: If the external auditing is not satisfied and if they find any mistakes or missing information they will send the first time CCL for second time verification. External Audit: First time check-clearing list is sent to an external audit team. Here they verify the check list once again and mistakes like invalid mode of folding (MOH). India info line appoints this team before the NFO processes. status minor without guardian name. They are nowhere related to the organization. Second time CCL: Second check the verification team prepares clearing after verifying the mistakes that are pointed out by the external audit team. investor signature missing are rectified. bank details PAN number. invalid email address. NRI with blank account type. name of the scheme/plan and mode of holding (MOH).
These rejected cheques are dispatched to the investors.. Handling over the data to MFS: 45 .. Reconciliation. Rejections and Cheque returns: Cheques of the investors are sent are sent by the balk to India info line Reconciliation team. bank a/c number. Scanning Default Values. Integrity Check (by Audit): After integrity check by the NFO team it is once checked by the internal audit team of India info line. Verification of Mismatch cases: Entire data is filtered at each and every step and finally it is given to the scanning team for scanning here scanning team will detect and rectify any further default values and mismatch cases. A sample statement of accounts (SOA) is prepared by this reconciliation team. and they are rejected. and rectify them.Check clearing list will be given by the external audit team to the NFO team in India info line This NFO team in India info line will once again check further mistakes like spelling mistakes in the name of the applicant etc. comparing the amount invested with that of the minimum amount that has to be invested cheques with out hue signature of the investor bounced cheques etc. Here this team will verify bank details of the investor like PAN number.
Final data that they got after filtering the mistakes and default values is ported in the task MF. This MFS team will once again verify the data and the final data will come out any mistakes and default values. This SOA contains data like: 46 .Entire data after getting filtered at each and every step will be handing over to mutual fund services team. Porting in Task MF: Task MF is the software developed by India info line Technology team. This Task MF will resemble the style or Performa or outlook of the statement of accounts. It is prepared according to the suggestion given by AMC. This verification will result in preparing a statement of accounts which in cent percent correct and exact. They will avail the units taking the Net Asset Value (NAV) of that particular scheme as base. Allotment of units: Allotment of units is done as per the amount that is invested by investors. Sample SOA verification by audit: Statement of accounts (SOA) is picked up randomly from a huge lot and the audit team does verification.
* * * * * * * * * * * * * * * * * * * Name of the investor Address Bank details Pan Number Guardian name Broker code Sub broker code Nominee name Nominee addresses 2nd and 3rd applicant name Amount invested No. SOA’s are neatly packed in an envelope and dispatched to the investors by the dispatch team through courier. current NAV etc. occupation. current cost. Of units allotted Fund name.. Dispatch of SOA: Statement of accounts (SOA) once prepared is dispatched to the investor. New Fund Report: 47 . Current balance. average price. Plan Name & A/c no Transaction type details Mode of redemption payment Mode of dividend payment Mode of dispatch Status. Scheme Name.
This new fund report has to be submitted to the AMC.India info line will finally prepare New Fund Report. Then AMC will submit a copy of the same to the SEBI. The new fund report details like 1) Scheme details * * * * * * Scheme name Scheme type Date of opening Date of closing the scheme / initial subscription period Target amount Minimum amount to be raised 2) Subscription / Allotment details * Number of applications received with in the country * * * * Number of NRI applications received Subscription amount received with in the country Subscription amount received form NRI Date of allotment of units 3) 4) 5) 6) 7) Initial issue expenses Date of dispatch of refund of refund orders Unit holding pattern Distribution schedule Geographical Dispersion list Holding profile of applicant: 48 . which is mandatory.
of applicants % of applicants 89 74 0 0 31 26 120 100 80 70 60 % of applicants 50 40 30 20 10 0 74 26 0 single Joint Anyone Mode of holding Interpretation: It can be seen that majority of the applicants prefer to hold the allotted units individually and 26% prefer to hold anyone/survivors. This corroborates with the age profile of the applicants.Particulars Single Joint Anyone Total No. Occupation profile of applicants: 49 .
It is found that professionals and retired are at the lowest.Particular Business Service Student Professional Retired Housewife Others Total No. next comes business People are 28%. of 34 46 2 4 7 23 5 120 applicants % of 28 38 2 3 6 19 4 100 applicants 40 35 % of applicants 30 25 20 15 10 5 0 28 38 19 2 3 6 4 t es s St ud en Se rv ic on al et ir ew Pr of es Bu Occupation Interpretation: Majority of the applicants are from services personnel at 38%. STATUS: a) Residential status of individual applicants: 50 H ou s R O th sin si er s ed ife e . The housewife occupy 3rd highest at 19%.
Particulars No. of applicants % of applicants Partnership 1 10 AOP/BOI 0 0 51 Trust 0 0 HUF 10 80 Fll 0 0 Banks 0 0 . b) Status of non-individuals: Particulars No. of applicants % of applicants Resident 104 96 NRI 4 4 Total 108 100 120 100 % of applicants 80 60 40 20 0 Resident Status NRI 96 4 Interpretation: It can be observed from the table and the chart that the majority of applicants are resident individuals constituting 96% the applicants and remaining 4% are the Non-resident Indians.
In others category 10% is found and all other nonindividual entities have recorded zero applications. Age profile of the applicants: Particulars Below 18 No.Particulars Company No. of applicants 1 % of applicants 10 Society 0 0 Fl 0 0 SME 10 80 Others Total 0 0 0 0 90 80 % of applicants 70 60 50 40 30 20 10 0 10 0 0 80 10 0 Fl l HS F ks 0 y pa n 0 ity 0 Fl 0 E SM 0 er s O th er sh ip AO P /B O I Tr us t Ba n Pa r Non-indivisuals Interpretation: In the non-individuals category HUF occupied the highest at 80% and next 10% is for partnerships. of 0 applicants 18-30 30 Co m tn 31-60 72 So c Above 60 18 Total 120 52 .
Investment profile of the applicants: Particulars 500025000 2500150000 32 50001100000 4 Above 100000 6 Total 120 No. of applicants 78 53 . This is followed by the age Group 18-30 years and 15% of the applicants are above 60 years.% of applicants 0 25 60 15 100 70 60 % of applicants 50 40 30 20 10 0 0 Below 18 18-30 Age 31-60 Above 60 25 15 60 Interpretation: The age profile of the applicants shows that the majority of the applicants fall into the age Group 31-60 years and the percentage of them being 60.
has registered Scheme profile of applicants: Particulars No. but the next slab. of applicants % of applicants Growth option 59 49 Bonus option 4 3 Dividend reinvestment 37 31 Dividend Total payout 20 17 120 100 54 .% of applicants 65 27 3 5 100 70 60 % of applicants 50 40 30 20 10 0 65 27 3 5000-25000 25001-50000 50001-100000 5 Above 100000 Amount invested Interpretation: Amount of investment is high at 65% in the range 5000-25000 and it is very low at 3% in 50001-100000. Above 100000 5%.
of applicants % of applicants Cheque 119 99 DD 1 1 Total 120 100 55 . This means that 80% of the applicants are not investing for income sake rather they look at the accumulation of profits.60 50 % of applicants 40 31 30 20 10 0 Growth oprion Bonus option Dividend reinvestment Scheme Dividend payout 3 17 49 Interpretation: Majority of the applicants Opted the growth option and the option of dividend reinvestment is 31%. Analysis of mode of payment: Particulars No.
120 100 % of applicants 80 60 40 20 1 0 Cheque Mode of payment DD 99 Interpretation: The mode of payment reflects upon the quality of applicants. Analysis of type of account: Particulars SB No. of 119 applicants % of 99 Current 1 1 NRO 0 0 56 NRE 0 0 FCNR 0 0 Total 120 100 . On an average 99% have paid through cheques and therefore the NFO is able to attract good quality retail investors.
No payments have been found from NRO. and FCNR even though 4% of the applicants are NRI s Gender profile of the applicants: Particulars No. NRE.applicants 120 100 % of applicants 80 60 40 20 1 0 SB Current 0 NRO Type of account 0 NRE 0 FCNR 99 Interpretation: Majority of the payments have been made from Savings Bank account (SB). of applicants % of applicants Male 89 74 Female 31 26 Total 120 100 57 .
80 70 % of applicants 60 50 40 30 20 10 0 74 26 Male Gender Female Interpretation: The female participation in the NFO is low at 26%. Geographical distribution of applicants: Particulars No. of applicants % of applicants Andhra Pradesh 4 3 Bihar Chandighar Delhi Gujarat Karnataka 1 1 1 1 17 14 11 9 5 4 58 . The male applicants are very high at 76% as is not normally found in found in institutional investments.
of applicants 10 % of applicants 8 Interpretation: Others 6 5 total 120 100 A predominant feature is that 40% of the applications are from Maharastra and next highest 14% is registered for Delhi. Lowest numbers of applications are from Bihar and Chandighar. 45 40 35 30 25 20 15 10 5 0 40 % of applicants 14 9 3 1 1 4 1 1 2 2 4 5 8 5 Pr ad es h C Bi ha ha nd r ig ha r D el h G i Ka uj r rn at at M ak ad hy K a e a Pr ria M ad ah es ar h a R sh aj as ra th a U Pu n tta r P nja b r Ta ad e m s W il N h es t B adu en ga O l th er s 59States An dh ra .Particulars No. of applicants % of applicants Madhya Maharastra Rajasthan Punjab Uttar Pradesh 1 1 48 40 2 2 2 2 Tamilnadu Pradesh 5 6 4 5 Particulars West Bengal No.
QUESTIONNAIR 60 .
61 .QUESTIONNAIR 1. WHAT IS YOUR AGE GROUP (A)25-35 (B)35-45 (C)45-55 (D)55-65 40 35 30 25 20 15 10 5 0 AGE 25-35 35-45 45-55 55-65 (From the above chart we can understand the age group 55-65 people are more investing in to the mutual funds). ARE YOU INTERESTED IN MUTUAL FUNDS (A)YES (B)NO 70 60 50 40 30 20 10 0 YES NO 3-D Colum n 3 (From the sampling of 100 people 70 percentage of people are really Interested in mutual funds.) 2.
62 . IN WHICH TYPE OF MUTUAL FUND DO YOU LIKE TO INVEST (A)CLOSE ENDED (B) OPEN ENDED 80 70 60 50 40 30 20 10 0 MUTUAL FUNDS OPEN ENDED CLOSE ENDED (Here open ended schemes are more flexible compare to close so Many people are interested into open ended schemes).3. 4. WHAT IS YOUR OCCUPATION (A)PRIVATE EMPLOYEE (B)GOVERNMENT EMPLOYEE (C)BUSINESS PERSON (D)RETIRED 35 30 25 20 15 10 5 0 OCCUPATION PRIVATE EMPLOYEES GOVERNMENT EMPLOYEES BUSINESS PERSON RETIRED (Here Number of Retired employees are investing more as they are concerns about their future).
5. WHAT PERCENT OF RETURN DO YOU EXPECT (A) 10-15 (B) 20-25 (C) 30-40 (D) DOUBLING YOUR AMOUNT 60 50 40 30 20 10 0 EXPECTING PERCENTAGE DOUBLING YOUR AMOUNT 20-30% 30-40% 10-15 % (Here Number of people likes to double their amount.) 6. WHICH TYPE OF FUND ALLOCATION DO YOU LIKE (A) 100 PERCENT EQUITY (B) 80 PERCENT EQUITY & 20 PERCENT DEBT (C) 70 PERCENT EQUITY 20 PERCENT DEBT & 10 PERCENT MONEY MARKET (D) 100 PERCENT DEBT 50 40 30 20 10 0 FUND ALLOCATION 70% EQUITY 20% DEBT & 10%MONEY MARKET 100% DEBT 80% EQUITY & 20 % DEBT 1OO% EQUITY (Here many investors are love to invest in 100 percent equity fund Allocation scheme.) 63 .
7. HAD YOU INVESTED IN ANY OTHER MUTUAL FUNDS (A)RELIANCE MUTUAL FUNDS 64 .) 8. IN WHICH OF THE UTI SCHEME YOU HAVE INVESTED (A)UTI WEALTH BUILDER FUND (B)UTI INFRASTRUCTURE ADVANTAGE FUND (C)UTI LONG TERM ADVANTAGE FUND (D)NONE 60 50 40 30 20 10 0 UTI SCHEMES UTI WEALTH BUILDER FUND UTI INFRASTRUCTURE ADVANTAGE FUND UTI LONG TERM ADVANTAGE FUND NONE (Here the investors are likely to invest in infrastructure advantage fund as this sector is in a booming stage. ARE YOU SATISFIED WITH THE RETURNS OF WHICH UTI IS GIVING (A)YES (B)NO (C)CANNOT SAY 50 40 30 20 10 0 SATISFIED WITH RETURNS YES NO CANNOT SAY (The above chart is clearly saying that today according to market situation many people are quite satisfied with the return they are Getting.) 9.
65 . DO YOU ADVICE PEOPLE TO INVEST IN MUTUAL FUNDS (A)YES (B)NO (C)CANNOT SAY 35 34 33 32 31 30 29 28 27 ADVICE TO OTHERS YES NO CANNOT SAY NOTE: As mutual funds is the subject to market so people generally does not Like to give advice to others as it is a risky business.(B)J M FINANCIAL (C)FEDILITY MUTUAL FUNDS (D)HSBC 70 60 50 40 30 20 10 0 RELIANCE MUTUAL FUNDS J M FINANCIAL FEDILITY MUTUAL FUNDS HSBC OTHER M UTUAL FUNDS (As people are specialized in market more the investors they all are Investing in HSBC if not in UTI because HSBC is the world’s local bank And international old more than 200 year old company) 10.
FINDINGS AND CONCLUSIONS 66 .
Majority applications are from state of Maharastra 67 . The most common investment amount is 5000-25000. * The NFO process is simple and well structured as long as it is to investor to investor. and. * An analysis of sample of applications revealed the following O O O O O O O O O O O Majority applicants prefer to hold the units individually. Majority the applicants are male. The model age group is 31-60. * Different funds have been designing different forms of applications for NFO. About half of the applicants prefer Growth option. Majority of the applicants are in service. * The SEBI regulations governing NFO are comprehensive and protect investor's interest at each level. There were no NRO. Almost all applicants make the payments by cheques. More than 2/3 rd of the applicants are HUF s. but thereafter the process is lengthy time consuming and found to be overlapping at some stages. NRE and FCNR accounts.Findings and conclusions: * The NFO is found to be a complex activity calling for creating an organization polling the knowledge and expertise of people in different areas. NRI s share is about 4% of the total.
SUGGESTIONS AND RECOMMENDAIONS 68 .
* The NRI subscribers to the fund maybe encouraged to make the payments from NRO. * The application from institutional investors and foreign institutional investors are to be encouraged through a package of incentives. NRE and FCNR accounts. * The NFO process is very complex and there is a need to simplify the process by eliminating certain unnecessary steps in the process ie instead of carrying out audit for three times and appropriate internal check system maybe devised to keep the errors within the tolerance limits. * A savings from all channels of India / World are to be tapped by the NFO rather than one or two states applying for a loin share of the option. There is a need to investigate the reasons for HUF s occupying more than 2/3rd share in the non-individual applications as its not a body corporate. A standardized form of application maybe designed by the competent authority and should be made mandatory for all funds to use the standard application form. * * The holding of units in joint names shall be encouraged. * The participation of senior citizens in the NFO s may be encouraged as they are likely to hold more surpluses compared to others. 69 .Suggestions and recommendations: * Different funds have been using different forms of applications.
com 71 .sebi.com www.Indiainfoline.BIBILOGRAPHY Bibliography * * www.
72 .* * * * www.amfiindia. NFO records of Reliance Mutual Fund. Mutual Funds in India by H SADHAK.com NFO propeller of India info line.
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