karvy stock broking ltd

Table of Contents

Particulars Page no.

ACKNOWLEGEDMENT 4
INTRODUCTION AND COMPANY PROFILE 5
HISTORY OF MUTUAL FUND IN INDIA 46
OBJECTIVES 76
RESEARCH METHODOLOGY 79
RESEARCH ANALYSIS 7 INTERPITATION 80
FINDINGS 90
LIMITATIONS 93
CONCLUSIONS 94
RECOMMENDATIONS 95
QUESTIONAIRE 97
GLOSSARY 100
BIBLIOGRAPHY

ACKNOWLEDGEMENT

Several people have been extremely helpful in completing this particular project.
“PREFERENCE OF ADVISORS TOWARDS FINANCIAL SERVICES- special emphasis
on Mutual funds.” Going through this project was not easy but it was the efforts of others also
that helped me out on my way. First of all I would like to thank my course Director , who
provide me this opportunity. I particularly want to acknowledge Mr. , Industrial guide.
I am thankful to him for his timely guidance, support, advice and co-operation. It was his
invaluable guidance in the project that made the work happen according to the needed format.
I also want to thank Mr. my faculty guide for providing me with the techniques and
precautions to be taken in the project.

(----------------------------)

INTRODUCTION
COMPANY PROFILE
________________________________________
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, Karvy’s 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 access to millions of Indian shareholders, besides companies, banks,
financial institutions and regulatory agencies. Over the past one and half decades, Karvy has
evolved as a veritable link between industry, finance and people.

In January 1998, Karvy became first Depository Participant in Andhra Pradesh. An ISO 9002
Company, Karvy’s 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 company’s 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.

WHERE KARVY STAND IN THE MARKET?

KARVY is a legendary name in financial services, Karvy’s 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 company’s 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 Karvy’s success is the faith reposed in company by valued
investors and customers, all across the country. Indeed, with Karvy’s wide network touching
every corner of the country, even the most remote investor can easily access Karvy’s services
and benefit from company’s expert advice.
KARVY GROUP
Karvy Consultants Limited
Karvy Investor Services Limited
Karvy Stock broking Limited
Karvy Computer Shares Pvt. Ltd.
Karvy realty (India) Pvt Ltd
Karvy globle services Ltd
Karvy data base management services
Karvy comtrade Ltd
Karvy Consultants Limited
As the flagship company of the KARVY Group, KARVY Consultants Limited has always
remained at the helm of organizational affairs, pioneering business policies, work ethic and
channels of progress. Having emerged as a leader in the registry business, the first of the
businesses that we ventured into, we have now transferred this business into a joint venture
with Computershare Limited of Australia, the world’s largest registrar. With the advent of
depositories in the Indian capital market and the relationships that we have created in the
registry business, we believe that we were best positioned to venture into this activity as a
Depository Participant. We were one of the early entrants registered as Depository Participant
with NSDL (National Securities Depository Limited), the first Depository in the country and
then with CDSL (Central Depository Services Limited). Today, we service over seven lakh
customer accounts in this business spread across over 540 cities/towns in India and are
ranked amongst the largest Depository Participants in the country. With a growing secondary
market presence, we have transferred this business to KARVY Stock Broking Limited
(KSBL), our associate and a member of NSE, BSE and HSE.
KARVY Stock Broking Limited
KARVY Stock Broking Limited, one of the cornerstones of the KARVY edifice, flows freely
towards attaining diverse goals of the customer through varied services. It creates a plethora
of opportunities for the customer by opening up investment vistas backed by research-based
advisory services. Here, growth knows no limits and success recognizes no boundaries.
Helping the customer create waves in his portfolio and empowering the investor completely
is the ultimate goal. KARVY Stock Broking Limited is a member of:
National Stock Exchange (NSE)
Bombay Stock Exchange (BSE)
Hyderabad Stock Exchange (HSE)
Karvy Investor Services Limited
Deepening of the Financial Markets and an ever-increasing sophistication in corporate
transactions, has made the role of Investment Bankers indispensable to organizations seeking
professional expertise and counselling, in raising financial resources through capital market
apart from Capital and Corporate Restructuring, Mergers & Acquisitions, Project Advisory
and the entire gamut of Financial Market activities.
Karvy Investor Services Limited (‘KISL’), a SEBI registered Merchant Banker has emerged
as a leading Investment Banking entity in the country with over a decade of experience. KISL
has built its reputation by capitalizing on its qualified professionals, who have successfully
executed a large number of complex and unique transactions.
Our quality professional team and our work-oriented dedication have propelled us to offer
value-added corporate financial services and act as a professional navigator for long term
growth of our clients, who include leading corporates, State Governments, Foreign
Institutional Investors, public and private sector companies and banks, in Indian and global
markets.
We have also emerged as a trailblazer in the arena of relationships, both at the customer and
trade levels because of our unshakable integrity, seamless service and innovative solutions
that are tuned to meet varied needs. Our team of committed industry specialists, having
extensive experience in capital markets, further nurtures this relationship.
Credentials
• Emerging as a leading Investment Banker with a strong support from its Group entities in
Research, Stock Broking, Institutional Sales and Retail Distribution.
• Strong team of more than 25 qualified professionals operating from six cities; Hyderabad,
Mumbai, Delhi, Kolkata, Chennai, and Bangalore apart from two overseas offices at New
York (USA) and Dubai.
• One of the largest retail distribution networks with over 584 branches in over 389
cities/towns.
• Excellent Institutional Sales D
Karvy Computer Shares Pvt. Ltd.
Karvy Computershare Private Limited is a joint venture between Computershare, Australia
and Karvy Consultants Limited, India in the registry management services industry.
Computershare, Australia is the world’s largest and only global share registry providing
financial market services and technology to the global securities industry.

Karvy realty (india) pvt ltd

Karvy Realty (India) Limited (KRIL) is promoted by the Karvy Group, India’s largest
financial services group. The group carries forward its legacy of trust and excellence in
investor and customer services delivered with passion and the highest level of quality that
align with global standards.
Karvy Realty (India) Limited is engaged in the business of real estate and property services
offering:
• Buying/ selling/ renting of properties
• Identifying valuable investments opportunities in the real estate sector
• Facilitating financial support for real estate and investments in properties
• Real estate portfolio advisory services.
KRIL is your personal real estate advisor guiding and hand holding you through real estate
transactions and offering valuable investment opportunities.
Building on the KARVY brand as a leading industry benchmark for world class customer
servicing and quality standards, KRIL brings to investors a reputation of reliability,
dependability and honesty. Our understanding of the needs and preferences of our clients and
our teams of qualified realty professionals help us to establish fruitful relationships with
buyers and sellers of properties alike.
A single stop shop for realty services offering:
• Transacting Options: Choose to buy, sell or rent properties (residential and commercial)
• Investing Options: Give your investments a good opportunity with properties marketed by
KRIL.
• Financing Options: Get unmatched deals for financing your investment
• Research Options: We undertake valuation and feasibility studies, area analysis and
customized analysis on behalf of clients.
KRIL has ongoing relations with builders and developers across the country which will help
you place your investments in the most genuine properties for a good value appreciation at
the right place and at the right price.
KRIL is committed to the guiding principles of quality, timely service delivery, fair pricing,
transparency and integrity.

Karvy globle servieses Ltd

Karvy Global is pioneering the creative business solutions approach to transform information
into insight aimed to address the business, marketing and operational intelligence needs of
global companies
Karvy data base management services
KDMSL is emerging as a leading service provider in the areas of E-governance processing,
insurance back office processing, record keeping, back office for BFSI clientele and is in
pursuit to establish credentials in the areas of Telecom processing, Data management
requirements of large corporates. KDMSL is striving to achieve leadership position by
tapping the Indian retail sector boom, through a combination of our extensive branch network
and proprietary IT backbone. Needless to say, KDMSL is run as an independent outfit with
seasoned professionals on board, who have decades of expertise in the industry.KDMSL is a
fully owned subsidiary of Karvy Stock Broking Limited (KSBL), incorporated in April 2008
and is head quartered at Hyderabad.
Karvy comtrade Ltd
Commodities market, contrary to the beliefs of many people, has been in existence in India
through the ages. However the recent attempt by the Government to permit Multi-commodity
National levels exchanges has indeed given it, a shot in the arm. As a result two exchanges
Multi Commodity Exchange (MCX) and National Commodity and derivatives Exchange
(NCDEX) have come into being. These exchanges, by virtue of their high profile promoters
and stakeholders, bundle in themselves, online trading facilities, robust surveillance measures
and a hassle-free settlement system. The futures contracts available on a wide spectrum of
commodities like Gold, Silver, Cotton, Steel, Soya oil, Soya beans, Wheat, Sugar, Chana etc.,
provide excellent opportunities for hedging the risks of the farmers, importers, exporters,
traders and large scale consumers. They also make open an avenue for quality investments in
precious metals. The commodities market, as it is not affected by the movements of the stock
market or debt market provides tremendous opportunities for better diversification of risk.
Realizing this fact, even mutual funds are contemplating of entering into this market.
Karvy Comtrade Limited is another venture of the prestigious Karvy group. With our well
established presence in the multifarious facets of the modern Financial services industry from
stock broking to registry services, it is indeed a pleasure for us to make foray into the
commodities derivatives market which opens yet another door for us to deliver our service to
our beloved customers and the investor public at large.
With the high quality infrastructure already in place and a committed Government providing
continuous impetus, it is the responsibility of us, the intermediaries to deliver these benefits at
the door-steps of our esteemed customers. With our expertise in financial services, existence
across the lengths and breadths of the country and an enviable technological edge, we are all
set to bring to you, the pleasure of investing in this burgeoning market, which can touch upon
the lives of a vast majority of the population from the farmer to the corporate alike. We are
confident that the commodity futures can be a good value addition to your portfolio.
The company provides investment, advisory and brokerage services in Indian Commodities
Markets. And most importantly, we offer a wide reach through our branch network of over
225 branches located across 180 cities.

Board of Directors
Parthasarathy C
Yugandhar M
Ramakrishna M S
Prasad V Potluri
Robert Gibson
Sanjay Kumar Dhir
R Shyamsunder

Karvy Investor Services Limited

Parthasarathy C
Yugandhar M
Ramakrishna M S

Karvy Securities Limited

Parthasarathy C
Yugandhar M
Ramakrishna M S
Ajay Kumar K
William Samuel
Nicholas Tully
Karvy Stock Broking Limited
Parthasarathy C
Yugandhar M
Ramakrishna M S
Ajay Kumar K
Kutumba Rao V
William Samuel
Nicholas Tully

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.
Karvy’s 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.
Company’s mission statement is clear and thoughtful which guide geographically dispersed
employees to work independently yet collectively towards achieving the organization’s goals.

Vision of Karvy
Company’s 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.” Company’s 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.

Behind the Picture: What Customers matter for KARVY?

The underlying picture forming answer for above question is given below.

Market Brand Customer

Power Preference Value

RELATIONSHIPS
OUR COMPETITIVE ADVANTAGE

Every year with this picture keeping in mind ‘Karvy accelerate with Recovery, Revival and
Reappearance.’
Karvy has started 2004 on a strong note with the realization to signal some of the challenges
it faced previous year. In a competitive market and a branded business, Karvy need to
carefully manage itself to avoid down trading or brand shifts by consumers.

For Karvy, Aligarh branch 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.

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.

Karvy’s 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.

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.

KARVY SERVICES – AN OVERVIEW

________________________________________

1. Stock broking
2. Demat services
3. Investment product distribution
4. Investment advisory services
5. Corporate finance & Merchant banking
6. Insurance
7. Mutual fund services
8. IT enabled services
9. Registrars & Transfer agents
10. Loans

1. Stock Broking:
KARVY is working as Capital Market Intermediaries. Stockbrokers are regulated by SEBI
[Stock-brokers and Sub-brokers] Regulations, 1992. The stockbroker is a member of the
stock exchange. Stockbrokers are the intermediaries who are allowed to trade in securities on
the exchange of which they are members. They buy and sell on their own behalf as well as on
behalf of their clients.
Stockbrokers expand their business by engaging sub-broker. Sub-brokers mean “any person
not being a member of a stock exchange who acts on behalf of a stock broker as an agent or
otherwise for assisting the investors in buying, selling or dealing in securities through such
stock-brokers.”

2. Demat Services:

Karvy is a depository participant with the National Securities Depository Limited (NSDL) for
trading and settlement of dematerialized shares.
Depository Participants (DPs) are described as an agent of the depository. They are
intermediaries between the depository and the investors. The relationship between the DPs
and the depository is 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 Karvy’s depository services
get a dual benefit. They can use Karvy’s brokerage
services to execute transactions and Karvy’s depository services to settle them.

3. Investment Products Distribution:

Company is also concern with the distribution of investment products like

(a). Fixed Deposit

(b). Bonds
(c). 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]
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.
13 Sound Craft Industries Ltd.
14 Supreme Industries Ltd.
15 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 in various
financial products like shares, bonds, debentures, mutual funds, fixed deposits, insurance etc.,
Company design portfolio by considering following factors.

Investor’s requirement of getting money back,

Investor’s willingness to take risk,
Investor’s 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. Firm’s capital can be raised by raising
loans, issuing shares, and acquiring or merging with other businesses by public or private
companies.
Merchant banking is a financial intermediation that matches entities that need capital and
those that have capital. Hence they facilitate the flow of capital in the market.
Karvy enjoys SEBI category (I) authorization for Merchant Banking. Karvy offers the full
spectrum of Merchant Banking Services, beginning from identifying the best time for an
issue to final stage of marketing it, to harvest unparalleled success.
As a merchant banker Karvy offer following services:
Issue management
Instrument designing
Pricing of the issue
Registration process for the issue of shares
Marketing efforts
Final allotment to investors
Listing details on stock exchanges
Loan syndication
Lease financing
Corporate advisory services
Underwriting
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. Company’s single minded focus in delivering products for
customers has given it the distinguished position of being the preferred provider of financial
services in the country.

List of Mutual Fund Clients of KARVY:

1 Alliance Mutual Fund
2 Birla Mutual Fund
3 Bank of Baroda Mutual Fund
4 Can Bank Mutual Fund
5 Chola Mutual Fund
6 Deutsche Mutual Fund
7 DSP Merrill Lynch Mutual Fund
8 Franklin Templeton Investments
9 GIC Mutual Fund
10 HDFC Mutual Fund
11 HSBC Mutual Fund
12 IL & FS Mutual Fund
13 JM Mutual Fund
14 Kotak Mutual Fund
15 LIC Mutual Fund
16 Punjab National Bank Mutual Fund
17 Prudential ICICI Mutual Fund
18 Principal Mutual Fund
19 Reliance Mutual Fund
20 State Bank of India Mutual Fund
21 Standard Chartered Mutual Fund
22 Sundaram Mutual Fund
23 SUN F&C Mutual Fund

24 Tata Mutual Fund

8. Income Tax enabled services:

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.

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 India’s 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

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.

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 sub-brokers of Karvy.

Company doesn’t give advertisement in media like TV, Newspapers, and Magazines etc.
Karvy’s 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.

HR POLICY OF KARVY
________________________________________

Karvy’s 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.

Employee Motivation:

Karvy’s employees are highly empowered. They don’t 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 co-
operation between employees.
NATIONAL LEVEL ORGANIZATION CHART
________________________________________

CM & MD
(Hyderabad)

GM GM GM
(Marketing) (Finance) (HRM)

Zonal Manager

Regional Manager

Branch Mgr. Branch Mgr. Branch Mgr.

Accountant Sr. Executives

Executives

[Fig.3 National Level Organization Chart of Karvy]

BRANCH LEVEL ORGANIZATION CHART

________________________________________

Branch Manager

Sr. Executive Executives Executive (Investment) (SB - 4) (IT)

Marketing Clerk
Executives-3

Executive
(Demat) Accountant

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 Customer’s 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.

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

INDUSTRY DETAILS
________________________________________
Sr. No. Mutual Fund Name No. of Schemes
1 Alliance Mutual Fund 36
2 Benchmark Mutual Fund
5
3 Birla Mutual Fund 74
4 Bank of Baroda Mutual Fund 17
5 Can Bank Mutual Fund 25
6 Chola Mutual Fund
45
7 Deutsche Mutual Fund 40
8 DSP Merrill Lynch Mutual Fund 40
9 Escorts Mutual Fund
15
10 Franklin Templeton Investments 130
11 GIC Mutual Fund 5
12 HDFC Mutual Fund 79
13 HSBC Mutual Fund 32
14 IL & FS Mutual Fund 43
15 ING Vysya Mutual Fund
55
16 JM Mutual Fund 55
17 Kotak Mutual Fund 56
18 LIC Mutual Fund 35
19 Morgan Stanley Mutual Fund
1
20 Punjab National Bank Mutual Fund 4
21 Prudential ICICI Mutual Fund 124
22 Principal Mutual Fund 68
23 Reliance Mutual Fund 74
24 Sahara Mutual Fund
12
25 State Bank of India Mutual Fund 59
26 Standard Chartered Mutual Fund 100
27 Sundaram Mutual Fund 52
28 SUN F&C Mutual Fund
1
29 Tata TD Mutual Fund
100
30 Taurus Mutual Fund
9
31 Unit Trust of India
42
32 UTI Mutual Fund 66
HISTORY OF MUTUAL FUND
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.

Third Phase – 1993-2003 (Entry of Private Sector Funds)

With the entry of private sector funds in 1993, a new era started in the Indian mutual fund
industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year
in which the first Mutual Fund Regulations came into being, under which all mutual funds,
except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged
with Franklin Templeton) was the first private sector mutual fund registered in July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and
revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI
(Mutual Fund) Regulations 1996.
The number of mutual fund houses went on increasing, with many foreign mutual funds
setting up funds in India and also the industry has witnessed several mergers and acquisitions.
As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805
crores. The Unit Trust of India with Rs.44,541 crores of assets under management was way
ahead of other mutual funds.
Fourth Phase – since February 2003
In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was
bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of
India with assets under management of Rs.29,835 crores as at the end of January 2003,
representing broadly, the assets of US 64 scheme, assured return and certain other schemes.
The Specified Undertaking of Unit Trust of India, functioning under an administrator and
under the rules framed by Government of India and does not come under the purview of the
Mutual Fund Regulations.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is
registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation
of the erstwhile UTI which had in March 2000 more than Rs.76,000 crores of assets under
management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual
Fund Regulations, and with recent mergers taking place among different private sector funds,
the mutual fund industry has entered its current phase of consolidation and growth. As at the
end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores
under 421 schemes.
The graph indicates

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 RBI Dept. of IT

Stock Brokers Commercial PAN

R & T Agent Banks TAN
Mutual Fund NBF Co. E-TDS

[Fig.8: Regulatory bodies]

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

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.

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 IPO’s /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.

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.
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.
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.

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

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 fund’s 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).

STRUCTURE OF INDIAN MUTUAL FUNDS

________________________________________

Mutual fund industry is highly regulated by the government keeping in view of the protection
of investor’s 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. Sponsor
2. Board of Trusties
3. Asset Management Company
4. Custodian and Depositories
5. 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.

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.

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 Fund’s “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.

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.

Critical View About Mutual Fund

Advantage

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 cross-section 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.

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:

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.

MUTUAL FUND CYCLE

________________________________________

From the shown 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.

Types of Mutual Fund

________________________________________
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 child’s
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.

(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 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.

Risk Return Grid

Risk Tolerance/Return Expected Focus Suitable Products Benefits offered by MFs

Low Debt Bank/ Company FD, Debt based Funds Liquidity, Better Post-Tax returns
Medium Partially Debt, Partially Equity Balanced Funds, Some Diversified Equity Funds and
some debt Funds, Mix of shares and Fixed Deposits Liquidity, Better Post-Tax returns, Better
Management, Diversification
High Equity Capital Market, Equity Funds (Diversified as well as Sector) Diversification,
Expertise in stock picking, Liquidity, Tax free dividends

3. By Load:

(a). Load Fund:

Marketing of new mutual fund scheme involves initial expenses. These initial expenses may
be recovered from the investors by entry or exit load.

(i). Entry Load or Front-end Load:

If initial expenses recovered from investors at the time of investor’s entry into the fund, by
deducting a specific amount from his initial contribution it is called Entry Load.

(ii). Exit Load or Back-end Load:

If initial expenses recovered at the time of the investor’s 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 don’t 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.

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.

(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 country’s 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.
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 today’s 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
Aligarh City. Company wants to increase it’s sub-brokers who can work as intermediary
between company and the investors.”

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 map market potential of Karvy Investor Service Ltd.

Secondary Objectives:

Following are secondary objectives.

To assess an awareness of mutual funds in Aligarh City.

To find out level of awareness of mutual funds in Aligarh 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.
To do SWOT analysis.

RESEARCH METHODOLOGY
________________________________________

1. Research Design:

A research design is a pattern or an outline of a research project’s 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 Research ’ of ‘Exploratory Research ’. The research is of both

qualitative as well as quantitative type.

2. Unit of Analysis:

Mutual Fund Advisors.

Characteristics of interest:

Advisor’s knowledge about Mutual Fund

Advisor’s knowledge about Karvy
Advisor’s interest in getting knowledge of Mutual Fund
Advisor’s willingness to deal in Mutual Fund with Karvy
Advisor’s preference in selecting tax saving instrument of investment
Advisor’s preference in selecting dealer

3. Sources of Data:

a. 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: Aligarh 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’

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’ or ‘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.
RESEARCH ANALYSIS AND INTERPRETATION
________________________________________
1. As a financial investment adviser which investment options you suggest to your
customers?

Shares Mutual Fund

Insurance Fixed Deposit
Tax Bond PPF

2. Please indicate reason for choosing above.

Returns Risk
Safety Tax Benefits
Timely Brokerage

6. If a service person who pays Income Tax wants to invest, generally which option do you
suggest for investment?

Insurance
Mutual Funds
Fixed Deposits
Tax Bond

7. Are you interested to deal in MF?

Yes
No

8. Do you know about MF services provided by Karvy’s Aligarh Branch?

Yes
No
9. Are you interested in attending a seminar arranged by Karvy to guide investors about MF?

Interested
Not Interested.

11. Would you like to work with Karvy Securities Ltd for dealing in mutual fund?
Yes
No

11.1 If no, then the reason would be:

Not answered
No time
Lack of knowledge
No expansion plans

FINDINGS
________________________________________
After getting in depth research study of Karvy, I came to know that Karvy is not much
popular as other brands operating in Aligarh city. Bajaj Allianz, HDFC, ICICI are having
much higher tapped market in respect to mutual funds.
• Karvy as an investment option in Mutual Fund does not posses much proficiency and
potential customers in Aligarh city. Though the financial advisors advise their clients to go
for Mutual Fund as a investment option. About 42% of advisors advise their clients to invest
in Mutual Funds, followed by investing in Insurance sector.

• The advisors after having a deep thought says that it is the Returns that make them convince
their clients to go for investment in mutual funds. 36% of advisors said that it is the Returns
which make a person to invest in Mutual Fund. Followed by Risk which is quite lesser in
other investment options.

• A huge lott of advisors showed a positive response in dealing of for Mutual Fund. About
60% of them said that they are interested in dealing for Mutual Funds, because that results in
higher brokerage.

• As far as Karvy is concerned about 91% of the advisors said that they are not aware of the
services provided by Karvy, including Mutual Fund.

• When asked, 53% of advisors said that they are not interested to work with Karvy
Securities, to the contrary with they don’t have any such expansion plans and they have little
knowledge anout Karvy.

• In Aligarh city advisors don’t have an appropriate knowledge about Karvy as a Investment
hub.

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.

LIMITATIONS
________________________________________

Due to limitation of time and cost constrains a sample size of only 50 respondents was
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 Aligarh City.

Some of the respondents may be biased in giving responses.

My inexperience in research area might have affected results.

CONCLUSION
________________________________________

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.

RECOMMENDATIONS
________________________________________

There is high potential market for Mutual Fund Advisors in Aligarh city, but this market
needs to be explored as investors are still hesitated to invest their money in Mutual Funds.

In Aligarh 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 don’t 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.

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 Mutual Fund

Insurance Fixed Deposit
Tax Bond PPF

2. Please indicate reason for choosing above.

Returns Risk
Safety Tax Benefits
Timely Brokerage

3. Approximately how many customers you have?

4. What is the brokerage Payment Period?
5. 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
Mutual Funds
PPF
Tax Bond
Fixed Deposits

8. Are you interested to deal in MF?

Yes
No
If No Why?

9. Do you know about MF services provided by Karvy’s Aligarh Branch?

Yes
No

10. In future will you attend seminar arranged by Karvy to guide investors about MF?

Yes
No
11. Would you like to work with Karvy Securities Ltd for dealing in mutual fund?
Yes
No
11.1 If no, then the reason would be:

Not answered
No time
Lack of knowledge
No expansion plans

Name :
Address :

Thank You

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 client’s 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.

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.

BIBLIOGRAPHY
________________________________________

1. www.mutualfundsindia.com
2. www.amfiindia.com
3. www.themanagementor.com
4. www.dewb-vc.com
5. www.karvy.com
6. www.indiacorporateadvisor.com
7. www.nsdl.co.in
8. www.incometaxdelhi.nic.in
9. www.incometaxindia.gov.in
10. David J. Luck & Ronald S. Rubin, “Marketing Research”,
Ed. – 7 (ISBN)
11. D.C.Anjaria & Dhaivat Anjaria, “AMFI Workbook”, Ed. – 2 (Association of Mutual
Funds in India)
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November 11, 2010 10:56 PM

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